Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

B-Shares

What it is:

B-shares are either 1) common stock or 2) preferred stock that generally give fewer benefits to share holders than A-shares.

How it works (Example):

For example, Joe purchases stock in company XYZ.  If Joe buys B-shares, and a single B-share gives him two votes.  However, if Joe buys A-shares, he receives six votes per share.  B-shares also have lower dividend priority than A-shares.

Why it Matters:

While B-shares offer shareholders fewer benefits than A-shares, if the company issuing the stock is well managed, retail investors needn’t be concerned about the different classes of stock. In most cases, different shares are issued to give the company's managers, insiders and directors a greater degree of power over the company -- and to provide a better defense against such events as hostile takeover attempts. It should also be noted that differences in share class does not affect the average investor’s share of the profits or benefits from the overall success of the company.