The European Union’s highest court is on track to throw out the so-called ‘Volkswagen Law’ that effectively protects the region’s biggest carmaker from any foreign takeover.
The advocate general, who advises the European Court of Justice, has decided the law is illegal and should be scrapped as it prevents the free flow of capital.
That is because it limits any VW shareholder to 20% of the company’s voting rights, even if they own more than 20% of the stock.
The legislation dates back to 1960 when VW was privatised. German politicians and trade unions say it helps ensure the company’s stability.
The court will make its final judgement within six months, but it mostly backs the opinion of the advocate general.
VW’s biggest shareholder is German sports car maker Porsche with 27.4% of its shares. It welcomed the recommendation which would give it more say in the running of VW. And together with the German state of Lower Saxony, which has 20.8% of the shares, they could still block any takeover.