State gov’t holds on as Porsche aims to strip its power
Porsche is embarking on a collision course with the government of Lower Saxony. The German state in which Wolfsburg, where VW is based, holds a 20.1% interest in the Volkswagen Group. But Porsche, which currently holds 31% of the company and is aiming to acquire majority interest, is on a campaign to reduce the influence of the state government on the auto giant’s governance.
While most decisions at most companies require a 50% plus one majority, or possible a two-thirds majority for major issues, Volkswagen’s regulations stipulate that “significant decisions” need to be approved by an overwhelming 80% +1 in order to pass, essentially giving the state government a veto over any major decisions to be undertaken by the company’s shareholders. While a ruling handed down by the European Court of Justice mandated that certain laws put in place to protect Volkswagen from a hostile take-over were illegal, the governor of Lower Saxony insists that its 20% +1 blocking power was perfectly legal and that his government would oppose Porsche’s proposal to amend the regulations.
[Source: Detroit News]
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