Bloomberg News
HONG KONG—When JD.com Inc.’ billionaire founder and Chief Executive Liu Qiangdong was arrested last week on suspicion of rape, his company’s board of directors was technically powerless.
That’s because the Chinese e-commerce giant’s JD, +3.12% bylaws say the board isn’t allowed to hold a formal meeting without Liu being present, or unless he recuses himself. JD.com even spells out that “any confinement against his will” wouldn’t merit an exception to this rule, although permanent mental or physical incapacity would.
It is a highly unusual clause, corporate governance experts say, although not unique: Chinese entrepreneur Forrest Li has a similar rule in place at his online firm, Sea Ltd.
And it shows Liu’s tight control of his company—worth $38 billion by market value—even by the standards of global technology companies, whose founders often wield greater voting power than their economic stakes would allow.
In China, several high-profile CEOs have been jailed or detained in recent years, which could explain why JD has such a clause.
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