Partners retain right to increase board size to ensure majority of votes
Top executives of Alibaba Group have moved to ensure control of the e-commerce company and reserve the right to name two directors to its board without shareholder approval after its planned IPO, according to an amendment to an earlier SEC filing in the US.
A group of 27 Alibaba executives, which rules the group in a partnership, will appoint the two directors if the partnership board’s appointees together constitute less than half of the board after the company’s listing, the amendment says.
The group has until now retained the right to name four out of the nine board members after the IPO. If the two mooted additional directors are appointed, the board would grow to 11 members, six of whom would be appointed by the partners and include co-founder Jack Ma.
‘If at any time our board of directors consists of less than a simple majority of directors nominated or appointed by the Alibaba Partnership… the partnership will be entitled (at its sole discretion and without the need for any additional shareholder approval) to nominate or appoint such number of additional directors as necessary to… comprise a simple majority of our board of directors,’ reads Alibaba’s amended filing.
The amendment has also boosted Alibaba’s valuation to $133 bn, a sharp increase from the $119 bn suggested in a June filing. It also states that the company’s 2011 move to spin off online payment company Alipay, which angered many investors, came about because of uncertainty over licensing.
Alibaba’s IPO ‒ which could exceed $20 bn to become the largest-ever tech IPO ‒ could come as soon as the end of this month, the Wall Street Journal reports, citing ‘people familiar with the matter’. The newspaper says an Alibaba email to select investors reveals that the company’s shares may be trading on the NYSE as early as the middle of August.