Definitions
What are the controlling owners?
Those who concentrate more of 20% of the shares, as long as no one else has any large concentration of shares
What are the minority shareholders?
Those without the controlling block, the 80% of the shares is disperse among many different shareholders. Those who own shares but do not have enough voting power to influence decisions.
What are dual class shares?
When there are two types of shares, and one of them has a superior voting right over the other class.
What is a pyramid structure?
A way for a family to control multiple companies without owning 50% of the total equity.
What are control rights?
They are voting rights, the power to make decisions and select the board.
What are cash flow rights?
It is the portion of the cash flows generated by the firm that the family has a right to.
What is tunneling?
It is the conflict of interest where a controlling family has an incentive to try to move profits up the pyramid.
What are cross-holdings?
This occurs when one fim's largest shareholder is another firm.