Facebook intros dual-class structure

- Facebook has established a dual-class stock structure to ensure voting control by existing owners, but has no plans to become a public company.

"We did introduce a dual-class stock structure because existing shareholders wanted to maintain control over voting on certain issues, to help ensure the company can continue to focus on the long term to build a great business," said Larry Yu, a Facebook spokesman. "Facebook has no plans to go public at this time."

An analyst said he found the move unsurprising, because the social networking company has in some ways been modelling itself on Google, which long ago went to a dual-class structure.

"That is the exact same thing Google did," said Ben Schachter of Broadpoint AmTech. "The structure is a way to protect longer term interests against short-term pressures."

Schachter said that, without a dual-class structure, a majority of shareholders could force business decisions for short-term gains at the expense of the long-term success sought by the company's founders.

The social networking company, which has signed up more than 300 million users, has large investments from Microsoft and Russian investment company Digital Sky Technologies (DST).

Last month, DST began purchasing shares directly from Facebook's shareholders, two people familiar with the deal told Reuters at the time.

In July, DST purchased $100 million of Facebook shares from employees and ex-employees, at a $16.5 billion valuation.

Chief executive Mark Zuckerberg said in May an IPO was "a few years out".

Copyright 2010 Reuters Limited. All rights reserved. Republication and redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Headline

Comment

Name

Email

I have read and agree to the Terms of Usage.

Please enter the CAPTCHA characters below