(BERLIN) - German lawmakers have worked out a new "Volkswagen law" which still retains Lower Saxony's de facto veto ruled illegal by Brussels last year, a justice ministry spokeswoman said on Thursday.

The bill covering Europe's biggest carmaker is due to go before Chancellor Angela Merkel's cabinet next week and then to parliament, the spokeswoman said, confirming a report in mass circulation daily Bild.

Last year the EU's top court ruled against the law because it gives the state of Lower Saxony the ability to block company decisions with 20 percent of the company's shares.

Normally a blocking minority is only accorded to those owning more than 25 percent.

The ministry spokeswoman said however that the proposed new law scraps the 20 percent limit on voting rights as well as a regulation stipulating that Lower Saxony has a certain number of seats on VW's supervisory board.

The law was drawn up in 1960 as VW was being privatised to protect it against hostile takeovers by foreign companies. It also ensures that workers have significant say on strategic decision-making.

Porsche, which plans to raise its stake in VW from the current 31 percent to over 50 percent and to bring both companies under the umbrella of one holding company, also opposes the law.

VW also owns the Audi, Lamborghini, Seat, Skoda car brands in addition to Scania trucks.

Text and Picture Copyright 2008 AFP. All other Copyright 2008 EUbusiness Ltd. All rights reserved. This material is intended solely for personal use. Any other reproduction, publication or redistribution of this material without the written agreement of the copyright owner is strictly forbidden and any breach of copyright will be considered actionable.