Prosecutors in Stuttgart, Germany, have dropped a market manipulation probe against Volkswagen's chairman in exchange for a 1.5 million euros payment, parent company Porsche Automobil Holding SE said on Thursday.

Proceedings have been dropped against Hans Dieter Poetsch and Matthias Mueller, a former chief executive of Volkswagen, the Stuttgart prosecutor's office said.

In addition to their roles at Volkswagen, both Poetsch and Mueller were members of the board of Porsche Automobil Holding SE, the family-owned company which has 53.3% voting stake in Volkswagen AG.

A spokesman for Porsche Automobil Holding SE said the company welcomed the settlement and reiterated that Poetsch and Mueller had not violated disclosure rules. Porsche Automobil Holding SE further said it would pay the 1.5 million euros to settle the case.

In Germany, payments can be accepted by prosecutors in exchange for dropping criminal charges.

Prosecutors had looked at whether executives at the holding company that controls Volkswagen (VW) manipulated markets by delaying the disclosure of VW's emissions scandal in 2015.

The Stuttgart prosecutor's office launched the probe at the behest of markets regulator BaFin, but Volkswagen executives have argued the scale of the financial fallout from diesel cheating was not forseeable.