TORONTO – Corporate governance experts say the feud over the board of directors of Rogers Communications Inc. has highlighted loopholes in the way Canada regulates businesses.
Richard Leblanc, professor of governance at York University, says outdated rules at the provincial and federal levels allow undemocratic business practices.
He says a Friday BC Supreme Court ruling that found Edward Rogers, head of the Rogers Family Trust, could replace directors without holding a shareholders’ meeting is only possible because the province is an outlier that has not updated its regulations on the problem.
Leblanc says the two-class share structure used by Rogers and many other large corporations in Canada, which gives some shares more voting power than others, is also problematic and should be accompanied by sunset clauses or tighter internal governance controls.
Randall Morck, professor of commerce at the University of Alberta, says two-class structures have some uses, especially in the fast-paced high-tech world where a business founder may have specialized knowledge, but become more problematic when passed to a second or third generation.
He says the Rogers case also highlights problems with the use of family trusts, which he says are a way for the very wealthy to reduce inheritance taxes.
This report by The Canadian Press was first published on November 7, 2021.
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