B-Share

Some companies may issue A shares and B shares, with each class of shares equalling a different amount of votes. Family-owned companies may opt for this measure to keep B-shares, which may be equivalent to multiple A shares in terms of voting power, in the family.

A special case is Berkshire Hathaway. Berkshire Hathaway has never split its stock, thereby leading to an abnormally high stock price. Unit trusts were formed to pool together investors’ funds to purchase shares of Berkshire Hathaway for investors who could not afford to purchase a share on their own. Buffett was worried that such unit trusts would market themselves on Berkshire’s stellar past performance and may disappoint investors. Therefore he issued B-shares which were equivalent to 1/30 of an A share in economic interest (though with no voting power).

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