Jack Ma hands over control of Alibaba in symbolic form

Ma Yun announced the handover plan last month, starting from September 10 next year, he will step down as chairman of the board of directors and be replaced by Zhang Yong, the current CEO of the group.(Reuters)

Alibaba confirmed yesterday that this change is to reduce the administrative burden on Ma Yun. The company has submitted an application to the US Securities and Exchange Management Commission in July this year.

(Hong Kong Comprehensive News) Jack Ma, the founder of Chinese Internet giant Alibaba, has ceded control of Alibaba's variable interest entity (Variable Interest Entity, VIE), symbolically handing over control of the company.

Based on reports from the Financial Times, Wall Street Journal and Sina Technology, Alibaba confirmed yesterday that the change was to reduce the administrative burden on Ma Yun. The company had already submitted the application to the US Securities and Exchange Management Commission in July this year.

According to general understanding, due to the prohibition of foreign investment in China's Internet industry, Chinese technology companies will accept investment from foreign entities by splitting their companies into listed entities registered overseas and business operating entities in China.

According to Alibaba's 20-F filing with the U.S. Securities and Exchange Commission this month, control has passed from Jack Ma and co-founder Xie Shihuang to five new unnamed owners.

Alibaba stated that the company adjusted the shareholders of variable interest entities from Ma Yun and Xie Shihuang to control through limited liability companies and limited liability partnerships. These entities are indirectly held by Alibaba partners or management members through limited partnership entities..

Alibaba explained that this move will ensure that the Ali partner system plays a role in corporate governance, reduce the risk of key personnel, and improve the stability of the equity of variable interest entities.This adjustment does not involve equity adjustments at the Alibaba Group level. Jack Ma will still serve as a partner of Alibaba and continue to play an important role in the mechanism.

The Alibaba partners are made up of top executives who, although they don't own a large share of the company, have the power to nominate a majority of the company's board of directors.

Under the structure of variable interest entities, there may also be asset transfers that are unfavorable to other shareholders.In 2011, in order for Alipay to obtain a payment license smoothly, Jack Ma transferred the equity of Alipay to a purely domestic company under his own name without the consent of major shareholders Softbank and Yahoo.

Ma Yun announced the handover plan last month, starting from September 10 next year, he will step down as chairman of the board of directors and be replaced by the current group chief executive officer (CEO) Zhang Yong.