Corporate governance and sanctions: CJEU delivers judgment on voting rights

18/03/26

Can a sanctioned entity attend and vote at the general meeting of shareholders under EU sanctions law? “No,” says the Court of Justice of the European Union in Case C-465/24 SBK Art v Fortenova Group STAK. The ruling has significant implications for corporate governance across Europe.

The case arises in the context of a commercial dispute concerning the hostile takeover of one of the largest retail conglomerates in the Balkans, Fortenova Group STAK (“STAK”). STAK issued depositary receipts, including a controlling interest in favour of SBK Art. SBK was later sanctioned by the EU. SBK was prevented from voting on a proposed re-structuring of the Group, which saw SBK bought out of the Group at an undervalue. The Board relied on EU sanctions as a justification for preventing SBK from voting on the re-structuring and takeover.

SBK Art brought a £500m civil fraud claim in the Dutch courts against Fortenova Group and a Mr Vujnovac. In that context, the Dutch Supreme Court stayed proceedings and referred a number of questions to the CJEU. In essence, the Dutch court asked whether EU sanctions prevent sanctioned parties from exercising voting and other rights THAT attach to depository receipts (and other instruments such as shares).

The Court ruled that, on a proper construction of Article 1(f) and 2(1) of Regulation (EU) No 269/2014, the exercise of rights attached to depositary receipts constitutes a “use of funds” and therefore is prohibited under the asset-freeze provision. In reaching that judgment, the Court relied heavily on its landmark judgment in C-340/20 Bank Sepah v Overseas Financial Ltd and Oaktree Finance Ltd.

The civil fraud case continues in the Dutch courts.

The Judgment can be found here.