German office comments on Porsche’s merger with Volkswagen
Publication Date: May 08, 2009
Following the announcement on 6th May, that Porsche and Volkswagen are due to merge, relieving the carmaker from its debts, questions have been raised as to the viability of the plan and potential legal stumbling blocks.
Robert Heym, Corporate Partner in international law firm Reed Smith’s Munich office comments:
“The plans that Porsche and Volkswagen are about to merge will cause a lot of questions from a legal perspective.
“Assuming that a new holding company will be formed, there are various follow-up questions caused by such a structure, some of them associated with the special rights granted under the Volkswagen-Act. As the law implies, this act is aimed at Volkswagen AG and would not automatically extend to a new holding company.
“This will have consequences for the blocking majority of the Country of Lower Saxony as well as for the current de-facto veto right of the employee representatives in the supervisory board with regard to decisions on moving and closing production sites.
“These special rights would not apply in a new holding company, and the question is under which conditions the Country of Lower Saxony and the employee representatives, including the trade unions, will approve the plans for a new structure.”
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