By abolishing a Franco-German shareholder pact, public and private shareholders are on the verge the biggest shake-up of control since the maker of Airbus passenger planes, Ariane rockets and Eurofighter combat jets was founded in 2000.

"Everything is basically done but there are a few complexities to work out, mostly legal stuff," one person said, asking not to be named because the talks are confidential.

France and Germany have agreed to control 12 percent each of the voting rights, handing Berlin a direct stake in the Airbus parent company for the first time.

Germany reported progress in shareholder talks on Tuesday.

EADS and French President Francois Hollande confirmed the shareholder discussions earlier this week.

EADS declined to comment further on the talks, which are taking place at an undisclosed location in Paris.

The changes are designed to simplify EADS' structure and give the financial markets a bigger slice of Europe's largest aerospace firm. They come weeks after talks broke down to merge the group with UK defense contractor BAE Systems (BAES.L).

While the shake-up increases direct state shareholdings, they will be held inside a smaller tent without proxy industrial shareholders. Government powers will also be curbed.

French, German and Spanish shareholdings will fall to less than 30 percent from 50.5 percent under the current power-sharing scheme, which will be wound up, sources have said.

German car firm Daimler (DAIGn.DE) and Lagardere (LAGA.PA), which had played a role in representing national interests in EADS, are expected to exit, but the timing remains unclear.

Cash-rich EADS is expected to launch a share buyback to cushion the share price, which has risen this week on optimism that the reorganization would reduce the role of politics in one Europe's most strategic firms and a rival to Boeing (BA.N).

At 5:20 a.m. EDT, EADS shares were up 2.6 percent at 27.27 euros, still well below prices of over 30 euros before news of the BAE merger talks came out.

(Reporting By Tim Hepher and Sophie Sassard; editing by Jane Barrett and Louise Heavens)

• A Permanent Economic Emergency