China in Proceeds to Acquire Minority Shares of Tencent and Alibaba Subsidiaries

China is attempting to acquire minority holdings with special rights in the local subsidiaries of Tencent Holdings Ltd. and Alibaba Group Holding Ltd.

Beijing started purchasing these "golden shares," which typically represent 1% of a company, in private internet media companies more than five years ago in an effort to gain influence. Government-backed funds or businesses purchase these "golden stakes" in exchange for board seats and/or the ability to veto important corporate decisions.

According to the report, which cited people familiar with the matter and public records, an entity under the state investment fund established by China's internet regulator last week purchased a 1% stake in an Alibaba unit in Guangzhou in order to tighten control over content at the e-commerce giant's streaming video unit Youku and web browser UCWeb.

According to sources, the government's plan to acquire golden shares in Tencent is still being worked out, but it will involve a stake in one of the company's key operating subsidiaries in China.

Alibaba Group Holding Limited, or Alibaba, is a Chinese multinational technology corporation that specialises in e-commerce, retail, the Internet, and technology. The company, founded on June 28, 1999 in Hangzhou, Zhejiang, provides electronic payment services, shopping search engines, cloud computing services, and consumer-to-consumer (C2C), business-to-consumer (B2C), and business-to-business (B2B) sales services through web portals. It oversees a diverse portfolio of businesses in a variety of industries around the world.