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Rogers has two classes of shares, Class A and Class B. The Rogers Family Trust owns approximately 97.5% of the Class A shares, which carry voting rights, and 9.89% of the Class B shares, which pay dividends but carry no voting rights . Individual investors are likely to own Class B shares. Members of the Rogers family hold the majority of the company’s board seats.
From a shareholder perspective, one takeaway from the chaotic Rogers power struggle is how a two-tier share structure puts voting rights in the hands of the chosen few, giving them disproportionate power with little accountability. If you owned Class B (non-voting) stock of Rogers Communications Inc., you had no say in the matter. As an investor, it’s important to understand what kind of stocks you’re buying and what your rights are.
Preferred Stock vs. Common Stock
Being a shareholder means that you own a share in a publicly traded company. Individual investors typically buy and sell stocks — also known as stocks or stocks — on an exchange with the help of an investment advisor, online broker, or robo-advisor. You can also buy shares privately and through initial public offerings (IPOs).
Canadian public companies have two main types of shares:
- Common Stock: These shares usually carry voting rights, but dividends are not guaranteed. When a company’s common stock pays a dividend, it can be cut or stopped at any time depending on the company’s profitability. The majority of the shares are common shares.
- preferred shares: These shares typically do not grant shareholders voting rights, but offer a guaranteed return in the form of dividends. Investors enjoy higher tax efficiency with dividend income than capital gains from bonds, for example. Preferred stocks are given preferential treatment with regard to the return of capital, even in the event of liquidation or bankruptcy.
What rights do shareholders have?
As a shareholder in a company, you have more rights than you might think, including the following:
- Right to choose: Common stockholders typically have the right to vote on important corporate matters, such as mergers, acquisitions, and the election or removal of a company’s board of directors. Preferred shareholders have no voting rights.
- Right to participate in shareholders’ meetings: Owning common stock gives you the right to receive notices of, and to attend and vote at, stockholders’ meetings. (Common stockholders unable to attend a meeting in person may vote by proxy.) Preferred stock does not include these rights.
- Right to access company information: Federal, provincial, and local government regulations and provincial and local securities laws permit all shareholders to access basic information, including shareholder lists, articles of incorporation and bylaws, and minutes of shareholders’ meetings.
- Entitlement to share in company profits (dividends): by definition, Preferred stockholders are entitled to fixed, periodic dividends, determined at issuance. Common stockholders aren’t typically entitled to dividends, but companies can pay them out if they choose (usually less than what preferred stockholders receive). Depending on their profitability, companies may also cut, halt, or increase distributions to common shareholders.
- Right to Sell Shares: Shareholders have the right to transfer ownership of their Shares by sale, usually through a broker or investment adviser.
- Entitlement to compensation in the event of a company failure: If a company becomes insolvent or bankrupt, The remaining assets are distributed to shareholders in this order: creditors (i.e. bondholders), preferred shareholders, common shareholders. In other words, common shareholders have the least claim to a company’s assets.
- Countermeasures against oppression: This is a legal mechanism that allows shareholders to sue a company. “It is a remedy under federal, provincial and territorial law whereby a shareholder may seek relief from the court if the Company or its affiliates or the directors have engaged in conduct that is oppressive or unfairly prejudicial or that is in the interests of the complainant,” said Robert Staley, partner and securities litigator at Bennett Jones in Toronto. The suppressive tool protects the legitimate expectations of shareholders and other complainants.
What is shareholder activism? How does it relate to shareholder rights?
Shareholder activism aims to change a company’s behavior by threatening the tenure of some or all directors or by raising issues for shareholder voting.
“Shareholder activism is typically seen in public companies, where shareholders or groups of shareholders exercise or threaten to exercise their voting rights to remove or replace directors or to influence board decisions,” Staley said.
Shareholder activism is often seen where a company’s performance lags behind or where there are disagreements between the company and shareholders over strategic issues. During the pandemic, for example, shareholders have targeted boards and management teams at numerous companies for their perceived poor leadership during the global crisis. Recently, after Peloton Interactive’s shares fell below their IPO price, activist investor Blackwells Capital LLC sent a letter to the company demanding the firing of its CEO and calling for the company to be sold.