Share Classes

Share Classes

Share classes refer to different categories of Shares issued by a company, each with distinct rights and privileges. These variations can include differences in voting rights, Dividend Payments, and Liquidation preferences. Companies often create multiple Share classes to cater to different investor needs or to maintain control among founding members.

Examples

• Class A Shares: Typically carry more voting power than Class B Shares. For instance, Google (Alphabet Inc.) has Class A Shares that provide one vote per Share.
• Class B Shares: Often have fewer voting rights. For example, in the case of Berkshire Hathaway, Class B Shares have significantly less voting power compared to Class A Shares.
• Preferred Shares: These may not provide voting rights but usually come with fixed dividends and priority over common Shares in Liquidation scenarios.

Cases

In a company like Facebook (Meta Platforms, Inc.), the founder Mark Zuckerberg retains control through a special class of Shares that hold significantly more voting power than those available to regular investors. This structure allows him to influence company decisions while still raising Capital from the public.