Golden Share System In The Process Of Privatization Of Public Utilities

Most people are not familiar with Golden Share, which is coming to being with privatization of public utilities. However, we are familiar with privatization of public utilities. Due to the increasing of the government financial budget, the inefficiency and monopoly of the government services, reducing the government's direct intervention, adopting market mechanism, transferring the public services to the private are to be taken into account. In order to improve efficiency and benefit of public utilities, privatization is the inevitable tendency of the public services. As we know, public utilities are related to public interests and national interests, how can the government search for a balance between the business freedom of a formerly state-owned enterprise and the state. Golden share provides a means for achieving that balance.Golden share emerged in the beginning of 1980s in Great Britain and its function has not changed much since that time. The main objective of golden share was and remains the protection of a State's national interests by maintaining special rights in privatized companies. There are many reasons why states created and continue to preserve golden share. First, strategic privatized companies are important employers and tax-payers. Second, some companies have large financial power and influence on a State's economy. Third, privatized companies have substantial effect on public policy and Security. Golden shares help States to effectively safeguard these interests and protect companies against unwanted takeovers. Golden share confers various special rights, which may be of various types and concern different subject matters, e.g.: (a) Rights to appoint company directors and members of the board, rights to limit representation of foreign company directors; (b) Rights to veto and decision rights in the general meetings, rights to influence fundamental company decisions, e.g. dissolution of the company, mergers and takeovers and any other structural changes, sale of substantial assets, amendment of the company's articles of association, liquidation of the company; (c) Obligation to obtain authorization of the State before certain decisions or transactions; (d) Rights to influence and restrict acquisition of shareholding of the company in question. In a word, golden share do not necessarily refer to a real shareholding. It refers to a special right which is hold by the State. Now, our country is carrying out the privatization of public utilities, and also faced with retain the state's control in these enterprises. Maybe the golden share can be taken into consideration. Therefore, I choose this device as my dissertation: Golden Share under The Privatization of Public Utilities.PartⅠof this essay introduces the privatization of public utilities, and presents the background and concept of golden share. PartⅡprovides the development of golden share, discusses the relevant background of the free movement of capital and freedom of establishment, which are confirmed in EU Treaty Law and the Commission's 1997 Communication, then analyzes each of the six ECJ cases which affected golden share. PartⅢintroduces the practice of golden share in our country, analyzes the active meanings and potential abuse of golden share and concludes that carefully crafted golden share are a viable means of retaining governmental control over industries that are imperative to the national interest. Finally, PartⅣtries to construct the golden share system in our country, separately structures the essence and fundamental principles of golden share and specific manipulation.