Luxembourg, 27/04/2005 (Agence Europe) - The European Court of Justice will be deciding whether a provision in the Italian legal code of 1942, still in force, and which favours public entities as shareholders in companies, is compatible with European law.
During the privatisation of the AEM (Azienda Electtrica Milanese) company, Milan council sold off a large number of its shares, leaving it with a 51% in the company instead of the previous 33%. At the same time it used a privilege contained in Article 2449 in the Italian civil code, dating back to the fascist era and, which was accorded to public concerns. Despite everything, this article allows it to maintain an absolute majority on the board of directors, by appointing representatives from the council as nine members of the AEM board of directors.
Small savers opposed the Milan borough council decision to amend the statutes of the company to this effect. They considered that they had been wronged as their shares in the company were difficult to sell to investors who knew that even if they acquired 60% of the shares in the company, they would never be on the board. The small shareholders went to the regional administrative tribunal of Lombardy, which in turn asked the European Court of Justice if this Italian legal provision was contrary to the principle of free movement of capital. If the European Court responds in the affirmative, the provision may no longer be applicable in Italy.
According to legal experts, this case goes beyond the framework for privatisations as Article 2449 of the Civil Code is a general provision of the Civil Code and applies to all companies that have a minority public stake in them (in the banking sector, for example). No hearing has been planned as yet. The parties are still at the written procedure stage. Therefore no ruling is expected before the end of 2006.