The European Court of Justice is expected to rule tomorrow against the so-called "Volkswagen Law," paving the way for Porsche to take control of the continent's biggest carmaker.
Striking down the 40-year-old law, which prevents Volkswagen (VW) from being taken over, would allow Porsche to raise its 31-percent stake to a majority.
Porsche has made no secret of its desire to expand beyond its traditional focus on the luxury sports car market to create a truly global group.
The law was introduced in 1960 as VW, which was founded in the wake of World War II, was being privatized and was designed to shield the company from foreign attempts to control it.
The crux of the law is that regardless of the amount of capital it owns, a shareholder cannot hold more than 20 percent of the voting rights in a company.
The law also stipulates that the authorities in Lower Saxony, the German state where VW is based, have the right to appoint two members to VW's supervisory board, allowing them to block the majority needed to adopt resolutions.
Lower Saxony is the second-biggest investor in VW with 20.3 percent of the capital.
Porsche has long objected to the restriction on its voting rights in the firm.
"To have 31 percent of the capital but only 20 percent of the voting rights is clearly discrimination," Porsche chief executive Wendelin Wiedeking said.
The European Court of Justice is widely expected to rule in favor of the European Commission's opinion that the law is restrictive, obliging Germany to revise it.
In February, the court's Advocate General Damaso Ruiz-Jarabo Colomer said he believed the law contravened European legislation because it constricts the free movement of capital within the 27-nation bloc and restricts foreign investment.
The Luxembourg-based court agrees with the opinion of the advocate general in eight out of 10 cases.
If the law is changed, Porsche will enter a "decisive" phase in its attempt to take control of VW, Wiedeking said.
It will probably only be a matter of time before Porsche takes a majority share.
Ferdinand Piech, who is both the head of the VW's supervisory board and co-owner of Porsche, is already rattling the saber, promising big changes at VW.
The creation of a car group with global reach would be the realization of Piech's long-held dream.
The grandson of Ferdinand Porsche, who set up Porsche and created the mould-breaking VW Beetle at the request of the Nazis, 70-year-old Piech is the driving force between the two carmakers' rapprochement.
A question mark hangs over the future involvement of Lower Saxony, however, where elections are scheduled to take place in January.
The state could either withdraw from VW, or "adapt" to the new situation by raising its stake by 5 percent to 25 percent. Under German corporate law, a 25 percent share gives a shareholder a blocking veto.
The paramount chief of a volcanic island in Vanuatu yesterday said that he was “very impressed” by a UN court’s declaration that countries must tackle climate change. Vanuatu spearheaded the legal case at the International Court of Justice in The Hague, Netherlands, which on Wednesday ruled that countries have a duty to protect against the threat of a warming planet. “I’m very impressed,” George Bumseng, the top chief of the Pacific archipelago’s island of Ambrym, told reporters in the capital, Port Vila. “We have been waiting for this decision for a long time because we have been victims of this climate change for
Rainfall is expected to become more widespread and persistent across central and southern Taiwan over the next few days, with the effects of the weather patterns becoming most prominent between last night and tomorrow, the Central Weather Administration (CWA) said yesterday. Independent meteorologist Daniel Wu (吳德榮) said that based on the latest forecast models of the combination of a low-pressure system and southwesterly winds, rainfall and flooding are expected to continue in central and southern Taiwan from today to Sunday. The CWA also warned of flash floods, thunder and lightning, and strong gusts in these areas, as well as landslides and fallen
MASSIVE LOSS: If the next recall votes also fail, it would signal that the administration of President William Lai would continue to face strong resistance within the legislature The results of recall votes yesterday dealt a blow to the Democratic Progressive Party’s (DPP) efforts to overturn the opposition-controlled legislature, as all 24 Chinese Nationalist Party (KMT) lawmakers survived the recall bids. Backed by President William Lai’s (賴清德) DPP, civic groups led the recall drive, seeking to remove 31 out of 39 KMT lawmakers from the 113-seat legislature, in which the KMT and the Taiwan People’s Party (TPP) together hold a majority with 62 seats, while the DPP holds 51 seats. The scale of the recall elections was unprecedented, with another seven KMT lawmakers facing similar votes on Aug. 23. For a
All 24 lawmakers of the main opposition Chinese Nationalists Party (KMT) on Saturday survived historical nationwide recall elections, ensuring that the KMT along with Taiwan People’s Party (TPP) lawmakers will maintain opposition control of the legislature. Recall votes against all 24 KMT lawmakers as well as Hsinchu Mayor Ann Kao (高虹安) and KMT legislative caucus whip Fu Kun-chi (傅崐萁) failed to pass, according to Central Election Commission (CEC) figures. In only six of the 24 recall votes did the ballots cast in favor of the recall even meet the threshold of 25 percent of eligible voters needed for the recall to pass,
RSS