What Is a Dual-Class Structure?
A dual-class structure issues two (or more) classes of common shares with different voting rights. The most common setup: Class A shares (held by investors and the public) carry one vote per share; Class B shares (held by founders) carry ten votes per share. Economic rights — dividends, exit proceeds — are identical between classes.
The structure allows founders to dilute economically while preserving voting majority. A founder who owns 25% of the economic equity but 70% of the voting power retains absolute control over board composition, M&A decisions, and major corporate actions. The investor base accepts reduced voting influence in exchange for backing a founder whose long-term vision they want to support.
Dual-class is distinct from preferred-vs-common. Preferred stock carries economic preferences (liquidation, anti-dilution, dividends) and governance rights (board seats, vetoes); dual-class concerns only the voting power of common shares. The two can coexist in the same cap table.
EU Legal Availability
The availability of dual-class structures varies significantly across European jurisdictions and has evolved substantially in the past five years as EU member states compete for tech listings.
Germany: AG (Aktiengesellschaft) and SE (Societas Europaea) allow multiple voting rights since the 2023 ZuFinG reform, with a cap of 10 votes per share. GmbHs achieve a similar effect through voting agreements in the shareholders' agreement.
Netherlands: BV (Besloten Vennootschap) is highly flexible — different share classes with different voting rights are common since the 2012 Flex-BV reform. There is no statutory cap on the voting differential.
France: Loi Florange (2014) automatically grants double voting rights to shares held for more than two years in listed companies, unless explicitly opted out. For unlisted SAS structures, voting differentials are freely negotiated.
UK: Permitted for private limited companies with no statutory cap. The London Stock Exchange now permits dual-class on the premium listing segment (2021 reform) with a five-year sunset.
Sweden, Denmark and Finland have long traditions of A/B share structures with voting differentials of 10:1.
How Dual-Class Interacts with Preferred Stock
In a typical venture-backed cap table with dual-class, the structure becomes: founder Class B common (multi-vote), employee Class A common (single-vote), preferred (single-vote per share, plus contractual protective provisions).
Preferred shareholders retain their economic rights (liquidation preference, anti-dilution, dividends) and their contractual veto rights (consent required for protected matters: M&A, new share issuances, debt above threshold). What they lose is voting majority on common-stock votes — board elections, approval of stock plans, ordinary course matters that go to a shareholder vote.
The protective provisions become more important in a dual-class cap table because they are the primary tool for preferred shareholders to influence company direction. Founders accepting a dual-class structure should expect investors to negotiate harder for broad protective provisions to compensate for reduced voting influence. See the [protective provisions guide](/captable/protective-provisions) for the typical list.
Sunset Provisions
Sunset provisions automatically convert high-vote Class B shares into single-vote Class A shares on a triggering event. The two common types are time-based (Class B converts to Class A after N years post-IPO, typically 5–10 years) and event-based (Class B converts when the founder departs the company, dies, or transfers shares to a non-permitted holder).
Sunset provisions are increasingly demanded by institutional investors as a precondition for accepting dual-class. The argument: dual-class is acceptable while the founder is actively running the company, but should not persist into perpetuity, especially after the founder has departed.
Some structures combine multiple triggers. A common combination: 7-year sunset after IPO OR founder's departure OR transfer to non-family — whichever comes first. The specific structure is negotiable and should be calibrated to the company's stage and the strength of investor relationships.
When Dual-Class Makes Sense
Dual-class is most defensible in companies where the founder's long-term vision is genuinely the source of value — typically deep-tech, R&D-heavy, or platform businesses where short-term financial performance is a poor proxy for long-term outcomes. Investors who back these companies often prefer a founder with strong control over a board that can be captured by short-term financial pressure.
Dual-class is harder to negotiate in consumer or SaaS companies where the strategic playbook is well understood and investors expect to influence direction through standard governance. New leads will resist dual-class because it limits their ability to drive change if performance disappoints.
Founders considering dual-class should establish the structure at incorporation (much easier than retrofitting later) and discuss it explicitly in seed-round term-sheet negotiations. By Series B it is typically too late — earlier investors who accepted single-class will resist the introduction of a structure that demotes their voting position. See [board composition and voting control](/captable/board-composition-voting-control) and [shareholder agreements](/captable/shareholder-agreements) for the broader control framework.