Donald Trump gets ‘golden share’ in Nippon-US Steel acquisition: What it means, what are the provisions, explained

Earlier this month, Japanese steel giant Nippon Steel announced that it had won conditional approval from the Donald Trump administration for its $14.1 billion purchase of United States Steel Corporation (US Steel).

Nippon Steel agreed to a national security agreement proposed by the US government and as part of this, gave the US government under Donald Trump a “golden share” in what will become one of the largest steelmakers in the world.

Bloomberg had earlier reported that the golden share does not include an equity stake in the company for the US government, but the specifics were not yet available.

Now, filings with the US Securities and Exchange Commission (US SEC) show what this golden share provision entails, how it works and also how the details are worded, the AP reported.

What is a ‘golden share’?

Usually, a golden share means that the holder (the US government in this case), get veto voting power over certain changes the companies (Nippon Steel, US Steel) might want to make, as per the Bloomberg report.

Further, explaining the concept, US Commerce Secretary Howard Lutnick had on social media said that this golden share would allow the US to prevent Nippon Steel from moving the company out of Pittsburgh, change the name of US Steel, or close plants in the US without their consent.

What does this mean? What does the provision allow?

According to the AP report, this provision gives the US president the following:

• power to appoint a board member, and
• have a say in company decisions that affect domestic steel production and competition with overseas producers.

Further, under the provision, either Donald Trump or his designated appointee, will control decision making under the ‘golden share’ during his term.

The report noted that the filing specify that once Donald Trump leaves office and is replaced by someone else, these powers revert to the US Treasury Department and the US Commerce Department.

Controversial wording for golden share?

Responding to a query on the wording of the provision, the White House told Reuters that the share is “not granted to Trump specifically, but to whoever the president is”. It however noted that the wording of the provision is specific to Donald Trump.

It lists what decisions cannot be made “without, ... at any time when Donald J. Trump is serving as President of the United States of America, the written consent of Donald J. Trump or President Trump’s Designee” or “at any other time, the written consent of the CMAs,” a contractual term for the Treasury and Commerce departments.

Nippon Steel-US Steel merger: ‘Partnership’, national security agreement

Nippon Steel buyout of US Steel became final last week, making the Pittsburgh-based company, a wholly owned subsidiary.

Donald Trump has sought to characterise the acquisition as a “partnership” after he made a u-turn from blocking the deal to approving it. The national security agreement became effective June 13 and is between Nippon Steel, as well as its American subsidiary, and the federal government, represented by the departments of Commerce and Treasury, according to the disclosures.

The complete national security agreement hasn't been published publicly, although aspects of it have been outlined in statements and securities filings made by the companies, US Steel said on June 25.

(With inputs from AP, Bloomberg)