Golden share

Source: Wikipedia, the free encyclopedia.

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.

Purpose

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]

History

The term arose in the 1980s when the

Boris Yeltsen) on November 16, 1992.[2]

People's Republic of China

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]

Legal challenges

The British government's golden share 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

Argentaria and Tabacalera
.

The golden share structure of

Niedersachsen (Lower Saxony) are discussed by Johannes Adolff[10] as well by as Peer Zumbansen and Daniel Saam.[11]

References

  1. ^ "Our Ownership". NATS Holdings. Archived from the original on 21 April 2014. Retrieved 19 December 2013.
  2. doi:10.2991/aebmr.k.200114.122. Archived from the original on 7 February 2024. Retrieved 7 February 2024.{{cite journal}}: CS1 maint: multiple names: authors list (link
    )
  3. ^ a b Wei, Lingling (March 8, 2023). "China's New Way to Control Its Biggest Companies: Golden Shares". The Wall Street Journal. Archived from the original on 2023-03-08. Retrieved 2023-03-09.
  4. ISSN 0013-0613. Archived
    from the original on 2023-11-26. Retrieved 2023-11-27. 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.
  5. ^ McGregor, Grady (April 2, 2023). "Golden Grip". The Wire China. Archived from the original on April 15, 2023. Retrieved April 15, 2023.
  6. ISSN 0013-0613. Archived
    from the original on 22 November 2021. Retrieved 2021-11-22.
  7. ^ "Fretting about data security, China's government expands its use of 'golden shares'". Reuters. 2021-12-15. Archived from the original on 24 February 2022. Retrieved 2022-02-24.
  8. ^ "Business | BAA 'golden share' ruled illegal". BBC News. 2003-05-13. Archived from the original on 2008-09-22. Retrieved 2016-04-02.
  9. ^ "Portugal's holding of golden shares in Energias de Portugal is contrary to European Union law" (PDF). Curia.europa.eu. Archived (PDF) from the original on 2016-03-04. Retrieved 2016-04-02.
  10. S2CID 142085251. Archived from the original
    on December 12, 2007. Retrieved January 24, 2008.
  11. doi:10.1017/S2071832200006167. Archived from the original
    on July 19, 2011. Retrieved January 24, 2008.
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