Jack Ma To Cede Control of Ant Group After Regulatory Crackdown

Jack Ma is no longer the head of Ant Group.

The China-based company recently announced it would be ending agreements that allowed the Chinese business magnate to control it following a shareholding restructure caused by a regulatory crackdown.

Jack Ma previously criticized the Chinese Communist Party's (CCP) "pawnshop" financial regulators and state-owned banks for their policies being similar to those found in an "old people's club," per Business Insider.

Ant Group Shareholder Restructuring Details

Ant Group mentioned in its announcement that its shareholder restructures resulted in Jack Ma losing control over the company despite not sitting on the company's board of directors, with him now holding 6.2% from his previous combined 50.5% company stake.

Jack Ma was able to have this much control over Ant Group through his Hangzhou Yunbo and two other companies, according to the IPO prospectus cited by a CNN report.

Instead of Jack Ma holding the controlling stake in the company, he and nine other company executives and employees would have voting rights to use independently of one another.

Previously, Jack Ma had an acting-in-concert arrangement with fellow shareholders Eric Xiandong Jing, Simon Hu, and Fang Jiang to control the company's direction.

Ant Group said that this "more transparent and diversified" structure would not result in any change to the economic interests of any shareholder. It also expects that this change will help create opportunities to steadily develop itself further.

Additionally, the restructuring will also not affect the company's day-to-day operations.However, Ant Group didn't mention when it would implement its new shareholder structure.

The restructuring is the result of the CCP's latest crackdown on the company and the country's tech industry as a whole to curb its influence, per CNBC's interview with Trivium China tech analyst Linghao Bao.

It also serves as a way to prevent it from creating "unfair market competition" in the country.

You may remember that Jack Ma criticized the CCP and China's financial sector in a speech he delivered in Shanghai on Oct. 24, 2020. According to Jack Ma's speech, China's regulation system was hindering innovation while also comparing global banking rules to an "old people's club."

Since then, the Chinese government, particularly its regulators, went down hard on Jack Ma's companies, preventing Ant Group from launching its $37 billion IPO in November 2020 - the largest the world had ever seen had it gone through.

The Effects On The Company

Some analysts believe that Jack Ma ceding his control over Ant Group could give the company the opportunity it needs to revive its $37 billion IPO. However, this change may also cause a delay in that plan due to listing regulations.

China's domestic A-share market requires companies to wait three years after a change for it to list their shares publicly. Meanwhile, Ant Group would have to wait two years to launch its IPO on Shanghai's STAR market.

The same is also true in Hong Kong's stock exchange, with companies waiting a year after implementing changes for them to launch an IPO.