Nissan hints at reviewing its cross holdings with Renault

Paris, Tokyo: Nissan Motor Co. has updated its corporate governance code, a month after the arrest and indictment of former Chairman Carlos Ghosn brought differences with partner Renault SA out in the open after a two-decade partnership. As part of the new code, the Japanese automaker revised the cross-shareholding policy.

Renault is the largest shareholder in Nissan and the Asian company in return is the second-largest shareholder in the French carmaker. The two companies also have minority shareholdings in Germany’s Daimler AG.

Nissan said it reserved the right to sell those stakes. Nissan’s statement- which didn’t name any automakers and was released on Christmas Day, when the offices of its European partners are closed — comes at a time when Renault asked the Japanese company to call a shareholder meeting to discuss corporate governance issues.

Nissan is shoring up cash to build its firepower amid tensions with Renault. Its move, which raises more questions than answers on whether this means the company is gearing up to sell the stake, comes as the two long-time partners have differed over how they approach the issue of Ghosn’s arrest.

While Nissan immediately sacked the official as its chairman, Renault chose a different option by naming a deputy for the CEO role he played at the French carmaker.

The Japanese automaker holds a 15 per cent stake in Renault — with a market value of about $2.8 billion — and no voting rights, a position that has been the source of tensions with the French company. Renault owns 43 per cent of Nissan, a stake worth almost $14 billion.

With regards to voting rights of cross-shareholdings, the new Nissan code says the company will consider “whether or not it leads to the improvement of mid to long term corporate value and shareholder interest and exercise our voting-rights properly”. The previous version of the code in July didn’t refer to the possibility of selling cross holdings.

“We will investigate including the option of sale of the shares when continued possession of the shares is judged to be inappropriate as a result of verification of the propriety of such cross-shareholdings,” Nissan’s code also said.

Source of constant tension

The fact that France owns a stake in Renault with voting rights has also been a source of tensions, with Carlos Ghosn saying in the past that a merger that was explored between the two would never happen as long as France remains a shareholder.

Still, both Nissan, Renault and the French and Japanese governments have praised the carmaking alliance. Both companies have publicly said they weren’t looking to reconsider its current structure.