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Brussels, 22 July 2005

Free movement of capital: Commission reports satisfactory progress in eliminating unjustified special rights in EU privatised companies

A European Commission staff report published today highlights the considerable progress made in the EU in eliminating special rights, often referred to as golden shares, in privatised companies. Such rights often claim to protect the general interest by giving governments veto rights on takeovers or management decisions of such companies. In the framework of the Internal Market they are however in most cases a restriction to capital movements. Based on two surveys among 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. The report highlights the impact of the recent European Court of Justice case law in forcing Member States to abandon special rights. Given the substantial progress in the regulatory framework most Member States address nowadays an increasing proportion of their general interest considerations through regulation rather than through special rights. The report is available at:

Internal Market and Services Commissioner Charlie McCreevy said: “I am very satisfied with the progress made by Member States in this area in a relatively short period of time. I am particularly impressed by the good progress made by new Member States, especially when taking into account the huge privatisation programmes that these governments undertook 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.”

A restriction to the free movement of capital

Although there are certain exceptions, special rights cannot be justified under the Treaty Articles (56-60) on the free movement of capital as they hinder cross-border direct and portfolio investment and thereby the proper functioning of the Internal Market.

“Special rights” - also known as “golden shares” - are used by governments to maintain control in privatized companies by granting themselves rights that go beyond those associated with normal shareholding. They enable governments to block takeovers, limit 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 affords a much more predictable and transparent way for Member States to guarantee that companies conform to their public interest obligations.

Progress in eliminating special rights

The Commission has taken several steps to make sure that Member States comply with the Treaty rules in this area. Following the publication of an interpretative Communication (IP/97/477) and an EU-wide survey in 1997, Member States were persuaded to abandon their special rights in several companies, either voluntarily or as a result to the rulings of the Court of Justice. In addition, the Commission gave appropriate attention to this issue 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 the course of 2004.

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