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Brussels, 11 December 1997
The Commission refers Portugal to the European Court of Justice over restrictions on foreigners investments
The European Commission decided to refer certain Portuguese restrictions on the participation of foreigners in the Portuguese privatization programme to the European Court of Justice.
According to the Portuguese framework law 11/90 of 5 April 1990 the Portuguese government can impose restrictions on the total participation of foreigners and the reselling of shares by the initial private investors. Different decree-laws have used this authorization and imposed such restrictions in a number of individual cases of privatization of Portuguese companies.
Furthermore, Decree-law 380/93 of 15 November 1993 imposes on any, domestic or foreign, investor in a company to be privatized after the date of entry into force of this Decree-Law an authorization if he wants to buy more than 10 % of the voting capital of the company.
These restrictions violate in the view of the Commission the Treaty rules on the free movement of capital (Art. 73b ff.) which oblige Member States, among others, to freely allow any EC national to buy shares in a company established in another Member State.
The Commission issued in July 1997 a Communication on "certain legal aspects concerning Intra-EU investment" (97/C 220/06) which lays down the view of the Commission on the compatibility of general authorization procedures on foreign investment, even if applied to nationals and foreigners equally. According to this view, such a general authorization procedure is acceptable only under certain circumstances. In the view of the Commission these circumstances are not met in the case of the above mentioned Portuguese authorization procedure (Decree-Law 380/93).