The Mech Touch novel Chapter 513

"I think you are mistaken about something, Calsie." Benjamin gently lectured. The old Larkinson wanted to be kind, but sometimes people needed to learn a harsh lesson. "For all the Bright Republic’s claims about upholding the standard of freedom, the government isn’t about to let an uncontrolled element have their way within their borders. The economy is always within their grip."

This really came as a surprise to Calsie. Previously, she was just a law graduate who turned into a temporary caretaker of a multibillion credit company. Though the responsibility initially overwhelmed her, she grew in the position with the help of capable friends within the LMC.

Now though, she found out that her vision was much too narrow. Like a frog within a well, she never became exposed to the truth about the Republic up until she hopped out of hole.

"What are my options?"

"As Ves’ agent, you’ll have to bend the knee in the face of authority. If the Ministry of Economic Development has their eyes on a stake in the LMC, then it’s best to accept the fact that Ves and you won’t enjoy an absolute majority anymore. How many shares are they demanding from Ves?"

"They’re asking for twenty-one percent, though it will be a different proportion if I choose to issue new stock."

"That’s their way of saying that no matter what kind of financial wizardry you pull off, they want to achieve an outcome where Ves no longer run his company like a tyrant."

"So they want to diminish Ves’ ownership in his own company until it dips into 49 percent?"

"That’s correct. You can decide to sell his shares or issue new stock. The former will swell his bank account while the latter will infuse new funds into the company. I don’t advise you to do the latter, and that’s not just because our Larkinson Estate will stand to lose. The Ministry of Economic Development often likes to meddle in how mech manufacturers are run, and they’ll demand you spend the influx of money into their pet projects."

This was valuable advice from an insider who walked the halls of power in Rittersberg. Calsie frowned at the old man’s words. She recognized their import, but Ves had insisted in the strongest terms to never sell away his shares.

"Ves will not be happy."

"Ves is not here. He appointed you as his agent for a reason. Even if it breaks one of his commands, you do not want to stand against the Bright Republic’s industrial policy. This is the way that almost every state works. The government doesn’t care about the small fries, but the moment a company grows to the point of being able to affect their prosperity, they will definitely take action. This is the reality of running a large corporation."

Calsie knew that this was no joke. Whenever the Bright Republic, they almost always knew what they were doing. They wouldn’t back off from this demand now that they issued it. The only thing she could do was to mitigate the damage.

"So how do I have to treat the negotiation between the LMC and the Ministry?"

"Fill in the Financial Department and the Legal Department and let them handle the details. Some of our retainers will know what to do. Whatever you do, don’t let the MoED run over you with their demands. Everything is negotiable, and their negotiators won’t push too hard if you demonstrate some spine."

"Why is that so?" Calsie frowned. "From what I’ve witnessed so far, they’re never satisfied with what’s on offer!"

"That’s because the Ministry is wary about chasing Ves from the Republic if they push him to the brink. It’s counterproductive for them to chase away a promising mech designer within their midst."

"Can we negotiate an alternative to giving up his majority stake?"

"That’s not possible. You should thank yourself that we live in the Republic. Many other states demand a much higher proportion of outstanding shares."

"So even if Ves decides to move the company’s assets and settle in another state, he’ll face the same thing over again, is that right?"

"It’s worse in that case, because a foreign entrant will always attract more scrutiny. It’s best for Ves to start anew in that case and found a new company from the ground up."

All of this largely neutralized the threat of moving their industries elsewhere. Calsie vaguely recognized a common understanding between the states. They kept their grasp on their domestic industries so long as everyone else played along.

"So how will the company be run from now on?"

"Well, the board of directors will have some actual teeth. The MoED will appoint some of their people to the board who will aim to steer the LMC in a way that benefits the Republic as a whole. This won’t always be good for Ves or the company, but they aren’t out to ruin your business either, so you don’t have to worry about that part."

"And if Ves or I disagree with their representatives?"

"Then it comes down to a vote. The main reason why the MoED wants to strip Ves’ majority is because they believe it is detrimental for a large company to be controlled by a single person. Even if Ves is the founder and lead designer, there are many companies that have ruined themselves in a single day due to missteps from the majority shareholder. The Republic doesn’t want its economy to turn into a commercialised version of the Vesia Kingdom. Power must be shared, and no one should have the ultimate say."

"Splitting up power comes with their own downsides. Ves has told me all about that when he prepared me for this job."

"And all of that is true, but in general the risks are minimized if the LMC transitions away from being under the reigns of someone who holds an absolute majority. With a controlling stake of 49 percent, you will need to think twice on every proposal you put forward, because you need to convince at least one of the other shareholders to go ahead with your ideas."

"That also means that the Larkinson Estate can collaborate with Mrs. Bollinger and the Ministry to vote through your own plans." Calsie incisively pointed out.