What is a Constrained Share Company?

• A. A company with unrestricted foreign ownership
• B. An institution important to the Canadian economy with foreign ownership restrictions
• C. A type of company focused solely on environmental issues
• D. A business with no regulations on governance

Answer: (B)

A Constrained Share Company refers to an institution that is significant to the Canadian economy and is subject to restrictions on foreign ownership. These restrictions are put in place to ensure that such companies serve the national interest and maintain a level of Canadian control over critical sectors of the economy. This could include industries that are vital for security, cultural identity, or economic stability.

The importance of these companies arises from their roles in sectors like telecommunications or natural resources, where telecommunications services, for example, could impact the availability and security of communication infrastructure for Canadians. By regulating the percentage of foreign ownership, the Canadian government aims to protect the integrity and viability of these essential institutions.

The other options do not accurately reflect the nature of a Constrained Share Company. The first option describes a company with no ownership limitations, which is contrary to the concept of being "constrained." The third option, focused on environmental issues, does not define the ownership constraints characteristic of these entities. Lastly, option four, which mentions no regulations on governance, contradicts the very premise of a constrained share company's specific restrictions on foreign ownership.