PARIS -- Renault has signaled it will block alliance partner Nissan from adopting planned governance reforms unless the French automaker gets more say in the new system, a demand which Nissan said was "most regrettable" and which one Nissan source said was a potential conflict of interest.
The rift exposes the deepening strain between Renault and Nissan, whose 20-year-old tie-up has been under pressure since the arrest of former Chairman Carlos Ghosn in November.
The relationship was further tested when a proposed merger of Renault and Fiat Chrysler was scrapped last week.
Nissan on Monday said it had received a letter from Renault stating that Renault planned to abstain from a shareholder vote on the reform plans, effectively blocking them as they require a two-thirds majority to pass.
At issue in the letter seen by Reuters was Nissan's shift to a new corporate governance structure which includes statutory committees comprised mainly of independent outside directors, which Renault warned may dilute its influence of in Nissan. Renault is Nissan's biggest shareholder.
"We firmly believe that Renault's rights as 43.4 percent shareholder of Nissan need to be fully recognized and, at a minimum, one or two directors proposed by Renault should be members of each of the three committees," the letter said. "As currently proposed, this does not seem to be the case."
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.
"Nissan finds Renault's new stance on this matter most regrettable, as such a stance runs counter to the company's efforts to improve its corporate governance," it said in a statement.
A Renault spokeswoman did not immediately return calls and messages seeking comment.
A Renault source said Senard's letter was motivated by concern about Renault's under-representation on the new Nissan board committees being introduced following the arrest of Ghosn, who is now awaiting trial and denies the financial misconduct charges against him.
"It's not a final abstention, and Renault's position can still change," the Renault source said. "As things stand, Renault has not been assured of appropriate committee representation as Nissan's main shareholder."
Renault had yet to receive specific details on the proposed composition of each of the committees, another source with knowledge of the issue told Reuters.
A Nissan source said Renault CEO Thierry Bollore had expressed a desire to sit on new Nissan committees to oversee executive nominations and compensation, and a planned corporate governance auditing committee.
But such a move would raise concerns about a possible conflict of interest, as it would give Renault a say in Nissan salaries and corporate governance, the Nissan source said.
Japan's Jiji news agency earlier quoted Nissan CEO Hiroto Saikawa as saying: "We are preparing for the shareholder meeting and will discuss necessary issues at the appropriate time. If there are differences of opinion (with Renault), then I'd like for those to be discussed."
In March a Nissan-appointed outside team recommended the formation of the three committees to improve its corporate governance. Under the proposal, Renault directors would be free to serve on the nominations committee, but would be barred from the compensation and audit committees.
The two companies have struggled to repair their relationship after Ghosn's arrest exposed simmering tensions, including Nissan's long-held concerns about the alliance's capital structure.
Nissan also appears to have been largely left in the dark on merger discussions between Renault and Fiat Chrysler, which had attempted to join forces to create the world's third-largest automaker before talks fell apart last week.
Nissan is seizing on comments made by the finance minister of France, Renault's biggest shareholder, that his government is willing to reduce its stake to strengthen the alliance. Nissan has longed chafed against French influence and would prefer a full exit by the government, people familiar with Nissan's thinking said, asking not to be identified because the information isn't public.
Bloomberg contributed to this story