Does the type of ownership shares matter when determining if someone i

[Guest michaelv]

If ownership of a company is based on A and B shares of stock, with the difference being that B shares are non-voting shares, would that impact HCE determination?

For example, if there are 100 A shares and 100 B shares for a company, and Mr. A. owns 4 A shares and 20 B shares, is he an HCE?

YES: He owns 24 out of 200 shares of a company, which is 12%, making him HCE.

NO: Since only 4 of the shares are voting shares, he only owns 4 out of 100 shares, which is 4%, making him NHCE.

Thanks for any comments.

[David MacLennan]

I think he's an HCE. You use the rules under 416i, which state to use voting or non-voting stock, whichever gives 5% makes them an HCE. Also, options count as ownership too.

Non-voting preferred stock can be excluded for controlled group purposes, but not for HCE test.

[Guest michaelv]

I believe you are correct. After posting, I dug around some and arrived at the same answer.

Thanks for your help.