Control Stock

AAA

DEFINITION of 'Control Stock'

1. Equity shares owned by major shareholders of a publicly traded corporation. These shareholders have either a majority of the shares outstanding or a portion of the shares that is significant enough to allow them to exert a controlling influence on the firm's decisions.

2. In situations where companies have more than one class of common shares, shares with superior voting power or vote weighting are considered to be control stocks, relative to the inferior class.

INVESTOPEDIA EXPLAINS 'Control Stock'

1. Shareholders who control a majority of a company's shares effectively have enough voting power to dictate the firm's decisions. As such, their shares can be referred to as control stock.

2. Suppose XYZ Corp. had two classes of common stock, Class A and Class B, and both types of shares carry equal claim to the firm's assets. In other words, if the firm has 100 common shares in total, 50 are Class A shares and 50 are Class B shares. Let's assume that the B shares entitle the shareholder to one vote, but the A shares entitle the shareholder to 10 votes. If you owned one Class A share, you would own 1% of the company's assets, but wield 10 votes at company meetings. An investor who owned one Class B share would have the same 1% claim to the firm's assets, but wield only one vote at company meetings.

RELATED TERMS
  1. Outstanding Shares

    A company's stock currently held by all its shareholders, including ...
  2. Direct Investment

    1. The purchase or acquisition of a controlling interest in a ...
  3. Class A Shares

    A classification of common stock that may be accompanied by more ...
  4. Class B Shares

    A classification of common stock that may be accompanied by more ...
  5. Inside Director

    A board member who is an employee, officer or stakeholder in ...
  6. Board Of Directors - B Of D

    A group of individuals that are elected as, or elected to act ...
Related Articles
  1. Investing Basics

    Knowing Your Rights As A Shareholder

  2. Investing Basics

    What Owning A Stock Actually Means

  3. Investing

    Why would a company have multiple share ...

  4. Investing Basics

    Using Appreciative Inquiry To Solve ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center