Latvian court finds unrestricted access to shareholder data unconstitutional — Baltic News Network

Latvia’s Constitutional Court has found unrestricted public access to shareholders’ personal data to be incompatible with the Constitution. The challenged provision provided for the publication, in the public part of a company’s registration file, of information from the shareholder register, as well as data from notifications about the acquisition, increase or decrease of holdings in the capital of joint-stock companies.

Access upon a substantiated request

As Baltic News Network reports, the court concluded that shareholder data are necessary to prevent money laundering and monitor compliance with sanctions. Persons and institutions that have legally defined duties in these areas already have access to the necessary information.

Potential buyers of shares can verify whether the seller is entered in the shareholder register by submitting a substantiated request. At the same time, for people who have no legally established duties and cannot demonstrate a legitimate interest, it is impossible to guarantee that the data will be used solely for a legitimate purpose, the court said.

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Position of the Court of Justice of the EU

During its consideration of the case, the Latvian court requested a preliminary ruling from the Court of Justice of the European Union. In the Jautiva case, the CJEU clarified that EU legislation does not require the disclosure of information about all shareholders, including minority shareholders, and that the General Data Protection Regulation does not allow such personal data to be provided to anyone without access conditions.

The CJEU noted that the published information makes it possible to build a profile of a person’s financial situation and identify the sectors and companies in which they invest. The risk of abuse is heightened by the fact that data on the internet can be stored, disseminated and downloaded in bulk, including by unidentified users.

Latvia’s Constitutional Court stated that transferring such information to the non-public part of the registration file with restricted access would be less burdensome for the right to personal data protection. The provisions on publishing the relevant parts of the shareholder register cease to have effect on the day the decision is published, while for the applicants in the case they were declared invalid retroactively from July 1, 2023. The decision is final and not subject to appeal.