What is Classified Stock?

Classified stock is a type of common stock that has special privileges, such as enhanced voting rights or dividend rights. The main differentiator is that certain types of classified stock have a larger number of votes per share. Company founders use these share holdings to maintain control over their businesses even after they have sold a large portion of the outstanding shares to other investors.

There may be several types of classified stock, such as Class A or Class B stock. The charter and bylaws of a corporation contain the specific privileges accorded to each type of stock. When classified stock is present, a company is said to have a complex capital structure.