Despite the issuing of a last warning to the German government over legislation designed to protect Volkswagen AG from hostile takeover bids earlier this month, it now appears that the European Commission has decided to postpone a decision on the country's 'golden share' law indefinitely.
The law caps the voting rights of shareholders at 20%, requires the support of more than 80% of shareholders for any important decisions, and guarantees the state of Lower Saxony rights of 20% no matter what the size of its stake, and has been dubbed "an obstacle to the free movement of capital".
However, according to reports in the European media, the EC has opted to pursue further diplomatic avenues before issuing an ultimatum to the German government.
This circumspection is thought to be due to Commission president, Romano Prodi's desire not to anger German Chancellor, Gerhard Schroeder further during the ongoing dispute over the size of the country's budget deficit.
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