In Alibaba's latest filings with the U.S. Securities and Exchange Commission (SEC), it said Ma this year initiated a bonus program that allowed senior executives and Alibaba staff to acquire share rights at an affiliated company he controls.

Alibaba on Tuesday underscored the potential conflict of interest from Ma's role as Alibaba's executive chairman and as the controlling shareholder at the company which holds Alibaba's affiliated Alipay payment business - even as the company said it was forging a closer relationship with the unit.

"If conflicts arise," Alibaba said in an amended SEC filing, "such conflicts may not be resolved in our favor."

Companies routinely amend their filings ahead of an IPO. In Tuesday's filing, Alibaba expanded its "risk factors" comments, but it was not clear whether this reflected any concerns raised by the SEC or potential investors.

Alibaba's CEO Jonathan Lu, chief people officer Lucy Peng, and chief risk officer Shao Xiaofeng, are among 20 senior executives who have benefited from the bonus program, taking share rights which provide the holder with the economic benefits of the stock, company registration documents show.

All 20, along with Ma, are members of the Alibaba Partnership, the 27-member group which will have the exclusive right to nominate a majority of Alibaba's board of directors, documents show.

A bonus scheme granting employees at a listed company shares in an unlisted affiliate doesn't raise any legal concerns, but it is unusual for a firm to allow an executive to independently determine compensation, corporate governance experts say.

The scheme potentially further separates Alibaba investors from voting control of the company, said Charles Elson, director at the Center for Corporate Governance at the University of Delaware. "For investors, it's a troubling structure. Public shareholders are going to put up lots of capital, but get very little back in terms of control."

The rewards program, which Ma intends to continue using, may also deepen the 49-year-old executive chairman's control of Alibaba's executive management, and allow him to further influence how the company's board is selected.

"Alibaba is doing many things that go against what is considered best practice in corporate governance," said Paul Gillis, an accounting professor at Peking University's Guanghua School of Management. "These kinds of structures can be dangerous in a large organization because they lack transparency and may misalign the interests of shareholders and employees."

PAYMENT, FINANCIAL SERVICES

Ma this year began distributing share rights for Zhejiang Alibaba E-Commerce (Small and Micro Financial Services Co), a Hangzhou-registered company that holds Alipay and other financial services licenses. Ma stripped Alipay from Alibaba four years ago in a controversial move that damaged relations with major shareholders, led by Yahoo Inc (>> Yahoo! Inc.).

Alibaba's 20 executives acquired about 42 percent of Small and Micro Financial Services' shareholding rights through participation in Hangzhou Junao Equity Investment Partnership, an entity registered late last year which is controlled by Ma through a separate unit, Hangzhou Yunbo Investment Consultancy Ltd.

Alibaba said on Tuesday that Ma believes the equity-related awards tied company employees "to the success" of Small and Micro Financial Services, which has entered into a more far-reaching framework agreement with the e-commerce firm.

As of March, the Alibaba executives agreed to pay 921.3 million yuan ($149 million) for the share rights, company registration documents show. The rest of Small and Micro Financial Services was recently transferred to Hangzhou Junhan Investment Partnership, another entity controlled by Ma, Alibaba said in its filings.

In March, Ma also used Junhan to give similar share-based awards to most Alibaba employees, Alibaba said in a July SEC filing. Ma intends to "issue additional share-based awards" to Alibaba staff "from time to time in the future," it added.

The Junhan share-based employee awards will be vested "upon the fulfillment of requisite service," Alibaba said. Similar awards by Junhan will be subject to the approval of the company's audit committee.

The awards, to be settled in cash, are similar to share appreciation awards and are linked to the valuation of Small and Micro Financial Services. Junhan has the right to buy back the awards if the company should sell shares in a public offering.

Ma's own stake in Small and Micro Financial Services would be "reduced over time" to equal his 8.9 percent shareholding in Alibaba Group, with the share reduction to take place over the next 3-5 years, Alibaba said on Tuesday.

While Alibaba isn't obliged to pay for the awards, and the Alibaba founder pledged not to receive "any economic benefit" from the reduction in his shareholding in Small and Micro Financial Services, the company will record future related costs, it said.

"Jack (Ma), through his role with us and his control over Junhan could be in a position to propose and promote further share-based grants that result in additional, and potentially significant, expenses to our company," Alibaba said in Tuesday's filing.

(Editing by Ian Geoghegan)

By Matthew Miller