JURIST - Paper Chase: Germany redrafts Volkswagen law after EU court ruling

[JURIST] The German Federal Ministry of Justice [official website, in German] Wednesday circulated a new draft [press release, in German] of a law aimed at maintaining state control over auto maker Volkswagen AG [corporate website]. The European Court of Justice ruled [JURIST report] in October 2007 that a previous version of the law, which protects Volkswagen from hostile takeovers, was illegal because it limited "the free movement of capital" and discouraged foreign direct investment in Germany. The new version drops a provision that limited shareholder voting rights to 20 percent, but requires the agreement of shareholders holding more than 80 percent of all shares to approve important changes.

The European Commission (EC) [official website] initially challenged the "Volkswagen Law" in 2005. In February 2007, Advocate General Damaso Ruiz-Jarabo of the ECJ advised the court that the law should be repealed [JURIST report], saying the law restricts the free movement of capital [press release, PDF] and "strengthens the position of the Federal Government and the land, preventing any intervention in the management of the company." The EC has filed similar suits or threatened to file suit against Spain and its energy companies, Italy and highway company Autosrade SpA, and Poland for intervening in Italy's UniCredit SpA business in Poland. The New York Times has more.

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