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Control of a company is the potential to make the strategic decisions of the business. This is generally viewed as the ability to select a majority of the board of directors of the company. Most of the time, the ability to elect the board of directors is based on the ownership of the voting equity. In most cases, control is the result of one company owning more than 50% of the voting shares of the other. This is referred to as majority voting ownership. However, effective control can result from ownership of the largest block of voting shares. . This may also be called minority control. For simplicity, the owner of a block of equity which has at least 33% of the voting rights and which exceeds the sum of the next two largest blocks is assumed to have effective control.
There are a variety of other methods of controlling a company that may be taken into consideration when assigning control. They include interlocking directorships, franchise or licensing agreements, management or supply contracts, or control of essential technology.
The country of control (CoC) variable originated with Statistics Canada’s Industrial Organization and Finance Division and is linked to valid enterprise numbers. These numbers and CoC are then used to assign a CoC to each of the enterprises and their component establishments on the 2002 Exporter Register. The CoC is not to be confused by country of ownership; for example, if a Canadian enterprise is owned by a U.S. company the CoC is the U.S. However, if the U.S. company is controlled by a company headquartered in a third country, then that country is the CoC for the enterprise.
Note: A statistical enterprise represents the sum of the statistical establishments under its control.
In most cases of foreign control, the country of control classification is the country of residence of the ultimate foreign parent corporation. A company whose voting rights are equally owned by Canadian and foreign-controlled corporations is assigned the country of control of the foreign-controlled owner. In addition, if two foreign-controlled corporations jointly own an equal amount of the voting rights of a Canadian resident company, the country of control is assigned according to an order of precedence based on their aggregate level of foreign direct investment in Canada .
Source: Corporations Returns Act, 2002. Industrial Organization and Finance Division (IOFD), Statistics Canada.
The Exporter Register consists of domestic export data assigned to the exporting establishments from 1993 to 2002. Transaction level export data are derived from U.S. import documents (Canadian exports to the U.S. ) and Canadian export documents (Canadian exports to non-U.S. destinations). In 1987, Canada and the United States signed a Memorandum of Understanding (MOU) to exchange import statistics starting with January 1990 data. Each country now uses the other country’s import data to derive their export statistics . Basic information about exporting establishments and enterprises is also stored in the database. In its detailed version, each domestic export transaction is assigned to its exporter. This means that all transaction level export variables (value, commodity classification, province of origin, country of destination, etc.) are available along with information about the exporting establishment. Published aggregates based on the Exporter Register 1993-2002 include all establishments exporting $30,000 or more in value in at least one year from 1993 to 2002.
Note: The data used in this paper refer only to the linked portion of the Exporter Register. As a result, totals may not equal those that have been published elsewhere. For more details on the linked-unlinked methodology, please refer to the current issue of A profile of Canadian exporters (Statistics Canada, International Trade Division, catalogue 65-506-X).