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Facebook Nixes Plan for New Stock Class Ahead of Court Fight
Court Watch |
2017/09/26 11:48
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Mark Zuckerberg said Friday that Facebook is withdrawing plans to create a new class of stock that would have let him keep tight reins on the social media company even as he sold down his stake to fund his philanthropy.
Zuckerberg had said in April 2016 that the plan for the new shares would let him fund his philanthropy goals while keeping control of Facebook. But shareholders sued, arguing the move would give an unfair economic advantage to the company's founder.
A class-action trial on the matter was due to start next week in Delaware but was called off with Zuckerberg's announcement. He had been slated to testify during the trial.
The billionaire CEO said in a Facebook post that because the value of Facebook's stock has grown, he can fully fund the philanthropy while still keeping voting control of the company for "20 years or more," making the stock-reclassification plan unnecessary.
Zuckerberg and his wife, Priscilla Chan, have committed to donating 99 percent of their wealth in their lifetimes. They plan to accelerate their philanthropic work and sell more Facebook shares, sooner, he said Friday.
A lawyer representing Facebook shareholders in a lawsuit against the company deemed it a win for clients.
"We're thrilled that Facebook has dropped the reclassification," attorney Stuart Grant said in a statement. "Today's move is a total victory for stockholders." |
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Class action or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued. This form of collective lawsuit originated in the United States and is still predominantly a U.S. phenomenon, at least the U.S. variant of it. In the United States federal courts, class actions are governed by Federal Rules of Civil Procedure Rule. Since 1938, many states have adopted rules similar to the FRCP. However, some states like California have civil procedure systems which deviate significantly from the federal rules; the California Codes provide for four separate types of class actions. As a result, there are two separate treatises devoted solely to the complex topic of California class actions. Some states, such as Virginia, do not provide for any class actions, while others, such as New York, limit the types of claims that may be brought as class actions. They can construct your law firm a brand new website, lawyer website templates and help you redesign your existing law firm site to secure your place in the internet. |
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