CCGG on Dual Class Shares

(Excerpt from Original Post: The Globe & Mail) Dual-share structures have long been a feature in corporate Canada, given the number of family-controlled companies such as the Desmarais’ Power Corp., or Bombardier. The newest Canadian dual-class companies, however, may be taking their cue from U.S. tech giants Google parent Alphabet Inc. and Facebook Inc., whose structures are more about founder control than family control.


Canada’s institutional investors have largely expressed misgivings about dual-class structures but have needed to tolerate them in order to invest in as wide a range of domestic stocks as possible. The Canadian Coalition for Good Governance, in a 2013 policy statement on the issue, noted “there is not unanimity among CCGG members as to the governance principles which should apply to [dual-class share] companies in Canada” – something still true, says the group’s executive director, Catherine McCall. “Institutional shareholders continue to buy them, in spite of some of them having objections in principle. There’s not just one view on it.”


Author: David Milstead, Institutional Investment Reporter