Opinion of Mr Advocate General Tesauro

Mr President,

Members of the Court,

1. In this case, the Court is asked to interpret a number of provisions of the Second Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent (hereinafter referred to as the Second Directive).

2. I shall briefly summarize the relevant national legislation and the background to the main proceedings.

3. The applicants in the main proceedings are shareholders in Klostiria Velka AE, a company subjected to the provisions of Law No 1386/1983 by decision of 14 December 1983 of the State Secretary for Industry, Energy and Technology. On 28 May 1986 the OAE, which had taken over the administration of the company, decided to increase its capital of approximately DR 200 million by DR 400 million under Article 8(8) of the Law. The decision was ratified by the Greek authorities by Decree No 162 of 6 June 1986.

4. In its first question, the national court refers impliedly to the Court's consistent case-law on the direct effect of directives and asks whether Article 25 in conjunction with Article 41(1) and Article 42 of the Second Directive are free of conditions left to the discretion of the Member States and are sufficiently precise for individuals to rely on them against the administration before the national courts, claiming that the rules set out in a legislative provision are incompatible with them.

5. The same applies to Article 41 of the Second Directive, under which the Member States may derogate from Article 25 if such derogation is necessary for the adoption or application of provisions designed to encourage the participation of employees or other groups of persons defined by national law in the capital of undertakings. Whilst it is true that the provision does give the national authorities a discretion to derogate from the principle set out in Article 25, it is also true that such a possibility appears to be strictly limited to the case provided for, namely that of encouraging popular participation in companies' capital by facilitating share purchase on the part of a number of groups of people, in particular employees.

6. In its second question, the national court asks whether a legal provision comes within the scope of Article 25 of the Second Directive where it does not permanently govern matters relating to increases in the capital of a limited liability company but is intended to deal with the exceptional circumstances of over-indebted companies which are of particular economic and social importance for society as a whole and provides, in order to ensure the survival and continued operation of those companies, for the adoption by administrative act of a decision to increase the company capital, without prejudice, however, to the preemptive right of the existing shareholders when the new shares are distributed, and if so to what extent it is compatible with that provision in conjunction with Article 41(1) of the directive.

7. On the other hand, where the EEC Treaty itself seeks to allow the Member States to adopt particular measures in order to safeguard vital interests, it makes express provision for this and generally arranges for appropriate control mechanisms designed to obviate abuses.

8. As for the view that the national legislation at issue may fall within the derogations expressly provided for in Article 41 of the Second Directive, it must be observed that it emerges from an examination of the wording of Law No 1386/1983 that transfers of shares, in particular to employees or their representative organizations, local authorities, other public-law entities, charitable institutions or social organizations or private individuals (Article 2(3)), constitutes just one of the possibilities and potential activities of the OAE and is not the principal purpose of its operations. Consequently, the provision is not such as to make the legislation at issue, taken as a whole, comply with the Second Directive.

9. The conclusions which I have reached regarding the interpretation of the provisions in question release me from having to consider the question on the direct effect of Article 42 of the Second Directive as raised in the third question concerning the interpretation of that provision.

10. Before concluding, I shall briefly dwell on the Greek Government's request to the effect that the scope ratione temporis of the Court's judgment should possibly be limited.

1. In the light of the foregoing considerations, I propose that the questions referred by the Greek Council of State should be answered as follows:

1 Original language: Italian.

2 OJ 1977 L 26, p. 1.

3 Official Journal of the Hellenic Republic No 107 of 8. 8. 1983, p. 1926.

4 OJ 1988 L 76, p. 18.

5 Official Journal of the Hellenic Republic No A 43 of 23. 3. 1990.

6 Official Journal of the Hellenic Republic No 725 of 14. 12. 1983.

7 Official Journal of the Hellenic Republic No 374 of 10. 6. 1986.

8 See in particular Article 36; Article 48(3) and (4); Article 73(2); Article 92(3); Article 100a(4); Article 108; Article 109; Article 223; Article 224; Article 226.

9 See to that effect the judgment in Case 222/84 Johnston v Chie/Constable of the Royal Ulster Constabulary [1986] ECR 1651, paragraph 26.

10 OJ 1978 L 295, p. 36.

11 In its third question, the Council of Sute asked whether provisions of the type embodied in Law No 1386/1983 were compatible with the provisions of Article 42 of the Second Directive (which provides that the Member Suttes are to ensure equal treatment to all shareholders who are in the same position) in view of the fact that they did not prescribe that the price of the shares was to be fixed by the State on the basis of the objectively established net worth of the undertaking and the resultant inherent value of the old shares but left it to the discretion of the administration to fix the price so as to make possible the necessary immediate inflow of capital into companies which, because of their difficulties, had had confidence in them shaken, although it did safeguard the preemptive right of existing shareholders when tne new shares were distributed.

12 Judgment in Case 61/79 Amministrazione dello Finanze dello Stato v Denkavit Italiana [1980] ECR 1205, paragraph 16; judgment in Joined Cases 66/78, 127/78 and 128/78 Salumi [1980] ECR 1237, paragraph 9.

13 Judgment in Denkavit Italiana, cited above, paragraph 17; judgment in Salumi, cited above, paragraph 10.

14 Judgment in Case C-262/88 Barber v Guardian Royal Exchange Assurance Croup [1990] ECR I-1889, paragraphs 40 to 45; judgment in Case 24/86 Blailot [1988] ECR 379, paragraphs 25 to 35; judgment in Case 43/75 Defienne [1976] ECR 455, paragraphs 69 to 75.