Business

Facebook on its way to become a public company
by Zuzana Zelenakova

Social networking site Facebook has taken an initial step on a way to become a public company. The company announced Tuesday that it is in the process of creating a dual-class stock structure, which means different classes of stock varying in voting rights, dividend payment or other. Class B shares will have ten times stronger voting right than class A shares, which are expected to be sold in initial public offering (IPO) eventually. However, Facebook made it clear that it “has no plans to go public at this time.” For now all current shares are class B and they will remain that way until the owner sells them in IPO. “We did introduce a dual-class stock st! ructure 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,” a Facebook spokesman, Larry Yu, said in an e-mailed statement. “This revision to the stock structure should not be construed as a signal the company is planning to go public,” he added. There is lot of controversy around dual-class stock structure. The founder and the biggest shareholder of Facebook 25 year old Mark Zuckeberg confirmed in several interviews that the company plans to go public eventually and when that happens shareholders will have firmer grip over their investments thanks to the dual-class system, which will also make it easier to drive back undesirable suitors. On the other side, there are claims about the system being unfair by allowing a small group of shareholders to hold the reins while others provide the capital. Other well known companies that hav! e the dual-class system are the Ford Motor Company, The New Yo! rk Times Company, EchoStar Communications, Hewlett Packard, Viacom, Visa International and others.

related story (sgx16004): http://tech.yahoo.com/news/ap/20091124/ap_on_hi_te/us_tec_fa...

by Zuzana Zelenakova for PocketNews (http://pocketnews.tv)

PocketNews is a new real-time news broadcaster delivering the latest and hottest news right to your pocket ! With global clients who want to be kept up to date, PocketNews is everyone's way of keeping in touch with the World.

posted by Blog TechSource @ 1:55 PM