123Sanctions
CJEU: Assets of Non-Listed Companies Can Be Frozen If Controlled by a Sanctioned Person
On 12 March 2026, the Court of Justice of the European Union (CJEU) delivered its judgment in Case C-84/24 (EM System), ruling that the funds and economic resources of a company not itself included on an EU sanctions list may be frozen where that company is controlled by a listed person. The Court further held that a 50% shareholding in a company gives rise to a presumption of control — over both the company and its assets.
The case originated in Lithuania. Following the listing of Belarusian national A.V.S. under Annex I to Council Regulation (EC) No 765/2006 (Belarus sanctions regime) on 17 December 2020, two Lithuanian banks froze the accounts of EM SYSTEM, a Lithuanian company in which A.V.S. held a 50% stake. EM SYSTEM challenged the freezing before the Lithuanian courts. The Supreme Court of Lithuania referred the matter to the CJEU for a preliminary ruling.
The Court confirmed that the scope of asset freezes under Regulation No 765/2006 extends beyond listed persons themselves. It covers any funds and economic resources owned, held, or controlled by a listed person — including those held through corporate structures. The CJEU emphasised that the concepts of "held" and "controlled" must be interpreted broadly, encompassing both direct and indirect forms of influence. A narrow reading, the Court reasoned, would undermine the effectiveness of sanctions and facilitate circumvention.
Crucially, the Court established that a 50% shareholding creates a rebuttable presumption of control. This means that compliance officers and financial institutions may — and in practice must — treat such ownership thresholds as sufficient grounds for freezing, without the need to prove actual operational control on a case-by-case basis.
However, the CJEU also stressed that Member States must provide an effective legal remedy. Both the non-listed company and the listed person must have the opportunity to rebut the presumption and seek the unfreezing of assets.
Compliance takeaway: The judgment reinforces the obligation of financial institutions and companies to look beyond sanctions lists themselves. Entities with ownership links to listed persons — particularly at or above the 50% threshold — must be treated as subject to asset freeze requirements. Screening processes should incorporate beneficial ownership data and corporate structures, not just direct name matches.
Source: CJEU Press Release No 32/26, 12 March 2026 — Judgment of the Court in Case C-84/24 | EM System (curia.europa.eu).
The case originated in Lithuania. Following the listing of Belarusian national A.V.S. under Annex I to Council Regulation (EC) No 765/2006 (Belarus sanctions regime) on 17 December 2020, two Lithuanian banks froze the accounts of EM SYSTEM, a Lithuanian company in which A.V.S. held a 50% stake. EM SYSTEM challenged the freezing before the Lithuanian courts. The Supreme Court of Lithuania referred the matter to the CJEU for a preliminary ruling.
The Court confirmed that the scope of asset freezes under Regulation No 765/2006 extends beyond listed persons themselves. It covers any funds and economic resources owned, held, or controlled by a listed person — including those held through corporate structures. The CJEU emphasised that the concepts of "held" and "controlled" must be interpreted broadly, encompassing both direct and indirect forms of influence. A narrow reading, the Court reasoned, would undermine the effectiveness of sanctions and facilitate circumvention.
Crucially, the Court established that a 50% shareholding creates a rebuttable presumption of control. This means that compliance officers and financial institutions may — and in practice must — treat such ownership thresholds as sufficient grounds for freezing, without the need to prove actual operational control on a case-by-case basis.
However, the CJEU also stressed that Member States must provide an effective legal remedy. Both the non-listed company and the listed person must have the opportunity to rebut the presumption and seek the unfreezing of assets.
Compliance takeaway: The judgment reinforces the obligation of financial institutions and companies to look beyond sanctions lists themselves. Entities with ownership links to listed persons — particularly at or above the 50% threshold — must be treated as subject to asset freeze requirements. Screening processes should incorporate beneficial ownership data and corporate structures, not just direct name matches.
Source: CJEU Press Release No 32/26, 12 March 2026 — Judgment of the Court in Case C-84/24 | EM System (curia.europa.eu).