Earlier this month, the Canadian Coalition for Good Governance published a Dual Class Share Policy setting out the organization's views on dual class share companies. Dual class share structures exist where a company issues a class of shares carrying a disproportionate vote per share relative to other classes of shares. Such structures can also be referred to as having multiple voting shares or restricted shares.
According to the policy, companies undertaking initial public offerings should employ a single class of voting common shares. In "exceptional circumstances" where a dual class share structure is used, the CCGG sets out a number of principles that should be followed, namely in respect of director elections, the maximum voting ratio of multiple voting shares to subordinate voting shares, non-voting common shares, coattails, collapse of the dual class share structure, monetization of multiple voting shares, and payments to an owner of multiple voting shares on the collapse of the dual class share structure.
Where a company undertakes an IPO with a dual class structure that does not comply with the principles set out in the policy, the CCGG expects that the company will explain why it is not appropriate for such principles to apply to the company to shareholders annually in the company's proxy circular.
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