One of the most famous cases of a German partially state-owned enterprise that provides special
privileges to the government is automotive manufacturer Volkswagen, in which the German state
of Lower Saxony controls a 12.7% stake (the fourth largest), but 20% of the voting rights.
The so-called Volkswagen Law passed in 1960 limited individual shareholder’s voting rights in
Volkswagen to a maximum of 20% despite the actual number of shares owned, in order to ensure
that Lower Saxony could veto any foreign takeover attempts.
In 2005, the European Commission successfully sued Germany at the European Court of Justice (ECJ), claiming the
law impeded the free flow of capital. The law was amended to remove the cap on voting rights,
but Lower Saxony’s 20% share of voting rights was maintained, preserving its ability to block
hostile takeovers of the company. In 2013, the ECJ said the amended law complies in full with
the earlier ruling.