Renault driven to the edge over double-voting rights

Outlook Time for Renault to check its airbags are working. The car maker’s board looks set for a nasty collision with the French government.

At issue is shareholder voting rights, and France’s so-called Florange law. It was passed in March 2014 and allows those who own shares of a public company for longer than two years to have double-voting rights.

That might sound undemocratic, but there is a sound principle at work: the aim is to prioritise long-term investors over hedge funds and short-term speculators, who have a habit of pushing vulnerable companies into unwanted and unwelcome deals. Unfortunately, long-term investors can cause problems of their own when they behave badly, especially if you offer them two votes for the price of one.

A supermajority of Renault shareholders (66 per cent) can overturn the law’s provisions, but the French government is expected to win the day and there doesn’t appear to be much that Renault can do about it. It’s stuck in the pit lane, hoping the machinations don’t create too many problems with Nissan, which is similarly appalled at the developments. This matters because Nissan, which Renault once rescued, now drives through the lion’s share of its profits. Sacré bleu!