Meta to create non-voting shares to fund AI expansion, retain Zuckerberg’s control
Meta Platforms plans to introduce publicly traded non-voting Class C shares to fund AI investments, acquisitions and employee compensation while preserving Mark Zuckerbergs voting control. The proposed one-for-one share distribution is expected to begin trading in January 2027.
Meta Platforms plans to create a new class of non-voting shares to help finance its artificial intelligence ambitions, fund acquisitions and compensate employees while preserving Chief Executive Officer Mark Zuckerberg’s control over the social media giant.The proposed Class C shares will be publicly traded and distributed to existing shareholders on a one-for-one basis, effectively splitting Meta’s stock two-for-one.
The new shares are expected to begin trading in January 2027, according to a company filing cited by Reuters.US MarketsPowered ByAs on 24 Oct 2026, 01:30 AM ISTS&P 500 Top GainersCrown Castle85.97(9.06%)CrowdStrike Holdings257.57(8.25%)Palo Alto Networks380.55(7.22%)SLB53.06(7.08%)Gainers»S&P 500 Top LosersLKQ17.42(-22.47%)Coterra Energy32.56(-8.62%)Globe Life154.79(-8.09%)AT&T20.93(-7.96%)Losers»Meta said the shares would provide additional flexibility to raise capital and support other corporate purposes.
The company expects to issue new shares periodically as it pursues its business objectives.Read more: Global Market: China's yuan hits four-year high as dollar weakens ahead of policy meetingsThe move comes as Meta ramps up spending on AI infrastructure, including data centres, semiconductors and computing capacity, amid intensifying competition among technology companies to develop advanced AI systems.Live EventsMeta has forecast capital expenditure of $135 billion to $145 billion for 2026, highlighting the scale of investment required to expand its AI capabilities.
The company said the unprecedented funding needs made additional financing options increasingly important.Relying heavily on debt to finance such investments could put pressure on credit ratings and balance sheets, making equity financing an attractive alternative, Meta said in its filing. The company wants the new share class to be available as early as the end of 2026.Read more: Global Market: South Korean shares fall over 1% as AI trade concerns weigh; won strengthensNew share structure to protect Zuckerberg's voting powerThe proposed arrangement would allow Meta to issue equity without significantly diluting Zuckerberg's voting control.Zuckerberg maintains control through his Class B shares, which carry greater voting rights than the company's publicly traded Class A shares.
The new non-voting Class C stock would allow Meta to raise funds, finance acquisitions and provide employee compensation without issuing additional voting shares.Preserving Zuckerberg's leadership was a key objective of the recapitalisation, according to Meta's special committee. The committee said Zuckerberg would not support a significant equity financing if it reduced his voting control.The committee also considered provisions that would eventually end the company's dual-class share structure under certain circumstances, including Zuckerberg's death, disability, departure from the company or a substantial reduction in his ownership stake.
However, Zuckerberg indicated he would not support such provisions or any arrangement that could cause him to lose voting control.The structure follows a model used by other founder-led technology companies, most notably Alphabet, Google's parent, which introduced non-voting shares in 2014.Zuckerberg to receive 342.4 million Class C sharesUnder the proposal, all existing shareholders will receive one Class C share for every Class A and Class B share they own.As of October 1, 2026, Zuckerberg beneficially owned approximately 341.2 million Class B shares and 1.2 million Class A shares, representing about 60.6% of Meta's voting power and a 13.4% ownership stake.He would therefore receive approximately 342.4 million Class C shares under the proposed distribution, according to details cited by Reuters.However, restrictions will apply to the sale of these shares.
Under a separate Founder Alignment Agreement, only 20% of the Class C shares received by the holder group, comprising Zuckerberg and certain permitted transferees, will be immediately available for sale.The remaining shares will be subject to restrictions intended to prevent Zuckerberg from monetising his stake without a corresponding reduction in his voting influence.Alphabet provides precedent for non-voting sharesAlphabet's experience offers a precedent for Meta's proposed restructuring.Google announced a non-voting Class C share dividend in April 2012, prompting a Delaware shareholder class-action lawsuit.
The company subsequently reached a settlement that was approved by the court in October 2013.Under the settlement, Google agreed to compensate Class C shareholders if the new shares traded at a discount of more than 1% to its Class A shares during the first year.The Class C dividend was distributed on April 2, 2014. In 2015, Google determined that it owed Class C shareholders an adjustment payment of $522 million based on the price difference between the two share classes.Meta's proposal similarly seeks to provide greater financing flexibility while maintaining the founder's influence over corporate decisions.Potential wealth tax also features in the proposalThe proposed share structure could also give Zuckerberg greater flexibility to manage his personal finances amid a potential wealth tax in California.According to the filing, Zuckerberg told Meta's special committee that he was evaluating whether to relocate because of the potential tax liability associated with California's Proposition 40, a proposed wealth tax on the November 2026 ballot.The proposal would impose a one-time 5% tax on the net worth of billionaires who were California residents on January 1, 2026.
Unlike an income tax, the measure would target accumulated wealth.The new non-voting shares could let Zuckerberg sell some of his holdings without immediately surrendering voting control, offering another option for managing potential tax exposure.Meta's board said Zuckerberg's existing ownership stake already aligned his interests with those of shareholders and did not justify additional cash compensation or equity awards.
The company said it had maintained this position for several years.The proposed restructuring comes as Meta faces substantial investment requirements in AI and seeks to preserve financial flexibility without compromising the governance structure that keeps Zuckerberg firmly in control.(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)(You can now subscribe to our ETMarkets WhatsApp channel)
