GOLDEN SHARE: How and when issued

There should be a clause in Articles of Association. This is a tool used in some countries (notably the UK and France). During privatizations, when some restrictions on ownership were deemed important in the public interest the government issues golden share. This share typically, is a single golden share of a company, owned by the government, which has no ability to influence day-to-day management but has the power to assert its influence in major decisions of the company such as amendment of certain provisions in the articles of association, foreign interests being able to acquire more than a certain percentage of the shares. Prevent hostile takeovers which a government judges against the public interest, Restrict the issue of new voting shares etc.
Golden shares are usually retained by the state in infrastructure policies, utilities, natural monopolies, mining operations, defense contractors, and the space industry. They allow their holders to block business moves and counter management decisions, which may be detrimental to national security, to the economy, or to the provision of public services (especially where markets fail to do so). Golden shares also enable the government to regulate the prices of certain basic goods and services – such as energy, food staples, sewage, and water.
If we look at the other side of the introduction of golden share then we will realize it can prevent takeovers which a government judges against the public interest. It will also place constraints on the disposal of asset illegally. When a company is being wounded up, it imposes a restriction on the same. It guarantees the place of government appointed directors on the board.
Special features of making provision for golden share in the privatized entity can prove to be a double-edged sword and it may give protection to the government in certain sensitive circumstances but leave the government with the risk of incurring the wrath of shareholders who would be denied the right to accept what might be a very attractive offer for their shares. Therefore in the end I would like to conclude by saying that the power of golden share should be used very cautiously and in rare circumstances.
Conclusion

With the introduction of golden share it will not lead to a smooth privatization of any company. It can be abused by less scrupulous governments in order to maintain political control over an enterprise while nominally privatizing it and collecting the financial proceeds from the sale. Investors might also be wary of the potential abuse of government power through the golden share.