Singapore-based e-commerce and gaming company Sea Limited is looking to increase its founder and chief executive Forrest Li’s voting power at its annual general meeting on February 14.
Chinese technology giant Tencent Holdings, a Sea backer, plans to convert all the Class B ordinary shares it holds to Class A ordinary shares, Sea said in a press release issued on Tuesday morning. If this gets the green light, Li will own all of Sea’s Class B ordinary shares.
Tencent’s agreement that gave Li voting power through its Class B ordinary shares by proxy will also end.
Li’s voting power will increase from 54% to 57% if this plan goes through.
Tencent will also be reducing its equity stake in the company from 21.3% to 18.7%, by divesting nearly 14.5 million Class A shares. Taken with the proposed voting rights changes, Tencent’s voting power will be reduced to less than 10%.
According to a term sheet seen by Reuters, Tencent is selling the shares at a price range of $208.00-$212.00 apiece and could potentially earn up to $3.1 billion from the sale.
Tencent said in a statement that it “intends to retain the substantial majority of its equity stake in Sea for the long term and will continue its existing business relationships with the company.”
The Chinese company has agreed not to sell anymore Sea shares in the next six months, Bloomberg reported.
Sea’s share price closed nearly 11.5% lower on Tuesday at $197.83, going below the $200 mark for the first time since January 2021.
Tencent’s move comes about two weeks after it announced it was parring its stake in e-commerce platform JD.com by issuing $16.4 billion worth of its JD.com stock as a dividend to shareholders.
Sea also plans to get shareholders to vote on increasing the voting power of each Class B ordinary share from three votes to 15 votes at the meeting.
At least 75% of the shareholders at the meeting have to approve the proposals for them to pass.
Sea said these moves are “in [its] best interests… in pursuing its long-term growth strategies to further clarify its capital structure”.
Founders of other large technology companies based in Southeast Asia are also known to control the majority of their company’s voting power. For example, through a dual-class structure, Grab’s founder and chief executive Anthony Tan has 60.4% in voting rights though he owns only 2.2% of Grab’s ordinary shares.
Editor’s note: This story has been updated to include Tencent’s share sale and comment.