Brussels, 22/07/2005 (Agence Europe) - On Friday 22 July, the European Commission published a report by its services stressing the considerable progress made within the EU on the elimination of unjustified special rights in EU private companies (specific shares known as “golden shares”). Such rights generally claim to protect the general interest by giving governments veto rights on takeovers or management of such companies. In the framework of the internal market, they are, however, in most cases a restriction to capital movements. On the basis of two surveys carried out in Member States 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. It stresses the impact of recent European Court of Justice caselaw forcing Member States to abandon special rights. Given the substantial improvement of the regulatory framework, most Member States nowadays prefer to address an increasing proportion of their general interest considerations through regulation rather than through special rights. The report is available at: http: //europa.eu.int/comm/internal_market/capital/framework/reports_en.htm.
Commissioner Charlie McCreevy, responsible for the internal market, said: “I am very satisfied with the progress made by Member State in this area in a relatively short period of time. I am particularly impressed by the good progress made by new Member States, especially taking into account the huge privatisation programmes that these governments use 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”.
Apart from a few exceptions, special rights are incompatible with the articles of the Treaty (56 to 60) relating to the free movement of capital as they hamper direct and portfolio cross-border investment, and thus also hinder the proper functioning of the Internal Market.
The special rights, also known as golden shares, are used by governments to maintain control in privatised companies by granting themselves rights that go beyond those associated with normal shareholding. They enable governments to block takeover voting rights, and veto management decisions. But over the last decade a comprehensive regulatory framework has developed, both at European and at national level, that is a much more predictable and transparent way for Member States to guarantee that companies conform to their public interest obligations.
The Commission has taken several steps to make sure that Member States comply with Treaty rules in this area. Following the publication of an interpretative Communication in 1997 and an EU-wide survey in the same year, Member States were persuaded to give up their special rights in several companies, either voluntarily or as a result of rulings of the Court of Justice. The Commission also gave appropriate attention to this during accession negotiations. The report published today provides a comprehensive overview of the situation in the 25 Member States based on a survey carried out in 2004.