PARIS--The board of French car maker Renault SA on Thursday
instructed Chief Executive Carlos Ghosn to preserve the existing
one-share one-vote resolution at the coming annual general meeting,
putting the company on a collision course with its largest
shareholder, the French government.
An emergency board meeting was called for Thursday afternoon to
discuss recent moves by the French government to secure itself
double-voting rights at the April 30 annual shareholders" meeting.
Last week, the state said it would spend up to EUR1.23 billion
($1.3 billion) to buy more shares in the auto firm and vote against
a pending resolution to maintain a one-share, one-vote system.
After Thursday's meeting, the company released a statement
saying the board stands by its resolution to preserve the balance
of its alliance with partner Nissan Motor Corp. Renault and the
Japanese car maker have been in a partnership since 1999. Nissan
owns a 15% nonvoting stake in Renault.
"The strength of the partnership between Renault and Nissan
explains the success of the alliance which has directly benefited
both partners," the company said in a statement late Thursday.
A person close to French Economy Minister Emmanuel Macron said
the French government wishes to preserve the alliance, adding,
"Renault's future lies in the alliance."
The state's heavy hand at the French car maker comes as France
is trying to guard its influence on the economy and could disrupt a
rare example of a successful cross-border partnership in the auto
sector.
The issue of voting rights has flared because of France's
so-called Florange Law, a measure that was passed in March 2014 and
allows those who own shares of a public company for longer than two
years to have double-voting rights. The law can be overridden if a
company's shareholders adopt a resolution by a two-thirds majority
at a general meeting that limits all stock owners to single-voting
status. Otherwise, double-voting rights will be granted starting
April 3, 2016.
The potential of expanded state influence over Renault is
troubling to Nissan, a person familiar with the matter said. For
Nissan, the lack of voting power at Renault meetings could be
especially vexing given that Renault has a 43% stake with full
voting rights in the Japanese manufacturer even though the French
firm is the smaller entity. When the partnership was first formed
in 1999, Renault saved Nissan from the brink with its large
investment. But in recent years, Nissan has contributed the lion's
share of Renault's profit.
The French government said last week it would increase its stake
from 15% to 20% with the sole intention of blocking the resolution.
Mr. Macron said the increase was temporary and that the state would
reduce its holdings after the meeting.
To gain the extra votes ahead of the meeting later this month,
the French government bought options representing 4.7% of Renault's
shares with Deutsche Bank as its broker, according to a disclosure
made by the German financial firm on Thursday.
Patrick Savadoux, an equity manager specializing in corporate
governance issues at Mandarine Gestion, said the maneuver using
options to boost voting power has been typically criticized by
French financial regulators in the past.
"The way that the state acquired the extra shares was especially
surprising," he said.
Those who watch Renault closely said the government's 20% stake
should be enough for the government to defeat the resolution
because of the low turnout rate of voting shareholders at past
annual meetings.
Analyst Yohann Terry at Exane BNP Paribas in Paris said in a
research note that even if the French government reduces its stake
after the meeting to its previous level of 15%, double-voting
rights could potentially allow it to nominate an extra board
member.
In the course of the past year, several French industrial giants
have been targeted for acquisition by foreign buyers. This week,
Nokia Corp. of Finland agreed to buy Alcatel-Lucent to form a
European telecommunications equipment behemoth. Last year, General
Electric Co. bought the energy assets of Alstom SA, fueling
concerns among French politicians that Paris was losing its grip on
key companies.
Blandine Hénault contributed to this article.
Write to Jason Chow at jason.chow@wsj.com
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