Golden Share

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 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, 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 (Zolotaya Aktsiya, "Золотая Акция" in Russian) by a law initiated by the President in November 16 1992.

Legal challenges

In 2003 the UK government's golden share in BAA, 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, Repsol YPF, Endesa, Argentaria and Tabacalera.

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 [ [http://www.germanlawjournal.com/article.php?id=170] ] 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, [ [http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1030652] ] (also published in 7 German Law Journal 1027 [2007] [ [http://www.germanlawjournal.de/print.php?id=870] ] )

References

ee also

*Stock
*Privatization
*Security (finance)

External links

* [http://www.adamsmith.org/80ideas/idea/62.htm Information on Golden Shares at the Adam Smith Institute]
* [http://news.bbc.co.uk/1/hi/business/3022809.stm BBC News: BAA 'golden share' ruled illegal]
* [http://www.investopedia.com/terms/g/goldenshare.asp Golden Share at Investopedia.com]
* [http://www.smh.com.au/news/business/golden-share-could-allow-qantas-to-soar/2006/04/20/1145344215092.html "Golden share could allow Qantas to soar"]
* [http://www.germanlawjournal.com/article.php?id=170 Johannes Adolff, "Turn of the Tide? The 'Golden Share' Judgments of the European Court of Justice and Liberalization of the European Capital Markets" in the German Law Journal]
* [http://www.germanlawjournal.de/print.php?id=870 Peer Zumbansen and Daniel Saam, "The ECJ, Volkswagen and European Corporate Law: Reshaping the European Varieties of Capitalism", CLPE Research Paper 30/2007, also available at 7 German Law Journal 1027 (2007)]


Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Golden Share — La Golden Share ( action spécifique ) permet à celui qui la détient de conserver un droit de veto sur l ensemble du capital d une société dans certaines circonstances spécifiques. Elles sont souvent détenues par un État dans le cas d une… …   Wikipédia en Français

  • golden share — ➔ Share * * *    A share that confers sufficient voting rights in a company to maintain control and protect it from takeover. The golden share prevents potential predators from buying shares and then using them to outvote the company s existing… …   Financial and business terms

  • golden share — noun A large share in a company, etc held by an institution or (often) a government, which prevents takeover by another company • • • Main Entry: ↑golden * * * golden share UK US noun [countable] [singular golden share …   Useful english dictionary

  • golden share — A single special rights redeemable preference share (preference shares) in a company held by a government minister, whose consent is required for, among other things, material disposals, share issues or a voluntary winding up. Related links… …   Law dictionary

  • Golden share — La golden share (« action spécifique ») permet à celui qui la détient de conserver un droit de veto sur l ensemble du capital d une société dans certaines circonstances spécifiques. Elles sont souvent détenues par un État dans le cas d… …   Wikipédia en Français

  • Golden Share — A type of share that gives its shareholder veto power over changes to the company s charter. A golden share holds special voting rights, giving its holder the ability to block another shareholder from taking more than a ratio of ordinary shares.… …   Investment dictionary

  • golden share — UK / US noun [countable] Word forms golden share : singular golden share plural golden shares business British a share that is owned by the government in a private company which allows the government to control what the company does after it has… …   English dictionary

  • Golden Share — Inhaber so genannter „Goldener Aktien“ (engl. golden shares ) verfügen in einem Unternehmen über Rechte, die über die der übrigen Aktionäre weit hinausreichen. Im Normalfall stehen jene Befugnisse die zumeist bei der Privatisierung großer… …   Deutsch Wikipedia

  • golden share —   La golden share o azione d oro è un pacchetto azionario posseduto dal governo che permette di intervenire nelle decisioni più importanti di una società privatizzata garantendo al possessore poteri speciali, indipendenti dal numero di azioni in… …   Glossario di economia e finanza

  • golden share — A share in a company that controls at least 51% of the voting rights. A golden share has been retained by the UK government in some privatization issues to ensure that the company does not fall into foreign or other unacceptable hands …   Accounting dictionary

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.