Question

Classified stock differentiates various classes of common stock, and using it is one way companies can meet special needs such as when owners of a start-up firm need additional equity capital but don't want to relinquish voting control.A. TrueB. False

Answer 1

Answer: True

Explanation:

Classified stocks are referred to as the stocks of a publicly-traded company which possess different classes of stocks. Classified shares typically has some special privileges, like the dividend rights and the enhanced voting rights.

The use of classified stock allows the founders of a company to have control over the company despite not having to own the majority of the common stock. Therefore, the correct option is True.