Google Inc. (NASDAQ: GOOGL) is creating a new public holding company called Alphabet Inc. This represents what may be a paradigm shift in the company’s reporting structure, as well as who is running the day-to-day operations at Google. It is also going to leave many shareholders scratching their heads.

Google will to be asking shareholders to trust management here, albeit new management. Without much surprise, Google shares rose 5% or so in the after-hours session on this news. The belief is that this streamlines the business structure. Still, we have to see what this really means for the Google structure and holders before making a final judgment — and a lot of the issues here will not be known for quite some time.

The new operating structure is said to increase management scale and focus on its consolidated businesses. The main Google business will include search, ads, maps, apps, YouTube and Android, and the related technical infrastructure.

Businesses such as Calico, Nest and Fiber, as well as its investing arms, such as Google Ventures and Google Capital, and its incubator projects, such as Google X, will be managed separately from the Google business.

Under the new operating structure, Larry Page will become the chief executive officer of Alphabet and Sergey Brin will become the president of Alphabet. Dr. Eric Schmidt will become the executive chairman of Alphabet, with Ruth Porat the senior vice president and chief financial officer.

David C. Drummond will become the senior vice president, corporate development, chief legal officer and secretary of Alphabet.

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Larry, Sergey, Eric and David will transition to these roles from their respective roles at Google, whereas Ruth will also retain her role as the CFO of Google.

After the completion of the Alphabet merger, Sundar Pichai will become the new CEO of Google Inc. — he is currently the senior vice president of products at Google, and he oversees product management, engineering and research efforts for Google’s products and platforms. Prior to his current role, he served as Google’s senior vice president of Android, Chrome and Apps.

Google calls this a “Holding Company Reorganization” and it will result in Alphabet owning all the capital stock of Google. The company said:

Alphabet will initially be a direct, wholly owned subsidiary of Google. Pursuant to the Alphabet Merger, a newly formed entity (“Merger Sub”), a direct, wholly owned subsidiary of Alphabet and an indirect, wholly owned subsidiary of Google, will merge with and into Google, with Google surviving as a direct, wholly owned subsidiary of Alphabet. Each share of each class of Google stock issued and outstanding immediately prior to the Alphabet Merger will automatically convert into an equivalent corresponding share of Alphabet stock, having the same designations, rights, powers and preferences and the qualifications, limitations and restrictions as the corresponding share of Google stock being converted. Accordingly, upon consummation of the Alphabet Merger, Google’s current stockholders will become stockholders of Alphabet. The stockholders of Google will not recognize gain or loss for U.S. federal income tax purposes upon the conversion of their shares in the Alphabet Merger.

The Alphabet Merger will be conducted pursuant to Section 251(g) of the General Corporation Law of the State of Delaware, which provides for the formation of a holding company without a vote of the stockholders of the constituent corporations. Effective upon the consummation of the Alphabet Merger, Alphabet will adopt an amended and restated certificate of incorporation and amended and restated bylaws that are identical to those of Google immediately prior to the consummation of the Alphabet Merger, except for the change of the name of the corporation as permitted by Section 251(g). Furthermore, the conversion will occur automatically without an exchange of stock certificates. Stock certificates previously representing shares of a class of Google stock will represent the same number of shares of the corresponding class of Alphabet stock after the Alphabet Merger. Following the consummation of the Alphabet Merger, shares of Class C Capital Stock and Class A Common Stock will continue to trade on the NASDAQ Global Select Market under the symbol “GOOG” and “GOOGL” respectively. With respect to Alphabet stock, Larry, Sergey, Eric and their respective specified affiliated entities, as well as Alphabet, will be bound, without any modification, by the same restrictions, undertakings and obligations that are imposed under the Transfer Restriction Agreements, related Joinders and other documentation entered into in connection with the prior settlement of the litigation relating to Class C Capital Stock.

Upon consummation of the Alphabet Merger, the directors of Alphabet will be the same individuals who are the directors of Google immediately prior to the Alphabet Merger.

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Here is where this gets to another “trust me” area for shareholders. The financial reporting’s new legal and operating structure will be introduced in phases over the coming months and, when finalized, Google anticipates that it will result in two reportable segments for financial reporting purposes, with the Google business presented separately from other Alphabet businesses taken as a whole. Accordingly, Alphabet will report its results under this new structure commencing with its fourth-quarter earnings release and its annual report on form 10-K for the period ending December 31, 2015.

Google also noted even more changes here. Concurrently upon completion of the Alphabet merger, Omid Kordestani will transition from his role as Google’s chief business officer to become an advisor to Alphabet and Google.

Google’s official blog post said:

What is Alphabet? Alphabet is mostly a collection of companies. The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main internet products contained in Alphabet instead. What do we mean by far afield? Good examples are our health efforts: Life Sciences (that works on the glucose sensing contact lens), and Calico (focused on longevity). Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related. Alphabet is about businesses prospering through strong leaders and independence. In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed. We will rigorously handle capital allocation and work to make sure each business is executing well. We’ll also make sure we have a great CEO for each business, and we’ll determine their compensation. In addition, with this new structure we plan to implement segment reporting for our Q4 results, where Google financials will be provided separately than those for the rest of Alphabet businesses as a whole.

This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google. A key part of this is Sundar Pichai. Sundar has been saying the things I would have said (and sometimes better!) for quite some time now, and I’ve been tremendously enjoying our work together. He has really stepped up since October of last year, when he took on product and engineering responsibility for our Internet businesses. Sergey and I have been super excited about his progress and dedication to the company. And it is clear to us and our board that it is time for Sundar to be CEO of Google. I feel very fortunate to have someone as talented as him to run the slightly slimmed down Google and this frees up time for me to continue to scale our aspirations. I have been spending quite a bit of time with Sundar, helping him and the company in any way I can, and I will of course continue to do that. Google itself is also making all sorts of new products, and I know Sundar will always be focused on innovation — continuing to stretch boundaries. I know he deeply cares that we can continue to make big strides on our core mission to organize the world’s information. Recent launches like Google Photos and Google Now using machine learning are amazing progress. Google also has some services that are run with their own identity, like YouTube. Susan is doing a great job as CEO, running a strong brand and driving incredible growth.

Sergey and I are seriously in the business of starting new things. Alphabet will also include our X lab, which incubates new efforts like Wing, our drone delivery effort. We are also stoked about growing our investment arms, Ventures and Capital, as part of this new structure.

Alphabet Inc. will replace Google Inc. as the publicly-traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all of the same rights. Google will become a wholly-owned subsidiary of Alphabet. Our two classes of shares will continue to trade on NASDAQ as GOOGL and GOOG.

The long and short of the matter is that investors are going to have to play a game of wait and see before they really understand how this works out. 24/7 Wall St. said when Google conducted its stock split that it was really an issue of taking more control by creating the two public classes of shares.

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Google’s shareholders already had to accept that they had no real vote that matters in how the company is run. Now they get that plus being confused over what the real structure will be ahead.

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