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The European Union's highest court this week struck down a German law that shielded Volkswagen from takeover, paving the way for Porsche to take majority control of Europe's biggest carmaker.
The ruling is a major boost for the European Commission in its crackdown on so-called golden shares, or strategic stakes that give governments special influence over listed companies.
"The court confirmed that public authorities should not have special rights in private companies. Special rights have become an ever more endangered species on their way to extinction," commission spokesman Oliver Drewes said.
The law's demise could also end decades of cosy ties between management and labour at VW in a system that gives workers a major say in how the company is run.
The court ruled as expected that the Volkswagen law broke EU rules on the free flow of capital because it capped voting rights at 20 per cent and let VW's home state of Lower Saxony veto strategic decisions with just 20 per cent of the votes.
Porsche welcomed the ruling that lets it exercise all of its VW voting rights via its nearly 31 per cent stake in Volkswagen ordinary shares.
Porsche has said it has secured enough options to let it "significantly" raise its holding in VW but has declined to say whether this meant it could already gain majority control.
One source said it was unlikely Porsche would increase its stake before the end of this year.
VW said it would examine the ruling's impact on its statutes.
The 1960 VW law stipulated that Germany and Lower Saxony were each entitled to appoint two members to VW's supervisory board as long as they owned shares.
The German Federal Government is no longer a VW stockholder, but Lower Saxony is its second-biggest investor and said it intends to keep its VW stake of 20.1 per cent.
Porsche said it would be in favour of Lower Saxony's two board representatives remaining in their positions.
- Reuters
