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In finance a class A share refers to a classification of common or preferred stock that typically has stronger voting rights or other benefits compared to Class B or Class C shares.[1]

For example, a company might allocate class A shares to its management giving them 7 times face value of class B shares, while class B shares have the same voting right as class A shares. Companies classify stock for many reasons. In some cases this is to give company insiders a greater degree of power over the company and to provide a better defense against events like hostile takeover attempts.[2]

Class A share is also a way of pricing sales charges (loads) on mutual funds in the United States. In a class A share, the sales load is up front, typically at most 5.75% of the amount invested. In contrast is the class B share that does not have an upfront charge, but instead has higher ongoing expenses in the form of a higher 12B-1 fee, and a contingent deferred sales charge that only applies if the investor redeems shares before a specified period. The maximum A share sales load is decreased for larger investment amounts as a volume discount.

ReferencesEdit

  1. ^ http://www.investopedia.com/terms/c/classashares.asp
  2. ^ "Class A Shares". InvestingAnswers. Retrieved October 31, 2017. 

See alsoEdit