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CFA Level I · CFA Level I Exam · Equity Jurisdictions, Classes, and the Voting Process

A company has Class A shares with one vote each and Class B shares with ten votes each, and the founder holds only Class B shares. The structure is most likely to:

Dual-class shares with ten votes per Class B share most likely give the founder voting control greater than the founder's economic ownership. Votes per share are unequal, so voting power is not aligned with economic claims, and the founder can strongly influence board elections.

  1. AGive the founder voting control exceeding economic ownershipCorrect
  2. BAlign voting power exactly with economic ownership
  3. CPrevent the founder from influencing board elections

Explanation

Superior voting shares give the holder more votes per share than economic claim, so control can exceed ownership. Voting power therefore does not match economic ownership, and the founder can strongly influence board elections.

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