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Firms may have dual or multiple categories of common stocks which can be issued as Class A, B or C. The director, senior executive and other members of the management can hold the B types, which may or may not be launched publicly as it helps the management to retain voting power. Mostly the Class A type has a majority of rights but, sometimes, organizations provide Class B with certain rights that are held by the directors. B has a lower dividend priority than A and does not involve front-end sales charge but may have internal charges/ fees, which may be applied on sale. It can involuntarily be converted into A on a predefined date, when it may happen; a certain amount of fee may be deducted from the sum converted.
In Google, Class A has 1 voting right and the firm held 299.4 million such shares till March 31st, 2019. Class B holds 10 voting rights (51%) and the cofounders -Sergey Brin and Larry Page owned 84.2 per cent of B types till December 31, 2018.
A number of analysts and common stockholder oppose the scheme of dual status that sometimes, is used to manipulate the decisions of the board and invalidate the decisions of the common stockholders. Such dual status market capitalization can be found in Alibaba, Alphabet, Facebook and a number of family-controlled old firms like Ford Motors. In the last year at least 20 percent of the firms listed with the New York Stock Exchange had such status. One of the leading investors Warren Buffet has been recommending the elimination of such shares, while his own company Berkshire Hathaway maintains such dual status. Experts have been trying to find the pros and cons of such arrangements where one studies find lower returns for common stockholders in comparison to a single class.
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