What is AB Shares?
Basic Definition
- AB shares refer to a company issuing two classes of shares with different rights
- This can take the form of:
- Same shares with different voting rights
- Or different share classes with different rights
Common Structure
- For example:
- Class A: one share, one vote
- Class B: one share, multiple votes, or multiple shares for one vote
Requirements
- Must be clearly stated in the company’s Constitution
- The company must clearly define the rights attached to each class of shares
- To ensure investors fully understand their respective rights
Purpose and Impact
- AB share structure allows founders to retain control and decision-making power even after their shareholding is diluted
⚠️ Note: If the company plans to go public, the AB share structure must typically be removed, as it is not permitted for listing in Malaysia. The shares will need to be restructured into ordinary shares.