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

A founder-controlled company has Class A shares with one vote each and Class B shares with ten votes each. The founder owns all 2 million Class B shares and none of the 18 million Class A shares. The founder's share of total voting power is closest to:

The founder holds 20 million votes from Class B shares against 18 million from Class A, so total votes are 38 million. The founder's share is 20/38, about 53%. Using share count alone gives 10%, which ignores the ten-votes-per-share weighting.

  1. A10%
  2. B53%Correct
  3. C100%

Explanation

Founder votes = 2 million x 10 = 20 million. Class A votes = 18 million x 1 = 18 million. Total = 38 million. Founder share = 20/38 = 52.6%, about 53%. The 10% answer uses share count (2/20) instead of votes.

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