Conversion shares or C shares are issued by investment trusts to raise money and allow investors to subscribe for new shares without negatively affecting existing shareholders. The C shares will convert to ordinary shares when either a predetermined level of investment is achieved or on a predetermined date.
What is Class A and Class B shares?
When more than one class of stock is offered, companies traditionally designate them as Class A and Class B, with Class A carrying more voting rights than Class B shares. Class A shares may offer 10 voting rights per stock held, while class B shares offer only one.
Are C shares a good investment?
The Basics of Class C Shares Compared to other mutual fund share classes, class C shares often have lower expense ratios than class B shares. As a result, Class C shares may be a good option for investors with a relatively short-term horizon, who plan to keep the mutual fund for just a few years.
How are Class C shares different from Class A shares?
Compared to other mutual fund share classes, class C shares often have lower expense ratios than class B shares. However, they have higher expense ratios than class A shares. Expense ratios are the overall annual management costs of running a mutual fund.
How many share classes can a company have?
There are, however, no legal restrictions on how many share classes a company can have. Increasingly, companies are choosing to either incorporate with more than one share class or having incorporated with just one share class, either split the existing ordinary shares into multiple share classes or create an additional share class.
When to buy Class C mutual fund shares?
Class C mutual fund shares are best for investors who have a short time horizon and plan on redeeming their shares soon. While there are no front-end fees with Class C shares, a back-end load is charged if funds are withdrawn within the first year. Additionally, investors who purchase Class C shares could pay a high annual management fee.
What happens to a C share in a company?
The “C” shareholders will only receive any return of capital if both the “B” and “A” shareholders have received a return of the nominal value of their shares in full. A particular shareholder may just have shares in one share class.
