PARIS (Reuters) – Renault has signaled it will block alliance partner Nissan from adopting planned governance reforms unless it gets a seat on new board committees, sources said, a demand one person at the Japanese automaker derided as a potential conflict of interest.
FILE PHOTO: The logos of car manufacturers Renault and Nissan are seen in front of a common dealership of the companies in Saint-Avold, France, Jan. 15, 2019. REUTERS/Christian Hartmann/File Photo
The rift exposes the deepening strain between France’s Renault SA and Nissan Motor Co, whose 20-year-old tie-up has been under pressure since the arrest of former Chairman Carlos Ghosn in November.
The relationship was further tested when a proposed merger of Renault and Fiat Chrysler was scrapped last week.
Renault, which owns 43.4% of Nissan, informed its Japanese affiliate in a letter signed by Chairman Jean-Dominique Senard that it planned to abstain in a shareholder vote on the plans, the Financial Times reported on Sunday.
An abstention by Renault would effectively block the reforms, which require a two-thirds majority to pass.
A Renault spokeswoman did not immediately return calls and messages seeking comment. Nissan was not immediately available for comment.
A Renault source said Senard’s letter was motivated by concern about Renault’s under-representation on the new Nissan board committees being introduced following the arrest of Ghosn, who is now awaiting trial and denies the financial misconduct charges against him.
“It’s not a final abstention, and Renault’s position can still change,” the Renault source said. “As things stand, Renault has not been assured of appropriate committee representation as Nissan’s main shareholder.”
A Nissan source said Renault CEO Thierry Bollore had expressed a desire to sit on new Nissan committees to oversee executive nominations and compensation, and a planned corporate governance auditing committee.
But such a move would raise concerns about a possible conflict of interest, as it would give Renault a say in Nissan salaries and corporate governance, the Nissan source said.
DIFFERENCES OF OPINION
Japan’s Jiji news agency earlier quoted Nissan Chief Executive Hiroto Saikawa as saying: “We are preparing for the shareholder meeting and will discuss necessary issues at the appropriate time. If there are differences of opinion (with Renault), then I’d like for those to be discussed”.
In March a Nissan-appointed outside team recommended the formation of the three committees to improve its corporate governance, a move approved by Renault.
The outside team has proposed that Renault directors would be free to serve on the nominations committee, but would be barred from the compensation and audit committees.
The two companies have struggled to repair their relationship after Ghosn’s arrest exposed simmering tensions, including Nissan’s long-held concerns about the alliance’s capital structure.
Nissan also appears to have been largely left in the dark on merger discussions between Renault and Fiat Chrysler, which had attempted to join forces to create the world’s third-largest automaker before talks fell apart last week.
Reporting by Kanishka Singh in Bengaluru, Laurence Frost in Paris, David Dolan and Naomi Tajitsu in Tokyo; Editing by Louise Heavens, Christopher Cushing and Muralikumar Anantharaman
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