Keywords

Summary



Keywords

1. Free movement of capital – Provisions of the Treaty – Field of application – Open pension funds

(Art. 56 EC; Council Directive 88/361, Annex I)

2. Free movement of capital – Restrictions – Open pension funds – National legislation limiting foreign investments of those funds

(Arts 56 EC and 58(1)(b) EC)

Summary

1. Occupational pension funds operating in accordance with the principle of capitalisation engage, notwithstanding their social objective and the compulsory affiliation to the retirement scheme to which they belong, in economic activity. That is the case in respect of open pension funds, the assets of which are managed and invested by separate companies, which operate for a fee, in the form of a joint-stock company. The prudential supervision of those funds and companies by the public authorities and the guarantee made by the State to cover any deficits in those funds is not such as to call into question the economic nature of the activities in question.

In addition, even if the public nature of those resources were to be accepted in so far as they originate from the pension contributions collected from the employers of the workers concerned, such a fact would in itself be insufficient, in any event, to prevent Article 56 EC from applying to transactions concerning those resources, as is apparent from Annex I to Directive 88/361 for the implementation of Article 67 of the Treaty (article repealed by the Treaty of Amsterdam), which provides that the concept of capital movements covers, inter alia, operations in respect of the assets or liabilities of Member States or of other public administrations and agencies.

(see paras 40-41)

2. National legislation which imposes both quantitative and qualitative restrictions on open pension funds with regard to investments made outside national territory has a restrictive effect in relation to companies established in other Member States in that it constitutes an obstacle to the raising, by such companies, of capital in the Member State in question since the acquisition of, inter alia, shares in joint investment bodies is restricted by that legislation.

Such restrictions cannot be justified under Article 58(1)(b) EC because, even if the national legislation in question lays down the substantive content of the prudential rules applicable to those pension funds, it is not, by contrast, in any way whatsoever designed to prevent infringement of the laws and regulations in the field of the prudential supervision of financial institutions and cannot, therefore, come within the exception laid down in that article.

Moreover, the restrictions at issue cannot be justified in terms of overriding reasons in the public interest. While it is true that the need to guarantee the stability and security of the assets administered by a pension fund, in particular by the adoption of prudential rules, constitutes an overriding reason relating to the public interest capable of justifying restrictions of the free movement of capital, such restrictions must be appropriate to the objective pursued and must not go beyond what is necessary to attain that objective. The difficulties of those pension funds in evaluating the risks linked to foreign investments cannot justify quantitative restrictions of investments in securities issued in Member States. The laws of the Member States concerning disclosure of information on financial products and protection of investors and consumers have, to a large extent, been the subject of harmonisation at EU level, thereby facilitating the creation of a common market in European capital. Likewise, such quantitative measures cannot be justified on the ground that it is easier for national monitoring authorities to implement them, even in the context of an emerging social security scheme or on the ground that some of those measures protect those funds from the risk of bearing additional or excessive costs, since such costs must, in any event, be taken into account by the investor when choosing his investments, irrespective of where they are made.

A Member State that maintains in force legislative provisions imposing both quantitative and qualitative restrictions on open pension funds with regard to investments made outside national territory, in that they limit investments by those pension funds in other Member States, must therefore be found to have failed to fulfil its obligations under Article 56 EC.

(see paras 51-52, 56-58, 65-67, 69-71, 73, operative part)