Mixed ownership companies in CanadaHarry Swain1A consequence of the privatization process adopted by Russia in the mid-1990s is the persistence of a large number of enterprises with mixed public and private ownership. Questions of performance, governance, accountability, and improper conversion of assets and control have arisen in the Russian context. The purpose of this note is to examine Canadian instances of mixed ownership to see whether they might suggest fruitful avenues for reform of corporate governance.Canadian corporate structuresIn Canada, organizations may be chartered under federal or provincial law. Provincial law for the most part follows the principles established under federal law, the main features of which are as follows: Ordinary joint stock companies are registered under the Canada Corporations Act, Part 1, or the Canada Business Corporations Act. They may have one or more classes of stock with different economic and governance rights. Their legal personality rests in a board of directors, who carry ultimate responsibility for running the company and are elected by the shareholders. Directors fiduciary obligation is to the best interests of the company. There is an extensive set of behavioural norms and obligations laid out in such statutes as the Canada Business Corporations Act, the Income Tax Act, the Canadian Environmental Protection Act, employment law, the Bankruptcy and Insolvency Act, and many others. Provincial securities commissions regulate their issuance of equity and debt, and their obligations to disclose material information. The principal provincial statute, and a model for other provinces, is the Ontario Securities Act. Non-profit companies can be chartered under Part 2 of the Canada Corporations Act. They may operate in a commercial manner but must devote any surplus of revenues to the typically charitable interests they are organized to serve. In these cases the members of the society elect a board of directors who “are” the corporation in the usual way. These directors have the same kinds of duties and liabilities as do 1 Centre for Global Studies, University of Victoria. Paper prepared as a contribution to CEPRA Project 51, “Problems of management of corporations with government participation,” directed by Prof. Alexander Radygin, Institute for the Economy in Transition, Moscow2directors of ordinary profit-oriented joint stock companies. These companies are sometimes called “non-share corporations” as they do not issue equity to investors. If such an organization has some directors named by the government and some of its assets provided by appropriations, it may be an example of shared governance, if not ownership. From time to time, though infrequently in recent years, Parliament may by statute establish a corporation. Such “special act” companies normally have all the powers of an ordinary company except for certain specific constraints, which typically relate to corporate objectives in effect, the allowed fields of endeavour or to obligations to perform certain functions as a matter of public policy. Official language requirements, limits on borrowing powers and the issuance of securities or the location of offices are common examples of such obligations. When all the shares of such a corporation are owned by the government the company is referred to as a Crown corporation. If any shares are owned by a private party it is a mixed enterprise. If shares are held by a province it is referred to as a joint enterprise.Mixed-ownership corporationsStephen Brooks, writing in 1987, remarked that the literature on mixed-ownership corporations was scanty.2 His brief historical and analytical overview remains the best in the literature almost two decades later. Drawing on French and British as well as Canadian experience, he makes the point that such companies, in the crunch, are often disobedient. Elf and BP both disobeyed their national government shareholders to look after national customers first during the 1973-74 oil embargo, and the Canada Development Corporation refused to invest in the failing Massey-Ferguson company in 1981. All were highly public confrontations. The directors of mixed enterprises are well within their statutory rights to decline to take actions that are not in the best interests of the company, and with the possible exception of France, Western publics will generally not support the government in such an affray.Boardman and Davis, canvassing a large number of mixed, private, and state-owned enterprises in western Europe, North America and Japan, assessed their performance on a wide range of measures, concluding that “large industrial state-owned enterprises and mixed enterprises perform substantially worse than private corporations.”3 Their quantitative conclusion seems sound; less 2 Stephen Brooks, “The mixed ownership corporation as an instrument of public policy,” Comparative Politics 19 (January 1987): 173-913 Anthony E. Boardman