Starting immediately, companies listed on the Toronto, Montreal, Vancouver and Alberta exchanges will not be permitted to reduce the voting power of shareholders by issuing securities that have greater voting rights than shares already listed.
Under the new rules, a capital reorganization that creates restricted shares will require the approval of the majority of minority shareholders.
However, the new policy would not prevent companies from distributing high-vote shares to all holders of a company’s participating voting shares on a proportionate basis, as long as the required shareholder approval is given.
The new policy represents a natural evolution from the position taken by Canadian exchanges as a result of the much-publicized takeover bid for Canadian Tire of Toronto, securities lawyers say.
A lot of companies are replacing multi-share voting systems with a single-share voting structure and that can only be good for all shareholders,” said a securities lawyer.
In 1987, The Toronto Exchange introduced new rules to increase the likelihood that holders of non- voting and subordinate voting shares would be given the opportunity to participate in takeover bids on an equal footing with holders of shares carrying greater voting rights.
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