Introduction To Shares

In Malaysia, companies issue two main types of shares: Ordinary shares and Preference shares. But what sets them apart?

Dividend Rights:

• Preference shareholders get priority for dividends over ordinary shareholders.
• Ordinary shareholders receive dividends after preference shareholders.

Voting Rights:

• Preference shareholders typically don’t have general voting rights but may vote on matters affecting their rights.
• Ordinary shareholders have voting rights, usually one vote per share, influencing company decisions.

Importance Of Voting Rights

Voting rights allow shareholders to influence crucial decisions like choosing the board of directors and major moves such as mergers. More voting rights mean more influence on the company’s direction.

What Are Dual-Class Shares (A/B Shares)?

Dual-Class Shares (DCS) structure is common among publicly traded companies in the United States. It divides ordinary shares into Class A (for the public) and Class B (for founders), offering different voting rights.

• Class A shares have limited voting rights, while Class B shares grant more voting power.
• For example, Class A shares might offer one vote per share, while Class B shares might offer ten votes per share.

Can SMEs In Malaysia Implement A DCS?

Yes, small and medium-sized enterprises (SMEs) in Malaysia can adopt DCS. While more common among larger corporations in the United States, SMEs can benefit too. Seeking professional advice is wise to align this approach with their objectives.

Can A Company With DCS Be Listed On BURSA Malaysia?

Yes. The Malaysian government announced plans to allow the listing of dual-class shares on Bursa Malaysia to encourage high-growth tech companies to list locally.

Company Example

Grab Holdings Inc. is a notable example. Despite owning only 3.6% of ordinary shares, co-founder Anthony Tan maintains majority voting power, empowering strategic control while accessing public capital markets.

Conclusion

Dual-class shares offer a structure where certain shareholders, often founders, have more voting power, ensuring control over company decisions.

Disclaimer: The contents of this write-up is intended for general informational purposes only and does not constitute legal advice.