This is highly country dependent, but in America for example, if this is not presented in your employment contract then it is not something your employer needs to do.

However, if your employer is a public organization then all of this information needs to be made available to shareholders. While you may not have access to this information, it is not secret and can be shared by any of the shareholders. Due to this, there is an implicit requirement to reduce risk and “cooking the books” while allowed is generally seen as risky since shareholders may run for the hills. In a smaller, privately run company there are no shareholders to run for the hills. Just a bunch of employees who hold paper IOUs. In order to get that audit protection, the employee would need to negotiate that into their employment agreement!

> The other side of the table has no legal right to audits or reviewing the books so the opportunity for fraud is huge.

Are private companies allowed to share some information with a subset of their investors and not others?

Well, they don't always get away with it. Depends on who gets pissed off.

I think you can nix the qualifiers - multiple classes of stock have inherent problems and should probably never be legal

At least in public companies there are enough safeguards where I think a reasonable person could be fine with it.

Not every company is a unicorn. For bootstrapped companies that might never sell, multiple classes of stock can be extremely useful for a variety of legitimate accounting and dividend purposes. One of the local law firm's company setup packages uses a de facto _six_ share classes.

I agree with your concerns re. transparency but I don't think eliminating share classes would fix that.

I'm super curious - what are the six classes and what's the reasoning behind them?

A common structure would be something like:

* Class A - voting shares, founders / controlling parties, etc. Typically small fixed share count (e.g. 100), not issued dividends directly but used to represent percent of controlling interest.

* Class B - non-voting shares, early stage employees, advisors, supporters, etc. Used to issue dividends.

* Class C - Same as class B but reserved for future issuance through more formal programs like ESOP when you're ready for that

Then you might have some preferred shares for investors, say class D and E for two investor groups and then a Class F for convertible debt (even bootstrapped companies can have owner / friends / family / seed / etc money, plus may want to not rule out raising at some point).

This is obviously a lot of classes, but by doing something like this you can separate control from economic upside, create different terms / stock agreements for different classes, keep room for future planning (things like ESOP), facilitate investor needs (they almost always want preferred shares), have more flexibility with fundraising or convertible debt, etc.

I'm not actually trying to argue that exactly six classes are necessary or optimal, but moreso that its common to want not just one single share class. Practically speaking I imagine that firm does six because they're trying to give a template that'll work for many of their companies and reduce the amount of per-customer customization. My company has less although more than one.

Ah, I'm thoroughly familiar with the idea of multiple share classes (although I must commend your excellent explanation and examples here) - I was actually particularly interested what their six choices were to cover the bases as a lowest common denominator etc. No worries at all if you can't say though, I get that.