Golden Share

A golden share is a special class of share that grants its holder exceptional voting or veto rights—most commonly the power to block changes to a company’s charter, key corporate decisions, or transfers of control. Governments and private companies use golden shares to preserve strategic influence over firms, especially when national security, critical infrastructure, or major public interests are involved.

Key takeaways

• Golden shares give their holder veto power over certain corporate actions, helping preserve control after privatizations or restructurings.
• They are often used to protect companies from hostile takeovers or foreign acquisition of critical assets.
• Governments have frequently issued golden shares in privatized firms to retain influence without full ownership.
• The European Union has largely restricted the use of golden shares as disproportionate, though the UK, Brazil and other jurisdictions have continued to use them.
• While useful for safeguarding public interests, golden shares can centralize power and conflict with other shareholders’ rights.

How golden shares work

Golden shares are established by creating a special class of shares with defined rights in a company’s constitutional documents (for example, its articles of association). Those rights typically include a veto over:
* amendments to the company charter or bylaws,
major transactions such as mergers, asset sales, or changes in ownership structure, and
appointments to key management or board positions in some cases.

Governments most commonly issue golden shares when privatizing state-owned enterprises to retain a degree of control without direct ownership. The instrument became widespread in the 1980s during privatization waves in the U.K. and elsewhere. Legal treatment varies by jurisdiction: some countries allow them for national-interest protection, while entities such as the EU have deemed many uses unjustified and disproportionate.

Advantages

• Protects strategic or public-interest companies from hostile takeovers and foreign control.
• Allows governments or founding stakeholders to influence long-term policy and operations without full ownership.
• Can preserve national security, continuity of essential services, or other public-policy goals.

Disadvantages

• Concentrates power in the hands of a single shareholder or small group, potentially overriding minority shareholders.
• Can deter investment, reduce market confidence, or lead to legal challenges if viewed as disproportionate.
• May conflict with corporate governance norms and competition or investment rules in some jurisdictions.

Notable examples

• Embraer (Brazil): The Brazilian government has retained a golden share in Embraer, giving it veto power over certain transactions. This status was cited publicly during negotiations around a proposed commercial-division sale to Boeing that later collapsed.
• British Airports Authority (BAA): When BAA was privatized in 1987, the U.K. government retained a golden share. In the early 2000s, European legal challenges concluded that certain uses of that share violated EU law.

Bottom line

Golden shares are a targeted tool for preserving control over companies deemed vital to national interest, security, or public policy. They provide clear benefits for protecting strategic assets, but they also raise governance, legal, and investor-relations concerns. Their use and legality depend on jurisdictional rules and how proportionately the special rights are applied.