On 3 July 2025, Advocate General Capeta issued an opinion addressing whether the funds and economic resources of a natural person, frozen by virtue of European Union sanctions, also encompassed the assets of a company in which that person holds a 50% shareholding (Case C-84/24, EM System UAB v. SEB Bankas AB, Citadele banka AS Lietuvos filialas).
The question arose in the context of sanctions imposed against Belarus under Regulation (EC) 765/2006. Following the listing of Mr. A.V.S, a Belarus national, in the Annex to that Regulation, two Lithuanian banks froze the accounts of EM Systems UAB, a Lithuanian company in which Mr. A.V.S held 50% of the shares. After freezing the company’s accounts, one of the two banks sought clarification from the Lithuanian Ministry of Foreign Affairs as to whether, given Mr A.V.S.’s listing, it was lawful to also freeze EM Systems UAB’s accounts.
EM Systems UAB challenged the banks’ decisions, arguing that it was an independent legal entity and that, accordingly, the asset freeze imposed on one of its shareholders could not be presumed to automatically extend to the company’s own funds and economic resources.
In her opinion, the Advocate General considers that the imposition of asset freezing measures on a designated person does not automatically extend to a non-listed company in which that person owns shares. However, where a designated person owns 50% of the shares, it may be presumed that the designated person “controls” the company’s funds and economic resources and therefore banks can provisionally freeze assets of controlled entities while conducting further due diligence The term “control” must be interpreted broadly to capture all possible direct and indirect ways in which a designated person can influence an entity’s funds and economic resources. That presumption, however, is rebuttable and must be assessed by national courts on a case-by-case basis. While Advocate General’s opinions are not binding, they are very often followed by the Court of Justice and can therefore be indicative of how the Court is likely to rule on the matter.
Whose assets are frozen by EU sanctions?
Under EU sanctions, all funds and economic resources “belonging to, or owned, held or controlled” by a designated person must be frozen. The Lithuanian Supreme Court, which referred the matter to the Court of Justice, noted that there was uncertainty as to how to interpret “ownership” and “control” in circumstances where a listed person owns exactly 50% of a non-listed entity.
The referring court asked the Court of Justice to issue a preliminary ruling on whether the funds of a company in which a designated person holds a 50% shareholding are “owned, held or controlled” by that person and must therefore be frozen.
No automatic freezing of assets without listing
The Advocate General noted that the referring court appeared to interpret the asset freezing measures as applying automatically to EM System UAB solely because a designated person held 50% of its shares. In doing so, the referring court interpreted the asset freezing measures as automatically extending to the funds and economic resources of an independent and legally distinct entity, even though that entity was not itself listed as a designated entity.
This interpretation, the Advocate General argues, is incorrect. Indeed, EU sanctions designate individuals and entities based on specific justifications linked to the objective of the measures in question. The Council is not at liberty to impose sanctions arbitrarily and designations must be grounded in objective reasons and comply with procedural safeguards, including notification of the listing to the interested persons and entities, who have a right to be heard.
In this case, the Belarus sanctions only designated the shareholder, not EM System UAB. As such, automatically extending the freezing measures to the company’s funds solely on the basis of its shareholding structure would infringe this company’s fundamental rights and broaden the scope of the sanctions as decided by the Council.
The notion of control
In this case, the banks froze EM System UAB’s accounts on the grounds that this company was ‘controlled’ by the designated shareholder. The banks derived control from the designated individual’s 50% shareholding in the company.
While the Advocate General confirms that the shares held by the designated shareholders had to be frozen, the funds of EM Systems UAB appeared to be owned and held by the company itself and not by the designated shareholder. Therefore, any freezing of the company’s funds had to be justified by demonstrating that the designated shareholder indeed controlled those funds.
The lack of definition of “control” has led to divergent interpretations. The governments of Spain, Estonia, Lithuania and Finland, as well as the Council and the Commission, considered that any ‘control’ the designated shareholder may exercise over EM System UAB by reason of his shareholding also extended to his controls of the funds and economic resources of that company. Thus, controlling shareholding establishes a presumption of control over the funds and economic resources of that company. By contrast, the German government considered that control by reason of holding shares was insufficient to establish control over the funds and economic resources of that company. Thus, even majority shareholding does not necessarily equate to control over the company’s assets.
The Advocate General disagreed with Germany and emphasized that the concept of ‘control’ under EU sanctions differs from that generally understood in corporate law. While corporate law may treat a shareholder – even a majority one – as distinct from the company itself, as the German Government argued, EU sanctions must interpret the notion of control more broadly as it must account for the many ways in which the designated person could influence the use of the company’s assets indirectly, potentially circumventing the restrictive measures.
Thus, to ensure the effectiveness of the asset freezing measures, ‘control’ must be interpreted broadly to include both direct and indirect ways of influencing an entity’s funds and economic resources. Thus, the key question is not whether the designated person is capable of freely disposing of the funds and economic resources of EM System UAB, but rather whether its link to the company enables it to influence the company’s decision in relation to those funds and economic resources.
In the context of EU sanctions, where speed is crucial to ensure the effectiveness of the measures and given that a 50% shareholder typically has the power of directing or preventing certain decisions within the company, it can be presumed that such a shareholder does exercise control over both the company and its financial assets. Accordingly, the banks acted lawfully in freezing EM Systems UAB’s accounts while conducting further due diligence on whether control existed.
Rebutting the presumption of control
The Advocate General acknowledged that the presumption of control arising from a 50% shareholding can be rebutted. The burden falls on the company to demonstrate that, despite the designated person’s ownership stake, the designated person does not control the company’s funds and economic resources.
What evidence may rebut such presumption will vary depending on the circumstances. Some indicators may include the separation of the assets of the company from those of its shareholders and the fact that access to the company’s bank accounts is granted only to the head of the company (who is another person than the designated person). However, no single factor is sufficient on its own to disprove control, nor does any single element guarantee that the designated person cannot and does not influence how the company’s funds and economic resources are used.
It is for the national courts to examine the facts and decide as to whether control exists in a particular case.
The link between the prohibition on making funds or economic resources available and the requirement of ‘control’
Lastly, the Advocate General clarified that a decision to freeze a company’s assets cannot be challenged solely on the grounds that the designated person does not use or benefit from those assets. The obligation to freeze the assets of a non-listed entity controlled by a designated person is separate from the prohibition to make funds or economic resources available to the designated person.
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