Nov 13, 2008, 22:09 GMT
Berlin - The German government threw down a gauntlet Thursday to both luxury carmaker Porsche and the European Commission, with Parliament in Berlin passing new legislation to cement state rights over Volkswagen.
Porsche has announced it will own just under 75 per cent of the giant car manufacturer when options fall due next year. A German state, Lower Saxony, owns just over 20 per cent of Volkswagen.
The new legislation, an amendment of the long-standing 'Volkswagen Law,' gives Lower Saxony veto rights at shareholder meetings that normally require a share stake of at least 25 per cent.
A solid majority of legislators in Berlin backed the bill, which is popular because the state is seen as a guarantor of jobs at the company, the biggest industrial enterprise in Lower Saxony.
The European Union is expected to challenge the legislation in court, arguing that it distorts European corporate law.
Porsche lobbied vainly against the bill.
Porsche chief executive Wendelin Wiedeking wrote to legislators, predicting that law would cause future problems for Berlin.
The highly profitable Porsche holding company says it currently controls 42.6 per cent of voting shares at the bigger Volkswagen.
But the labour leader at Volkswagen, Bernd Osterloh, applauded the law as a 'grand signal' and said it fully met provisions of European Union law.
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