Pursuant to Article 2 of Regulation (EU) No 269/2014, concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine, natural or legal persons designated in Annex I to that Regulation are subject to the freezing of all funds and economic resources belonging to them. It is also prohibited to make funds or economic resources available to such persons, directly or indirectly. By their very nature, these restrictive measures extend to any entity that is owned or controlled, directly or indirectly, by a designated person.

However, EU sanctions legislation did not explicitly define the notions of control and ownership of a legal person or entity for the purpose of implementing restrictive measures.

These notions are evidently important. As noted, the prohibitions laid down in Article 2 of Regulation (EU) No 269/2014 apply not only to the persons designated in the Annex but also to entities that are owned or controlled by them. Their definition is therefore of particular interest to all EU operators, notably in determining with which entities or persons these operators may contract and under what conditions. This interest also extends to jurisdictions outside the European Union, insofar as they must themselves assess the existence of ownership or control exercised by a designated person under Regulation (EU) No 269/2014 (for example, High Court of Justice, 31 July 2025, LLC Eurochem North-West-2 and another v. Société Générale S.A. and others).

Until recently, stakeholders relied on the interpretation of these concepts provided in guidance documents, such as the EU Best Practices and the Commission’s consolidated Frequently Asked Questions (FAQs).

These documents indicated that if non-listed entities were considered to be owned or controlled by listed persons or entities, their assets should also be frozen, and the prohibition on making funds and economic resources available should likewise apply.

However, according to the General Court of the European Union, the EU Best Practices have uncertain normative value, in that they “must be regarded as containing non-exhaustive, general recommendations intended to ensure the effective implementation of restrictive measures in accordance with EU law and applicable national legislation. These recommendations have no binding legal effect and must not be understood as provisions recommending action that would be incompatible with EU law” (General Court, T-302/22, Vinokurov v Council, 29 May 2024, paragraph 122).

In contentious proceedings, in particular before the General Court and the Court of Justice of the European Union, the notions developed in the Best Practices could therefore not be invoked by applicants in their arguments concerning the interpretation and scope of a listing criterion.

As for the FAQs, they referred only to Commission opinions on the notion of control (Commission Opinions of 19 June 2020 and 8 June 2021), without providing a clear and precise definition of control.

The case-law of the Court of Justice of the European Union has also contributed to harmonising the notions of ownership and control. The notion of control has thus been assessed in light of the significance of shareholdings, the structure of the shareholding and decision-making arrangements (General Court, T-302/22, Vinokurov, cited above, paragraph 123). The Court also clarified that a company may be classified as “owned or controlled” by another entity where the latter is in a position to influence the choices of the company concerned, even in the absence of any legal or capital link (ECJ, C-123/18 P, HTTS v Council, paragraph 75). The notion of control was therefore closely associated with that of decisive influence, requiring a case-by-case assessment.

In these circumstances, it had become necessary to enhance legal certainty and ensure a coherent and effective application of restrictive measures by giving a clearer and binding legal scope to these definitions.

On 23 October 2025, the Council of the European Union adopted Regulation (EU) 2025/2037, amending Regulation (EU) No 269/2014. This Regulation inserts definitions of “ownership” and “control” into Article 1 of Regulation (EU) No 269/2014. These definitions are aligned with those used in other EU restrictive measures frameworks, including Regulation (EC) No 2580/2001.

The notion of “Ownership” of a legal person, entity or body is defined as holding 50% or more of the proprietary rights of that legal person, entity or body, or holding a majority share therein.

The notion of “Control” of a legal person, entity or body covers several situations, including:

  • the right or power to appoint or remove the majority of the members of the administrative, management or supervisory bodies, including where the majority of such members have been appointed by the person during the current or previous financial year;
  • sole control of the majority of voting rights of other shareholders, notably pursuant to ancillary agreements (shareholders’ agreements, side letters, etc.);
  • the right to exercise, directly or indirectly, a dominant influence over an entity;
  • the right to use the assets of an entity;
  • the management of an entity’s activities on a unified basis, notably through the publication of consolidated accounts;
  • jointly and severally sharing or guaranteeing an entity’s financial obligations.

These definitions clarify the scope of Article 2 of Regulation (EU) No 269/2014 concerning asset freezes. Article 2 is replaced to stipulate clearly that all funds and economic resources belonging to listed persons, as well as all funds and economic resources that those natural or legal persons, entities or bodies own, possess or control, are frozen.

By providing clear legal definitions of “ownership” and “control”, Regulation (EU) 2025/2037 transforms an administrative practice based on guidance and FAQs into an explicit regulatory obligation, thereby strengthening the legal basis and effectiveness of the EU sanctions regime.