Facebook prepares for IPO, sets up dual class stock structure

Social networking site Facebook has taken the first step for an initial public offering (IPO) in the future by setting up a dual-class stock structure on Tuesday to ensure voting control over the company by founder Mark Zuckerberg and other existing investors.

The Palo Alto-based company is creating a dual-class stock structure and converting all of its current shares into Class B shares, which will have 10 votes each. It said the reason for doing it was, "Because existing shareholders wanted to maintain control over voting on certain issues" and "focus on the long-term."

Class A shares, which would be sold in an IPO, would carry one vote. Currently, Zuckerberg, Marc Andreessen, Jim Breyer, Don Graham and Peter Thiel are on the board of Facebook.

By making this move, the current shareholders will have 10 times the voting power on corporate governance.

Although the company said that it has no plans to go public at this time, analysts say that such dual-class stock structures are not unusual and indicate that the company is planning to go public.

Dual-class stock structures typically gives existing shareholders special voting shares to maintain control of the company in the event it sells shares to the public to raise money.