Ruling [CJEU] ¦ When 50% Is Enough: EU Sanctions, Corporate Control and Frozen Bank Accounts

A dispute that matters far beyond Lithuania

On 12 March 2026, the Court of Justice of the European Union delivered a judgment that significantly clarifies how EU financial sanctions apply to companies linked to designated individuals. The case arose from a dispute in Lithuania, but its implications reach banks, compliance teams, corporate lawyers and companies across the EU.

At the center of the case was EM System UAB, a Lithuanian company whose bank accounts were frozen after one of its shareholders, holding exactly 50% of the shares, was placed on the EU sanctions list concerning Belarus. EM System itself was not listed. The company argued that its funds should not have been frozen and brought proceedings against two banks that had blocked access to its accounts.

The Court was asked to interpret Article 2 of Regulation No 765/2006, which governs the freezing of funds in relation to Belarus, and to clarify whether a 50% shareholding is enough to justify treating a company’s funds as controlled by a sanctioned person.

The legal framework behind the freeze

EU sanctions law does not only target individuals and entities explicitly named on sanctions lists. It also extends to funds and economic resources that belong to, are owned by, are held by, or are controlled by listed persons. This broad wording is intentional and reflects the EU’s aim of preventing sanctioned individuals from accessing assets indirectly through corporate structures.

However, Regulation No 765/2006 does not define in detail what “owned”, “held” or “controlled” means. To fill that gap, the Court relied on the wider sanctions framework, including Council guidelines, best practices, and definitions taken from earlier EU sanctions legislation, particularly Regulation No 2580/2001.

Those instruments consistently link ownership and control to shareholding thresholds and governance rights, especially the ability to block or dictate key corporate decisions.

Bastian Schwind-Wagner _Follow

"This judgment confirms that EU sanctions law looks at practical influence, not just formal listings. A 50% shareholding by a sanctioned person is enough to trigger a presumption that a company’s funds are under that person’s control, even if the company itself is not named in the sanctions annex.

At the same time, the Court underlined the importance of legal safeguards. Companies affected by asset freezes must have a real opportunity to challenge those measures and to show that sanctioned shareholders do not, in reality, control their funds."

Can a non-listed company’s funds be frozen?

The Court answered this question clearly. The funds of a company that is not itself listed can still be frozen if those funds are owned, held or controlled by a listed person.

According to the Court, limiting asset freezes only to entities formally named on sanctions lists would seriously weaken the sanctions regime. It would allow designated individuals to continue operating through subsidiaries or jointly owned companies until the Council completed additional listing procedures. That delay would undermine the speed and surprise that make sanctions effective.

As a result, banks and other operators are allowed, and in fact required, to freeze funds that appear to be under the control of a listed person, even if the company holding those funds is not named in the annex to the regulation.

Why a 50% shareholding creates a presumption of control

The most important part of the judgment concerns the 50% threshold.

The Court held that when a listed person owns exactly 50% of a company’s shares, there is a presumption that the person controls the company and its funds. This is because a 50% shareholder is normally able to block strategic decisions, influence management, and prevent actions that go against their interests. In practical terms, that level of influence is enough to treat the company’s assets as being under the shareholder’s control.

The Court aligned this reasoning with Council guidelines and earlier sanctions law, which define ownership as holding 50% or more of proprietary rights. While “more than 50%” is often mentioned in guidance, the Court confirmed that exactly 50% is sufficient to trigger a presumption of control.

For banks, this is a crucial clarification. It means that a strict majority is not required before freezing corporate accounts linked to a designated person.

Presumption does not mean inevitability

Although the presumption is strong, it is not absolute.

The Court stressed that the presumption of control must be rebuttable. A non-listed company whose funds are frozen must have the possibility to show that, despite a 50% shareholding, the listed person does not in reality control the company or its assets.

This is essential to protect the right to effective judicial protection guaranteed by EU law. A company must be able to challenge a freeze before national authorities and courts and to present evidence about its governance, decision-making processes, and actual use of funds.

In the EM System case, the company argued that its assets were separate from those of its shareholders and that day-to-day control rested with management rather than the sanctioned shareholder. The Court did not rule on the facts themselves but confirmed that such arguments must be examined by national authorities and courts.

The role of banks and national authorities

Another key message of the judgment concerns the role of private actors, especially banks.

Banks are often the first to implement sanctions by freezing accounts. The Court accepted that banks may rely on presumptions derived from EU sanctions law when acting quickly to prevent asset flight. At the same time, they must inform affected customers of the legal basis and reasons for the freeze.

National authorities must provide a framework that allows challenges to these measures. In Lithuania, that role has since been formalized through the Financial Crime Investigation Department, which can list entities controlled by sanctioned persons and whose decisions can be reviewed by courts.

What this means for compliance and risk management

For compliance teams, the message is clear. A 50% shareholding by a designated person is enough to trigger serious sanctions risk. Waiting for formal listing of the company itself is not required and may expose financial institutions to enforcement action.

For companies with sanctioned shareholders, the judgment highlights the need to understand and document governance arrangements. If a company wants to rebut a presumption of control, it must be able to show, with evidence, that the listed person cannot direct or block the use of its funds.

For regulators and courts, the ruling reinforces a careful balance. Sanctions must be fast and effective, but they must also allow meaningful review. Presumptions are allowed, but they must not become irreversible.

A clear signal from the Court

The Court’s judgment sends a clear signal about the EU’s approach to sanctions enforcement. Corporate structures and equal shareholdings will not shield assets from restrictive measures. Control is assessed in substance, not only by formal titles, and a 50% stake is enough to raise a red flag .

At the same time, the Court confirmed that companies caught in the sanctions net are not without remedies. They must be heard, they must be informed, and they must have access to courts. In EU sanctions law, speed and fairness are both essential, and this judgment shows how the Court expects them to coexist.

Dive deeper

• EUR-Lex ¦ Case C-84/24, Judgment of the Court (First Chamber) of 12 March 2026 ¦ Link
• EUR-Lex ¦ Regulation No 765/2006 ¦ Link
• EUR-Lex ¦ Regulation No 2580/2001 ¦ Link