Lesson 2 of 6 · All lessons in this module
  1. Common shares: voting rights, share classes, callable and putable shares
  2. Dual class shares: splitting economic rights from voting rights
  3. Investing in foreign equity: direct, depository receipts, GRS and BLDRs
  4. Depositary receipts in practice: ratios, implied exchange rates and when arbitrage fails
  5. The shareholder voting process: proposals, record date and proxy votes
  6. Proxy advisors, shareholder proposals and investor stewardship

This lesson is part of the 2027 curriculum. You are following the 2026 curriculum, where it is not taught in this form. Switch if you are sitting the exam under the 2027 curriculum.

Lesson 2 of 6 · 12 min

Dual class shares: splitting economic rights from voting rights

A dual class structure gives share classes different votes, different cash-flow rights, or both, so insiders can keep control of a company while outside investors supply most of the capital.

In short

  • A dual class share structure typically pairs a widely held, traded class with one vote per share and a non-traded insider class with several votes per share.
  • It lets founders or families with a minority economic stake control the company; strategy then follows their priorities, not necessarily those of public holders.
  • Variants: unequal votes with equal economics; a non-voting class with equal dividend and liquidation rights; or unequal votes and unequal economics.
  • Differential voting rights (DVR) shares trade votes for money: a fraction of a vote, a higher dividend if one is paid, and an issue price below the ordinary shares.
  • DVRs can disappoint: thin institutional demand makes them illiquid, discounts can widen sharply, and the dividend premium is worth nothing if no dividend is paid.
  • Some asset owners refuse to support unequal voting rights or will not buy dual class companies, because their votes would carry little weight.

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