Meta to distribute non-voting Class C shares at a 1:1 ratio, paving the way to raise capital for AI while preserving Zuckerberg’s 60.6% voting power.

Meta’s board of directors has approved the creation of Class C shares, a new class of stock that is essentially non-voting. The plan was announced Wednesday, alongside the company’s third-quarter results. Under the plan, holders of Class A and Class B shares will receive one additional Class C share for each share they currently own. The new class of shares will be established on January 19, 2027, and the distribution must be completed within five business days of that date.

In effect, a 1-for-1 stock dividend has a similar impact to a 2-for-1 stock split and does not change any shareholder’s voting power. The key point is that Meta can sell Class C shares to raise cash, use them as compensation, or pay for acquisitions without diluting Mark Zuckerberg’s control.

According to a filing with the U.S. Securities and Exchange Commission (SEC), as of October 1, Zuckerberg held about 60.6% of the total voting power, despite having an economic interest of just 13.4%. The gap stems from Meta’s dual-class share structure, under which each Class B share carries 10 votes, 10 times the voting power of a Class A share. Zuckerberg currently beneficially owns about 341 million Class B shares.

$700 billion in potential financing and constraints on the founder

The filing said Moelis’s advisers had told a special committee of the board that Meta could raise about $700 billion in equity over several years before Zuckerberg’s voting power fell below 50%. Management also cited a need to raise “hundreds of billions of dollars,” potentially beginning in fall 2026. However, speaking with analysts, Chief Financial Officer Susan Li said this was only a theoretical maximum and did not reflect current fundraising plans. The size and timing of any share sale have not been disclosed.

To balance interests, the Founder Alignment Agreement, signed on October 20, allows Zuckerberg to freely sell only 20% of the Class C shares he receives. For the remaining 80%, he generally must also sell or convert a corresponding amount of Class A or Class B shares within two business days. The agreement also requires him to remain a resident of California, or wherever Meta’s headquarters is located, for eight years. According to the filing, Proposition 40, a wealth tax measure scheduled to go to a vote on November 3, could leave Zuckerberg owing billions of dollars in taxes. If he sold Class B shares to cover the bill, his voting power could fall to about 53%.

The board also agreed to continue issuing Class C shares as a 1-for-1 stock dividend whenever the 30-day volume-weighted average price (VWAP) reaches successive doubling thresholds relative to the September 10 reference price of $580.60 for Class A shares, provided the compound annual growth rate in shareholder returns is at least 10% per year.

Nevertheless, the filing warned that Class C shares are likely to trade at a discount to Class A shares, forcing Meta to issue more shares when raising capital. In addition, Class C shares are not treated as voting stock under Section 368(a) of the U.S. Internal Revenue Code, so a business seller seeking to defer taxes could require a different transaction structure.