(CN) – The Portuguese government cannot hold a “golden share” giving it veto power over the country’s dominant telecommunications company, the European Court of Justice ruled.
Portugal claimed its golden share would ensure the availability of the communications network in case of crisis, war or terrorism, but failed to explain such power would enable it to protect public security, Europe’s high court ruled.
Portugal got the 500 shares after Portuguese Telecom was privatized in 1995 and sold 1 billion regular shares on the open market. The golden shares were designated as state property and include veto power over any major company changes.
The Court of Justice found that this violation of the free movement of capital is not justified, because it prevents other EU states from investing in the telecom.
The Luxembourg-based court also pointed out that the state’s influence over the company could only be changed by the state itself.
Holding the golden shares “constitutes serious interference with the free movement of capital in that it confers on the national authorities, as regards the use of such powers, a latitude so discretionary in nature that it cannot be regarded as proportionate to the objectives pursued,” the high court ruled.