Buy a share in most companies and you get one vote on matters such as electing directors. But at some companies, especially in the technology sector, not all shares are equal. Founders and early insiders hold special shares with many more votes each, allowing them to keep control even if they own a minority of the company. These are called dual-class shares, and they are one of the most debated topics in corporate governance.
How dual-class shares work
A company with a dual-class structure issues two or more types of shares. Typically, ordinary shares sold to the public carry one vote each, or sometimes none. A separate class, held by founders or insiders, carries multiple votes per share, often 10 or more.
The result is that a founder might own 15 per cent of the company’s shares but control more than half of the votes. Well-known examples include Alphabet, Meta and many recent technology listings.
Why companies use them
Supporters argue that dual-class shares let founders focus on long-term plans without worrying about short-term pressure from investors. A founder with a bold vision can invest heavily for years, ignoring calls to boost profits quickly. Some of the most successful technology companies have used this structure.
Dual-class shares can also make it harder for activist investors or hostile buyers to take control, which some see as protecting the company’s direction.
The case against
Critics argue that dual-class shares weaken accountability. If ordinary shareholders cannot outvote the founder, they have little power to change the board or management, even if the company is performing badly or facing a scandal. That can increase what is known as key person risk, where too much depends on one individual.
Some index providers have restricted or limited the inclusion of companies with unequal voting rights, and many large investors push for so-called sunset clauses, which convert special shares into ordinary ones after a set period.
The UK approach
The UK has traditionally favoured one share, one vote, and dual-class structures were long limited on the London Stock Exchange’s premium segment. Listing rule changes in recent years have relaxed this to attract more technology companies, allowing certain dual-class structures with safeguards. The debate continues about whether this helps London compete or weakens investor protection.
Why it matters to traders
For traders, dual-class structures matter most in moments of crisis. If a founder-controlled company faces a scandal or poor performance, ordinary shareholders may have limited ability to force change. That can make the shares more vulnerable to a sustained governance discount.
Conversely, when a company with a strong founder thrives, the structure may help it stay focused. The key is knowing whether a company you are trading has one, and who really holds control.
How to check
Company filings and annual reports set out share classes and voting rights. Look for multiple share classes, often labelled Class A, Class B and so on, and check how many votes each carries and who owns the high-vote shares.
A beginner’s takeaway
Dual-class shares give some shareholders, usually founders, more votes than others. They can support long-term thinking but reduce accountability. Before trading a company built around a powerful founder, find out who controls the votes; it reveals a lot about how the company would respond if things went wrong.
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