# C_2006261EN.01001201.xml

| 28.10.2006 | EN | Official Journal of the European Union | C 261/12 |
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28.10.2006

EN

Official Journal of the European Union

C 261/12

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Action brought on 4 August 2006 — Commission of the European Communities v Kingdom of Spain

(Case C-338/06)

(2006/C 261/22)

Language of the case: Spanish

Parties

Applicant: Commission of the European Communities (represented by: G. Braun and R. Vidal Puig, Agents)

Applicant:

Defendant: Kingdom of Spain

Defendant:

Forms of order sought

| — | Declare that, by failing to transpose correctly Council Directive 77/91/EEC (1) of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent, the Kingdom of Spain has failed to fulfil its obligations under that directive, and in particular:






  (1) | Article 42, read in conjunction with Article 29(1) and (4), by allowing the general meeting of shareholders to approve the issue of new shares without pre-emptive subscription rights, at a price below their fair value; |
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Declare that, by failing to transpose correctly Council Directive 77/91/EEC (1) of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent, the Kingdom of Spain has failed to fulfil its obligations under that directive, and in particular:

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(1)

Article 42, read in conjunction with Article 29(1) and (4), by allowing the general meeting of shareholders to approve the issue of new shares without pre-emptive subscription rights, at a price below their fair value;

| (2) | Article 29(1), by granting the right to pre-emptive subscription of shares in the event of a capital increase by consideration in cash, not only to shareholders, but also to holders of bonds convertible into shares; |
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(2)

Article 29(1), by granting the right to pre-emptive subscription of shares in the event of a capital increase by consideration in cash, not only to shareholders, but also to holders of bonds convertible into shares;

| (3) | Article 29(6), read in conjunction with Article 29(1), by granting the right to pre-emptive subscription rights for bonds convertible into shares not only to shareholders, but also to the holders of bonds convertible into shares pertaining to earlier issues; |
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(3)

Article 29(6), read in conjunction with Article 29(1), by granting the right to pre-emptive subscription rights for bonds convertible into shares not only to shareholders, but also to the holders of bonds convertible into shares pertaining to earlier issues;

| (4) | Article 29(6), read in conjunction with Article 29(4), by failing to provide that the shareholders' meeting may decide to exclude pre-emptive subscription rights for bonds convertible into shares. |
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(4)

Article 29(6), read in conjunction with Article 29(4), by failing to provide that the shareholders' meeting may decide to exclude pre-emptive subscription rights for bonds convertible into shares.

| — | order Kingdom of Spain to pay the costs. |
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order Kingdom of Spain to pay the costs.

Pleas in law and main arguments

The Commission takes the view that Articles 158, 159 and 293 of Royal Legislative Decree 1564/1989 of 22 December 1989 approving the amended text of the Law on companies (‘LSA’) incorrectly transpose Directive 77/91/EEC on the following grounds:

| (1) | The second subparagraph of Article 159(1)(c) of the LSA is contrary to Article 42, read in conjunction with Article 29(1) and (4), of Directive 77/91/EEC, in that it permits the shareholders' meeting to decide to issue new shares without pre-emptive subscription rights at a price below their market value; |
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(1)

The second subparagraph of Article 159(1)(c) of the LSA is contrary to Article 42, read in conjunction with Article 29(1) and (4), of Directive 77/91/EEC, in that it permits the shareholders' meeting to decide to issue new shares without pre-emptive subscription rights at a price below their market value;

| (2) | Article 158(1) of the LSA is contrary to Article 29(1) of Directive 77/91/EEC, in that it grants the right to pre-emptive subscription for shares in the event of capital increase by consideration in cash not only to shareholders, but also to holders of bonds convertible into shares; |
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(2)

Article 158(1) of the LSA is contrary to Article 29(1) of Directive 77/91/EEC, in that it grants the right to pre-emptive subscription for shares in the event of capital increase by consideration in cash not only to shareholders, but also to holders of bonds convertible into shares;

| (3) | Article 158(1) of the LSA is contrary to Article 29(6) of Directive 77/91/EEC, read in conjunction with Article 29(1), in that it grants the right to pre-emptive subscription for bonds convertible into shares not only to shareholders, but also to the holders of bonds convertible into shares pertaining to earlier issues; |
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(3)

Article 158(1) of the LSA is contrary to Article 29(6) of Directive 77/91/EEC, read in conjunction with Article 29(1), in that it grants the right to pre-emptive subscription for bonds convertible into shares not only to shareholders, but also to the holders of bonds convertible into shares pertaining to earlier issues;

| (4) | Article 293(2) of the LSA is contrary to Article 29(6) of Directive 77/91/EEC, read in conjunction with Article 29(4), in that it fails to provide that the shareholders' meeting may decide to exclude the right to pre-emptive subscription for bonds convertible into shares. |
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(4)

Article 293(2) of the LSA is contrary to Article 29(6) of Directive 77/91/EEC, read in conjunction with Article 29(4), in that it fails to provide that the shareholders' meeting may decide to exclude the right to pre-emptive subscription for bonds convertible into shares.

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(1)  OJ L 26 of 31. 1. 1977, p. 1

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