Ruling [CJEU] ¦ Freezing Rights: How EU Asset Freezing Measures Silence Shareholder Influence in Cross-Border Corporate Structures

How the C‑465/24 ruling changes shareholder voting for sanctioned investors

The Court of Justice of the European Union’s judgment in Case C‑465/24 (SBK Art v STAK and Open Pass) clarifies a critical point of EU sanctions law with wide-reaching consequences for corporate governance, investors and compliance teams: where an entity or person is listed in Annex I to Council Regulation (EU) No 269/2014, the “freezing of funds” prevents absolutely and unconditionally the exercise of rights attached to securities such as depositary receipts, including the rights to attend meetings and to vote. That interpretation puts firms, trustees and service providers that manage voting rights and shareholder meetings on notice that sanctions can cut off not only transfers of economic value but also participatory powers that influence corporate decision-making. For a financial crime audience, the ruling crystallizes how sanctions interact with corporate voting mechanisms and highlights the operational, legal and compliance risks that arise when sanctioned ownership is held through intermediated structures.

What the Court decided – legal core and reasoning

At the heart of the Court’s decision is Article 1(f) of Regulation No 269/2014, which defines “freezing of funds” as preventing any move, transfer, alteration, use of, access to, or dealing with funds in any way that would result in change in volume, amount, location, ownership, possession, character, destination or any other change that would enable the funds to be used, including portfolio management. The Court confirmed that depositary receipts fall squarely within the definition of “funds”, since Article 1(g)(iii) explicitly lists traded securities and certificates representing securities. Consequently, any exercise of rights conferred by those instruments – including attending meetings and voting – is a “use” of the funds. The Court held that such use inevitably has, at least indirectly, effects on value and ownership characteristics of the underlying instruments and therefore is caught by the broad freezing provision. For that reason the Court interpreted Article 1(f) to mean the freezing operates “absolutely and unconditionally” to prevent persons listed in Annex I from attending meetings of depositary receipt holders or voting thereon.

Bastian Schwind-Wagner _Follow

"The Court’s ruling makes clear that frozen funds include depositary receipts and that holders listed in Annex I are automatically barred from attending meetings and exercising voting rights attached to those instruments. This bright-line approach prioritizes the effectiveness of sanctions and reduces opportunities for sanctioned parties to influence corporate decisions through intermediated holdings.

Compliance teams and trustees must therefore treat corporate event participation as a sanctions-controlled activity and ensure screening and exclusion mechanisms are in place. At the same time, affected parties retain the ability to seek relief under the regulation’s derogations, and national courts will continue to resolve factual disputes about association and eligibility."

Why a strict interpretation prevailed – effectiveness over narrow proportionality

Proportionality and fundamental rights arguments were raised by the sanctioned party and national courts, but the CJEU prioritized the clarity and effectiveness of the sanctions regime. The judgment reasons that adopting a case-by-case or content-dependent test – allowing attendance and voting depending on the agenda item or intended vote – would create serious risks of circumvention and impose onerous, uncertain burdens on trustees and meeting administrators. It would require real-time, speculative assessments of indirect economic effects and the subjective voting intentions of shareholders. The Court also emphasized that sanctions inherently impose adverse effects on property rights, and that the EU legislature provided limited derogations and review channels (Articles 2a and 4–7) to address exceptional situations.

Operational implications for trustees, custodians and meeting administrators

This ruling forces trustees and entities administering depositary receipt schemes to treat affected holdings as not only immobilized for transfers but also for participatory corporate rights. Practically, that means trustee charters, voting protocols and meeting procedures must incorporate strict mechanisms to identify sanctioned holders and exclude their votes and attendance. Custodians and depositary receipt agents face an acute need for robust sanctions screening, not only at settlement but also for corporate event processing and meeting attendance lists. Entities must ensure that electronic voting platforms, proxies and in-person admission checks block voting where the holder is listed in Annex I. Failure to do so risks breaching Regulation No 269/2014, and Article 9(1) explicitly criminalizes knowingly participating in acts that circumvent freezing measures.

Risk of litigation and national court challenges – what to expect

The judgment does not foreclose legal challenges on narrow factual grounds or relief under derogations, but it significantly narrows defenses for sanctioned holders seeking to exercise control via intermediaries. National courts will still handle disputes about whether a particular holder falls within the relevant scope, about association with listed persons, and about eligibility for derogations or releases set out in the regulation. Firms should expect increased litigation where trustees refuse participation or where complex beneficial ownership chains raise factual disputes. Compliance teams need to prepare for document preservation, swift evidence gathering and engagement with competent authorities when holders request derogations or releases.

Financial crime enforcement and circumvention risk

From an enforcement perspective, the ruling strengthens the tools available to prevent sanctioned individuals from using corporate governance levers to influence value or control of assets. The Court explicitly flagged the circumvention risk of permissive approaches and endorsed a bright-line rule to minimize ambiguous assessments. That aligns with financial crime priorities – preventing sanctioned persons from manipulating corporate decisions to launder value, transfer benefits indirectly, or preserve economic influence through governance. Enforcement agencies and financial intelligence units will likely use the judgment to justify stricter oversight and to pursue cases where service providers facilitated prohibited participation despite notice.

Practical compliance checklist – what firms should do now

Although this is not a formal checklist, the ruling implies several immediate priorities. Firms providing trustee services, custodial services, shareholder registry functions or meeting administration must ensure sanctions screening covers not only transfers and settlements but also corporate event participation. Governance documents should be updated to reflect automatic exclusion where holdings are frozen under Annex I listings. Policies and procedures should be revised to require escalation to legal and sanctions teams prior to any engagement with potentially sanctioned holders, and to document decision-making when excluding attendance or votes. Communication templates for notifying holders and authorities should be prepared in advance. Finally, processes for handling derogation or release requests under Articles 2a and 4–7 must be clear and accessible, with timeframes for engagement with competent authorities.

Cross-border complications and secondary risk

The case illustrates how cross-border ownership through structures and depositary receipts can complicate compliance. Sanctions lists and measures are enacted at EU level but interact with national corporate law governing attendance and voting rules, as well as with third-country regimes. Service providers operating across jurisdictions must navigate inconsistent rules on association, beneficial ownership thresholds and procedural remedies. This decision raises the bar for coordination between corporate secretarial functions, legal counsel and sanctions teams, and puts a premium on cross-border information flows and governance oversight.

Conclusion – a clear rule but not the end of nuance

The CJEU’s judgment establishes a clear, strict rule: funds that are frozen under Regulation No 269/2014 include depositary receipts, and the freezing prevents the exercise of attendance and voting rights attached to those instruments. For the financial crime community, that translates into a stronger prophylactic standard against circumvention via governance rights, a need for operational changes in trusteeship and meeting administration, and an expectation of litigation over edge cases. Yet nuance remains: sanctioned persons may still seek relief under specified derogations and national courts will continue to examine association and factual questions. Compliance and legal teams should treat the decision as a mandate to tighten controls around corporate event processing and to coordinate closely with regulators when managing holdings linked to sanctioned entities.

Dive deeper

• InfoCuria ¦ Case C-465/24 ¦ Link
• EUR-Lex ¦ Case C-465/24, Judgment of the Court (Fifth Chamber) of 12 March 2026 ¦ Link
• EUR-Lex ¦ Council Regulation (EU) No 269/2014 ¦ Link