Dual-class share structures in Canada

Review and recommendations

In Canada and, indeed, wherever there are functional stock markets, differences between classes of shareholders in publicly listed corporations raise important and controversial issues. Thus, the European Commission has undertaken a vast consultation on a proposed directive to enshrine the “one share, one vote” principle.

Everywhere, the topic has proved divisive, particularly when the positions of the parties are couched in the simple vernacular of public pronouncements. Unfortunately, the arguments for or against dual classes of shares are still heavily weighted by ideology and misconceptions.

The aim of this paper is a) to outline the scope of the issue in Canada, b) review the terms of the debate, c) introduce relevant research findings and d) propose a framework of safeguards that could enhance the benefits of dual share structures and minimize their potential downside.