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Quebec shareholder rights advocate Yves Michaud wants Canada's largest companies to give special voting and dividend rights to investors if they have owned their shares for more than a year.

The Quebec-based Movement for the Education and Defence of Shareholders, led by Mr. Michaud, has submitted shareholder proxy resolutions to 11 major companies, hoping to encourage longer-term share ownership to counter the power of hedge funds and other short-term investors.

One resolution proposes increasing dividends by 10 per cent for investors who have owned their shares for two years or more, while a second proposes giving voting rights only to shareholders who have owned their shares for at least a year.

"This proposal was written in order to put some handicaps on traders that are trying to make a fast buck or to [exert] influence by buying a lot of shares in order to beat or approve some proposals by shareholders," Mr. Michaud said in an interview.

Mr. Michaud has long peppered major corporations with annual shareholder resolutions and has had some high-profile successes with his campaigns. In 1996, for example, he won a landmark court victory against two banks, forcing them to put his proposals on their proxies. In 1998, National Bank of Canada agreed to his proposal to allow shareholders to vote for each individual director on the board - a practice that has become increasingly common. In 2000, he succeeded in convincing banks to reveal how much they pay their auditors for non-audit work, which is now a requirement for all companies.

His latest resolutions have been sent to seven major banks as well as BCE Inc., Bombardier Inc., Manulife Financial Corp. and Power Corp. of Canada. The group wants the issues added to the ballot for voting by shareholders at each company's next annual meeting.

One company that may lend a sympathetic ear to the proposals is Power Corp., where chairman and co-CEO Paul Desmarais Jr. has spoken about the dangers posed by the explosive growth of hedge funds and other private equity funds.

At Power Corp.'s annual meeting in May, Mr. Desmarais said many alternative investment funds have short time horizons and don't favour patient, long-term management of capital, pushing companies to make drastic changes that will result in quick added value for shareholders, such as sales or spinoffs.

In June, Mr. Desmarais talked to reporters about the merits of rewarding long-term shareholders with extra voting rights or tax breaks. He noted that legislation passed in France in 1994 allows companies to give special rights to investors who own shares for at least five years.

Power Corp. spokesman Edward Johnson said the company had just received the proposals from Mr. Michaud's group last week and could not comment on whether it will support or oppose the proposals.

"We haven't really studied it. We just got the proposals a couple of days ago," he said.

The idea of tying voting rights to long-term share ownership was proposed last year in a paper published by the Montreal-based Institute for Governance of Private and Public Organizations. The institute's board, which adopted the report, includes major shareholders such as Stephen Jarislowsky of investment firm Jarislowsky Fraser Ltd. and Claude Lamoureux, CEO of the Ontario Teachers' Pension Plan.

The report said giving shareholders immediate rights of corporate citizenship is akin to letting tourists vote in an election.

But many details remain untested. For example, Mr. Michaud says his group's lawyers believe companies could change their voting rights by simply amending their bylaws and without requiring changes to legislation such as the Canada Business Corporations Act. If legislative changes are required, he believes it could be done quickly with lobbying by major companies - assuming they get behind the proposal.

It's also unclear how the proposals would affect trading in companies' shares. Hedge funds, for example, may avoid stocks where they do not have voting rights. And without their trading, there may be less liquidity in the shares - especially at key trading times, such as after takeover bids have been announced.

Even among shareholder advocates, there is not universal support for the proposals.

Laura O'Neill, director of law and policy for Vancouver-based Shareholder Association for Research and Education (SHARE), said her organization strongly supports long-term share ownership by investors and a long-term outlook on the part of managers and other market participants.

But she said SHARE also believes that a fundamental tenet of corporate governance is the one-vote-per-share system.

"Any practice that creates more than one class of shareholder, whether it be when votes are cast or when dividends are paid, is not ideal as a method of encouraging long-term investment," she said.

Mr. Michaud's group submitted nine resolutions to each of the 11 companies it has targeted. The other resolutions include a call for companies to share the enormous rewards from takeover bids with all employees, a request to allow shareholders to vote on executive compensation policies, and a demand that boards be comprised of 50 per cent female directors.