<p>A <strong>Golden Share</strong> is a special type of equity in a company, often held by a government, that grants additional rights beyond those of ordinary shares. It's a financial tool used in privatization processes, particularly in emerging markets.</p>

<h2>How It Works</h2>
<p>The golden share, also known as a <em>golden vote</em>, provides its holder with unique privileges, such as:</p>
<ul>
  <li>Veto power over strategic decisions, like mergers and acquisitions.</li>
  <li>Exclusive rights to appoint or remove board members.</li>
  <li>Control over the company's charter or articles of association.</li>
</ul>
<p>These rights are typically designed to protect national interests, maintain strategic control, or influence the company's direction. The golden share is usually non-voting and non-dividend-paying, and it's often attached to a specific asset or business line.</p>

<h2>Why It Matters</h2>
<p>Golden shares play a significant role in privatization, especially when governments want to divest ownership but retain some control. For instance, consider the privatization of a state-owned telecom company:</p>
<ul>
  <li>To ensure national security, the government might retain a golden share, allowing it to block foreign takeovers or strategic decisions that could harm national interests.</li>
  <li>This balance between private ownership and government influence can help attract investors while mitigating potential risks.</li>
</ul>
<p>However, golden shares can also create tensions between investors and governments, as they can limit the company's strategic flexibility and potentially deter foreign investment. Therefore, their use is often subject to international regulations and negotiations.</p>