Alibaba shareholders OK 1-to-8 stock split, may ease potential Hong Kong listing

Alibaba Group Holding’s shareholders overwhelmingly approved a 1-to-8 split of the company’s US-listed stock, a move the company has said would give it greater flexibility for raising capital, including issuing new shares, according to a US securities filing late on Monday.

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The approval comes as the company is reportedly considering a secondary listing of its shares in Hong Kong.

Bloomberg previously reported that Alibaba, the operator of the world’s largest ecommerce platform, is considering raising as much as US$20 billion in the offering.

In addition to increasing the company’s flexibility for future capital-raising activities, the split would increase the number of shares available for issuance at a lower per-share price. Alibaba’s American Depositary Shares (ADS) closed on Monday on the New York Stock Exchange at US$173.50, up 2.6%.

Alibaba is the parent company of the South China Morning Post.

Under the changes, one ADS, which currently represents one ordinary share, will represent eight ordinary shares. Voting rights of shareholders will remain the same.

The company said that the share split would not result in a gain or loss or realization of taxable income to shareholders under US tax law.

Shareholders also approved the reelection of Daniel Zhang Yong, Alibaba’s chief executive, and three other directors to the company’s board.

The other directors who were re-elected are: Chee Hwa Tung, vice chairman of the Thirteenth National Committee of the Chinese People’s Political Consultative Conference; Jerry Yang, co-founder of Yahoo Inc.; and Wan Ling Martello, former chief executive for Asia, Oceania and Subsaharan Africa for Nestle SA. Shareholders also ratified the appointment of PricewaterhouseCoopers as the independent registered public accounting firm for fiscal year 2020.

The Hangzhou-based company has not confirmed whether it would seek a secondary listing in Hong Kong, saying it does not comment on market rumors.

It has been listed on the New York Stock Exchange since 2014, when it raised US$25 billion in its initial public offering.

At the time, Alibaba expressed frustration with Hong Kong’s listing rules, with the company’s vice chairman, Joe Tsai, writing in a blog post that “the question Hong Kong must address is whether it is ready to look forward as the rest of the world passes it by.”

The city’s stock exchange operator, Hong Kong Exchanges & Clearing Limited, and the Securities and Futures Commission have adopted a series of reforms to the city’s rules, including allowing listings by dual-class share companies, such as Alibaba.