A continuing analysis of the never-ending story : golden shares after Italian elections

Abstract

The ‘golden shares’ (hereafter GS) were created at the time of privatisation whenthe EU Member States’ Governments were actively disposing of theirshareholdings in former state monopolies, such as energy companies andtelecoms. Under the normal operation of company laws a loss of share ownershipwould normally trigger a loss of control. However, since many of the privatisedcompanies were operating in strategic industries which provided public services,the Governments sought to retain their controlling grip via ‘golden shares’. Beinga special class share, GS grants its holder (usually the Minister responsible for therelevant industry) with a wide range of special powers that allows them to controlthe company. Such State-driven interventions could make acquisitions incompanies less attractive, thus the use of (non-discriminatory) golden sharescould be justifi ed only by the existence of overriding public interests and only ifapplied in a legally certain and proportional way. The striking majority of GS,which were put to the scrutiny of the Court of Justice, have failed to pass thisjustifi cation test, the only exception being case C-503/99 Commission v Belgium .