Dual-class share structures involve the creation of a second class of common stock with either superior or inferior voting rights to those of the existing class of stock.

The shares that have inferior voting rights sometimes pay a greater dividend and can usually be transferred more readily than the shares that have superior voting rights.

To the extent that shareholders opt for the lower voting shares, management, or certain shareholders, maintain effective control of the corporation by keeping for themselves the shares that have superior voting rights. Other forms of unequal share structures include those that allow a certain class of shareholders to elect a disproportionate share of directors.

Dual-class share provisions create a "second class" of common shares in every sense of the term. Such proposals allocate voting rights in a manner that is not consistent with economic ownership, thus depriving some shareholders of certain rights and controls.

Dual classifications with unequal voting rights violate the principle of "one share, one vote," leading to the possibility that the company may take actions or fail to take actions without the support of a true majority of shareholders.

While we do not support the creation of dual-class share structures, we understand that this structure does exist in many corporations. In these cases, it is important that the share provisions allow for fair and equitable treatment of both classes of shareholders, which we will assess on a case-by-case basis.

We support the collapsing of dual-class structures insofar as the transactions collapsing such structures are in the best long-term interests of the corporation. We would generally not support transactions which transfer a significant amount of wealth as a control premium to the controlling shareholder(s).