Dual-Class Shares
A share structure with two or more stock classes carrying different voting rights, often used to preserve founder control.
A dual-class share structure issues two (or more) classes of common stock with different voting power per share — commonly a high-vote class (10 votes per share, sometimes more) held by founders and a standard single-vote class held by other shareholders. It lets founders retain outsized control over major company decisions even after their economic ownership percentage has been diluted through multiple financing rounds.
Dual-class structures are most often implemented at or before an IPO, since public market investors can otherwise force a more standard one-share-one-vote structure earlier in a company's life. They're controversial among governance-focused investors, who argue reduced accountability to shareholders can persist for decades, particularly if the structure has no sunset provision that converts back to single-class after a set time or triggering event.
If pursuing a dual-class structure at IPO, consider including a sunset provision (converting to single-class after a fixed number of years, or upon a founder's departure) — it addresses the strongest governance objections institutional investors raise and can meaningfully ease the IPO process.
Why do founders want dual-class share structures?
To retain voting control over major company decisions even after their percentage economic ownership has been significantly diluted through multiple funding rounds and, eventually, a public offering.
Related terms
Run the numbers yourself: dilution, SAFE conversion, and fund-returner calculators.