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The End of the “Golden” Age of Privatisations? – The Recent ECJ Decisions on Golden Shares

Published online by Cambridge University Press:  17 February 2009

Paulo Câmara
Paulo Câmara
Affiliation:
Assistant Professor, Lisbon Faculty of Law; Head, Primary Markets Department, CMVM – Comissão do Mercado de Valores Mobiliários. This text expresses only the author's views.
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Type
Case Note
Information
European Business Organization Law Review (EBOR) , Volume 3 , Issue 2 , June 2002 , pp. 503 - 513
Copyright
Copyright © T.M.C. Asser Press and the Authors 2002

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References

1 The decisions are available on the ECJ's website: <http://curia.eu.int>.

2 This qualification is avoided in the text of the decision in case C-367/98 [compare indent 39 of this decision with indent 38 of the decision in case C-483/99 and with indent 39 of case C-503/99's opinion delivered on 3 July 2001, concerning all cases (indent 1).

3 In the literature, the concept is sometimes used in a restrictive meaning, referring only to these limitations on ownership. Taking this approach, see, inter alia, Graham, Stedman, Takeovers (London: Longman 1993) p. 7Google Scholar; Alain, Viandier, OPA, OPE, Garantie de Cours, Retrait, OPV2 (Paris: Litec 1993) p. 89Google Scholar. Other authors, however, prefer the broader concept used in the text: see, namely, San Sebastían, Flechoso, El Gobierno de las Sociedades Cotizadas y su Control (Madrid: CDBB 1996) pp. 569–570, 587, 599–604Google Scholar; Luís, Morais, Privatizaçāo de Empresas Públicas. As Opções de Venda (Lisboa: AAFDL 1990) pp. 224–228.Google Scholar

4 There are, however, cases of golden shares concerning fully privatised companies.

5 Symptomatically, both the United Kingdom and Spain supported France in case C-483/99. The United Kingdom also intervened in case C-503/99, supporting Belgium.

6 In Spain, the model has some special features. The regime embodied in Law 5/1995 only applies to companies that perform a precise public interest, requiring State authorisation for a number of corporate decisions taken in such companies. See Reyes Palá, Laguna, Las Ofertas Públicas de Venta (OPV's) de Acciones (Madrid: McGraw Hill 1997) 24–30.Google Scholar

7 See the ECJ's decision in cases C-483/99 (indent 44), C-503/99 (indent 44) and C-367/98 (indent 48).

8 See supra n. 3.

9 OJ [1997] C 220/15, point 9.

10 For a report concerning listed companies, see Bolsa de derivados do porto/Instituto do mercado de capitals, Processos de (Re)privatização – Sociedade Cotadas (1989/1996) (Porto 1996).

11 See on that reform, Eduardo Paz, Ferreira (ed.), Estudos sobre o Novo Regime do Sector Empresarial do Estado (Almedina/ Coimbra 2000).Google Scholar

12 For a description and a comment on this text, see San Sebastían Flechoso, supra n. 3, p. 598.

13 See Portuguese Code of Administrative Proceedings (Código de Procedimento Administrativo), articles 124-126.

14 See the ECJ's decision in case C-483/99 (indents 48-50), which in this respect has a much more developed reasoning than case C-367/98.

15 See articles 102-103 of the Banking Act (Regime General das Instituições de Crédito e das Sociedades Financeiras, approved by Decree Law no. 298/92, 31 December) and articles 43-50 of the Insurance Act (Decree Law n.94-B/98, 17 April). See also Engrácia, Antunes, Participações Qualificadas e Domínio Conjunto (Porto 2000) 17–32Google Scholar; Paulo, Câmara, “O governo dos grupos bancários”, in: Estudos de Direito Bancário (Coimbra 1999) 111–205.Google Scholar

16 See the ECJ's decisions in cases C-503/99 (indent 45), C-483/99 (indents 45-46) and C-367/98 (indents 49-50).

17 Reyes Palá Laguna, supra n. 6, p. 27.

18 See the ECJ's decision in case C-483/99 (indent 53).

19 See Decree-Law no. 558/99, 17 December and also Eduardo Paz Ferreira, supra n. 11.

20 Gilson, Ronald J./ Reinier, Kraakman, “Delaware's Intermediate Standard for Defensive Tactics: Is There Substance to Proportionality Review?”, 44 Business Lawyer (1988) 247–274Google Scholar; Daniel, Neff, “The Impact of State Statutes and Continuing Director Rights Plans”, 51 University of Miami Law Review (1997) 663–676, at 666–668Google Scholar; Alistair, Alcock, “The Regulation of Takeovers”, 5 Journal of International Financial Management (2001) 167.Google Scholar

21 To illustrate this point, it is noteworthy that recent developments in Portuguese securities market law made it compulsory to present a annual report on corporate governance, which includes a description of special shareholder rights (CMVM Regulation no. 7/2001, Annex, Chapter III, 3.).

22 See, e.g., Art. 15 of the Portuguese Securities Code.

23 See, inter alia, Klaus, Hopt, “Europäisches und deutsches Übernahmerecht”, 161 ZHR (1997) 373.Google Scholar

24 See inter alia Graham Stedman, supra n. 3, pp. 416-417; Alain Viandier, supra n. 3, 89; San Sebastían Flechoso, supra n. 3, pp. 602-603; Arnaud, Perrier/ Raphaëlle, Scacchi, Les Stratégies anti-OPA (Paris: Economica 1995) pp. 81–82.Google Scholar

25 See the ECJ's decisions in cases C-367/98 and C-483/99.

26 High Level Group Of Company Law Experts, Report on Issues Related to Takeover Bids (10 January 2002), p. 34 and pp. 74–75 (Annex 4).Google Scholar

27 Klaus, Hopt, “European Takeover Regulation: Barriers to and problems of harmonising Takeover Law in the European Community”, in: Klaus, Hopt/ Eddy, Wymeersch (eds.), European Takeovers. Law and Practice (London: Butterworths 1992) 186Google Scholar; Eddy, Wymeersch, “Problems of the regulation of takeover bids in Western Europe”Google Scholar, ibid., p. 122; Paulo, Câmara, “Defensivemeasures adopted by the board: Current European Trends”, in: OECD, Company Law Reform in OECD Countries (2002)Google Scholar, available at <www.oecd.org>.

28 The new German Law on Takeovers also imposed a duty of neutrality (§ 33 Wertpapiererwerbs- und Übernahmegesetz), although with wider exceptions: see Hanno, Merkt, “Verhaltenspflichten des Vorstands der Zielgesellschaft bei feindlichen Übernahmen”, 165 ZHR (2001) 232–257Google Scholar; Matthias, Baudisch/ Alexander, Götz, “Nochmals: Neutralitätspflicht des Vorstands und Entscheidungsbefugnis der Hauptversammlung im Übernahmerecht”, AG (5/2001) 251–256.Google Scholar

29 On this concept, see High Level Group of Company Law Experts, supra n. 26, pp. 21-23.

30 See supra n. 2.

31 High Level Group Of Company Law Experts, supra n. 26, p. 34.

32 This division is not totally accurate. As explained supra n. 1, there are golden share rights that are barriers to the exertion of control not necessarily in the general meeting.

33 High Level Group Of Company Law Experts, supra n. 26, p. 30.

34 This is partially recognised by the Report, as it proposes that restrictions on the transferability of non-listed bearing shares should not be enforceable against the bidder (High Level Group of Company Law Experts, supra n. 26, pp. 36-37). But reference is not made to any potential restriction to the acquisition of either non-listed or listed shares – even if such restriction technically is not a restriction on the transferability of shares (see Annex 4 to the said Report, where other barriers of such nature are identified under 1.1, at p. 74). Therefore, the Report fails to expressly admit the general inadequacy of the breakthrough rule to address the problem of pre-bid barriers to the acquisition of shares in the target company – and consequently its inability to deal with golden shares of such nature.