China's Alibaba Group said it told its board in July 2009 that it had transferred ownership of its online e-commerce business to Chief Executive Jack Ma, rejecting allegations by major shareholder Yahoo Inc
Yahoo, which owns 43 percent of Alibaba Group and holds a board seat, said on Thursday that it had not been informed of the deal until March 2011.
The transfer had occurred without the knowledge or approval of the Alibaba Group board of directors or shareholders, Yahoo said.
Yahoo shares were down 5.6 percent in early trade.
Yahoo disclosed in a regulatory filing on Tuesday that Ma had taken full ownership of Alipay, a Chinese service similar to PayPal. Yahoo shares fell as much as 9.8 percent in reaction.
Alibaba directors were told in a July 2009 board meeting that majority shareholding in Alipay had been transferred into Chinese ownership, Alibaba Group spokesman John Spelich said in a statement on Friday.
Alibaba has made it clear that it wants to buy back Yahoo's stake in the company.
Yahoo's Asian assets, which include a 35 percent stake in Yahoo Japan <4689.T>, represent at least half of Yahoo's market value, according to some analyst estimates.
Yahoo Chief Executive Carol Bartz told Reuters in September that Alibaba constantly approaches Yahoo about repurchasing its stake but said Yahoo had no plans to sell it.
Yahoo's Jerry Yang is a board member of Alibaba Group.
Yahoo shares were down 5.6 percent at $16.20 in early trading on Friday.
(Reporting by Jennifer Saba in New York and Aditi Sharma in Bangalore)