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Control and Ownership Structure

Control and Ownership Structure

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Published by Mahmudur Rahman
CONTROL AND OWNERSHIP STRUCTURE 2.CONTENTS
• • • • • • • • Defining Ownership and Control Family Control Diffuse Stakeholders Institutional Investors Mechanisms and Control Internal CG Control (IC) Monitoring by the BOD (IC) Internal Control Procedures and Internal Auditors • Other Internal Control Mechanisms • External CG Control

3. DEFINING OWNERSHIP AND CONTROL
• Ownership is the ownership of cash flow rights • Control in corporate system means ownership of control or voting rights. • So, C
CONTROL AND OWNERSHIP STRUCTURE 2.CONTENTS
• • • • • • • • Defining Ownership and Control Family Control Diffuse Stakeholders Institutional Investors Mechanisms and Control Internal CG Control (IC) Monitoring by the BOD (IC) Internal Control Procedures and Internal Auditors • Other Internal Control Mechanisms • External CG Control

3. DEFINING OWNERSHIP AND CONTROL
• Ownership is the ownership of cash flow rights • Control in corporate system means ownership of control or voting rights. • So, C

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Published by: Mahmudur Rahman on Dec 08, 2012
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12/08/2012

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CONTROL AND OWNERSHIPSTRUCTURE
2.CONTENTS
Defining Ownership and Control
Family Control
Diffuse Stakeholders
Institutional Investors
Mechanisms and Control
Internal CG Control
(IC) Monitoring by the BOD
(IC) Internal Control Procedures and Internal Auditors
Other Internal Control Mechanisms
External CG Control
 
3. DEFINING OWNERSHIP AND CONTROL
Ownership is the ownership of cash flow rights
Control in corporate system means ownership of controlor voting rights.
 
So, Control and ownership structure refers to the typesand composition of shareholders in a corporation.
In most of Continental Europe, ownership is notnecessarily equivalent to control due to the existence of:
 –
dual-class shares
 –
ownership pyramids
 –
voting coalitions
 –
proxy votes; and
 –
clauses in the articles of association that confer additionalvoting rights to long-term shareholders.
 
4. FAMILY CONTROL
Family interests dominate ownership and controlstructures of some corporations
Interestingly, and may be quite logically, theoversight of family controlled corporation issuperior to that of corporations "controlled" byinstitutional investors, or by management.
 –
 A recent study found that companies in which"founding families retain a stake of more than 10% of the company's capital enjoyed a superior performance over other similar companies with non-family control.
 –
Since 1996, this superior performance amounts to 8%per year.

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