Global shareholder network analysis
T-rank enables the user to understand the effects of complex ownership constructs in any shareholder structure. T-rank calculates the indirect ownership and voting power of all shareholder structures. T-rank Shareholder Maps generates maps over owners and subsidiaries of any company. The maps contain voting power, and direct and indirect ownership.
Indirect ownership is about cash rights. What share of the value is a shareholder entitled to, in the case of company liquidation, the company is sold, or the company pays out dividends. Voting power is about control, about shareholder power. A powerful shareholder can use a company as a tool for his or her agenda, a legitimate agenda or a non-legitimate agenda. Both indirect ownership and voting power are relevant within compliance, for identifying Beneficial Owners.
T-rank Shareholder Maps has three main values:
- Intuitive overview – The product gives the user an intuitive overview of the shareholders and the subsidiaries of a company.
- Unique understanding – The product gives the user a unique understanding of the effects of complex ownership structures in any company
- Effective and easy – The product is effective and easy to use
Global ownership structures are often complex, with a lot of levels, paths and circles.
Circular ownership may lead to a situation where you get a difference between the direct ownership and the indirect ownership. Circular ownership may “hide” the cash rights of a shareholder.
The illustration shows two very important facts:
- The three persons on the top indirectly own 33.33% each of Santos of Vale LDA, and that is through three direct 2% links.
- Santos & Vale LDA indirectly owns 92.25% of itself.
These two facts are consequences of the ownership circles in the shareholder structure. There are simple examples with one loop, as the example above, and there are complex examples with a lot of loops and loops within loops. A given loop can consist of two companies, or a series of companies. T-rank calculates the correct accumulated indirect ownership in all ownership structures. A white paper describing the concept and calculation of indirect ownership is available here.
Strategic decisions are being made in all companies, and the question is always “Who will be able to get his/her will?”. What shareholder or shareholders are in control? Complex ownership structures may hide who has the decision power in a company. T-rank calculates a voting power score for every shareholder of a given company. Voting power/Shareholder power is a shareholder’s ability to push through his or her will in a vote. Voting power is an indication of how powerful a shareholder is. Voting power is a score between 0 and 100%. A voting power of 100%, or almost 100%, means control – the shareholder may dictate (almost) all votes. The calculation of voting power is extremely complex. The challenge is that the complexity grows exponentially with the number of shareholders. Complex ownership structures can hide powerful owners or a powerful group of owners.
- reveals powerful shareholders, not available via traditional methods.
- enables the user to reveal controlling coalitions, a situation where two or more shareholders will be in control if they vote together.
- reveals new controlling owners, not available by traditional methods
The example shows that the largest shareholder has a direct ownership of 49.74% but voting power of only 25%. The most powerful shareholder has a voting power of 75%, but his indirect ownership is only 0.75%. Voting power of 75% is not enough to be in control (control implies voting power of almost 100%). However, if the most powerful shareholder votes together with one of the companies, they will together be in control of the subject company. The will constitute a controlling coalition. A white paper describing Voting power is available here.