Ukraine is entering the final stage of a large-scale reform of the forestry sector: the state enterprise ‘Forests of Ukraine’ is being transformed into a joint-stock company. The relevant order was signed by the head of the State Agency of Forest Resources, Viktor Smal, and a special commission has been established to carry out the transformation and inventory.
This is reported by Finway
Corporatization as a Tool for Attracting Investments
The reform began three years ago and is now in its final stages. Its key objective is to harmonize with European standards of corporate governance and create a management model for the forestry sector that is clear to foreign investors. This is outlined in the government’s Action Plan for 2025 and is part of Ukraine’s commitments under the Ukraine Facility program.
“The corporatization of the state enterprise ‘Forests of Ukraine’ is included in the government’s Action Plan for 2025, and it is also part of our commitments to European partners within the framework of the Ukraine Facility. This harmonizes with EU corporate rules and provides a management model that is understandable to international investors, which is a prerequisite for attracting investments,” noted the Minister of Economy, Environment, and Agriculture, Oleksiy Sobolev.
The Deputy Minister of Economy, Environment, and Agriculture, Yegor Perelygin, emphasized that transforming the state enterprise into a joint-stock company will open new opportunities for implementing investment projects and will allow funds from the sale of non-liquid assets to be directed towards the company’s development. This will enhance the efficiency of ‘Forests of Ukraine’.
Details of the Transformation and Guarantees of State Ownership
Viktor Smal, the head of the State Forest Agency, emphasized that corporatization will allow for continued economic development of the enterprise through investments in infrastructure development, the purchase of modern equipment, and the implementation of automated production management systems.
The main conditions of the reform stipulate that the owner of the forest lands used by ‘Forests of Ukraine’ remains the state. The joint-stock company will act solely as a forest user, not as an owner. The privatization of forest resources is prohibited by the law ‘On the Privatization of State and Municipal Property’, and the formation of the joint-stock company’s charter capital will occur through the enterprise’s assets. All 100% of the shares of ‘Forests of Ukraine’ will remain in state ownership.
The reform allows ‘Forests of Ukraine’ to update its material and technical base, implement innovative technologies, and improve financial indicators and production efficiency.
The corporatization process was approved by the Cabinet of Ministers of Ukraine on September 7, 2022, under resolution No. 1003 ‘Certain Issues of Reforming the Management of the Forestry Sector’. At the beginning of 2025, the parliament adopted a law requiring all state enterprises to transform into joint-stock companies or limited liability companies.
The state enterprise ‘Forests of Ukraine’ is the largest forest user in the country and one of the most significant state forest companies in Europe. The enterprise employs over 22,000 people and manages 6.6 million hectares of forest resources.