In business and finance, 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.
This share gives the government organization, or other shareholder, the right of decisive vote, thus to vote all other shares, in a shareholder 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, or other shareholder, veto powers over any major corporate action, such as the sale of a major asset or subsidiary or of the company as a whole.
In the context of government-owned golden shares, 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 organisation concerned is deemed to be of ongoing importance to national interests, for example for reasons of national security.
NATS Holdings, the UK's main air navigation service provider, is an example of a company with a golden share. [1]
The term arose in the 1980s when the British government retained golden shares in companies it privatised, an approach later taken in many other European countries, as well as the former Soviet Union.[ citation needed ] It was introduced in Russia by a Decree of the President of the Russian Federation (Boris Yeltsen) on November 16, 1992. [2]
In 2013, the People's Republic of China introduced golden shares termed "special management shares." [3] Since then, golden shares have been utilized by Chinese Communist Party (CCP) general secretary Xi Jinping's administration to expand control over private companies, particularly technology companies. [3] [4] [5] In 2021, The Economist and Reuters described the Chinese government's stake in ByteDance as a golden share investment. [6] [7]
The British government's golden share in BAA, the UK airports authority, was ruled illegal by European courts in 2003, when it was deemed contradictory to the principle of free circulation of capital within the European Union. [8] The European Court of Justice also held that Portugal's holding of golden shares in Energias de Portugal is contrary to European Union law since it presented an unjustified restriction on free movement of capital. [9]
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 [10] as well by as Peer Zumbansen and Daniel Saam. [11]
A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity and recognized as such in law for certain purposes. Early incorporated entities were established by charter. Most jurisdictions now allow the creation of new corporations through registration. Corporations come in many different types but are usually divided by the law of the jurisdiction where they are chartered based on two aspects: whether they can issue stock, or whether they are formed to make a profit. Depending on the number of owners, a corporation can be classified as aggregate or sole.
Volkswagen AG, known internationally as the Volkswagen Group, is a German public multinational conglomerate manufacturer of passenger and commercial vehicles, motorcycles, engines and turbomachinery, headquartered in Wolfsburg, Lower Saxony, Germany, and since the late 2000s is a publicly-traded family business owned by Porsche SE, which in turn is half-owned but fully owned by the Austrian-German Porsche and Piëch family. The company also offers related services, including financing, leasing, and fleet management. In 2016, it was the world's largest automaker by sales, and keeping this title in 2017, 2018, and 2019, selling 10.9 million vehicles and was the largest automaker by revenue in 2022. It has maintained the largest market share in Europe for over two decades. It ranked seventh in the 2020 Fortune Global 500 list of the world's largest companies. In Forbes Global 2000 2023 Volkswagen Group ranked 29th.
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NatWest Group PLC is a British banking and insurance holding company, based in Edinburgh, Scotland.
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The Economist Newspaper Limited is a media company headquartered in London, England. It is best known as publisher of The Economist newspaper and its sister lifestyle magazine, 1843. The Economist Group specialises in international business and world affairs information. Its principal activities are in print and digital media as well as in conferences and market intelligence.
EDP - Energias de Portugal is a Portuguese electric utilities company, headquartered in Lisbon. It was founded in 1976 through the merger of 14 nationalised electricity companies.
Altice Portugal S.A. is the largest telecommunications service provider in Portugal. Since June 2, 2015, the company has been a wholly owned subsidiary of Altice, a multinational cable and telecommunications company with a presence in France, Israel, Belgium, Luxembourg, Portugal, French West Indies/Indian Ocean Area, the Dominican Republic, and Switzerland. The assets in Portugal were sold to Altice in 2015 per request of Oi SA to reduce debt. The African assets were mostly sold for the same reason. Portugal Telecom, SGPS SA was split in separate companies: PT Portugal and Pharol, which owns a 27,5% stake in Oi.
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A company, abbreviated as co., is a legal entity representing an association of legal people, whether natural, juridical or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared goals.
CPFL Energia (former name: Companhia Paulista de Força e Luz) is the second largest non state-owned group of electric energy generation and distribution in Brazil and the third biggest Brazilian electric utility company, after Eletrobras and Energisa. The corporation is composed by CPFL Brasil, CPFL Piratininga, CPFL Paulista, CPFL Geração, CPFL Renováveis, Rio Grande Energia (RGE) and SEMESA. Each of these companies operates as a holding company that owns dozens of other companies. Its headquarters are located in Campinas, the third-largest city in state of São Paulo. In 2017, it was purchased by the Chinese utility State Grid Corporation of China, a state-owned enterprise under State-owned Assets Supervision and Administration Commission of the State Council.
A variable interest entity (VIE) is a legal structure defined by the Financial Accounting Standards Board (FASB) for situations where control over a legal entity may be demonstrated through means other than voting rights. A public company with a financial interest in such entities may be subject to certain financial reporting requirements.
Porsche Automobil Holding SE, usually shortened to Porsche SE, is a German multinational corporation primarily known as a holding company of Volkswagen Group with investments in the automotive industry. Porsche SE is headquartered in Zuffenhausen, a city district of Stuttgart, Baden-Württemberg and is majority owned by the Austrian-German Porsche-Piëch family. The company was founded in Stuttgart as Dr. Ing. h.c. F. Porsche GmbH in 1931 by Ferdinand Porsche (1875–1951) and his son-in-law Anton Piëch (1894–1952).
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Traton SE, known as the Traton Group, is a subsidiary of the Volkswagen Group and one of the world's largest commercial vehicle manufacturers, with its MAN, Scania, Navistar, and Volkswagen Caminhões e Ônibus brands. The company also has digital services branded as RIO. In 2020, the group sold around 190,200 vehicles. The range of products includes light-, medium-, and heavy-duty trucks, as well as vans and buses. As of December 31, 2020, Traton employed around 82,600 people in its commercial vehicle brands.
Commission v Germany (2007) C-112/05 is an EU law case, relevant for UK enterprise law, concerning European company law. Following a trend in cases such as Commission v United Kingdom, and Commission v Netherlands, it struck down public oversight, through golden shares of Volkswagen by the German state of Lower Saxony. Soon afterwards, the management practices leading to the Volkswagen emissions scandal began.
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: CS1 maint: multiple names: authors list (link)State investors have also been taking "golden shares", tiny stakes that grant outsized voting powers, in China's internet giants. In October it was revealed that a government agency had taken a 1% stake in a subsidiary belonging to Tencent, China's mightiest internet titan.