Question

Why does not every company issue dual class shares?

Answer 1

Dual class shares provide with dual voting rights to various shareholders and there will be a privileged class of shareholders and there would be a common class of shareholders, so it would be leading to agency issues arising out in the company because there will be conflict of interest regarding various shareholders in the company and dual class shares are often controversial for the company because it is criticized for the lack of equity between its shareholders as shareholders are not treated equally and fairly and there has been a disproportionate inequality which has been existent between treatment of various stakeholders in the company.

Hence, every company does not issue dual class shares because they fear that there will be a conflict of interest between various shareholders and management of the company will also be targeted because of its lack of their approach and they will be biased towards the difference class of the shareholders and hence they usually srick to issuing with common class of shares which will be providing equal rights and they will be able to protect the fairness and equality among various stakeholders in the organisation.