Volkswagen Law

The law on the transfer of equity in the Volkswagenwerk limited company to private ownership ( VWGmbHÜG ) - colloquially referred to as the VW Law - occurred on 28 July 1960 in force when the Volkswagenwerk GmbH was privatized and transformed into a joint stock company.

It states that no shareholder can exercise more than 20 per cent of the voting rights, even if he owns more shares. The goal of the public sector at that time was to keep impact on the automaker, as the law of the State of Lower Saxony with its share of 20.2 percent, a blocking minority, so a veto on all major decisions, grants. A large part of the capital property was supplied by the Volkswagen Foundation.

• 3.1 1 action at the ECJ
• 3.2 second action before the ECJ

Content

The Act originally consisted of 14 paragraphs, most of which have now become meaningless or repealed. § 1 certain that the Volkswagen GmbH was to convert the entry into force of the Act immediately in a corporation. § 2 contained provisions on the voting rights and voting rights. This provision is no longer in force. § 3 deals with the representation to the exercise of voting rights. The § § 5-12 concerned details for purchase and sale of the conversion into a public limited company re- emerged the shares. These provisions are no longer in force today.

Four - fifths majority for shareholder resolutions

§ 4 Paragraph 3 of the VW law provides that

This special has the consequence that at Volkswagen AG, important decisions, such as amendments and capital, with an 80 percent majority of the vote can be taken. For other joint stock companies a 75 percent majority is sufficient. Since the state of Lower Saxony holds more than 20 percent of VW shares, such decisions are not possible without the consent of the country. The state of Lower Saxony, therefore, has a blocking minority. If § 4 section 3 of the Act should be repealed, so this blocking minority would be eliminated.

Two-thirds majority with manufacturing facility decisions

According to § 4 section 2 required for the construction and the relocation of production to the approval of the Supervisory Board. The resolution requires a majority of two thirds of the members of the Supervisory Board. Through this special, the Supervisory Board has a say in VW, if the board decides the fate of the VW production. The Supervisory Board must also approve by a two -thirds majority, which in result means that the employee representatives on the supervisory board, put the half of the members, may prevent the establishment and relocation of production.

History

The reason for this law is the Nazi past of the VW company. Shortly before the Second World War was the VW plant from the ' German Labour Front " ( DAF), the largest and most financially powerful structure of the Nazi Party, was built. The structure of the 1938/39, built east of Fallersleben factory funded the DAF partially with the assets of the battered unions in 1933. This and the use of forced labor made ​​a financially sound basis.

The privatization was the result of a dispute between the then CDU-led government and the then SPD -governed state of Lower Saxony. The British High Commission had handed over the company in the name and on the instructions of the Federal Republic of Germany the state of Lower Saxony. Thus, it was unclear whether Niedersachsen was merely become the trustee of the company or asset owner. The dispute was settled by a comparison which was closed as a State contract. Because of the treaty it came to the adoption of the VW law. The law changed the Volkswagen factory limited liability company into a joint stock company.

Only with the VW law an agreement with federal, state, trade unions and purchasers of call warrants was achieved.

Reviewed in the context of constitutional complaints and considered properly :; ( 1BvR 561/60, 579/60, 114/61 Az BVerfGE 12, 354) The privatization by the Federal Constitutional Court. The constitutional complaints were unfounded.

Another constitutional complaint (Case No.: 1BvR 764/70 ) against the waiver of privilege by the Federal and State of Lower Saxony pursuant to § 2 paragraph 4 of the VW Law aF by the Second Act Amending the Act on the transfer of equity in the Volkswagenwerk limited company on 31 July 1970 ( Federal Law Gazette I, p 1149 ) was indeed declared as " not allowed", but not according to § 93a, paragraph 4 Federal Constitutional Court accepted the decision.

Conflict with the EU Commission

1 action at the ECJ

The EU Commission has Germany in March 2004 ultimately prompted to change the VW law by the end of May 2004. The Commissioner Frits Bolkestein saw in the VW Law, which is designed to prevent a hostile takeover of the Wolfsburg- based car manufacturing company, an infringement of the free movement of capital ( Article 56, Section 1 of the EC Treaty) in the European Union. Maybe, but also the freedom of establishment under Article 43 paragraph 2 of the Treaty has been infringed.

The EU Commission has decided on 13 October 2004, appealing to the European Court of Justice ( ECJ) under Article 226, paragraph 2 of the Treaty. The action before the ECJ went on 18 March 2005 ( Case No. C-112/05 ).

By judgment of 2 June 2005, the Court has declared an Italian scheme for with Article 56, paragraph 1 of the EC Treaty incompatible, are automatically exposed in the voting rights of shareholders with shares of more than two percent of the electricity and gas companies ( C-174/04 ).

It was expected therefore generally also of the judgment in the matter VW that the special provisions of the VW law (eg the so-called " golden share " ) in the EU no stock will have, and thus the path will be free of for an increase in the company's shares Porsche group and for the industrial leadership in the VW Audi Group by Porsche AG. A preliminary decision in this direction was in the Opinion of Advocate General Colomer of 13 February 2007: it assessed the disputed provisions of the VW law ( voting restriction of appointment and reduce the blocking minority ) as inadmissible interference with the free movement of capital and suggested to the court, the Federal Republic to be ordered according to the requests of the European Commission. The ECJ shared this view with regard to the free movement of capital ( Article 56 EC ) and the law has, by judgment of 23 October 2007 declared illegal under EC law. In particular, the protection of workers not justify encroachment on Article 56 of the EC. The Federal Republic is obliged to alter or abolish the law.

On 27 May 2008 the Federal Government has presented a government bill for a new VW law. However, this only makes limited changes. While the right of appointment to the Supervisory Board and the restriction of voting rights are to be dispensed with, the federal government wants to hold on to 80 percent majority requirement for critical business decisions, and thus remains within the scope of § 179, paragraph 2 of the German Stock Corporation Act, under which a corporation for a different majority than three-quarters etc. for amendments may determine. In addition to a scheme under which any decision about the production site of a two-thirds majority in the Supervisory Board needs to be preserved. The new draft law has been heavily criticized and has been classified as also incompatible with the free movement of capital. The European Commission has already initiated a renewed infringement proceedings against Germany. On 9 September 2008 it was announced that the VW Law is renegotiated before the EU's highest court.

Despite massive criticism from the EU and major shareholder Porsche, the German Bundestag adopted on 13 November 2008 the redesign of the law, in the still blocking minority of 20 percent is included. Also, the Federal Council approved the law in the meantime. Immediately after the decision of the Federal Parliament, the EU Commission announced rapid action against the Federal Republic that could lead to a further hearing before the European Court of Justice. The new version was approved on 8 December 2008.

Second action before the ECJ

On November 27, 2008 Commission of the Federal Government has set a final deadline for amendment of the VW law. After the lapse of the two-month period, to change the law in the sense of the Commission, before the European Court of Justice ( ECJ) has been raised again. The EU Commission came to the veto of the state of Lower Saxony in important statutes changing policies and structural decisions ( 20% blocking minority of the state of Lower Saxony ). It is usual for such veto right only at a voting interest of 25%. On 21 February 2012, the Commission launched a new infringement proceedings before the European Court of Justice against Germany (Case C-95/12 ). Furthermore, the European Court of Justice (ECJ ) has negotiated on March 12, 2013 Luxembourg. The Advocate General had spoken out in May 2013 for dismissal of the action by the EU Commission. According to the Advocate General, the federal government has fully implemented an earlier decision. On October 22, 2013, the European Court of Justice dismissed the action on the grounds that the VW Law is not contrary by the already implemented changes to existing EU law. The ECJ ruled not content about the question, whether taken alone the blocking minority of Lower Saxony violates EU law, but only about whether Germany has complied with the required changes .. In the event of a successful iH had a fine, the Commission 31,000 EUR per day, since the day of judgment precipitation in 2007, applied for. That would have penalty payments means about 63-68 million euros in height. The Commission has announce that they 'll now be based on after the ECJ judgment the matter.