European Commission announces legal proceedings on VW law
An intense tussle is taking place over corporate governance arrangements at Volkswagen, among the largest carmakers in Europe. European Commission is planning legal proceedings against the German government. Brigitte Zypries, justice minister, warned the Commission to desist from any move to challenge the VW law, which prevents hostile takeover of the company. But the Commission is determined to proceed with the legal action.
The German cabinet had watered down the version of the law after European Court of Justice ruling last October. The court had upheld Commission’s charges that VW law breached European Union rules of free movement of capital. The Commission insisted that the revised law continued to give undue protection to Volkswagen, and accused Germany of disrespecting court order.
Charlie McCreevy, internal market commissioner, expressed concern over the provision in the law, which empowers shareholders with 20% stake to block any “significant” decisions as compared with 25% permitted under the German law. Lower Saxony holds 20 per cent of voting rights. Porsche, VW’s largest shareholder with 31 per cent, stake is pleased with the Commission’s support. VW workers and the state government of Lower Saxony, its second largest shareholder, are opposed to Porsche who wants to strip Lower Saxony of its veto right.
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