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Renault rift with Nissan widens over governance, casts shadow on alliance

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Renault, which owns 43.4% of the Japanese firm, made it clear that it would not allow Nissan to formally adopt the revised management structure at the shareholders meeting on June 25 - unless Renault is represented on the new Nissan committees.

The request, conveyed in a letter from Renault chairman Jean-Dominique Senar a few weeks before the meeting, could destroy the new structure created after several months of discussion by an external committee and previously supported by Senard. Nissan responded to one of its most outspoken statements against its main shareholder, calling this demand "most regrettable."

"Nissan received a letter from Renault stating its intention to abstain from voting,” the statement says.

"Nissan considers Renault’s new position on this issue to be the most regrettable, since such a position contradicts the company's efforts to improve corporate governance.”

The split exposes the deep tension between the two automakers, the union of which was under pressure after the arrest of former chairman Carlos Ghosn in November. What is now at stake may be even more than their extensive alliance, which includes Mitsubishi Motors.

Renault and Fiat Chrysler Automobiles (FCA) are looking for ways to reanimate a rolled-out merger plan and get Nissan approval for this deal, Reuters reported on Monday. Therefore, Nissan is ready to convince Renault to significantly reduce its 43.4% share, two people told Reuters.

By abstaining from voting for management, Renault will effectively block the new management system, which includes three committees, since approval requires two-thirds approval. Nissan recently said it would abstain from voting on the FCA-Renault merger, although FCA and Renault later blamed the failure of this deal on the French government.

"The rights of Renault as a 43.4% shareholder in Nissan must be fully recognized, and at least one or two directors proposed by Renault must be members of each of the three committees,” says a letter to Renault, a copy of which is being considered. Reuters.

"As proposed now, it looks like it is not."

A source at Renault said the Senard letter was motivated by concerns about Renault’s underrepresentation on the new Nissan board of directors that appeared after Gosn’s arrest, who is currently awaiting trial and denies financial misconduct against him.

"This is not a final abstinence, and the position of Renault can still change,” said a source. "At the moment, Renault was not sure about the proper representation of the committee as the main shareholder of Nissan."

Renault has not yet received specific information about the proposed composition of each of the committees, another source with knowledge of the issue told Reuters.

A source at Nissan said that Renault CEO Thierry Bollor expressed a desire to participate in the work of the new Nissan committees to oversee the appointments and compensations of the executive bodies, as well as the planned corporate governance audit committee.

But such a move will raise concerns about a possible conflict of interest, as this will give Renault the right to vote in Nissan’s salaries and corporate governance, a Nissan source said.
"This is a shocking behavior on the part of a shareholder who has been saying for several months that he has supported us in strengthening our corporate governance,” said a Nissan source.

The source added that even if Renault blocks the committees, Nissan will still try to create similar management structures and make them as mandatory as possible.

French Finance Minister Bruno Le Mare in Tokyo after the G20 meeting at the weekend, told reporters that the solution to both problems is solved by the leadership of both companies. The French government owns 15 percent at Renault.

The split could put further pressure on Nissan’s chief executive Hiroto Saikawa, who is increasingly confronted with Renault.

The Japanese news agency Jiji previously quoted the words of Saykawa: "We are preparing for a meeting of shareholders and discuss the necessary issues at the appropriate time. If there are differences of opinion (with Renault), then I would like it to be talked about. ”

In March, an external team appointed by Nissan recommended the formation of three committees to improve corporate governance. According to this proposal, Renault directors will have the right to work on the nominating committee, but will be suspended from the work of the remuneration and audit committees.

Both companies struggled to reestablish their relationship after Gosna’s arrest revealed growing tensions, including Nissan’s long-standing concerns about the capital structure of the alliance.

Nissan seems to have remained largely unaware of the mergers between Renault and Fiat Chrysler, who tried to work together to create the third largest automaker.


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