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Alliance looks at adjusting its capital ties

With the French government set to gain significant sway over Renault, the parent company of Japan's Nissan Motor, the two automakers are talking about altering their capital alliance.

PARIS -- Japan's Nissan Motor and France's Renault recently began reviewing their capital alliance, The Nikkei learned Wednesday. Specifically, the automakers are discussing the possibility of attaching voting rights to the Renault shares that Nissan owns.

     The French-Japan auto alliance is uneasy over the role that the French government could play. The French government's shareholder voting rights in Renault are to rise to about 28%. It stands to gain significant influence.

     Renault has a 43.4% stake in Nissan and wants to bring that below 40%. Part of the unease is over how the French government could also sway Nissan, which holds 15% of Renault.

     Under the existing French company act, a company that is at least 40% owned by another company cannot exercise voting rights on shares it owns in the dominant partner.

     Also, Paris in 2014 enacted the Florange law, which automatically grants double voting rights to shares registered for more than two years.

     Renault's board of directors came out against the act after it was proposed, but the board's bid to fend off any government interference failed.

     It remains to be seen whether Paris will agree to review Nissan and Renault's capital ties. The negotiations, which at some point will have to involve the French government, will probably continue through spring, when the government's voting rights are set to double.

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