Class A share

{{Short description|Class of company share}}

{{For|the A share traded on the Shanghai and Shenzhen stock exchanges|A share (mainland China)}}

File:Ford Motor Company of Canada 1930.jpg

In finance, a class A share refers to a share classification of common or preferred stock that typically has enhanced benefits with respect to dividends, asset sales, or voting rights compared to Class B or Class C shares. There may be restrictions on any specific issue of class A shares in exchange for the benefits; for example, preferences with regard to dividends may be traded for reduced voting rights. They are often convertible into class B (may not be publicly traded) shares at a favorable rate.{{cite book |last1=Medina |first1=Roberto A. |title=Business Finance |date=1988 |publisher=Rex Bookstore, Inc. |isbn=9789712308048 |page=144 |url=https://books.google.com/books?id=iOl48sBQ65kC&pg=PA144 |language=en}}{{cite book |last1=Stickney |first1=Clyde P. |last2=Weil |first2=Roman L. |last3=Schipper |first3=Katherine |last4=Francis |first4=Jennifer |title=Financial Accounting: An Introduction to Concepts, Methods and Uses |date=2009 |publisher=Cengage Learning |isbn=0324651147 |url=https://books.google.com/books?id=M72b6tXgT1MC&pg=PA662 |language=en}}

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.{{cite web |url=http://www.investinganswers.com/financial-dictionary/stock-market/class-shares-338 |title=Class A Shares |publisher=InvestingAnswers |accessdate=October 31, 2017}}

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.