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Brussels, 27 June 2007

Free movement of capital: Commission asks Portugal to abandon the special rights held in Energias de Portugal (EDP) and GALP Energia

The European Commission has formally requested Portugal to abolish the special rights held by the Portuguese State in two energy companies: EDP (Energias de Portugal) and GALP Energia. The special rights were established by the privatisation decree-laws and Articles of Association of these companies. Both infringement procedures were initiated by letters of formal notice in October 2006. Having analysed the replies to these letters from the Portuguese authorities, the Commission still considers that the special powers act as restrictions to the free movement of capital in violation of EC Treaty rules. The Commission's request takes the form of a reasoned opinion, the second stage of infringement procedures under Article 226 of the EC Treaty. Should the Portuguese authorities not take satisfactory steps to remedy the infringement of EU law within two months of receiving the reasoned opinion, the Commission may decide to refer the case to the European Court of Justice.

Legal basis of the infringement procedures


The legal framework governing the privatisation of EDP and the Articles of Association provide for special rights for the State in the company, including:

  • veto rights on (a) resolutions to amend the company's articles of association, including capital increases, mergers, divisions and winding-up; (b) resolutions on entering into parity and subordination group contracts; (c) resolutions on abolishing or limiting shareholders' rights of preference as regards capital increases;
  • the right to oppose the election of a number of directors and the right to appoint a director in the company.

The Articles of Association of the company impose also a voting limit of 5% in the general assembly for all shareholders, except for the State/equivalent entities.


The legal framework governing the privatisation of GALP Energia and the Articles of Association provide for special rights for the State in the company, including:

  • veto rights on any resolutions purporting to authorise the execution of equal partner or subordinate group agreements and further, any resolutions which may, in any way whatsoever, endanger the supply of oil, gas and electricity or other derivatives thereof to the country;
  • the right to appoint the chairperson of the board of directors.

The Commission considers that these special powers constitute an unjustified restriction on the free movement of capital (Article 56) and the right of establishment (Article 43), in violation of EC Treaty rules, in so far as they hinder both direct investment and portfolio investment.

Proportionality concerns

Portugal considers that the special rights are justified on two grounds: first, because the services provided by the companies are in the general economic interest (as defined in Article 86 of the EC Treaty); and secondly for public security and public interest reasons.

Based on ECJ jurisprudence, the Commission considers that in both cases, the restrictions do not meet the necessity, suitability and proportionality criteria that might justify restrictions to the free movement of capital
The latest information on infringement proceedings concerning all Member States can be found at:

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