October 16, 2015

Business Law Policy Consultation
Consumer and Business Policy Unit
Ministry of Government and Consumer Services

Re:     Ministry of Government and Consumer Services – Business Law Agenda: Priority Findings and Recommendations Report (“Business Law Agenda Report”) for reform of Ontario’s corporate and commercial legislation

Thank you for the opportunity to comment on the Ministry of Government and Consumer Services (“Ministry”) Business Law Agenda Report on priorities and recommendations for reform of Ontario’s corporate and commercial legislation, which was published for comment on July 9, 2015. We appreciate the opportunity to be a part of the Ministry’s reform process and to contribute to these important developments. 

Innovative Business and Concentrated Share Ownership

In a study on U.S. firms, funded by the Investor Responsibility Research Center Institute and conducted by Institutional Shareholder Services Inc., researchers found that controlled companies are on the rise. In 2002, the S&P 1500 Composite had 87 controlled firms; by 2012 this number was up 31% to 114. Within these firms, 79 contained multi-class capital structures with unequal voting rights, while 35 were controlled through a single class of voting stock.[3] The technology sector is at the forefront of this trend, as represented by Google’s (U.S. $464 billion, market capitalization) multi-class share split to concentrate voting control in the hands of two shareholders, the control position of a single shareholder over Facebook ($270 billion), and the concentrated shareholdings found in Amazon ($263 billion), Netflix ($43 billion), Tesla ($29 billion) and other emerging and newly listed technology companies.