Dual Class Shares in Canada: A Historical Analysis

Abstract

Dual class shares have been used by Canadian corporations to access public capital markets for the past sixty years. The debates surrounding the regulation of dual class shares have been reenergized. The authors of this article argue that only by looking to the legitimating role of nationalist policy, legislation and discourse in the historical development of dual class share structures can we derive context to the current debates surrounding the regulation of dual class shares and obtain a fuller understanding of the contemporary issues they present. Based on an analysis of the use of dual class shares as a financing technique over the past six decades, the central claim made in this article is that the legitimating function of nationalist policies, legislation and discourse provides the most compelling explanation for the persistence of dual class shares in Canada. The authors argue that reliance on policy, legislation and discourse that addressed concerns regarding foreign ownership and domination of Canadian business best accounts for the proliferation of dual class share structures in the 1970s, and their continued use in the current context. Their analysis also explores various theme that have operated alongside or in opposition to nationalist policies, legislation and discourse: the concentration of ownership of Canadian business, the roles of multiple regulators in securities and corporate law, convergence between shareholders and other stakeholders, and rising shareholder activism.

Keywords: dual class shares, capital markets, regulation of dual class shares, nationalist policies, legislation, discourse, foreign ownership, canadian business