• Who Owns BC Ferries?

    Uncovering the Mystery of Who Owns BC Ferries

    When we started working on Save Our Ferries we kept getting people asking us  “Who Owns BC Ferries”, so we decided that we needed to tackle this question and actually figure it out. So we went to the BC Ferry web site and according to BC Ferry Services Inc. it is the BC Ferry Authority that owns BC Ferries.

    “B.C. Ferry Authority is a no-share-capital corporation created under the Coastal Ferry Act (British Columbia). It is the owner of the single issued voting share of British Columbia Ferry Services Inc. (“BC Ferries”), a Company incorporated in British Columbia, which is subject to the Business Corporations Act (British Columbia).” http://www.bcferries.com/about/More_Information.html

     

    So then we went to the B.C. Ferry Authority, web site, and it turns out that they only hold the one voting share, which we started to refer to as the “Precious…So bright… so beautiful… ah, Precious. ”

     

    “B.C. Ferry Authority (Authority) is an independent, no-share capital corporation created under Coastal Ferry Act (British Columbia) thatholds the single issued voting share of British Columbia Ferry Services Inc. (BC Ferries), a company incorporated in British Columbia, which is subject to the Business Corporations Act (British Columbia). The provincial government is the holder of all of the preferred shares of BC Ferries. The Authority appoints the Board of Directors of BC Ferries. Both the Authority and BC Ferries operate independently of the provincial government.”

     

    So the Authority only holds the one voting share, the Precious, but they don’t actually own BC Ferries. So we went back to the Coastal Ferry Act, in case we missed something and also review what else the Authority does in their role. Basically they get paid to take care of the Precious, but it did not answer our question, “Who Owns BC Ferries?”

    Part 2 — Corporate Restructuring

    Division 1 — B.C. Ferry Authority

    Corporation established

    2  (1) A corporation known as the B.C. Ferry Authority is established.

    (2) The purposes of the Authority are to do any or all of hold, administer and sell a voting share in British Columbia Ferry Corporation after British Columbia Ferry Corporation is converted into a company.

    (3) The Authority has the power and capacity of an individual of full capacity in relation to its purposes.

    (4) The Authority has no share capital.

     

    We were not coming up with answers, so Nelle decided to ask the BC Ferry Commissioners’ Office to help us figure out, “Who Owns BC Ferries?”  

    Dear Nelle,

    My reply to the question on ownership of the one share was short but I see no reason to change it.

    The Coastal Ferry Act sets out the manner in which the Board of Directors of the BC Ferry Authority are selected: four from coastal regional districts; one from the labour union, two from the provincial government and two unaffiliated.

    If the Authority were to consider a sale of the one share in BCFS I think it is safe to say that the four coastal representatives would wish to be satisfied that the new owner would continue the service on the minor routes. The provincial representatives would think likewise. Therefore, the ONLY question worth considering is: would the province agree to continue to pay service fees to the new company. In the absence of those fees, BCFS or a new company would be losing upwards of $50 million annually. I think a new owner would want a long-term agreement from the provincial government to continue paying those fees (a change in government may also cause such an agreement to be cancelled).
    In other words the ferry company is ONLY viable as long as the provincial government agrees to pay service fees at a level that meets the revenue shortfall on all routes other than the three major routes. That amounts to a provincial veto over any change of ownership, which to me means the provincial government is the effective owner.. And no, I don’t know why the Auditor General chose to ignore the reality of the funding situation.

    Regards

    Alan Eastwood

    —– Original Message —–
    From: nelle maxey
    To: Eastwood
    Cc: Martin Crilly
    Sent: Tuesday, March 04, 2008 8:29 AM
    Subject: Re: Questions from N Maxey

    Good morning Alan,

    I did not respond yesterday to your reply to my question regarding the one (1) BCFS voting share as I had to find the reference to respond.

    I am quoting below from the Auditor General’s Report: “A Changing Course” issued last year.
    http://bcauditor.com/PUBS/2006-07/Report8/CoastalFerrySys2006.pdf

    I reproduce my questions and your response to my question.
    BCFS Share
    Nelle’s question:
    If BCFS were to sell it’s one voting share, would the new owner be the Province or do they just have first refusal right?

    Would you still have regulatory oversight of the new owner?

    Deputy Commissioners Answer:
    The Province owns the one voting share (through the BC Ferry Authority). If the Province were to sell the share and NOT enter into a ferry services contract similar to the contract between the Province and BC Ferries, then I suppose there would be no regulated routes, otherwise the core ferry services would continue to be regulated. (The Act refers to “ferry operators” not BC Ferries).

    Nelle’s Response:
    The Province does NOT own the one voting share as you indicated in your reply to me.
    This is why I asked the question of what happens if that share were sold.

    As the Auditor General explains on page 20 of his 2006 Report:
    The B.C. Ferry Authority — The B.C. Ferry Authority is the legal owner of British Columbia Ferry Services Inc. (which was formerly British Columbia Ferry Corporation).   

    Created by the Coastal Ferry Act, the Ferry Authority was structured to be an independent entity outside the control of government or any other organization. It is essentially a holding company, created for the purpose of owning the only common (or voting) share issued by BCFS. As sole shareholder, the B.C. Ferry Authority has the power to appoint all members of the Board of
    Directors of BCFS.

    Because the B.C. Ferry Authority has no share capital, it also has no shareholder who can control it through its Board of Directors.

    Thank you for reviewing your response to this question.

    Nelle

     

     

    As you can see the Coastal Ferry Act has created a lot of confusion to who actually owns BC Ferries, until the single voting share, the Precious, is sold. Then the Province of British Columbia, you the Taxpayers, become the owners once again, until then technically no one owns BC Ferries.