Golden goodbye

13 May 2003 By Chris Hughes

The European Court was right to rule against golden shares, while letting governments keep control over privatised companies in some cases. This might act as a deterrent to further privatisation. But the evidence suggests such fears are misplaced.

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The European Court of Justice ruled that it was illegal for the governments of Britain and Spain to hold golden shares in British Airports Authority, RepsolYPF, Telefónica, Endesa and Argentaria (now BBVA).

It said that any rules which limited people from buying shares or participating in a company's management restricted the free movement of capital.

Such rules are permitted only where they support a degree of control over public services, in which case that control should not be excessive.

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