(Toronto) Rogers Communication’s power war demonstrates flaws in the way businesses are regulated in Canada, experts say.
According to Richard Leblanc, a governance professor at York University, federal and provincial regulations are outdated and allow undemocratic practices.
He says the British Columbia Supreme Court’s decision to allow Edward Rogers, the chairman of the Rogers Control Trust, to replace five board members without holding a shareholder meeting only shows that the province should update its regulations.
Prof. Leblanc maintains that the dual structure of shareholding in place at Rogers and other large Canadian companies is problematic. We should add suspension clauses or a better internal control system.
To reduce inheritance tax
Randall Morck, a professor of administration at the University of Alberta, believes that this structure can be useful, especially in the high tech sector where the founder of a company may have specialized knowledge. It gets more boring when the management is handed over to the second or third generation.
He adds that the Rogers saga highlights the issues surrounding family trusts that allow the very rich to reduce inheritance tax.