Germany's Justice Ministry on Wednesday announced plans to salvage parts of a law governing Volkswagen AG that was ruled illegal by a European Union court _ notably a provision that allows worker representatives to block the relocation of production.
The European Court of Justice last year struck down the nearly 50-year-old "VW law," whose main effect was to protect Europe's largest automaker by sales from a hostile takeover.
The Justice Ministry stressed that it would comply with the ruling, in particular scrapping a provision that capped shareholders' voting rights at 20 percent, whatever the size of their holding.
However, "we want to preserve the proven VW law as far as possible and only nullify the provisions that were declared to be against European law," Justice Minister Brigitte Zypries said in a statement.
She said that she planned to keep a provision under which Wolfsburg-based Volkswagen's supervisory board must endorse decisions to build or move production sites with a two-thirds majority. Half of the board members are employee representatives.
Zypries said it was "good news for all employees" that decisions on production sites "will be made in Germany in future as well _ and, as previously, only with the approval of employee representatives."
She described the proposal as "a positive signal" both for Volkswagen's home state of Lower Saxony _ the company's second-biggest shareholder after luxury automaker Porsche _ and for Germany as a whole.
The Justice Ministry said it also planned to keep a provision under which "significant decisions" require the approval of shareholders representing 80 percent of Volkswagen's stock, plus one share, at the annual general meeting.
That would mean that a shareholder with 20 percent of the stock would continue to hold a blocking minority. Lower Saxony holds just over 20 percent, and state governor Christian Wulff has ruled out selling any of the stake.
Porsche has built up a 31 percent stake in Volkswagen, and the European court's ruling on the VW law fueled already rampant speculation that it would move to take a majority in the company.
Porsche, however, has been biding its time. CEO Wendelin Wiedeking said in November that there was no decision so far to increase the stake and that "we are not under time pressure."
Zypries said her center-left Social Democrats will now consult with their coalition partners, the conservative Christian Democrats of Chancellor Angela Merkel, before introducing the revised Volkswagen law to parliament.
Germany's DSW shareholders' rights group criticized the plan. Spokesman Juergen Kurz described the VW law as an "anachronism" that should be scrapped altogether.
"Why should there be special rights for VW? No one can explain why Volkswagen should be different from Daimler or BMW," two other German automakers, Kurz said.
Volkswagen shares were up nearly 1.9 percent at euro153.58 (US$228.34), while Frankfurt's DAX index of blue-chip stocks was down 0.7 percent overall.
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