UK Accounting Glossary
Class B shares are a classification of common stock that may or may not have more voting rights than Class A shares – typically thought to be the preferred class. It is a common misconception that Class B shares carry less weight than Class A, which is not always the case with Class B shares. Often corporations mask the disadvantages of owning shares with less voting rights by classifying those shares as “Class A shares”, and naming those with more voting rights “Class B shares”. Class B shares are described in a company’s charter and bylaws. Class B shares are also associated with mutual funds. Mutual fund shares that are considered Class B shares are often payable if the fund is sold within four to six years. Class B shares of this type carry higher expense ratios than Class A mutual fund shares. These Class B shares can often be converted to Class A.
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This glossary post was last updated: 4th February 2020.