A Shares

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In finance and investing, "A-Shares" can refer to different classes of shares in a publicly traded company or mutual fund (in which each class has different rights), or A-shares can refer to shares of Chinese companies traded on the Shanghai stock exchange.

Classes of Stock

Companies often issue multiple classes of stock, typically referred to as 'A-Shares' and 'B-Shares'. This may occur for a number of reasons.

A company may want to concentrate voting rights among a small percentage of owners. In this case, A-shares may represent only 10% ownership of the company but 90% of the voting rights (an example of this type of structure is CMG).

Alternately, a company may wish to list shares on different Stock Exchanges. In this case, the A-shares may trade on, for example, the New York Stock Exchange, while the B-shares trade on the Hong Kong Stock Exchange.

Another infamous example is BRK, whose A-shares got so expensive that a secondary market was created to track the A-shares. In response, B-shares were created to represent 1/30th of an A-share ownership stake.

Each company's structure for different classes of stock may contain unique clauses, rules, and justification.

Mutual Funds

Mutual funds will often offer several classes of shares. Each class represents an ownership stake in same pool of underlying securities of the mutual fund. The purpose of multiple share classes is to provide different fee structures to attract different types of investors. For instance, one class of stock may have front-loaded fees whereas another may charge fees on an accrual basis. See also: Mutual Fund Fees

Chinese stock market

A-Shares are shares in Chinese incorporated companies that trade on the Shanghai or Shenzhen stock exchanges, quoted in Chinese Renminbi (RMB). Shares are traded by residents of the People’s Republic of China (PRC). International investors can trade A Shares only under the China Qualified Foreign Institutional Investors (QFII) regulations.

See Also

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