All Topics  
Golden Share

 

 
   Email Print
   Bookmark   Link
 

 

Golden Share
 
 
  Topics Golden Share Topic Home

A Golden Share is a nominal share which is able to outvote all other shares in certain specified circumstances, often held by a government organization, in a government company undergoing the process of privatization
Privatization

Privatization is the incidence or process of transferring ownership of business from the public sector to the private sector . In a broader sense, privatization refers to transfer of any government function to the private sector including governmental functions like revenue collection and law enforcement....
 and transformation into a stock-company.

share gives the government organization the right of decisive vote, thus to veto all other shares, in a shareholders-meeting.






Discussion
Ask a question about 'Golden Share'
Start a new discussion about 'Golden Share'
Answer questions from other users
Full Discussion Forum



Encyclopedia


A Golden Share is a nominal share which is able to outvote all other shares in certain specified circumstances, often held by a government organization, in a government company undergoing the process of privatization
Privatization

Privatization is the incidence or process of transferring ownership of business from the public sector to the private sector . In a broader sense, privatization refers to transfer of any government function to the private sector including governmental functions like revenue collection and law enforcement....
 and transformation into a stock-company.

Purpose

This share gives the government organization the right of decisive vote, thus to veto all other shares, in a shareholders-meeting. Usually this will be implemented through clauses in a company's Articles of Association
Articles of Association (law)

The articles of association of a company, often simply referred to as the articles , are the regulations governing the relationships between the shareholders and directors of the company, and are a requirement for the establishment of a company under the law of the United Kingdom and many other countries....
, and will be designed to prevent stakebuilding above a certain percentage ownership level, or to give a government veto powers over any major corporate action, such as the sale of a major asset or subsidiary or of the company as a whole.

This share is often retained only for some defined period of time to allow a newly privatised company to become accustomed to operating in a public environment, unless ownership of the organization concerned is deemed to be of ongoing importance to national interests, for example for reasons of national security.

History

The term arose in the 1980s when the British government retained golden shares in companies it privatised, and later in many other European countries.

It was introduced in Russia
Russia

Russia , or the Russian Federation , is a list of countries spanning more than one continent country extending over much of northern Eurasia....
 (Zolotaya Aktsiya, "??????? ?????" in Russia
Russia

Russia , or the Russian Federation , is a list of countries spanning more than one continent country extending over much of northern Eurasia....
n) by a law initiated by the President in November 16 1992.

Legal challenges

In 2003 the UK government's golden share in BAA
BAA plc

BAA Airports Ltd. is the owner and operator of seven United Kingdom airports and the operator of several other airports worldwide, making the company one of the largest transport companies in the world....
, the UK airports authority, was ruled illegal by European courts, deemed contradictory to the principle of free circulation of capital within European Union. But taking in account the implications of this decision—especially the transitional state in countries which are candidates to join the Union—it allowed provisions to use Golden Shares in strategically important areas.

Other golden shares ruled illegal include the Spanish government's golden shares in Telefonica
Telefónica

Telef?nica, S.A., is a Spain Telephone company. Operating globally, it is one of the largest fixed-line and mobile telecommunications companies in the world: List of mobile network operators in terms of number of clients only behind China Mobile and Vodafone, and in the top five in market value....
, Repsol YPF
Repsol YPF

Repsol YPF, S.A., is an integrated Spanish Crude oil and Natural gas company with operations in 29 countries. The bulk of its assets are located in Spain and Argentina, as a result of the 1999 takeover of Argentine energy firm Yacimientos Petrol?feros Fiscales by the Spanish conglomerate Repsol S.A. within the controversial priva...
, Endesa
Endesa (Spain)

Endesa, S.A. is the largest Electric power transmission Public utility company in Spain and a subsidiary of the Italian utility company Enel. It has 10 million customers in Spain, with domestic annual generation of over 97,600 GWh from nuclear power, fossil fuel, hydroelectricity, and renewable energy power plants....
, Argentaria and Tabacalera
Tabacalera

Tabacalera is a Spain tobacco monopoly which was established in 1636, making it the oldest tobacco company in the world. In 1999 the company merged with SEITA of France to form Altadis. Its brands included Ducados and Fortuna ....
.

The Golden Share structure of Volkswagen AG and the travails of the German Land (Federal State) of Niedersachsen (Lower Saxony) are discussed by Johannes Adolff, Turn of the Tide? The 'Golden Share' Judgments of the European Court of Justice and Liberalization of the European Capital Markets, available in the German Law Journal as well as Peer Zumbansen and Daniel Saam, The ECJ, Volkswagen and European Corporate Law: Reshaping the European Varieties of Capitalism, CLPE Research Paper 30/2007, (also published in 7 German Law Journal 1027 [2007])

See also

  • Stock
    STOCK

    Software for fixed assets management and stock control developed in 2004. Stocktaking process is carried using a hand-held mobile terminal equipped with barcode reader or RFID technology....
  • Privatization
    Privatization

    Privatization is the incidence or process of transferring ownership of business from the public sector to the private sector . In a broader sense, privatization refers to transfer of any government function to the private sector including governmental functions like revenue collection and law enforcement....
  • Security (finance)
    Security (finance)

    A security is a fungible, negotiable instrument representing financial value. Securities are broadly categorized into debt securities , and stock securities; e.g., common stocks....


External links