Nissan rebuke betrays Renault tensions

Burlingame California. Fiat Chrysler announced that it has withdrawn a proposal to merge with French automaker Renault

Nissan Motor Co believes that attempts by Renault SA to place one of its directors on Nissan's planned governance reform committees may lead to a conflict of interest, a source with knowledge of the issue told Reuters on Monday.

Nissan Hiroto Saikawa said it was "most regrettable" that Renault planned to stymie board reforms, after receiving a letter from the French company's chairman, Jean-Dominique Senard. In the letter to Nissan, Senard said the French auto maker is seeking better representation within Nissan's plan to set up three committees on nominations, remuneration and auditing, said a person familiar with the matter, who cautioned that Renault hasn't made a final decision on its vote.

France is ready to consider paring back its 15-percent stake in Renault in the interests of consolidating the automaker's alliance with Japanese partner Nissan, Finance Minister Bruno Le Maire said Saturday. "Such a stance runs counter to the company's efforts to improve its corporate governance".

While Renault understands Nissan's desire to improve its governance, the so-called three board level committees system "should not serve as a tool directed or used against Nissan's largest shareholder", the letter said.

On Monday, Nissan pointed out that its board, which includes Senard and other Renault executives, voted unanimously in favor of the three committee system, adding that it would keep advocating for the need for the change in governance.

Le Maire said it was "legitimate" for France, as the "shareholder of reference" in Renault to have a say.

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"Following extensive deliberation, the special committee delivered a series of recommendations".

The rift lays bare the deep strain between the two automakers, whose alliance has been under pressure since the arrest of former Chairman Carlos Ghosn in November.

But they also say Nissan has been hoping to get more say in the alliance because until recently it was more profitable than Renault. "This is not a problem as long as, at the end of the process, we have a more solid auto sector and a more solid alliance between the two great vehicle manufacturers Nissan and Renault", the minister told AFP. "If there are differences of opinion (with Renault), then I'd like for those to be discussed". The corporate-governance reform "was discussed thoroughly by Nissan's board and approved by all board members, including Renault's own nominees", Saikawa said in a statement.

A second proposal to help win Nissan's approval would see the Japanese automaker granted a call option to increase its 7.5% voting stake in the merged FCA Renault.

The two companies have struggled to fix their relationship after Ghosn's arrest exposed simmering tensions, including Nissan's long-held concerns about the alliance's capital structure.

By scuppering Nissan's plan and by abstaining from the vote, which would require approval from two-thirds of shareholders, Renault appears to be repaying Nissan in kind, after Nissan threatened (as a shareholder in Renault) to abstain from voting to approve a mooted merger between Renault and Fiat.

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