Understanding Dual Class Shares: A Malaysian Perspective

by | Jun 10, 2024 | Business, Contracts, Featured, Law

Understanding Dual Class Shares: A Malaysian Perspective


Dual class shares (DCS) have become a topic of interest in various financial markets around the world, including Malaysia. This structure allows companies to issue two classes of shares with different voting rights and dividend policies. The primary objective of DCS is to enable founders and key management personnel to retain control over the company even after going public, while still accessing capital from a broader investor base.

What Are Dual Class Shares?

In a dual class share structure, companies issue two (or more) types of shares, typically classified as Class A and Class B shares. The fundamental difference between these classes lies in the voting rights. Class A shares usually carry more voting power (e.g., 10 votes per share) compared to Class B shares (e.g., 1 vote per share). This structure is used mostly by family-owned business as well as founders and early investors in maintaining control over the company’s strategic decisions despite potentially holding a minority of the total equity.

Advantages of Dual Class Shares

  1. Founder Control: Founders can retain decision-making power, ensuring that their long-term vision for the company is not compromised by external pressures.
  2. Protection Against Hostile Takeovers: The structure makes it difficult for outside investors to gain control of the company, thereby protecting it from hostile takeovers.
  3. Stability: Long-term planning and stability are often promoted, as the founders and key executives can focus on growth without worrying about short-term market reactions.

Criticisms of Dual Class Shares

  1. Minority Shareholder Rights: Critics argue that DCS can lead to the disenfranchisement of minority shareholders who have limited influence on corporate governance.
  2. Potential for Abuse: There is a risk that the controlling shareholders might pursue personal interests at the expense of other shareholders.
  3. Reduced Accountability: With concentrated control, there might be less pressure on the management to perform efficiently, potentially impacting overall company performance.

More Than Two Class Shares?

In other jurisdictions, there are more than two class of shares.

Alphabet Inc (Google’s parent company), which is listed on the National Association of Securities Dealers Automated Quotations Exchange (NASDAQ), has issued triple class shares, namely Class A shares (bearing 1 vote each and issued to members of the public), Class B shares (bearing 10 votes each and issued to the company’s management and early investors) and Class C shares (bearing no votes and issued to employees of the company).

Snap Inc’s listing on the New York Stock Exchange (NYSE) was particularly noteworthy. Apart from the fact that it issued triple class shares, the company pushed the envelope further by issuing Class A non-voting shares to the public. Class B shares, which carry 1 vote each, were issued to the management and early investors, whereas Class C shares, which carry 10 votes each, were issued to the company’s co-founders, Evan Spiegel and Bobby Murphy. Control therefore lies only in the hands of Snap Inc’s co-founders, the management and early investors.

Dual Class Shares in Malaysia

As part of the revised Budget 2023, tabled on 24 February, the Malaysian government revealed its plan to allow the issuance of dual-class shares on Bursa Malaysia. This measure is to encourage the listing of local high-growth technology companies in Malaysia. Bursa Malaysia, the Malaysian stock exchange, has been exploring the potential implementation of DCS to attract high-growth, innovative companies that might otherwise list in more competitive markets like the United States or Hong Kong.

This potential listing development does not and has not stopped private limited companies in issuing DCS as long as it is provided for in the companies constitutions.

Notable Malaysian Examples

While the implementation of DCS is still in relatively new in Malaysia, an example of Grab Holdings Inc. could be looked at as an example of its application. Although Grab is primarily listed on the NASDAQ, it is an example of a Southeast Asian company, co-founded by Malaysians, that uses a dual class share structure. This setup has allowed its founders to retain control while raising significant capital from international investors. Anthony Tan, Grab’s co-founder, controls 62.4% of the voting power at Grab, which would allow him to pass most resolutions if they were put to a vote. This is despite him owning only 3.6% of the ordinary shares. The disparity between his ownership and control is due to Anthony holding only Class B ordinary shares under its DCS structure, with each Class B share having 45 votes, and other Class B shareholders having irrevocably assigned their voting power to him.


Dual class shares present an intriguing opportunity for Malaysian companies looking to tap into global capital markets while retaining control over their strategic direction. As the regulatory framework evolves, it will be crucial to address the potential downsides and ensure that the interests of all shareholders are adequately protected. With careful implementation, DCS could become a valuable tool in Malaysia’s corporate landscape, fostering innovation and growth.

NIK ERMAN NIK ROSELI Commercial Lawyer


Share This