Opinion of the Advocate General — ECLI:EU:C:2009:743
Date: 2009-12-02
Language of the case: Portuguese
Subject matter: Right of establishment;Free movement of capital
Procedure: Action for failure to fulfil obligations - successful
Origin: Portugal

Summary of the Judgment 1. Actions for failure to fulfil obligations – Proof of failure – Burden of proof on the Commission (Arts. 226 EC) 2. Actions for failure to fulfil obligations – Subject-matter of the dispute – Determination during the procedure prior to the action (Art. 226 EC) 3. Free movement of capital – Restrictions – National legislation providing for State privileges in the management of privatised undertakings (Arts 56(1) EC and 58 EC) 1. When the Commission has not annexed to its application the full text of the national legislation at issue in action for failure to fulfil obligations but, both in the application and the reasoned opinion annexed thereto, has reproduced and explained on several occasions the content of the provisions of the legislation on which it based its action for failure to fulfil obligations, and when, in response to an express request by the Court, the latter has been able to confirm the truth of the Commission’s claims in relation to the content of the provisions of that legislation, it cannot be considered that the Commission based its action on mere presumptions without providing the evidence necessary to enable the Court to assess the infringement which the Member State concerned is alleged to have committed. Such an action is therefore admissible. (see paras 20, 22-24) 2. The subject-matter of an action under Article 226 EC for failure to fulfil obligations is determined by the Commission’s reasoned opinion, so that the action must be based on the same grounds and pleas as that opinion. However, that requirement cannot be stretched so far as to mean that in every case the statement of the objections expressly set out in the reasoned opinion and the form of order sought in the application must be exactly the same, provided that the subject-matter of the proceedings as defined in the reasoned opinion has not been extended or altered. The fact that, in its application, the Commission set out in detail the complaints it had already made more generally in the letter of formal notice and the reasoned opinion, by referring to other special rights held by a Member State in a privatised company, did not alter the subject of the alleged infringement, and has thus had no effect on the scope of the proceedings. (see paras 25-26, 29) 3. A Member State which maintains in a share management holding company, which came into being as a result of the merger of several wholly publicly-owned undertakings, special rights for the State and other public sector bodies, allocated in connection with the State’s golden shares in that company, special rights relating to the election of one third of the total number of directors, the election of a certain number of the members of the executive committee chosen from the board of directors, the nomination of at least one of the directors elected to deal specifically with certain management questions, the adoption of decisions of the general meeting relating to: – the appropriation of net income for the year – alterations to the articles of association and increases in share capital, – any limit on or suppression of preference rights, – fixing the parameters of increases in share capital, – the issue of bonds or other securities and fixing the value of those which the board of directors is entitled to authorise and the limitation or suppression of priority rights in respect of the issue of bonds convertible into shares and the fixing of the parameters by the board of directors for the issue of those types of bonds, – relocation of its registered office anywhere within the national territory, – approval of the acquisition of ordinary shares exceeding 10% of the share capital by shareholders engaged in an activity which competes with those carried on by companies controlled by that company and the adoption of decisions approving the general objectives and fundamental principles of that company and defining of the general principles of its policy in respect of the acquisitions and disposal of shareholdings in companies or groups, when the general meeting’s prior authorisation is required, fails to fulfil its obligations under Article 56 EC. The holding by the Member State of those golden shares, in so far as it confers on that State an influence on the management of the company which is not justified by the size of its shareholding in that company, is liable to discourage operators from other Member States from making direct investments in that company, inasmuch as they could not be involved in the management and control of that company in proportion to the value of their shareholdings. Similarly, the structuring of the special shares may have a deterrent effect on portfolio investments in the company in so far as a possible refusal by the State concerned to approve an important decision, proposed by the organs of the company concerned as being in the company’s interests, is in fact capable of depressing the value of the shares of that company and thus reduces the attractiveness of an investment in such shares. As regards the derogations permitted under Article 58 EC, requirements of public security must, in particular as a derogation from the fundamental principle of the free movement of capital, be interpreted strictly, so that their scope may not be determined unilaterally by each Member State without any control by the institutions of the European Union. Thus, public security may be relied on only if there is a genuine and sufficiently serious threat to a fundamental interest of society. Finally, as regards the proportionality of the restriction at issue, the uncertainty, created by the fact that neither a national law nor the articles of associations of the company concerned lay down any criteria determining when those special powers may be exercised, constitutes serious interference with the free movement of capital in that it confers on the national authorities, as regards the use of such powers, a latitude so discretionary in nature that it cannot be regarded as proportionate to the objectives pursued. (see paras 6-7, 60-61, 72-78, operative part)