Class Of Shares

DEFINITION of 'Class Of Shares'

1. Types of listed company stock that are differentiated by the level of voting rights shareholders receive. For example, a listed company might have two share classes, or classes of stock, designated as Class A and Class B.

2. With load mutual funds, there are three share classes, Class A, Class B and Class C, which carry different sales charge, 12b-1 fees and operating expense structures.

BREAKING DOWN 'Class Of Shares'

1. Owners of companies that have been privately owned and go public often create class A and B share structures with different voting rights in order to maintain control and/or to make the company a more difficult target for a takeover. Obviously, it's the original owners that end up with the preferential voting class of stock.

2. Class A mutual fund shares charge a front-end load, have lower 12b-1 fees and a below-average level of operating expenses. Class B mutual fund shares charge a back-end load and have higher 12b-1 fees and operating expenses. Class C mutual fund shares are considered level-load - there's no front-end load but a low back-end load applies, as do 12b-1 fees and relatively higher operating expenses.

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