Class A vs Class B Shares: What Is the Difference

The distinction between Class A and Class B shares is not standardized—it varies by company. Typically, one class holds more voting power per share (often 10x) while the other holds fewer votes but may have higher economic rights, or vice versa. Always read the company charter and capital structure before assuming.

No universal definition exists

Unlike preferred stock or common stock, the terms “Class A” and “Class B” carry no fixed legal meaning. The New York Stock Exchange or NASDAQ does not mandate what voting power attaches to each class. Instead, each company’s articles of incorporation and bylaws define the split.

Berkshire Hathaway’s Class A and Class B are distinguished mainly by price and share count, not voting. Google’s Class A has 10 votes per share, Class B has one vote, and Class C has zero votes. Facebook (now Meta) uses Class A for public shareholders (one vote) and Class B for founder Mark Zuckerberg (10 votes). The pattern is inconsistent by design—each company chooses.

This flexibility means an investor must always consult the charter, not rely on convention. Assumptions lead to surprises and are a common source of corporate governance disputes.

The typical dual-class pattern

In practice, the most common arrangement is:

• Class A: 10 votes per share, often held by founders or a founder family trust. May have limited liquidity.
• Class B: 1 vote per share, publicly tradeable, held by employees, institutions, and the retail market.

This structure lets founders maintain control even as outside investors own a large economic stake. At the extreme, a founder might own 20% of the company’s economic value but 50%+ of the votes.

Some companies invert this: Class A is the public class (1 vote) and Class B carries super-voting (10 votes). Berkshire Hathaway reverses it again with no voting differentiation at all. The lesson is: specificity matters.

Conversion and contingent rights

Many dual-class charters include conversion mechanics. For example:

• Class B shares might be convertible into Class A at the holder’s election, with Class A having lower voting power.
• Class A might convert automatically upon transfer outside the founder family (a lock-in on founder control).
• Some charters stipulate that if a founder dies or leaves, their Class A shares convert to Class B.

These contingencies are buried in fine print but materially affect the value and rights of each class. An investor buying what appears to be Class B might eventually enjoy Class A voting if a specific trigger occurs—or be permanently subordinated if they transfer shares.

Economic vs. voting asymmetry

The economic split (liquidation value, dividends per share) often diverges from the voting split. For instance:

In this scenario, Class B holders have equal economic claims but no voting power. They receive the same cash flow but no say in board elections or major decisions.

Conversely, some dual-class structures give the voting class lower economic rights, compensating the low-vote class for loss of control. This is rarer and appears mainly in private equity recapitalizations.

Real-world examples and patterns

Google (now Alphabet). Class A (public, 1 vote) and Class B (founders, 10 votes) and Class C (non-voting but otherwise identical to A). This maintains founder control through Sergey Brin and Larry Page despite selling shares to the public.

Ford Motor Company. Class A held by the Ford family and Class B publicly traded; Class A holds more economic and voting power per share. A legacy structure dating to the family’s founding.

Snap Inc. Only one class when public; CEO Evan Spiegel and early investors have no special voting shares post-IPO. An alternative to dual-class for founders comfortable with full market governance.

Berkshire Hathaway. Two classes distinguished by price and share count, not voting power. A unique case where both have equal voting rights per share.

Why companies adopt dual-class structures

Founders and early investors use dual-class shares to:

• Resist hostile takeovers by maintaining board control
• Pursue long-term strategy without quarterly earnings pressure
• Retain decision-making power even as outside capital grows
• Ensure founder vision is not diluted in M&A or activist campaigns

Critics argue dual-class structures entrench poor management and rob minority shareholders of voice. Advocates counter that founder-led companies (Apple, Amazon, Tesla, Berkshire) often outperform precisely because they are insulated from short-term market pressure.

Regulatory bodies in some countries (e.g., the UK) disfavor dual-class structures, while the US exchanges permit them with disclosure requirements.

Sunset provisions and governance evolution

Some dual-class charters include sunset clauses—provisions that automatically convert all shares to a single class (usually one vote per share) after a fixed date or upon a triggering event (founder death, shareholder vote, IPO anniversary).

These provisions create a predetermined path to single-class governance. When founders eventually retire or the company matures, governance reverts to standard majority-rule democracy. This balances founder control with eventual investor rights.

Disclosure and investor protection

When a company goes public with a dual-class structure, securities regulators require clear disclosure of voting rights, conversion mechanics, and economic differences. Prospectuses spell out the non-voting or super-voting rights, and the infobox of financial websites typically flag dual-class issuers.

Investors buying Class B (low-vote) shares of a dual-class issuer are knowingly accepting subordinate voting rights, usually at a discount to the voting class’s implied per-share value.

See also