Nissan updates governance code to address cross-shareholding

A Nissan spokesman yesterday said the exchange filing on Christmas Day was routine and mandatory to comply with Japanese corporate governance code requirements.
A Nissan spokesman yesterday said the exchange filing on Christmas Day was routine and mandatory to comply with Japanese corporate governance code requirements.PHOTO: BLOOMBERG

PARIS • Nissan Motor has updated its corporate governance code, a month after the shock arrest and indictment of its then chairman Carlos Ghosn brought differences with partner Renault out in the open after a two-decade partnership.

As part of the new code, Nissan clarified its policy on cross-shareholdings, in which two firms hold stakes in each other. The board will examine whether the purpose of each such shareholding is appropriate and whether the benefits and risks cover the cost of capital.

A Nissan spokesman yesterday said the exchange filing on Christmas Day was routine and mandatory to comply with Japanese corporate governance code requirements. The deadline for such submissions was the end of the calendar year and therefore the timing of the release was not unusual.

"The policy itself has not changed in any way, and the clarification does not refer to alliance partners, but rather to the company's holdings in certain other listed companies," the company said. "Nissan is one of hundreds of listed companies in Japan issuing an update at this time in this manner."

Nissan shares closed 2.24 per cent higher in Tokyo yesterday, the first rise in eight trading sessions.

Renault is the largest shareholder in Nissan and the Asian company in return is the second-largest shareholder in the French carmaker. The two firms have minority shareholdings in Germany's Daimler. Nissan said it also has minority cross-shareholding with other companies.

Nissan's exchange filing comes at a time when Renault asked the Japanese company to call a shareholder meeting to discuss corporate governance issues. Bloomberg News reported earlier that Nissan was shoring up cash to build its firepower amid tensions with Renault.

The move 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 chief executive officer role he played at the French carmaker.

Renault could not be reached on the Christmas holiday while a spokesman for the Renault-Nissan-Mitsubishi Motors alliance did not have a comment.

The Japanese carmaker holds a 15 per cent stake in Renault - with a market value of about US$2.8 billion (S$3.8 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 US$14 billion. Acrimony between the two has exploded since the arrest on Nov 19 of the bigger-than-life leader overseeing their alliance.

With regard 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 did not 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 says.

A version of this article appeared in the print edition of The Straits Times on December 27, 2018, with the headline 'Nissan updates governance code to address cross-shareholding'. Print Edition | Subscribe