Porsche Files Lawsuit in Battle for Control of VW26 May 2008 • by Natalie Aster
Porsche SE, Volkswagen AG's largest shareholder, filed a lawsuit seeking to overturn a vote by VW investors that upheld the German state of Lower Saxony's ability to block decisions, reported The Bloomberg.
The Porsche lawsuit is the latest move in a wrangle for control of Europe's largest carmaker. At Volkswagen's annual meeting in April, Lower Saxony blocked attempts to scrap its veto rights. Porsche says the state's blocking power is no longer valid after a European Court of Justice ruling last October.
``The action is aimed at clarifying the legal situation,'' Porsche said today in an e-mailed statement. The Stuttgart-based company, which wants to expand its stake to more than 50 percent from 31 percent, filed the suit in a Braunschweig court.
The battle over changing Wolfsburg, Germany-based VW's bylaws is in addition to a fight over the so-called Volkswagen Law passed by Germany's parliament in 1960. In October, the European Union's highest court ordered Germany to rewrite or scrap the law, which gives Lower Saxony, Volkswagen's home state, a blocking minority with its 20 percent stake.
The German government has agreed on an amended version of the law that protects Lower Saxony's right to veto shareholder decisions, a move Porsche opposes. German businesses typically give veto power to investors with at least a 25 percent stake.
Olaf Glaeseker, a Lower Saxony spokesman, didn't immediately return calls for comment to his office and mobile phones.
Volkswagen's ties to Porsche go back to the company's creation under Adolf Hitler's Nazi regime in the 1930s. Ferdinand Porsche, the grandfather of Volkswagen's current chairman, was the company's first leader. VW Chairman Ferdinand Piech's father, Anton Piech, married Porsche's daughter and became Volkswagen's director.
The extended Porsche-Piech family controls all of the sports-car maker's voting shares. Porsche produces about 100,000 cars a year, less than a week's production at Volkswagen.
Lower Saxony wants to maintain its blocking power in order to protect jobs. Volkswagen employs almost 170,000 people in Germany.