Brussels, 12/11/2010 (Agence Europe) - The special rights enjoyed by the Portuguese state by virtue of the "golden shares" it holds in the capital of Energias de Portugal (EDP) constitute an unjustified restriction on the free movement of capital; by holding them, Portugal has infringed the obligations incumbent upon it by virtue of Article 56 EC.
In its ruling in Case C-543/08, which it returned on 11 November, the Court of Justice of the EU has upheld the position of the European Commission, which challenged the special rights conferred upon the state in the statutes of the privatised company, considering that they ran counter to the free movement of capital and the freedom of establishment.
As regards these special rights, the Court states first of all that through its right of veto on a whole range of important decisions (capital increases, mergers, demergers and dissolution) and, most importantly, on changes to the statutes of the company by the general assembly, the state has an influence over the company which only it can call into question and which is disproportionate to its equity participation (25.73%). This could discourage direct investments by operators from other member states (which would effectively be unable to influence the management of the company), or portfolio investments (the state's potential veto would have a negative effect on the value of the shares and therefore on the attractiveness of the investment).
Among the special rights which create imbalances in favour of the state over potential external investors and which could negatively affect their likelihood to invest are: - the fact that unlike the other shareholders, the state is not subject to a 5% upper limit on voting rights (a ceiling beyond which the votes of the ordinary shareholders simply do not count); - the exclusive right for the State to oppose the election of the board members and, in such cases, to appoint one itself.
The Court argues that these restrictions on the free movement of capital cannot be justified by reasons of energy supply security in the event of crisis, war or terrorism, as Portugal claims, nor by the mission of general economic interest conferred upon EDP. On the one hand, Portugal has not demonstrated how these special rights could prevent an attack on public security and on the other, the special or exclusive rights of EDP are not in question here, as only those of the Portuguese state as a shareholder of the company are concerned. Lastly, a further objection is that Portuguese legislation does not stipulate the circumstances under which the state may make use of the rights in question, therefore giving it a great deal of latitude in the matter, an additional factor of uncertainty for external investors, therefore constituting a further serious infringement of free movement of capital. (F.G./trans.fl)