Alibaba Stock holders to Gain Huge as Lock Up Shares Expires
Insiders that bought 437 million shares of Alibaba Group prior to the company’s IPO will make create a major profit if they sell or trade shares as earliest lock up period for the stocks expired last March 11. The total lock up represents around 18 percent of Alibaba’s shares that if sold will be worth just $37 billion as of Friday’s closing price.
Among the 437 million shares, 100 million is subjected to trading restrictions that will apply to employees until the company released a report in May. A larger lock up of more than a billion shares that was held by insiders including Jack Ma and Yahoo Inc. will expire in September. Current and former Alibaba employees are holding around 26.7 percent of the company after building up holdings through stock options and other incentive since 1999.
If these shareholders decide to sell or trade their shares, the tax to be paid will be in the billions of US dollars as China taxes its residents 20 percent on capital gains. Based on US securities filings, Chinese citizens or residents who lived for more than a year in China were required to register with the State Administration of Foreign Exchange once the company is public. But as the expiring lock up shares are obtained at different times and costs the share holders gains are unknown.