VW Shareholders Headed for Showdown
March 17, 2008

Trouble has been brewing for months, but now it looks as though Volkswagen’s two largest shareholders are headed for a showdown at the automaker’s annual general meeting next month. Last week the two sides clashed — again — over who should have the say at Europe’s largest carmaker, the Financial Times reports.

Porsche, which owns 31 percent of VW and will soon increase that to a majority stake, said Friday it wants to take away the 20 percent blocking minority held by Lower Saxony, the government of VW’s home state and VW’s second-largest shareholder. Lower Saxony responded saying it would propose keeping the blocking minority at 20 percent, which has given it a veto over any big changes.

Porsche’s fight with Lower Saxony stems from the VW law, parts of which were struck down last year by the European Court of Justice. The Financial Times reported Porsche and Lower Saxony agreed Friday that provisions in the law capping voting rights at 20 percent and giving the state the automatic right to two supervisory board seats — both of which were also written into VW’s articles of association — should be scrapped.

But they don't agree on how the law should be changed. Specifically, they disagree about whether the blocking minority should be the current 20 percent or the normal limit of 25 percent set by German law, which also gives companies the right to set their own blocking minorities.

The Financial Times contends Porsche’s chances of success in the matter are slim and that Lower Saxony will be able to block changes to the articles of association.

In the past, Porsche has fought — and won — previous battles with Lower Saxony on corporate governance and board representation at VW. But Porsche is in a bigger fight with VW workers, who have a close relationship with Lower Saxony, complicating matters. Workers, for instance, want to be able to veto factory closures.

Posted by Michelle Krebs at 7:33 AM under Companies , News | Comments (0) | digg this | Seed Newsvine