Briefly explain what are Special Classes of Common Stocks & Founder Shares

May 3rd, 2011 Comments off
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Special classes of common stocks:-are created by a firm to meet special needs and circumstances.

Let’s  say we create two classes of common stock namely:

  • Class A which has no voting rights but is entitles to receive dividends before dividends can be paid on Class B common stock
  • Class B for stockholders who have the exclusive right to vote

{ note that the above two classes A & B have no standard meaning}

Founder shares:

Founders’ shares are stock owned by the firm’s founders that have sole voting rights but restricted dividends for a specified number of years.

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