The “golden share” held in Energias de Portugal (EDP) by the Portuguese government is unlawful and unjustified, the European Court of Justice has ruled.
The European Union’s highest court says that the special share is “contrary to the principles of free movement of capital and freedom of establishment” because it gives Portugal’s government an unjustified influence over the power company.
The Portuguese state owns just under 26 per cent of the share capital in EDP, which was privatised progressively between 1997 and 2006. However its ownership of a golden share entitles it to a right of veto and the right to object to the election of directors to EDP’s board.
In its ruling, the Court said that the state’s “influence over EDP’s management and control” was “unwarranted by the size of the state’s holding” and “might discourage other member states from making direct investments”.
The case against the Portuguese government was brought by the European Commission, which has been trying to abolish the practice of government-held golden shares across Europe.
The Court rejected Portugal’s claim that the golden share in EDP was justified because it would be needed to ensure a secure energy supply in the event of a crisis, war or act of terrorism.
