The Canadian Radio-television and Telecommunications Commission (CRTC) has approved, subject to certain conditions, the purchase of BCE by a group led by the Ontario Teachers’ Pension Plan.
“The application under review proposed to privatize the country’s largest communications company and included significant foreign interest,” says Konrad von Finckenstein, the CRTC’s chairman. “Consistent with previous decisions, we have imposed conditions to address our concerns relating to corporate governance. These conditions will ensure that control of BCE remains in Canadian hands once the transaction is completed.”
Among some of the changes in governance structure the CRTC requires are: a second Teachers’ representative must sit on the executive committee of the board, the chairman of the board must be Canadian and cannot be the CEO or a director nominated by a non-Canadian investor, and the number of directors on the board must be fixed at 13.
The proposed arrangement between Teachers’ and one of its former executives, P. Morgan McCague, was another area of concern for the commission.
Under the proposal, he will hold 66.7% of the class A voting shares and exercise his voting privileges according to Teachers’ directions, thereby allowing Teachers’ to exercise control over the majority of the company’s voting shares.
The CRTC accepted this arrangement only after being provided with a letter from the Financial Services Commission of Ontario stating that this structure does not contravene the province’s prohibition against pension funds directly or indirectly investing in more than 30% of the voting shares of a company.
The purchase still needs to be approved by Industry Canada.
For more about the BCE deal, click here to read our special section, The Rise of Private Equity.
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