Understanding Golden Shares

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The golden share allows its holders to retain a veto on the entire capital of a company under certain circumstances. They are often owned by a state in the case of a public company subject to the process of privatization and transformation into a publicly listed company.

The government aims to protect the public interest in companies that deal with areas of significant importance (public utilities). The golden share does not provide a minimum percentage of capital that the state must hold in a society to be in a position to act on.

State intervention is permissible only if it concerns public interest, that is, if requirements of public safety and order are justified – both apply in particular to energy, telecommunications, defense, and infrastructure companies (eg, airports). Even in this case, however, the principle of proportionality should be respected, and privileges may not go beyond what is absolutely necessary to achieve the objective. Even when a transparent design, and effective legal protection is ensured.

The public share holding limit can be reduced to symbolic a single action, and gives the state power over strategic decisions even when privatization is completed. Conversely, it is not applicable to subsidiaries and associates that the firm held before and after privatization.

The term golden share emerged in the 1980s when the British government retained the golden shares in companies. The type of share was used subsequently in other European states. The legality of golden shares has also been questioned, even if the principle guiding it has not been invalidated.

The term golden shares is divided into different sections. In the classical case, the special rights to a single statutory share of the highlighted companies are paired. This construction is however not mandatory.

Important examples of golden share special powers, include consent and veto rights on business policy decisions such as conversion or transfer of registered office, or new share issues. Including, the right to appoint board members outside of the regular electoral process.

Multiple voting is to to be expected in its legal effect (individual shareholders in preference to the majority), although the golden shares in a broad sense, have the typical characteristics (coupling of special rights to one share).

In some jurisdictions, multiple caps are not permitted for listed companies – the principle that applies is “one share, one vote”. In Europe, France has golden shares of energy giant Electricité de France and the bank Crédit Lyonnais.

In Sweden,  the Wallenberg family holds control in the holding company AB, including those specific shares on the telecom equipment supplier Ericsson. In Central and Eastern Europe, golden shares also common.



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