Keywords

Summary



Keywords

1. Actions for failure to fulfil obligations – Subject-matter of the dispute – Determination during the pre-litigation procedure

(Art. 258 TFEU)

2. Free movement of capital – Restrictions – Company law

(Arts 56(1) EC, 58 EC and 86(2) EC)

Summary

1. It is not permissible for a party to alter the very subject‑matter of the case during the proceedings and the merits of the action must be examined solely in the light of the claims contained in the application initiating the proceedings. Furthermore, by virtue of Article 21 of the Statute of the Court of Justice and Article 38(1)(c) of its Rules of Procedure, the Commission must, in any application made under Article 258 TFEU, indicate the specific complaints on which the Court is asked to rule and, at the very least in summary form, the legal and factual particulars on which those complaints are based. However, the fact that, in infringement proceedings, the Commission set out in detail in its reply a complaint which it had already made more generally in the application, making reference, as a supplementary argument to show the merits of its complaint, to another right enjoyed by a State in a privatised company, does not alter the subject-matter of the alleged infringement, and has thus has no effect on the scope of the proceedings.

(see paras 20-21, 23)

2. A Member State fails to fulfil its obligations under Article 56 EC when it maintains for that State and for other public bodies special rights in a limited liability company, allocated in connection with golden shares held by that State in the share capital of that company, relating to the exemption from the 5% voting ceiling applying to the votes of other shareholders, the right to appoint a director of the company, when the State has voted against the nominees successfully elected as directors of that company and the right of veto over resolutions of the general assembly of the shareholders in relation to:

- amendments of the articles of association, including increases of share capital, mergers, divisions and winding-up;

- the conclusion of certain contracts concerning the structure and control of groups of companies,

- the removal or restriction of the preferential rights of shareholders in the case of an increase in share capital.

The right of veto, in so far as it confers on that State an influence on the management and control 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 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 fact that the exercise by any shareholder of the voting rights carried by his holding of ordinary shares is restricted to a 5% ceiling, save only that the State concerned is not subject to that restriction, the voting rights attaching to shares constitute one of the principal ways whereby the shareholder can actively participate in the management of an undertaking or in its control. Consequently, any measure which is designed to prevent those rights being exercised or to subject them to qualifications may deter investors in other Member States from acquiring stakes in the undertakings concerned and constitute a restriction on the free movement of capital. Furthermore, a voting ceiling is an instrument which is liable to limit the ability of direct investors to participate in a company with a view to establishing or maintaining lasting and direct economic links with it which would make possible effective participation in the management of that company or in its control, and which diminishes the interest in acquiring a stake in the capital of a company.

As regards the right to appoint a director, that right constitutes a restriction of the free movement of capital, inasmuch as 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 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 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, 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 cannot be denied that the need to ensure a secure energy supply in the Member State concerned in case of crisis, war or terrorism may constitute a ground of public security within the meaning of Article 58 EC. However, 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 cannot 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. Where a State does no more than raise that 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 an interference with a fundamental interest of society, a justification based on public security cannot be upheld.

Moreover, as regards the proportionality of the restriction at issue, the uncertainty, created by the fact that the exercise of the special rights which the holding of golden shares in the share capital of the company 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 in so far as they constitute restrictions on the free movement of capital upheld by the Treaty. 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 that performance of the particular task assigned to that undertaking can be assured only through the grant of such rights and provided that the development of trade is not affected to such an extent as would be contrary to the interests of the European Union. That is, however, not the object of national legislation which attributes to a Member State special rights in a limited liability company, in connection with golden shares held by that State in the share capital of that company.

(see paras 56-58, 62-64, 84-85, 87, 90, 92-97, operative part)