Although each class of shares may receive a descriptive name (for example. B, non-voting shares, preferred shares or exchangeable shares), it is customary to label the class of shares only with alphabetical letters (A, B, C, D, etc.) according to the number of subgroups a company wishes to create), each class conferring different voting rights, dividend rights and capital rights. Ask a lawyer if you need additional advice on the stock categories to issue in your business. Class B shares are a classification of common shares that may be accompanied by voting rights more or less numerous than Class A shares. Class B shares may also have a lower priority when it comes to repayment in the event of bankruptcy. Alphabet shares are a sub-class of common shares that allow a company to vary the rights attached to shareholders. A detailed description of the different classes of shares of a company is included in the prospectus, the statutes and the statutes of the company. The difference between Class A and Class B shares is illustrated by the share categories of Berkshire Hathaway, the company of legendary investor Warren Buffett. The Company`s Class B stock was trading at $208.96 $US as of March 5, 2020, while class A shares were valued at $315,000. Thus, shareholders of all classes have the same rights to participate in corporate profits. In other words, they have the right to participate in all dividends approved by the Board of Directors. Common share rights are generally defined in the company`s by-law and/or in the shareholders` pact. When a company goes bankrupt and is forced into liquidation, ordinary shareholders are the last to be fined.
With respect to investment fund names, mandated investment fund brokers generally recommend Class A shares for individual investors. The shares of the fund have a sale charge or commission that investors must pay when buying the shares of the fund. Investors who buy a large number of shares or who have shares in other funds offered by the same investment fund company can benefit from discounts on the charge. Class A shares may have a fee of less than 12 B-1 or marketing and distribution costs than other class of shares. Since this class of shares has many advantages and guarantees, it is most often issued to investors, for example to venture capitalists who invest in startups. However, preferred shareholders do not have the same ownership rights over the company as ordinary shareholders; they are often not allowed to vote and can sometimes be exchanged. Buyable preferred shares are a common way to finance a business.