The German government has told EU Commissioner Charlie McCreevy it disagrees with his stance on the clauses that need to be deleted in the Volkswagen Law.
A letter signed by Justice Minister Brigitte Zypries, which was made available to reporters, said the government will comply with the European Court of Justice's October ruling to amend portions of the Volkswagen Law but that she disagrees with the former Irish minister for finance's interpretation of this decision.
Charlie McCreevy
Ms Zypries in particular said Section Two of the VW Law, whose clause stipulates a shareholder can exercise no more than 20 per cent of voting rights regardless of the number of share equity it holds in Volkswagen, is not illegal as such.
The VW Law was passed in the 1960s ahead of the privatisation of Volkswagen AG but critics said the law protects the company from takeovers.
She said Section Two is illegal if it is exercised together with Section Four, a clause which states that a 'qualified majority' is defined as 80 per cent of shares represented at the annual shareholders meeting.
A qualified majority vote is needed for certain strategic decisions, such as plant closures. Ms Zypries said these two clauses do not violate the EU laws but only when they are jointly exercised by a shareholder.
The EU court ruled last October that these two clauses violate EU laws on free movement of capital and that the German government should take steps to amend these laws.
The German government has already stated it will comply with the EU ruling and will make the necessary amendment to the VW Law.
A spokesman for the ministry said the government will scrap Section Two of the law as well as another clause that gives the German government and the state of Lower Saxony the right to send representatives to the VW supervisory board.
But Section Four on the qualified majority level will be retained, he added.
Agencies