Alibaba founders to enjoy greater control after planned IPO

E-commerce firm Alibaba's planned initial public offering (IPO) will limit Japan-based Softbank's voting rights, while the firm's founders will enjoy a greater control.

The firm's IPO prospectus states that SoftBank, which currently owns the biggest stake (34.4 per cent) in it, would have the right to nominate one member to the listed firm's board, but it would not be able to remove any director nominated by the firm's controlling partners without the permission of co-founders Jack Ma and Joe Tsai.

After the IPO, SoftBank's stake in Alibaba will slip to around 30 per cent, but it will grant voting power of any portion of more than 30 per cent to a voting trust under founders Ma and Tsai's directions. In case, the Japanese bank reduces its stake in the firm to below 15 per cent, it will lose its right to nominate any director to the firm's board.

Alibaba was founded around fifteen years back in Hangzhou, China-based apartment of Jack Ma, who started the company with an initial investment of $60,000 raised by his 18 friends.

SoftBank bought a stake in Alibaba in 2000. SoftBank founder and chief executive officer Masayoshi Son has been a member of Alibaba's board since 2000.

American internet firm Yahoo used to be the e-commerce firm's largest shareholder, but offloaded some of its stake to Alibaba in 2012. Under the terms of the deal, Alibaba can buy back more of Yahoo's stake if it goes public by December 2015.

Alibaba's top two e-commerce sites, viz. Taobao and Tmall, get more than one hundred million unique visitors per day. Last year, the sites sold goods worth around $240 billion, more than popular e-commerce sites eBay and Amazon combined.

Companies: 
General: