Judgment — ECLI:EU:C:2011:717
Date: 2011-11-10
Language of the case: Portuguese
Court formation: First Chamber
Subject matter: Free movement of capital
Procedure: Action for failure to fulfil obligations - successful
Origin: Portugal

Summary of the Judgment Free movement of capital – Restrictions – Company law – National rules vesting in the State special rights in the management of a privatised undertaking (Arts 56(1) EC, 58 EC and 86(2) EC) A Member State fails to fulfil its obligations under Article 56 EC if it maintains in a public limited company special rights provided in favour of that State and other public bodies, granted in connection with the golden shares held by the State in the share capital of that company, concerning, in particular, the election of the chairman of the Board of Directors and conferring on it a right of veto with regard to the appointment of a number of directors not exceeding one third of the total, and for resolutions amending the company’s articles of association, those authorising the conclusion of certain contracts concerning the structure and control of groups of companies and those that might in any way jeopardise the country’s supply of oil or gas, or of products derived therefrom. The right of veto, in so far as it confers on that State influence over the management and control of the company which is not justified by the size of its shareholding in that company, is liable to discourage traders from other Member States from making direct investments in that company, inasmuch as it would not be possible for them to be involved in the management and control of that company in proportion to the value of their shareholdings. Similarly, the right of veto at issue 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 that company as being in the company’s interests, is in fact liable to depress the value of the shares of that company and thus reduce the attractiveness of an investment in such shares. As regards the right to appoint the chairman of the Board of Directors, this amounts to a restriction of the free movement of capital, since such a specific right constitutes a derogation from general company law and is laid down by a national legislative measure for the sole benefit of the public authorities. While it is true that that facility can be conferred by legislation as a right of a qualified minority, it is clear that it must, in such a case, be accessible to all shareholders and must not be reserved exclusively to the State. By restricting the opportunity for shareholders other than the State to participate in the company’s share capital with a view to establishing or maintaining lasting and direct economic links with it such as to enable them to participate effectively in the management or control of that company, the right to appoint a director is liable to deter direct investors from other Member States from investing in the share capital of that company. As regards the derogations permitted under Article 58 EC, it is true that the necessity of safeguarding a secure energy supply in the Member State concerned in case of crisis, war or terrorism may constitute a ground of public security and may possibly justify an obstacle to the free movement of capital. However, requirements of public security must, in particular as a derogation from the fundamental principle of the free movement of capital, be interpreted strictly, with the result that their scope cannot be determined unilaterally by each Member State without any control by the institutions of the Union. Thus, public security may be relied on only if there is a genuine and sufficiently serious threat to a fundamental interest of society. However, where a Member State has done no more than put forward the ground relating to the security of the energy supply, without stating clearly the exact reasons why it considers that the special rights at issue, considered either individually or as a whole, would make it possible to prevent such interference with a fundamental interest such as energy supply, justification based on public security cannot be upheld. Moreover, as regards the proportionality of the restriction in question, the uncertainty, created by the fact that the exercise of the special rights which the holding of golden shares in the company’s share capital confers on the State is not subject to any specific and objective condition or circumstance, constitutes serious interference with the free movement of capital in that it confers on the national authorities, as regards the use of such rights, a latitude so discretionary in nature that it cannot be regarded as proportionate to the objectives pursued. Lastly, Article 86(2) EC is not applicable to the national provisions at issue and cannot therefore be relied on as justification for those provisions inasmuch as they constitute restrictions of the free movement of capital laid down in the Treaty. Indeed Article 86(2) EC, in conjunction with Article 86(1) EC, may be relied on to justify the grant by a Member State to an undertaking entrusted with the operation of services of general economic interest of special or exclusive rights which are contrary to the provisions of the Treaty, to the extent to which performance of the particular task assigned to that undertaking can be assured only by the grant of such rights and provided that the development of trade is not affected to an extent contrary to the interests of the Union. However, that is not the purpose of national legislation which attributes to a Member State special rights in a public limited company in connection with golden shares held by that Member State in the share capital of that company. (see paras 57-60, 82-83, 85, 88, 90-92, 95, 97, operative part)