Share Classes

Share classes are a way of assigning different rights to different stockholders. They can address issues such as voting authority, dividends, and rights to the company’s assets and capital. For example, a company might issue ordinary stock with one vote per share, designated as Class A shares, then also issue executive stock with 100 votes per share, designated as Class B shares. A company’s board might set different share classes for many reasons. One of the most common reasons is to keep voting control of the company in a few, well-defined hands by establishing different voting rights for different shareholders. To understand this further, it helps to understand the nature of stocks.

There are a few common rights that companies will grant or restrict when they create share classifications. Nonvoting Shares, Common/Ordinary Shares, Executive Shares, Preferred and Deferred shares. The value of different shares varies. Deferred shares, for example, pay fewer dividends and pay them less often. As a result, they’re typically worth less than ordinary stock. Nonvoting shares confer less control over the company, yet for an investor who is interested only in a financial return, this may not influence the stock’s value by much.

source: https://smartasset.com/financial-advisor/class-a-shares