BERLIN, Feb 25: Germany’s industry federation (BDI) said on Monday it would welcome common takeover rules in the European Union, including an end to “golden shares” that confer special voting rights and can be used to block takeover bids.

“All special voting rights should be scrapped,” Jan Wulfetange, the BDI’s EU company law expert, told Reuters, though he believed the EU would find such a move difficult to implement.

The BDI’s stance should be welcome news for European Internal Market Commissioner Frits Bolkestein, who visits Berlin on Monday for talks to prepare the publication of a new proposal for a common EU takeover law this spring.

But the stance could place the BDI at odds with the German government, which sources have said is anxious to keep a law in the state of Lower Saxony that stops car maker Volkswagen AG from falling into foreign hands.

The government has not taken any public position on the pending EU proposal, but Chancellor Gerhard Schroeder is a former premier of Lower Saxony, which owns 20 per cent of the car maker, the maximum allowed under the so-called “VW law”.

His successor as state premier, Sigmar Gabriel, said last week there had been talks on the issue and made clear Lower Saxony would not accept any attack on the VW law.

Germany last year rallied its representatives in the European Parliament to block a previous EU takeover law which had been more than 10 years in the making, ostensibly on the grounds it would have left German firms exposed to takeovers while preserving special voting rights in other countries.

A working group set up by Bolkestein to prepare a new proposal recommended in a report in January that special voting rights should be overruled if a bidder succeeded in capturing 75 per cent of a target firm’s ordinary shares.

Any bidder would find that hard in VW’s case, because as well as the 20 per cent held by Lower Saxony the firm holds 10 per cent of its own shares and has authorisation to buy another 10 per cent.

Many EU countries, including France and Spain, followed the example of Britain in the 1980s and maintained “golden shares”, allowing them to veto strategic decisions concerning privatized firms.

The BDI believed potential opposition from these countries and Sweden, many of whose firms also have special voting rights, made it unlikely the Commission would be able to push through any changes.

“We don’t think Bolkestein would be able to push this through,” Wulfetange said.

EU company law is adopted on the basis of “qualified majority” votes, meaning a handful of countries can form a blocking minority.

The only possible way of tackling the issue might be through using transitional clauses, which would phase out special voting rights over a number of years, Wulfetange said.—Reuters