Shaw 2009 Annual Report Download - page 39

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vi) Holding company structure
Substantially all of Shaw’s business activities are operated by its subsidiaries. As a holding
company, the Company’s ability to meet its financial obligations is dependent primarily upon
the receipt of interest and principal payments on intercompany advances, management fees, cash
dividends and other payments from its subsidiaries together with proceeds raised by the Company
through the issuance of equity and the incurrence of debt, and from the proceeds from the sale of
assets. The payment of dividends and the making of loans, advances and other payments to the
Company by its subsidiaries may be subject to statutory or contractual restrictions, are contingent
upon the earnings of those subsidiaries and are subject to various business and other
considerations.
vii) Control of Shaw by the Shaw family
As at November 24, 2009, JR Shaw and members of his family and the corporations owned and/or
controlled by JR Shaw and members of his family (the “JR Shaw Group”) own approximately 79% of
the outstanding Class A Shares of the Company. The Class A Shares are the only shares entitled to
vote in all shareholder matters. All of the Class A Shares held by the JR Shaw Group are subject to a
voting trust agreement entered into by such persons. The voting rights with respect to such Class A
Shares are exercised by the representative of a committee of five trustees. Accordingly, the JR Shaw
Group is, and as long as it owns a majority of the Class A Shares will continue to be, able to elect a
majority of the Board of Directors of the Company and to control the vote on matters submitted to a
vote of the Company’s Class A shareholders.
viii) Information systems and internal business processes
Many aspects of the Company’s business depend to a large extent on various IT systems and
software and internal business processes. The Company is subject to risk as a result of potential
failures of, or deficiencies in, these systems or processes. Although the Company has taken steps to
reduce this risk, there can be no assurance that losses may not occur.
ix) Dividend payments
The Company currently pays monthly dividends in amounts approved on a quarterly basis by the
Board of Directors. At the current approved dividend amount, the Company would pay
approximately $360 million in dividends during 2010. While the Company expects to generate
sufficient free cash flow in 2010 to fund these dividend payments, if actual results are different
from expectations there can be no assurance that the Company will continue dividend payments at
the current level.
35
Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2009