Facebook’s May Issue New Stock Runs Into a Lawsuit: On Friday, the Facebook Inc shareholder filed a proposed class action lawsuit, in a bid to stop the company’s plan to issue the new Class C stock., calling to the move in an unfair deal to entrench the Chief Executive Mark Zukerberg as the controlling shareholder.
Facebook’s May Issue New Stock Runs Into a Lawsuit
This lawsuit was filed on Wednesday in the Delaware Court of the Chancery and it is followed by the social networking company’s announcement, for its plan to issue the shares.
The Facebook’s rejiggering shares the structure which is effectively a 3-for-1 stock split. In December, Mark Zukerberg’s said that he intends to put 99 percent of his Facebook shares into the new philanthropy project which is focusing on the human potential and equality.
The lawsuit contends that the Facebook board committee which was approved to share deal, now did not bargin hard, in order to obtain the anything of meaningful value with Zukerberg, in exchange for granting the Zuckerberg added control.
Facebook in a statement said that, it is in the best interests of the company and all the stockholders. The company also stated that keeping Zuckerberg at the helm is the key to its future success.
Now, Facebook plans to create the new class of shares that are publicly listed but it does not have voting rights. Facebook will be going to issue the two of the so-called ‘Class C’ shares for each of the outstanding Class A and Class B that are share by the shareholders and the new Class C shares will now publicly have traded under the new symbol.
Also Read: Now you can earn cash by posting on Facebook
Zuckerberg, now wishes to retain this power, while selling off the large amounts of his stockholdings and reaping the billions of dollars in proceeds, stated by the lawsuit.
The issuance of the Class C stock will be in effect and have the same effect as a grant to the Zuckerberg for the billions of dollars in the equity and for that he will not pay nothing.