A Dual-Class Share Structure is a corporate governance arrangement where a company issues two or more classes of common stock, each carrying different voting rights. This structure is typically implemented to allow founders or specific groups to maintain control over corporate decisions despite holding a minority economic stake.
Mechanism
This mechanism involves at least two classes of shares: one with superior voting power often held by insiders, and another with standard or no voting power typically traded publicly. This disparity concentrates decision-making authority within the hands of a specific shareholder cohort.
Methodology
Companies adopt this structure strategically to protect long-term vision from short-term market pressures, deter hostile takeovers, and secure the strategic direction set by initial stakeholders. While offering stability in leadership, it can also lead to agency problems where the interests of controlling shareholders diverge from those of public investors with limited voting influence.
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