BERLIN -- Germany could copy France and allow companies to have shares with double voting rights in order to preserve the protected status of Volkswagen AG, a member of the ruling Greens party said on Thursday.
Speaking in a parliamentary debate on a European Union proposal for a common EU corporate takeover code, Greens deputy Hubert Ulrich said Germany might have to resign itself to abandoning a law that protects Volkswagen from hostile bids.
"We are going to have to reflect in Germany on whether to bring our shareholder rules into line with European rules or adopt the French system of double voting rights, because this seems to be accepted by the (European) Commission," Ulrich said.
Double voting rights accumulate when shares are held by investors for certain periods of time.
"This could be a replacement for the VW law in its current form," Ulrich said.
The Commission claims the law, which limits the acquisition of voting rights in VW to 20 percent, is a barrier to free capital movement in the 15-nation European Union and has started legal proceedings against it.
German junior justice minister Alfred Hartenbach said the Social Democrat-Greens government was not about to give in to the EU executive without a fight. Germany must respond to the EU's objections next month.
He said the intention of the law was not to interfere with capital movements and "we will make that absolutely clear to the Commission."
"We should not mix in the VW law with the discussion over the takeover directive," Hartenbach told the debate.
Germany reacted coolly to the Commission's draft takeover law when it was unveiled last year because it left open the possibility for some countries, notably Sweden, to continue to shield firms from bids via the use of multiple voting rights.
However, the proposal is in the process of being amended by the European Parliament and Greek EU presidency and Hartenbach signalled the government was happy with recent drafts. EU member state officials are due to discuss them in Brussels next week.
Klaus-Heine Lehne, a German Christian Democrat member of the European Parliament who has drawn up the assembly's opinion on the law, was in close contact with the government, he said.
However, Ulrich and other speakers emphasized any new EU law must also address barriers to takeovers that exist in non-EU countries such as the United States before it could be approved.
"We need reciprocity, not only at a bilateral level but at the global level, before any law comes into force," said Reinhard Schultz, a backbench member of Chancellor Gerhard Schroeder's Social Democrats (SPD).
He suggested harmonization should take place at the level of the Organization for Economic Cooperation and Development.
Schroeder has also in the past called for some kind of reciprocity clause that would allow the EU to protect its firms from corporate raiders based in countries which erect barriers to hostile bids.