EC Reports On Progress In Eliminating 'Golden Shares' Regimes

by Ulrika Lomas, for LawAndTax-News.com, Brussels

26 July 2005

A European Commission staff report published on Friday has highlighted the considerable progress made in the EU in eliminating special rights, often referred to as golden shares, in privatised companies.

Such rights often claim to protect the general interest by giving governments veto rights on takeovers or management decisions of such companies. However, the Commission considers that in the framework of the Internal Market they are, in most cases, a restriction to capital movement.

Based on two surveys of Member States conducted in 1997 and 2004, the report provides the first comprehensive review of developments in this field ten years after free movement of capital became a core freedom with the coming into force of the Maastricht Treaty. The report also highlights the impact of recent European Court of Justice case law in forcing Member States to abandon special rights.

The Commission has taken several steps to make sure that Member States comply with the Treaty rules in this area. Following the publication of an interpretative Communication and an EU-wide survey in 1997, Member States were persuaded to abandon their special rights in several companies, either voluntarily or as a result to the rulings of the Court of Justice.

In addition, the Commission gave appropriate attention to this issue during accession negotiations. The report published on Friday provides a comprehensive overview of the situation in the 25 Member States, based on a survey carried out in the course of 2004.

Internal Market and Services Commissioner Charlie McCreevy announced that:

“I am very satisfied with the progress made by Member States in this area in a relatively short period of time. I am particularly impressed by the good progress made by new Member States, especially when taking into account the huge privatisation programmes that these governments undertook in a short period of time. It shows that the Commission and Member States can work together to apply the Treaty rules."

"We will now discuss residual problem cases with Member States with a constructive approach but will eventually take firm action against unjustified obstacles that create problems to the completion of the Internal Market and the freedom of capital movements.”

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