Yahoo! a Modern Day Tale of Alibaba

Question: Is Jack Ma acting in the best interest of the company with regards to the transfer decision, given that Zhejiang Alibaba is 80% owned by himself? What are other possible alternatives?

Solution:

1. Is Jack Ma acting in the best interest of the company with regards to the transfer decision, given that Zhejiang Alibaba is 80% owned by himself?

* Yahoo, the owner of around 40% of Alibaba's stake, in mid-May said it was blindsided when Alibaba transferred ownership of Alipay earlier this year to a new company owned by Alibaba CEO Jack Ma. Alibaba and Mr. Ma said the transfer was legal and Yahoo was aware of the plans.

* In 2010, a new regulation termed the Second Ordinance was passed, requiring all online payment systems to be wholly owned by the Chinese in order to retain their operating licenses. Foreign owned systems had to undergo a separate application process, which was much more tedious and difficult.

* Alibaba arranged for Alipay to be transferred to Zhejiang Alibaba E-commerce Ltd (Zhejiang Alibaba). Zhejiang Alibaba was 80% owned by Jack Ma and 20% owned by Shihuang Xie, the co-founder and a key management executive of Alibaba.

* Beijing's new third-party payment services regulations allow only companies without any foreign shareholding to apply for a licence.

* If you want to operate, Alipay be China's central bank licensed online payment services. Therefore, the reconstruction of a local company to help the company reduce the time to receive a license.

* For his part, Jack Ma has insisted Yahoo! and Softbank were informed of the said transfer and acquisition is entirely consistent with the provisions of China

* Yahoo had accused Alibaba of transferring the ownership of Alipay to a company owned by Jack Ma without any intimation or board approval. As the owner of around 40% of Alibaba's stake, Yahoo found this move unacceptable. Alibaba countered the allegation citing the transfer of Alipay as a Chinese regulatory...