A Greek yes to golden share for privatized companies

Greece said yesterday it plans to maintain a golden share in privatized companies considered to have a strategic bearing on the public interest and that the veto option could help to reinforce their operations. The golden share – special voting rights which allow governments to control privatized companies – was overruled by the European Court of Justice early this week in cases involving France and Portugal. The court struck down both governments’ golden shares, saying one had not specified the circumstances justifying special voting rights while the other had breached EU law by restricting the free movement of capital. Belgium, however, got clearance from the court because it limits the time and scope under which the golden share would come into play. Like its European counterparts, the Greek government has also sought to maintain control on privatized companies via a golden share. The draft law on privatizations tabled in Parliament late last month defines such companies as those serving the public interest, are involved in the defense industry and the security of the country and those related to public health. The ministerial committee on privatizations will decide which are the companies deemed crucial to the country’s interest and which thus necessitate special voting rights for the State. National Economy and Finance Minister Nikos Christodoulakis said golden shares play another equally important role in addition to giving the State control over privatized companies. «Golden shares can serve as a tool to reinforce privatized companies,» he said. To date, the government has said it plans to hold a golden share in Hellenic Exchange Holdings and 35-percent stakes in electricity utility PPC, telecoms operator OTE and water company EYDAP. The State currently owns controlling shares in the three companies, although there are plans to reduce its stakes by the end of the year. Other companies expected to remain under government control include gas enterprise DEPA and oil refiner Hellenic Petroleum. Alex Manos of Schroder Salomon Smith Barney said there is no reason why Greece cannot maintain golden shares in privatized companies. «As long as they are structured well and intelligently done, I don’t see why [the Greek government] can’t have golden shares,» he said. However, he also said the government will need to spell out the circumstances for each company under which special voting rights will come into effect, as the draft law on privatizations is short on details. In Greece’s case, the arrangement could even prod the slow-moving privatization program along. «At the end of the day, a golden share gives some security to the government to proceed with privatizations,» Manos pointed out.

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