Renault and Nissan are taking action to limit the influence that one can exercise over the other's operations. The measures, announced by both automakers after meetings of their respective boards in Paris and Tokyo, aim to keep each other at arm's length. But more than that, they seek to cap the degree of influence which the French government can bring to bear on either automaker.
The steps are being taken in response to investment moves by the French state. While the government's investment arm – known as the Agence des Participations de l'État (or state participation agency) – previously controlled 15 percent of Renault's shares, it increased its holdings this April to 19.73 percent. The action sparked concerns at Renault that the French government would attempt to dictate operating procedures to both automakers, potentially to favor production in France over other locations. Given that Renault holds a 43-percent stake in Nissan, the Japanese automaker grew concerned over potential French state interference as well.
To assuage those concerns, Renault, Nissan, and the French government came to an agreement with three vital clauses. Most importantly, despite its nearly 20-percent holdings, the French government will be granted only 17.9 percent of voting rights in Renault (to be extended up to 20 percent under certain exceptional circumstances). Renault (and by extension the French government) will also be prevented from interfering in Nissan's governance. With those measures in place, Nissan will not seek more voting rights based on the 15-percent stake which it, in turn, holds in Renault.
Having successfully concluded the deal and hedged against the threat of government interference, the Renault board reasserted its confidence in Carlos Ghosn. Through the unique terms of their alliance, Ghosn serves as chairman and CEO of both Renault and Nissan. The two cooperate closely and share resources extending far beyond their chief executive, but remain distinct companies rather than merge, as Fiat and Chrysler have.
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The steps are being taken in response to investment moves by the French state. While the government's investment arm – known as the Agence des Participations de l'État (or state participation agency) – previously controlled 15 percent of Renault's shares, it increased its holdings this April to 19.73 percent. The action sparked concerns at Renault that the French government would attempt to dictate operating procedures to both automakers, potentially to favor production in France over other locations. Given that Renault holds a 43-percent stake in Nissan, the Japanese automaker grew concerned over potential French state interference as well.
To assuage those concerns, Renault, Nissan, and the French government came to an agreement with three vital clauses. Most importantly, despite its nearly 20-percent holdings, the French government will be granted only 17.9 percent of voting rights in Renault (to be extended up to 20 percent under certain exceptional circumstances). Renault (and by extension the French government) will also be prevented from interfering in Nissan's governance. With those measures in place, Nissan will not seek more voting rights based on the 15-percent stake which it, in turn, holds in Renault.
Having successfully concluded the deal and hedged against the threat of government interference, the Renault board reasserted its confidence in Carlos Ghosn. Through the unique terms of their alliance, Ghosn serves as chairman and CEO of both Renault and Nissan. The two cooperate closely and share resources extending far beyond their chief executive, but remain distinct companies rather than merge, as Fiat and Chrysler have.
Renault Board approves alliance stability covenant between Renault and Nissan
As early as 16th April 2015, the Renault Board of Directors unanimously reiterated that the sustainability, success and resilience of the Alliance since its very inception in 1999 were based on a balance of shares held by Renault and Nissan.
Since then, talks between the two long-term shareholders of Renault, Nissan and the French government, have resulted in a sound agreement that will ensure the Alliance's stability and promote its future growth.
Renault's Board of Directors has approved today a Stability Covenant based on three points:
- The principle of the French government's double voting rights within Renault to be maintained as of 1st April 2016, and a contract between the French government and Renault caps the French government's voting rights at 17.9%, up to 20% in case of an unusually high quorum at the shareholders general meeting;
- No enfranchisement of Nissan shares in Renault;
- A contract between Renault and Nissan providing for non-interference in Nissan's governance by Renault.
The French government's voting rights are to be capped on all decisions to be voted by the Ordinary Annual General Meeting except those on dividends, the appointment and dismissal of French government representatives on the Board, disposal of more than 50% of Renault's assets and interested party transactions not approved by French government representatives on the Renault Board.
The cap shall not apply in exceptional circumstances such as changes to or the termination of RAMA (Restated Alliance Master Agreement), the enfranchisement of Nissan shares in Renault, a takeover bid of Renault and the passing by any shareholder, including Nissan, of the 15% threshold either in shareholding or in voting rights.
Renault's non-interference in Nissan's governance shall include Nissan shareholders' decisions on the appointment, dismissal and compensation of Nissan Board members and motions from a shareholder not approved by Nissan's Board.
Renault's Board of Directors has welcomed this agreement as an essential confidence-building step that will enable the Alliance teams to strive for a top-3 ranking among global automotive manufacturers in the years to come.
At the conclusion of a fruitful debate, the Board of Directors of Renault unanimously renewed its confidence in the Chairman and CEO, Carlos Ghosn.
###
Renault-Nissan Alliance agrees to strengthen its partnership
TOKYO and PARIS – Following a Renault Board of Directors meeting in Paris, and a Nissan Board of Directors meeting in Tokyo today, Renault and the Nissan Motor Corporation, Ltd. issued the following statement from Carlos Ghosn, Chairman and Chief Executive Officer of the Renault-Nissan Alliance:
"Today was an important day for the future of the Renault-Nissan Alliance. After months of discussions, I am happy to say that an agreement has been reached that builds on our heritage and strong foundations to achieve further sustainable growth and success of the two partners. While there were important short-term issues to address, it was imperative that all involved took a long view."
The agreement is based on three points:
- The principle of the French government's double voting rights within Renault to be maintained as of April 1, 2016, and a contract between the French government and Renault caps the French government's voting rights at 17.9 percent, up to 20 percent in case of an unusually high quorum at the shareholders general meeting.
- No enfranchisement of Nissan shares in Renault.
- A contract between Renault and Nissan providing for non-interference in Nissan's governance by Renault.
Mr. Ghosn continued: "I want to thank all parties involved in helping us reach today's agreement for their hard work, constructive spirit and business vision. We now look forward to all parties returning their focus to day to day operations to pursue sustainable growth for Renault and Nissan and to increase performance through additional Alliance synergies."
About the Renault-Nissan Alliance
The Renault-Nissan Alliance is a strategic partnership between Paris-based Renault and Yokohama, Japan-based Nissan, which together sell one in 10 cars worldwide. The companies, which have been strategic partners since 1999, sold 8.5 million vehicles in nearly 200 countries in 2014. The Alliance has strategic collaborations with automakers including Germany's Daimler, Japan's Mitsubishi, China's Dongfeng, and India's Ashok Leyland. The Alliance also owns a majority stake in the joint venture which controls Russia's AVTOVAZ, maker of the Lada brand.
As early as 16th April 2015, the Renault Board of Directors unanimously reiterated that the sustainability, success and resilience of the Alliance since its very inception in 1999 were based on a balance of shares held by Renault and Nissan.
Since then, talks between the two long-term shareholders of Renault, Nissan and the French government, have resulted in a sound agreement that will ensure the Alliance's stability and promote its future growth.
Renault's Board of Directors has approved today a Stability Covenant based on three points:
- The principle of the French government's double voting rights within Renault to be maintained as of 1st April 2016, and a contract between the French government and Renault caps the French government's voting rights at 17.9%, up to 20% in case of an unusually high quorum at the shareholders general meeting;
- No enfranchisement of Nissan shares in Renault;
- A contract between Renault and Nissan providing for non-interference in Nissan's governance by Renault.
The French government's voting rights are to be capped on all decisions to be voted by the Ordinary Annual General Meeting except those on dividends, the appointment and dismissal of French government representatives on the Board, disposal of more than 50% of Renault's assets and interested party transactions not approved by French government representatives on the Renault Board.
The cap shall not apply in exceptional circumstances such as changes to or the termination of RAMA (Restated Alliance Master Agreement), the enfranchisement of Nissan shares in Renault, a takeover bid of Renault and the passing by any shareholder, including Nissan, of the 15% threshold either in shareholding or in voting rights.
Renault's non-interference in Nissan's governance shall include Nissan shareholders' decisions on the appointment, dismissal and compensation of Nissan Board members and motions from a shareholder not approved by Nissan's Board.
Renault's Board of Directors has welcomed this agreement as an essential confidence-building step that will enable the Alliance teams to strive for a top-3 ranking among global automotive manufacturers in the years to come.
At the conclusion of a fruitful debate, the Board of Directors of Renault unanimously renewed its confidence in the Chairman and CEO, Carlos Ghosn.
###
Renault-Nissan Alliance agrees to strengthen its partnership
TOKYO and PARIS – Following a Renault Board of Directors meeting in Paris, and a Nissan Board of Directors meeting in Tokyo today, Renault and the Nissan Motor Corporation, Ltd. issued the following statement from Carlos Ghosn, Chairman and Chief Executive Officer of the Renault-Nissan Alliance:
"Today was an important day for the future of the Renault-Nissan Alliance. After months of discussions, I am happy to say that an agreement has been reached that builds on our heritage and strong foundations to achieve further sustainable growth and success of the two partners. While there were important short-term issues to address, it was imperative that all involved took a long view."
The agreement is based on three points:
- The principle of the French government's double voting rights within Renault to be maintained as of April 1, 2016, and a contract between the French government and Renault caps the French government's voting rights at 17.9 percent, up to 20 percent in case of an unusually high quorum at the shareholders general meeting.
- No enfranchisement of Nissan shares in Renault.
- A contract between Renault and Nissan providing for non-interference in Nissan's governance by Renault.
Mr. Ghosn continued: "I want to thank all parties involved in helping us reach today's agreement for their hard work, constructive spirit and business vision. We now look forward to all parties returning their focus to day to day operations to pursue sustainable growth for Renault and Nissan and to increase performance through additional Alliance synergies."
About the Renault-Nissan Alliance
The Renault-Nissan Alliance is a strategic partnership between Paris-based Renault and Yokohama, Japan-based Nissan, which together sell one in 10 cars worldwide. The companies, which have been strategic partners since 1999, sold 8.5 million vehicles in nearly 200 countries in 2014. The Alliance has strategic collaborations with automakers including Germany's Daimler, Japan's Mitsubishi, China's Dongfeng, and India's Ashok Leyland. The Alliance also owns a majority stake in the joint venture which controls Russia's AVTOVAZ, maker of the Lada brand.
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