Here's a pitch you can't turn down. Someone starts a company. They say that they'll have 15 shares of the stock for sale. They'll keep five of the shares, and anyone else who wants to buy into their next great idea can purchase the other ten shares. So five new people purchase the other ten shares.
But there's a catch. The five shares the owner has are A-Shares of company stock, and the ten shares owned by the other five people are B-shares of the stock.
A-Shares get three votes each during company meetings.
B-Shares receive two votes during the meeting.
So the owner now has 50% of the company's assets, but 60% of the voting rights. And the other five people have 50% of the company assets, but 40% of the voting rights.
The A-Shares are an example of control stock, which provides a certain class of investor greater influence in the company than others. The structure is commonly done to ensure that CEOs and founders maintain influence over their companies.
This trend has been popular among technology companies. Facebook and Google both have different classes of stock that ensure their founders maintain totalitarian control of the company...while throwing a few bucks down to the pleb shareholders now and then.
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![Finance: What is non-voting stock?](https://media1.shmoop.com/video/thumbnails/COURSE.FINANCE.433_770x433.jpg)
Finance: What is non-voting stock?4 Views
finance a la shmoop- what is non-voting stock? hmm well it's stock that doesn't
vote. bet you're shocked to hear that. most people need a PhD in finance to [stock wears an "I didn't vote" sticker.
understand that notion. but really that's it in most cases common stock carries
with it the right to vote. and in fact it's the common shareholders who elect
the board of directors. but every now and then a potentially hostile investor
comes along and buys or wants to buy a big chunk of stock in a company. well the
amount might be a block large enough to elect that potentially hostile investor
slate or the group of people that investor wants to place on the board to
represent her evil intentions .when that happens companies will often create a
class of common stock similar in every way to its normal common only with its [stock checklist of privileges listed]
voting rights stripped away .that way the investor can own an economic interest in
the company but not monkey with the board.
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