Some freedom

23 October 2007 By Edward Hadas Follow @edwardhadas

The top EU court invalidated the special cap on voting rights in the carmaker. That clears Porsche s path to full control of the German carmaker. But an era of unfettered shareholder democracy has not arrived. Families and governments see no reason to relinquish their powers.

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The European Court of Justice struck down the Volkswagen Law, a 1960 German act which guaranteed board seats at the carmaker for both the national and regional governments and limited the voting rights of any shareholder to 20%, whatever the size of the holding.

The EU's highest court accepted the argument by the European Commission that this law violated the EC Treaty's prohibition on restrictions of the free movement of capital. The decision had been expected after an earlier expert ruling.

Porsche AG has a 31% holding in VW. It said there had been no decision on how to proceed.

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