Slovenia: Ownership and Performance of Mass-Privatised Firms

Abstract

After prolonged debates on the most adequate method for privatising companies in Slovenia, a combined model was adopted, which in principle allowed for paid and non-equivalent (i.e. mass) privatisation. The proponents of mass privatisation argued that its main advantages were the speed at which large parts of the economy would be transferred to the private sector and its contribution to starting of capital markets in countries in transition (Lipton and Sachs, 1990; Frydman et al., 1997). Mass privatisation indeed involved a large part of the corporate (nonfinancial) sector in Slovenia but was spread over five years. ’ Unlike in similar programmes implemented elsewhere, privatisation was decentralised on both the supply and demand sides, and in principle a wide spectrum of options was made available in the privatisation law. Nevertheless, in practice that model limited the selection of privatisation methods on both sides. The basic model of privatisation

• 1. Transfer of 20 per cent of shares to para-state funds: 10 per cent to the pension fund and 10 per cent to the restitution fund;

• 2. Transfer of 20 per cent of shares to privately managed privatisation funds in exchange for ownership certificates collected by them from citizens;

• 3. Exchange of 20 per cent of shares at favourable terms for ownership certificates ofinsider owners (managers, current and former employees);