Brussels, 08/07/2010 (Agence Europe) - In the decision made on Thursday 8 July (Case C-171/08), the European Court of Justice ruled that the special rights attributed to the Portuguese state with the “golden shares” it holds in the capital of Portugal Telecom S.A. (PT) constitute a non-justified restriction on the free movement of capital. According to the ECJ, the 500 golden shares held by the state give the latter an influence in the management of PT, which is not justified by the scale of its participation in the company and is likely to discourage direct investment from operators in other member states (by limiting their rights of control and management in the company and by influencing the value of the shares in the company). Given its preferential shares in the capital of this company (which has been subject to gradual privatisation as from 1995), the Portuguese state has maintained the right of veto on many important decisions such as: the appointment of the shareholder assembly bureau, the election of a third of the company's administrators and the president of the board of directors, the modification of statutes, increasing capital, the limitation and suppression of preferential rights, the setting out of general objectives and fundamental principles of the policy for participating in other companies and, especially, the acquisition of stakes above 10% in the social capital of the company by shareholders exercising, directly or indirectly, activities in competition to that of companies controlled by Portugal Telecom.
The ECJ also rejected the argument in favour of the necessity of guaranteeing the security and availability of telecommunications networks in the case of crisis, war or act of terrorism, invoked by Portugal to justify the reasons for its claim. The ECJ pointed out that Portugal had been eager to use this reason but had failed to clarify in what way the possession of golden shares would help counteract a threat to public security. Moreover, even if Portuguese legislation on privatisation subjects the creation of preferential shares to the condition of reasons pertaining to the national interest, neither this law nor the statutes of PT adopted in 1995 set out criteria regarding the circumstances in which the state can exercise the powers conferred on it by way of these special rights. Such uncertainty subsequently severely impedes the free movement of capital. In effect it bestows upon the national authorities such a level of discretionary powers, that it cannot be considered in proportion to the objectives pursued. The European Court of Justice has therefore ruled in favour of the Commission, which appealed against these special rights for the state on 25 April 2008. (F.G./transl.fl)