The French government has reached a compromise with Renault SA (PA: RENA) and Nissan Motor Co. in relation to the use of the voting shares in the French carmaker, writes The Wall Street Journal.
The French Government, in accordance with the law, received in April more voting shares in Renault auto manufacturing company, which calls into question the independence of both the French company, and its controlled Japanese corporation – Nissan, threatening the alliance itself.
Based on the compromise, the government has agreed to use its extra vote only in decision-making on issues related to mergers and acquisitions or other major changes in the business of Renault. At the same time, the vote on the non-strategic issues, including the election of members of the Board of Directors, the distribution of votes will remain virtually unchanged.
In addition, Paris has agreed not to interfere directly in the work of Nissan manufacturer.
The largest shareholder of the French manufacturer is the French Government, its package consisting in 19.7 %, but, under the new law, it was transformed in more than 30% of the votes. Renault owns a 43.4% stake of Nissan, while Nissan has 15% of shares in Renault and it also has the right to vote.
Earlier, Nissan Motor Co. considered the possibility of increasing its stake in Renault SA until at least 25% from the current 15%, to limit the influence of the French government in the alliance and to get the right to vote. This plan has not worked. Under the new agreement, Nissan still has not the right to vote in the French company, but it has received the right to increase its stake and get the right to vote if Paris will too actively intervene in the affairs of Renault.