At Moelis & Co., Founder Will Have 97% of Votes

When Kenneth D. Moelis moved last month to take his investment bank public, it was clear that he would exert a considerable degree of control over the company he founded.

But the level of that control was not disclosed until Friday. Mr. Moelis, a veteran deal maker, will hold 96.6 percent of the votes in his company after it goes public, an amended prospectus showed.

That is because he will own all of the 36.3 million shares of Class B stock, which have 10 votes each. He will also own 2.3 million shares of Class A stock, or about 15.4 percent of that class, which have one vote each. Class A shares are being sold to investors in the initial public offering.

Dual-class ownership structures are prevalent among technology and media companies, including Facebook and The New York Times. Just this week, Google introduced a third share class, Class C, that is expected to help the insiders retain their control.

But the disclosure about Moelis & Company’s plans on Friday raised eyebrows among some corporate governance experts who are critical of such ownership structures.

“The whole point of the structure is to cash out and yet keep control â€" having your cake and eating it, too,” said Charles M. Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “But for the shareholders, it’s a potentially bad cake, ultimately.”

In effect, there’s not much difference between holding 51 percent of the voting power and holding almost all of it, Mr. Elson said. Still, in Mr. Moelis’s case, the high degree of control could protect his influence over time, if he ever sells stock or if more shares are issued.

At Facebook, Mark Zuckerberg, the chief executive, held 57.5 percent of the voting power immediately after the I.P.O. That power has allowed him to move quickly in buying companies like WhatsApp and Oculus VR.

From one perspective, it makes sense that Mr. Moelis has an iron grip on his firm, said Jon Lukomnik, executive director of the Investor Responsibility Research Center Institute. Investment banking is a business built on relationships â€" and Mr. Moelis’s Rolodex underpins his firm’s success.

“It’s not like a major utility company where the asset is a power plant,” Mr. Lukomnik said. “You’re buying his address book and contacts and ability to do deals.”

In its prospectus, the company acknowledges how reliant it is on Mr. Moelis.

“We depend on the efforts and reputations of Mr. Moelis and our other executive officers,” the section on risk factors reads. “The loss of the services of any of them, in particular Mr. Moelis, could have a material adverse effect on our business, including our ability to attract clients.”