Germany was forced to redraft a nearly 50-year-old law that protects Volkswagen AG from a hostile takeover after an EU court ruled last year that it deters bidders and breaks European rules guaranteeing all EU companies the right to invest in any part of the 27-nation bloc.

German Justice Minister Brigitte Zypries says Germany is complying with that ruling particularly scrapping a provision that capped shareholders' voting rights at 20 percent, whatever the size of their holding.

But it has insisted on keeping other provisions, notably one under which 'significant decisions' require the approval of shareholders representing 80 percent of Volkswagen's stock, plus one share, at the annual general meeting.

That would mean that a shareholder with 20 percent of the stock would continue to hold a blocking minority. Lower Saxony holds just over 20 percent, and state governor Christian Wulff has ruled out selling any of the stake.

Volkswagen's biggest shareholder -- fellow German automaker Porsche, which has a 31 percent stake and has said it plans to raise that to a majority holding -- opposes the government's plan.

It has called for the threshold for major decisions to be lowered to 75 percent in keeping with standard German securities laws.