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Class A, common stock: Each share confers one vote and ordinary access to dividends and assets. Class B, preferred stock: Each share confers one vote, but shareholders receive $2 in dividends for every $1 distributed to Class A shareholders. This class of stock has priority distribution for dividends and assets.
Key Takeaways. Class A shares refer to a classification of common stock that was traditionally accompanied by more voting rights than Class B shares. Traditional Class A shares are not sold to the public and also can't be traded by the holders of the shares.
Let us understand the disadvantages of this class of shares through the discussion below. These shares are only reserved and offered to the company's management; they are scarce. These shares are not available to the public. It means an average investor cannot invest in them.
Class A shares are common or preferred stocks that offer special benefits to owners. Class A shares are the best class of stock. Upper- level management, executives, owners, and founders of the company usually hold this kind of stock. It offers the highest level of voting rights, too.
Investors generally should consider Class A shares (the initial sales charge alternative) if they expect to hold the investment over the long term. Class C shares (the level sales charge alternative) should generally be considered for shorter-term holding periods.