Dual-Class Shares
A dual-class structure has two or more share classes with different voting rights, often letting founders keep control with a minority of the economic ownership.
Dual-class shares give one group of shareholders, usually founders or insiders, more votes per share than ordinary investors. That lets insiders keep control even after selling most of the economic ownership. Listing rules and company law on these structures differ by country and exchange, so check the local rules before relying on any general description.
- Category
- Fundamentals and Macroeconomics
- Reading time
- 4 min
- Also called
- Dual-class stock, Dual-class structure, Multiple-voting shares
- Updated
Dual-class shares in plain words
Dual-class companies have two or more types of shares, and one type carries far more votes than the other.1
Typically the public gets one vote per share, while founders and insiders hold shares with many votes each.1
Many institutional investors object, arguing that one share should mean one vote.2
How to check a dual-class company
Read the share classes
Find every share class in the prospectus and how many votes each carries.1
Count the votes
Identify who owns the high-vote class — usually insiders.1
Compare votes and ownership
Divide insiders' share of votes by their share of the economic stake to see the control gap.
Look for a sunset
Look for a sunset clause that ends the structure after a set time.2
Check index and exchange rules
Some indexes and exchanges treat these shares differently, and rules vary by country.
Weigh the long-term evidence
Research suggests dual-class firms trade at a premium soon after listing, but it turns into a discount after about seven years.2
Worked examples
Example 1 — Control gap
Insiders controlHypothetical founders own 20% of the shares, all in a class with 10 votes each; the public class has 1 vote.
| Founder shares | 20 units × 10 votes |
| Public shares | 80 units × 1 vote |
| Founder votes | 200 of 280 ≈ 71% |
Owning 20% of the economics but about 71% of the votes is exactly what multi-vote insider shares make possible.1
Example 2 — Sunset clause
Control expiresA hypothetical charter converts the high-vote class to one vote after 7 years.
| Years 1–7 | Founder control |
| After year 7 | One share, one vote |
This is the kind of time-based sunset that investor groups push for.2
Example 3 — No sunset
Permanent controlA hypothetical company keeps the structure with no end date.
| Sunset | None |
| Founder control | Indefinite |
This is the open-ended case critics worry about: insiders keeping control with no end date.1
Dual-class vs single-class
| Aspect | Dual-class | Single-class |
|---|---|---|
| Votes per share | Differ by class | Equal |
| Insider control | Can exceed ownership | Tracks ownership |
| Takeover defence | Strong | Weaker |
| Governance view | Criticised by many investors | Preferred standard |
Where dual-class shares matter
IPO analysis
Many tech Initial Public Offering listings use multiple share classes.
Governance screening
Investors flag control gaps before buying.
Valuation
Low-vote shares can trade at a different price from high-vote shares.
Index inclusion
Some indexes treat these listings differently, which affects Liquidity.
Advantages and disadvantages
Advantages
- Lets founders pursue long-term plans.
- Protects against hostile takeovers.
- Can make it easier for founders to list early.
Disadvantages
- Weakens outside shareholders' voice.
- Control can outlast the founder's skill.
- Reduces accountability for poor decisions.
- Evidence suggests any premium may fade.
Going deeper
Read as far as you need. Each level builds on the one before it.
Votes versus ownership
Beginner
In a single-class company every share has one vote; with dual classes, insiders hold extra-vote shares while the public gets one vote each.1
History on US exchanges
Intermediate
For most of its modern history, the NYSE refused to list dual-class companies.1 Today they are common, and exchange rules differ by country.
Sunsets and value
Advanced
Because the early valuation premium tends to turn into a discount after about seven years, investor groups favour sunsets based on time.2
Common mistakes
Assuming equal votes
Always read which class you are buying.
Confusing ownership with control
A small stake can carry most of the votes.
Ignoring sunset terms
Whether and when control ends changes the risk.
Assuming rules are global
Listing and company law differ by country.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Dual-class shares split votes from ownership.
- Insiders usually hold the high-vote class.
- Many investors back one share, one vote.
- Sunset clauses limit how long control lasts.
- Rules differ by country and exchange.
Frequently asked questions
Do low-vote shares get the same dividends?
Can I buy the high-vote class?
Are dual-class shares allowed everywhere?
Further learning
- Initial Public Offering
Where these structures usually start.
- Exchange
Listing rules shape what is allowed.
- Market Capitalisation
Count every class when sizing a company.
- Fundamental Analysis
Governance is part of analysis.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- SEC. Perpetual Dual-Class Stock: The Case Against Corporate Royalty (speech by Commissioner Robert J. Jackson Jr.) (opens in a new tab) Checked .
- Council of Institutional Investors. Dual-Class Stock (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.