TOKYO – Nissan said it will continue to persuade partner Renault to back its proposed corporate governance reforms after Renault sent a letter to Nissan indicating it would abstain from supporting the changes at a shareholder meeting later this month.
Renault's threatened abstention comes just two weeks before the June 25 meeting at which Nissan planned to ask stakeholders to back an overhaul of the corporate governance structure.
The move threatens to undermine months of work Nissan CEO Hiroto Saikawa has done to improve compliance matters at Nissan in the of the Nov. 19 arrest of ousted chairman Carlos Ghosn and his subsequent indictments in Japan on charges of financial misconduct at Nissan.
The measures would restructure Nissan from a company overseen by statutory auditors into one governed by three committees looking over audit, remuneration and executive nominations.
The reform is one of several recommend by a monthslong third-party review.
An abstention by Renault, Nissan's biggest shareholder with a 43 percent state, could doom the measure at the upcoming shareholders' meeting. Passage of the amendments would require a two-thirds majority of a turnout of at least 50 percent of the total outstanding shares.
Renault has signaled it will block Nissan's reforms unless it gets more say in the new system. Renault fears that Nissan's shift to the new corporate governance structure with statutory committees comprised mainly of independent outside directors may dilute its influence in Nissan.
"We firmly believe that Renault's rights as 43.4 percent shareholder of Nissan need to be fully recognized and, at a minimum, one or two directors proposed by Renault should be members of each of the three committees," letter said.
In its statement, Nissan confirmed that it had received a letter from Renault indicating its intention to abstain from voting.
Nissan said the amendments are necessary to "lay the groundwork for a robust system of governance in support of Nissan's operations" and said it will keep pushing for them.
In the interests of all shareholders, Nissan will continue to make the utmost efforts to communicate the necessity of these governance-strengthening changes," it said.
Renault has changed its stance on the reforms. Renault Chairman Jean-Dominique Senard, who has a seat on the Nissan board, and other Renault appointees on the Nissan board, had earlier backed the measures at a Nissan board meeting.
The latest sparring between the alliance partners comes after Nissan reportedly undercut Renault's proposed merger with Fiat Chrysler Automobiles by deciding to abstain from supporting that deal.
In a statement on Monday, Nissan said Renault's move was "most regrettable" and counter to the "the company's efforts to improve its corporate governance."
Improving corporate governance at Nissan is a signature priority of Saikawa, who said that he will consider "passing the baton" to a successor only after nailing down lax compliance.
Reuters contributed to this report
