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Renault rift with Nissan widens

By Graeme Roberts | 10 June 2019

Despite some hope the withdrawn proposal for a merger between Fiat-Chrysler (FCA) and Renault could be revived if a way can be found to alleviate Renault's alliance partner Nissan's concerns over future stakeholdings and influence, the 20-year partnership was plunged into fresh crisis on Monday as the French automaker's demand for a greater say in Nissan's new governance system drew rare public censure by the Japanese firm.

Reuters said Renault, which owns 43.4% of the Japanese firm, signaled it would block Nissan from formally adopting an overhauled governance structure at a 25 June shareholder meeting - unless Renault received representation on new Nissan committees.

The demand, conveyed in a letter from Renault chairman Jean-Dominique Senard just weeks before the meeting, could scuttle the new structure, created after months of deliberation by an outside committee and previously supported by Senard. Nissan responded in some of its frankest language yet against its top shareholder, calling the demand "most regrettable".

"Nissan has received a letter from Renault indicating intention to abstain from voting," Nissan said in a statement.

"Nissan finds Renault's new stance on this matter most regrettable, as such a stance runs counter to the company's efforts to improve its corporate governance."

For Renault and FCA to secure help reviving the merger deal, Nissan is, therefore, poised to urge Renault to significantly cut the 43.4% stake, two people told Reuters.

By abstaining from the governance vote, Renault would effectively block the new governance system - which includes three committees - as adoption requires two-thirds approval. Nissan recently said it would abstain from voting on the FCA-Renault merger, although both FCA and Renault later blamed the failure of that deal squarely on the French government.

"Renault's rights as 43.4% shareholder of Nissan need to be fully recognised and, at a minimum, one or two directors proposed by Renault should be members of each of the three committees," Renault said in its letter, a copy of which was viewed by Reuters.

"As currently proposed, this does not seem to be the case."

A Renault source told Reuters Senard's letter was motivated by concern about Renault's under-representation on the new Nissan board committees being introduced following the arrest of former CEO Carlos 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 source said. "As things stand, Renault has not been assured of appropriate committee representation as Nissan's main shareholder."

Renault had yet to receive specific details on the proposed composition of each of the committees, another source with knowledge of the issue told Reuters.

A Nissan source told the news agency 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.

"It's shocking behaviour from a shareholder that has been saying for months that it supports us in strengthening our corporate governance," the Nissan source said.

The source added that even if Renault blocked the committees, Nissan would still try and go ahead and set up similar governance structures, and try to make them as binding as possible.

Reuters said the rift could put further pressure on Nissan chief executive Hiroto Saikawa, who looks increasingly at odds with Renault.

Japan's Jiji news agency earlier quoted 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".