Keywords

Summary



Keywords

Free movement of capital – Restrictions – Company law

(Art. 56 EC)

Summary

Article 56 EC must be interpreted as precluding a national provision under which the articles of association of a company limited by shares may confer on the State or a public body with a shareholding in that company the power to appoint directly one or more directors which, on its own or in conjunction with a provision which grants that State or public body the right to participate in the election on the basis of lists of the directors it has not appointed directly, is such as to enable that State or public body to obtain a power of control which is disproportionate to its shareholding in that company.

That provision enables public shareholders to participate in a more significant manner in the activity of the board of directors of a company limited by shares than their status as shareholders would normally allow, and thereby places at the disposal of those public shareholders an instrument which gives them the possibility of exercising influence which exceeds their levels of investment. By giving public shareholders an instrument enabling them to restrict the possibility of the other shareholders participating in the company 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 of that company or in its control, such a national provision is liable to deter direct investors from other Member States from investing in the capital of that company, and thus constitutes a restriction on the free movement of capital.

Whilst it is true that the national legislation at issue does not confer that right of appointment directly upon the State or a public body, but requires a decision of the general meeting of the shareholders of the company concerned, the fact remains that that does not take away the restrictive character of the legislation in question. Irrespective of whether the public shareholder itself has the majority required to have its right of direct appointment of the company’s directors included in the company’s articles of association or whether it can have it included only with the consent of the other shareholders, it must be noted that it is only by virtue of the legislation at issue, which derogates from ordinary company law, that a public shareholder may, unlike a private shareholder, obtain the right to participate in the activities of the board of directors in a more significant manner than its status as shareholder would normally allow.

Concerns which may, depending on the circumstances, justify the retention by Member States of a degree of influence within undertakings that were initially public and subsequently privatised, where those undertakings are active in fields involving the provision of services in the public interest or strategic services, cannot justify such a provision, since it does not make inclusion in the articles of association of a company limited by shares of a right for the State or a public body holding shares in that company to appoint directly one or more directors subject to any condition.

(see paras 22-24, 29, 33-34, 41-43, operative part)