For actions compromising or threatening the territorial integrity, sovereignty and independence of Ukraine, the natural or legal persons designated in Annex I of that Regulation are subject to a freeze of all funds and economic resources belonging to them. It is likewise prohibited to make funds or economic resources available to those persons, directly or indirectly. These restrictive measures extend by their nature to any entity owned or controlled, directly or indirectly, by a designated person.

However, EU sanctions legislation did not explicitly define the concepts of ownership and control of a legal person or entity for the purposes of applying restrictive measures.

Yet these concepts are of obvious importance. As noted, the prohibitions set out in Article 2 of Regulation (EU) 269/2014 apply not only to persons listed in the Annex but also to entities owned or controlled by them. Their definition is therefore of interest to all European operators, in particular for determining with which entities or persons those operators may contract and under what conditions. The interest extends equally to jurisdictions outside the European Union, where they must themselves assess whether ownership or control is genuinely exercised by a person designated under Regulation (EU) No 269/2014 (see, for example, High Court of Justice, 31 July 2025, LLC Eurochem North-West-2 and another v. Société Générale S.A. and others).

Until now, interested parties had relied on the interpretation of these concepts as provided in guidance documents, such as the EU Best Practices Guidelines and the consolidated FAQs published by the Commission.

Those documents clarified that where entities not listed in Annex I of Regulation (EU) 269/2014 were considered to be owned or controlled by listed persons or entities, their assets were likewise to be frozen, and the prohibition on making funds and economic resources available was equally applied to them.

However, according to the General Court of the European Union, the EU Best Practices Guidelines carry doubtful normative weight, in that they “must be regarded as containing non-exhaustive recommendations of a general nature, intended for the effective implementation of restrictive measures in accordance with applicable EU law and applicable national legislation. These recommendations do not have binding legal effect and should not be understood as provisions recommending action that would be incompatible with EU law” (GC, T-302/22, Vinokurov v. Council, 29 May 2024, paragraph 122).

In contentious proceedings, including before the General Court and the Court of Justice of the EU, the concepts developed in the Best Practices Guidelines could not previously be relied upon by applicants in their arguments concerning the interpretation and scope of a listing criterion.

As regards the FAQs, these referred only to Commission opinions on the concept of control (Commission Opinions of 19 June 2020 and 8 June 2021), without setting out 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 concepts of “ownership” and “control.” The concept of “control” has been assessed by reference to the significance of shareholdings, ownership structure, and decision-making arrangements (GC, T-302/22, Vinokurov, cited above, paragraph 123). The Court has also clarified that a company could be characterised as “owned or controlled” by another entity where that entity was in a position to influence the choices of the company concerned, even in the absence of any legal or capital link (CJEU, C-123/18 P, HTTS/Council, paragraph 75). The concept of “control” was thus broadly associated with that of “decisive influence,” requiring a case-by-case analysis.

In those circumstances, it had become necessary to strengthen legal certainty and ensure the consistent and effective application of restrictive measures by conferring greater precision and binding force on those 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, in particular Regulation (EC) No 2580/2001.

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

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

  • the right or power to appoint or remove a majority of the members of the administrative, management or supervisory bodies, including where a majority of those members has been appointed by the person during the current or preceding financial year;
  • sole control of a majority of the voting rights of other shareholders, in particular 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, in particular through the publication of consolidated accounts;
  • jointly and severally sharing or guaranteeing the financial obligations of an entity.

These definitions clarify the scope of Article 2 of Regulation (EU) 269/2014 on the freezing of assets. Article 2 is replaced so as to state explicitly that all funds and economic resources belonging to listed persons are frozen, as well as all funds and economic resources owned, held or controlled by those natural or legal persons, entities or bodies.

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