A class of common stock (specifically known as classified stock) that enjoys more voting rights than class “B” shares. The voting power for each class of stock is set forth in the company’s prospectus. Occasionally, some companies allow holders of class “A” shares to reclassify into class “B” shares during a specific reclassification period (e.g. 6-months) each year. A company, in the process of going public, would issue different classes of shares when the owners want to keep control either for themselves or for a close circle of insiders. The shares have equal financial claims on the company’s assets (dividends are also equal). However, class “A” get, for example, 10 votes in corporate elections and class “B” is entitled only to 1. In this sense, holders of class “A” shares can always possess a majority of votes.
June 12, 2024
