20+ Difference Between Class A And Class B Shares

Class A shares and Class B shares of stock vary from one another primarily in the number of votes each share is entitled to cast.

Typically, Class A shareholders have greater influence than Class B stockholders. As common as it is for Class A shareholders to have higher voting power, this is not mandated by law.

Those in managerial roles at a corporation often own Class A shares to ensure they have a sufficient say in company affairs.

Comparison Between Class A And Class B Shares

ParameterClass A SharesClass B Shares
Consequences of buyingClass A shares may include a front-end sales commission. Setting the price in advance is an investment. In certain circumstances, selling expenses are proportionate to the item value. Compared to other stock costs, they’re frequently fairer.Buying Class B shares is free. However, their fees are higher than other share classes since they depend on asset value. In addition, class B owners must pay a conditional delayed sales charge when selling shares within a particular time window. Class B shares are “no-load” because of this.
MeaningClass A shares might vary based on the company’s structure. Corporate insiders hold class A shares due to their voting power. As a result, they’re seldom traded publicly. However, class A shares, which are expensive common stock, and Class B shares, which are cheaper but have fewer voting rights, are frequent in public businesses.Class B shares are the kind of stock you buy by inputting the ticker symbol. In these systems, one share equals one vote. These shares don’t have Class A classification, but they’re cheaper.
Suitable for a time durationStockholders who are interested in maintaining their assets over the long run may consider purchasing Class A shares as their investment of choice.On the other hand, if you intend to sell your shares within the next seven or five years, you should seriously consider purchasing Class B shares instead of regular shares.
ResellingThe resale value of Class A shares is typically fairly high the vast majority of the time. In the vast majority of instances, this is the case.Class B shares often do not have a very high resale value, particularly when considering most possible scenarios.
Number of votesClass A shareholders are entitled to more votes per share than Class B stockholders.Class B shareholders are allotted fewer votes per share than Class A shareholders.

Major Difference Between Class A And Class B Shares

What exactly is Class A Share?

Class A shares, sometimes known as common stocks, are issued by the vast majority of publicly listed firms.

The ownership of common shares gives a person a stake in a company and entitles them to a proportional share of the profits that that company creates.

The rule of thumb is that each bearer of common stock is entitled to one vote. However, there are exceptions to this rule.

Key Difference: Class A Shares

  • Class A investors are given a higher opportunity to participate in the company’s decision-making process.
  • When referring to a subcategory of “class A shares,” the phrase “common shares” is used.
  • Class A shareholders are given a bigger say in the day-to-day operations of the organization as well as the strategic decisions that are made.
  • Class Every shareholder is required to make a payment of some kind to the corporation regularly.
  • Class: When shareholders sell their shares, they are not required to pay a fee since they are selling them.

What Exactly Is Class B Share?

A company is free to issue any number of distinct classes of common stock that it deems appropriate.

In actual reality, this option is often selected to provide a smaller group of people with a disproportionate amount of power in elections.

Companies that issue several classes of stock will often label the stocks with differing voting rights as “Class A” and “Class B” stocks in their naming conventions.

Key Difference: Class B Shares

  • Class B shareholders have little influence over how the company is managed. Common names for stock of Class B include preferred stock.
  • Preferred stock is another term for Class B stock, also called preferred stock on occasion.
  • Class B shareholders are only afforded limited power in terms of their capacity to influence the company’s management.
  • Class B shareholders are exempt from making mandatory periodic payments to a mutual fund. Therefore, they do not need to do so to maintain their ownership.
  • If a shareholder wants to sell their shares of Class B stock, the firm requires them to pay the company before they may do so.

Contrast Between Class A And Class B Shares


  • Class A Shares- Additional fees, such as a front-end sales commission, may be associated with buying Class A shares.

    You’ll be making an investment of sorts if the sales price is set in advance. In certain cases, the costs associated with a sale may be proportional to the value of your possessions.

    However, they are often more reasonable than the fees associated with certain other types of stock shares.
  • Class B Shares- No up-front costs are associated with buying Class B shares. Compared to other share classes, their fees are greater since they are calculated based on the total value of your assets.

    Class B shareholders are often subject to a conditional delayed sales fee, which must be paid after the sale of the shares but within a certain time frame. Class B shares are sometimes called “no-load” shares for these reasons.

Key features:

  • Class A Shares- There may be various distinct types of Class A shares, depending on the organizational makeup of the corporation.

    Class A shares traditionally have been held by company insiders because of the enhanced voting powers they provide. They are seldom traded on public markets.

    Class A shares, which are essentially common stock with a high share price, and Class B shares, which are cheaper but have fewer voting rights, are two types of equity ownership structures widespread in public companies.
  • Class B Shares- Investors often own Class B shares, which is the form of stock you’ll purchase from your broker by entering the ticker symbol.

    One share often equals one vote in these types of voting structures. These shares don’t have the same status as Class A shares but may be purchased at a discount.

Decision-making power:

  • Class A Shares- Shareholders of Class A get an increase in the number of votes they are entitled to cast and an increase in the degree of control they have inside the firm. Class A shareholders are eligible for additional benefits from the company.
  • Class B Shares- Class B shareholders do not have as much impact on the firm’s day-to-day operations as other shareholders do.

    Other shareholders have more say in the company’s strategic decisions. Other shareholders have voting rights when it comes to significant issues.

Frequently Asked Questions (FAQs)

Q1. What are the advantages of investing in Class A shares?

When compared to regular shareholders, holders of class A shares are granted extra voting rights on average.

Class A shares are distinct types of shares that come with their own set of special advantages.

They are categorized as common or preferred, depending on their ownership structure. The corporation’s management is the only group typically granted ownership of these shares.

Q2. Should one consider making an investment in Class A shares?

Investors who want to keep their money in the market for a considerable amount of time may consider purchasing Class A shares rather than other types of shares due to the lower cost ratios and lower initial fees associated with the former.

Class A shares provide an extra advantage in minimizing up-front charges for larger investments. As a result, wealthy investors should consider class A shares to be the preferred investment choice.

Q3. Are there any shares of Class A stock now available for sale?

Class A shares are a sort of common stock that traditionally came with a higher number of voting rights than Class B shares did. On the other hand, Class B shares were not entitled to any voting rights.

In the past, everything operated in this manner. Traditional Class A shares are not available for purchase by the general public, and existing owners are not authorized to dispose of their holdings in this class of stock.

Q4. When a corporation is sold, what happens to the Class B shares that have been issued?

When the Class B shares an investor purchases are eventually sold, the investor is subject to a fee. Delaying payment of the charge for hanging on to the shares for five years or longer is an option.

In addition, Class B shares can become Class A shares if they are held for an extended period.

Q5. What legal rights does a shareholder in Class B enjoy about the business?

In spite of the fact that there is also something called Class B shares, they do not have any voting rights. Nonetheless, they could have additional rights in other areas, such as collecting dividend payments.

Remember that the Articles of Association of the company might be used to describe things in a way that is suitable for the corporation if you want.

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