ECJ to rule on golden shares next month

Date: 24/04/03

By Martin Banks

The European Court of Justice will next month rule on whether EU governments can retain 'golden shares' in former nationalised companies.

In what is seen by many as a landmark ruling, the ECJ will give its verdict on infringement proceedings by the European Commission against the UK and Spain.

Golden shares allow governments to veto significant transfers of shares to a prospective investor or buyer, especially in the event of foreign takeover bid.

The British case involves the government's golden share in BAA, the airport operator, while Madrid's control over former state-owned companies such as petrol giant Repsol is also under the legal microscope.

The Commission believes that golden shares infringe the free movement of capital and the freedom to provide services. Member states, however, claim they are necessary to protect the public interest in vital companies.

The Luxembourg-based ECJ will rule on the cases involving the UK and Spain on 13 May. With similar cases pending in the Netherlands and Germany, the ruling could have a far-reaching impact.

One legal expert said: "Depending on which way the ruling goes, it will either be a nail in the coffin of golden shares or a vindication of the state's right to hold such shares."

The European Court of Justice will rule on 13 May 2003 on whether EU governments can retain 'golden shares' in former nationalised companies.