Germany's 1960 Volkswagen Law sold 60% of VW as 'people's shares' — and kept a veto

Volkswagen had been founded in 1937 under the Nazi party and ended the war in state hands, run by the federal government and Lower Saxony. Economics Minister Ludwig Erhard wanted 'property for all': turning ordinary Germans into shareholders. VW boss Heinrich Nordhoff and the workforce were unenthusiastic, and compromise took years.

On 21 July 1960 the Bundestag passed the Volkswagen Law, converting Volkswagenwerk GmbH into a joint-stock company. In 1961, 60 percent of the shares were sold to the public as 'Volksaktien' — people's shares aimed at small savers — while the federal government and Lower Saxony kept 20 percent each. The sale proceeds went to the Volkswagen Foundation to fund science and research.

The law also armored the company: no shareholder could exercise more than 20 percent of votes regardless of holding, and key resolutions needed an 80 percent majority — letting Lower Saxony block any takeover. The European Court of Justice struck those protections down in 2007; the federal government had already sold its last stake in 1988.

60% of VW moved to private shareholders, proceeds funding the Volkswagen Foundation; the 1959–65 people's-share sales made 4.5 million Germans shareholders.

Erhard's ideology demanded broad share ownership, so the sale was designed for small savers, not institutions.

Keeping 40% in public hands and a 20% voting cap answered the fear of foreign or hostile control of the national champion.

Routing proceeds to a science foundation blunted criticism that the state was selling the family silver for cash.

Legal clarity — a bespoke statute — let a contested privatisation survive years of committees and court fights.

Privatisation can trade price for legitimacy: giving citizens discounted shares and keeping a protective state stake made selling the national carmaker politically survivable.

The mass-ownership dream only half worked: a 1971 cabinet report judged the people's-share experiment a failure because within a decade barely half the shares remained with the original small buyers. But the company flourished as a listed firm, and the 'VW Law' itself outlasted the debate — surviving until the ECJ voided it in 2007, which opened the door to Porsche's raid and the eventual Porsche–Volkswagen merger.