The mass privatization programs of Eastern Europe and the former Soviet Union have been designed as the centerpieces of the momentous transformation of the region’s command economies to principles of market forces. The programs are designed to distribute shares in thousands of state-owned enterprises amongst hundreds of millions of citizens for free or for nominal payment, thereby creating a revolutionary class of citizen-shareholders with a strong stake in the privatization process. From the inception of the first wave of large-scale privatization in Czechoslovakia, investment funds’ have played a central role in the successes and failures of the varying mass privatization programs of Eastern Europe and the former Soviet Union. This article presents the major issues and policy options to be considered in preparing investment fund legislation for privatizing economies. The conclusions drawn herein are based upon the experience of government officials, World Bank representatives and the author and other attorneys of the law firm of White & Case gained in connection with the establishment of investment fund legislation in the Czech and Slovak Republics, Russia, Poland, Armenia, Lithuania and Kazakhstan.
