SAN FRANCISCO: A group of 27 top executives and investors in Alibaba Group Holding Ltd, including co-founder Jack Ma, can appoint another two directors to the company’s board once it goes public, according to a United States regulatory filing on Friday.
The move would expand the Chinese e-commerce company’s board to 11 members from nine and cement the group’s control over the board after Alibaba’s initial public offering (IPO) on the New York Stock Exchange later this year.
In its updated prospectus filed with the US Securities and Exchange Commission, Alibaba boosted its estimated value to US$130 billion (RM414 billion), up from more than US$116 million in earlier filings.
The company also gave a more detailed explanation of its controversial decision in 2011 to spin out its Alipay payments service, a PayPal-like affiliated established in 2004.
Ma started Alibaba in his one-room apartment in 1999 and has since branched out into areas as diverse as e-payments and financial investment. But its complex governance structure and Ma’s outside investments have raised questions about potential conflicts of interest and investors’ ability to sway Alibaba’s strategy and direction.
He and 26 other Alibaba co-founders and senior executives at the company and its affiliates are part of a powerful group dubbed the “Alibaba Partnership”. Alibaba has said the interests of the partnership may conflict with those of investors.
“This governance structure and contractual arrangement will limit your ability to influence corporate matters, including any matters determined at the board level,” Alibaba wrote.
Ma’s group already planned to designate four of Alibaba’s nine directors prior to its IPO. With the new disclosure, the group can name six of 11 directors if they expand the board.
Ma has an 8.9 per cent stake in Alibaba. Other investors in Alibaba include SoftBank Corp with a 34.3 per cent stake and Yahoo Inc, which owns 22.5 per cent.
In the updated filing, Alibaba said it needed to spin out Alipay and turn it into a domestic entity in 2011 to prevent delays in obtaining an operating licence under newly issued Chinese regulations.
Alibaba spun out Alipay to a group that includes Ma, who holds a 46 per cent stake in Alipay through another company, Zhejiang Alibaba E-Commerce Co.
Alipay provides the lion’s share of payment services for the company’s retail marketplaces.
“This action enabled Alipay to obtain a payment business licence in May 2011 without delay and without any detrimental impact to our China retail marketplaces or to Alipay,” Alibaba said. Reuters