Definition
The Volkswagen Act (German: Volkswagengesetz) is a federal German statute that regulates the ownership structure, voting rights, and corporate governance of Volkswagen AG, one of the world’s largest automobile manufacturers. The law establishes special provisions concerning the share capital, the role of the state of Lower Saxony, and restrictions on foreign control of the company.
Overview
- Enactment and purpose – The Act was originally passed on 4 December 1960 in conjunction with the creation of the newly formed Volkswagen AG. Its primary aim was to secure the long‑term interests of the German state, particularly the State of Lower Saxony, and to preserve Volkswagen as a key industrial asset in Germany.
- Legal context – As a piece of corporate legislation, the Volkswagen Act operates alongside the German Stock Corporation Act (Aktiengesetz) and other EU regulations. Over the decades it has been the subject of several high‑profile legal disputes, especially concerning compatibility with European Union competition law.
- Key developments – Notable amendments occurred in 2005 (to address EU concerns about the “special voting rights” of Lower Saxony) and again in 2020, when the European Court of Justice ruled that certain provisions of the Act constituted restrictions on the free movement of capital within the EU. Germany subsequently revised the law to align it with EU jurisprudence while retaining a “golden share” for the state.
Etymology / Origin
The title “Volkswagen Act” derives directly from the name of the company it governs—Volkswagen, which translates from German as “people’s car.” The German term Volkswagengesetz combines Volkswagen (the corporate name) with Gesetz (law), reflecting its function as the statutory framework for the corporation.
Characteristics
| Feature | Description |
|---|---|
| Share structure | The Act mandates that at least 20 % of Volkswagen AG’s share capital be held by the State of Lower Saxony, which also possesses a “golden share” granting it a veto over certain strategic decisions. |
| Voting rights | Historically, Lower Saxony’s shares carried enhanced voting rights (up to 10 % of votes per share), a provision that has been partially curtailed to satisfy EU competition rules. |
| Foreign ownership limits | The law imposes caps on the percentage of shares that can be owned by non‑EU investors, aiming to prevent external acquisition of a strategic national asset. |
| Governance provisions | Specific rules concerning board composition, supervisory board representation, and the appointment of key executives are detailed in the Act. |
| Amendments and EU compliance | Following EU rulings, the Act has been amended to eliminate overtly discriminatory provisions while preserving a degree of state influence through ordinary voting rights rather than special rights. |
| Legal status | The Act is a federal law (Bundesgesetz) and thus supersedes any conflicting provisions in the general corporate code. It remains in force, subject to periodic revision. |
Related Topics
- Volkswagen Group – The multinational automotive conglomerate of which Volkswagen AG is the core entity.
- German corporate law – The broader legal framework governing corporations in Germany, including the Aktiengesetz.
- European Union competition law – The body of EU law that addresses anti‑competitive practices and has scrutinized the Volkswagen Act.
- State‑owned enterprises – The role of government ownership in strategic industries, a context in which the Volkswagen Act is often discussed.
- Daimler AG, BMW AG – Other major German automotive manufacturers subject to comparable corporate governance structures.
- Golden share – A type of share that gives its holder veto power over certain corporate actions, akin to the prerogatives historically granted to Lower Saxony under the Act.