Share Class

Classified Stock

1. A type of stock in a publicly-traded company that issues more than one type of stock. Each type of classified stock has distinct rights attached to it. Two common classified stocks are preferred stock, which carries the right to guaranteed dividends, and common stock, which carries the right to vote in the annual meeting.

2. In mutual funds, a stock with a particular load. The load, which is the sales fee for buying into the mutual fund, is charged at different times depending on the stock class. For example, a class A stock has a load that is paid up front, while a class B stock has a load that is paid when one sells the shares in the mutual fund.

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Share class. Some stocks and certain mutual funds subdivide their shares into classes or groups to designate their special characteristics.

For example, the differences between Class A shares and Class B shares of stock may focus on voting rights, resale rights, or other provisions that enhance the power of certain shareholders.

In fact, in the United States, most dual class shares involve one class that is publicly traded and another class that is privately held.

In some overseas countries, Class A shares can be purchased by citizens only, while Class B shares can be purchased by noncitizens only.

In the case of mutual funds, class designations indicate the way that sales charges, or loads, are levied. Class A shares have front-end loads, Class B shares have back-end loads, also called contingent deferred sales charges, and Class C shares have level loads.