It is proposed that the Board of Directors adopt governance rules ensuring that minority
shareholders may have a reasonable impact on the corporation’s future and on its good
governance.
For the minority shareholders MÉDAC represents, multiple voting shares raise significant issues
legally, economically and in terms of good governance. The recent scandal in the Magna case
illustrates this.
MÉDAC is quick to acknowledge that shareholding structures with multiple voting shares have
been — and continue to be — a positive element in the development of the Canadian and Quebec
economy and that of its family-run businesses. As President of The Institute for Governance of
Private and Public Organizations (“IGPPO”), Professor Yvan Allaire astutely demonstrated in a
study published on November 17, 20061 that such structures [Translation] “would foster continuity
and long-term commitment of the corporation’s officers and founders and present better financial
results than other types of corporations”.
However, MÉDAC would like to ensure that minority shareholders are not just fodder and that they
can influence the corporation’s future through their votes. In our opinion, as pointed out by the
Canadian Coalition for Good Governance, “Any corporate governance regime is suspect if all the
structures, protections and processes can be negated by a voting interest well beyond the
economic interest [...]2”. One example is the outcome of our proposal on the advisory vote at
Bombardier where, although we obtained close to 50% of shareholder votes, management did not
act upon it.
In the spirit of the principles put forward by the IGPPO, MÉDAC is proposing the following
governance rules:
1. One shareholder (or related shareholders) should not exercise absolute control (more
than 50% of the votes) without holding at least 20% of the corporation’s capitalization.
2. Disassociation of the duties of Chairman of the Board and President and CEO, as the
Board should be chaired by an independent director.
3. At least one-third of Board members elected by minority shareholders. The Governance
Committee should prepare a director’s profile in terms of experience and competence and
draw up a list of nominees meeting the independence criteria set by regulatory authorities.
4. A policy stating that a director who does not obtain the majority of votes cast by
subordinate shareholders, should immediately submit his resignation to the Chairman of
the Board, who shall accept it.
5. Voting equality (one share = one vote) regarding shareholder proposals and the advisory
vote on executive compensation.
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2 http://www.ccgg.ca/site/ccgg/assets/pdf/CBCA_Amendments_from_CCGG.pdf