France will spend as much as 1.23 billion euros ($1.3 billion) to temporarily increase its stake in Renault in order to keep its influence on the auto company. The French government has been purchasing shares in the automaker to raise its stake from 15% to 19.73%. In 2014, a revision was made in French law that means that double voting rights are given to shares in publicly traded companies that have been held for over two years.
However, shareholders could adopt resolutions in annual general meetings to preserve the one-share, one-vote system. According to the industry minister, this resolution was suggested for Renault's annual meeting on April 30. The government is undertaking measures to guarantee that it doesn’t pass.
In a statement, Economy Minister Emmanuel Macron said that this deal is proof of the intention of the State to exploit “all the arms” that investors can make use of in order to support “a progressive, long-term kind of capitalism that supports workers and helps companies grow.”
He also said that the government aims to sell the newly acquired shares after the vote and has gotten options to maintain the stock’s value. He added that the move isn’t meant to increase the government’s stake in Renault in the long term.
The ministry said that what they’re doing complies with the new doctrine of state shareholdings, which refers to the active management of the portfolio. He shared that the goal is to “protect the state’s weight in the governance of the company and to defend its long-term interests.”
Last Tuesday, the French treasury purchased 9.6 million Renault shares on the market and has given a bank a mandate to acquire 4.4 million more. This move is expected to cost anywhere from 814 million euros to 1.23 billion euros.
On Tuesday, shares in Renault closed up 0.71% at 85.26 euros. In France, double-voting rights are quite common. Meanwhile, countries like the United States and Britain considers the one-share, one-vote principle as the foundation of good corporate governance.