Shares in a company represent units. One share is one unit of ownership in any given company.
Owning shares in company provides an investor with certain rights, specifically a say in how major decisions are made on the corporate level and the right to any dividends that are paid out on your shares.
However, this is not always the way it functions.
“Various companies of both a public and private nature have the right to establish separate share classes to merge voting rights and thus maintain control of the company for specified groups”, explains Richard Meyer Cayne of Meyer International. “If an investor has concerns about who controls a specific company, or if an investor has intentions of exercising their ownership rights, it’s imperative that they comprehend these share classes before investing in these companies”.
As the name suggests, a company can designate different classes or levels of shares within their company. Each share signifies a unit of company ownership, but voting rights, dividends and share-transferring abilities may change designation among different share classes.
Generally, this structure has been put into place so that the leadership and founders of the company are able to maintain control while simultaneously retaining the ability to sell shares and raise funds from said shares.
Google is a prime example. It divvied its shares into three classes when it went public.
One vote per share went to shareholders in Class A. 10 votes per share went to shareholders in Class B. And Class C shareholders received no votes
Many people maintain that as long as shareholders can profit off their shares, either through selling off their shares at a higher price than purchase or through dividends, that the shareholders really aren’t all that concerned about things like voting rights.
On the other hand, many argue that when you allow those at the top of a company to remain in power, it can cause stagnation within the company or create a structure that allows the top brass of a company to implement policies that are only to their own benefit. And regardless of share class, this can ultimately impact the overall value of a share.
While privately held companies in many jurisdictions can build share class structures into their platforms, the rules may be a lot stricter when it comes to publicly traded companies.
While jurisdictions like London, Singapore and Hong Kong essentially stick to the “one share, one vote” structure in an effort to discourage and restrict share classes, they may find themselves having to rethink that strategy, as the exchanges in these jurisdictions are increasingly losing IPO’s to the US exchanges.
So how does that affect you?
Well, perhaps it doesn’t affect you at all.
But a certain degree of added scrutiny should be applied if you are considering investing in any company that utilizes share classes in their structure so that you can be certain you find yourself in the correct share class.
It’s important to discuss these matters with a trusted financial advisor like Richard Meyer Cayne of Meyer International. For decades he’s been helping investors make the informed decisions that help them make the most of their investments.
Richard Meyer Cayne of Asia Wealth Group Holdings, the Meyer Group, Meyer Asset Management and Meyer International Ltd has been involved in wealth management planning for decades. Originally born in Montreal Quebec, Canada, he later relocated to Tokyo, Japan for over 15 years and now resides in Bangkok, Thailand. While he runs the Meyer Group and serves as the high credibility CEO of Asia Wealth Group Holdings Ltd, a London, UK Stock Exchange-listed Financial Holdings Company, as well as the Managing Director of the Meyer Group of Companies www.meyerjapan.com. and has additionally been the managing director of multiple organizations that specialize in helping high net worth individuals with succession planning .
Having worked with clients all over the globe with everything from portfolios to bonds to mutual funds to offshore investing to investing in retirement for your golden years, Richard Cayne of Meyer International can help you invest the right way and protect your cash. Richard has been a financial advisor involved in wealth management planning solutions and asset management in Asia for over 25 years and while living in Tokyo, Japan, he assisted many high net-worth Japanese families create innovative international tax and wealth management planning solutions. The financial holding public company of which he is CEO can be seen at Asia Wealth Group Holdings Ltd or the stock exchange link:
Asia Wealth Group Holdings Ltd – Richard Cayne Thailand. Meyer Asset Management Ltd has been in the wealth management space since March 2000 and uses fundamental analysis along with modern portfolio theory.
His image worldwide as a professional advisor has been sterling and he maintains a firm command and understanding of all things finance-related.