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 that it had been blindsided by the deal.
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 occurred without the knowledge or approval of the Alibaba Group board of directors or shareholders, Yahoo said.
Yahoo shares were down 6.8 percent in midday trading on Friday.
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 Group spokesman John Spelich said in a statement on Friday that Alibaba directors were told in a July 2009 board meeting that majority shareholding in Alipay had been transferred into Chinese ownership.
Yahoo was not immediately available for comment.
Alipay's ownership was transferred to Ma to comply with Chinese law in order to secure a license to continue operating the e-commerce system, according to Alibaba.
The latest salvo from Alibaba highlights the bitter relationship between the two companies over Yahoo's stake in the group. Alibaba has made it clear that it wants to buy back Yahoo's stake.
I think at the minimum it raises questions of how acrimonious relations may be, said Ken Sena, an analyst with Evercore Partners. It's surprising you can have that sort of communication lapse.
Yahoo's Asian assets, which include a 35 percent stake in Yahoo Japan, represent at least half of Yahoo's market value, according to some analysts.
Investor David Einhorn's hedge fund Greenlight Capital took a significant position in Yahoo last week, citing its valuable Asian assets and estimating its stake in Alibaba is ultimately worth Yahoo's entire current market value.
Softbank Corp, Japan's No. 3 mobile phone operator, also owns a stake in the Alibaba Group, which owns China's largest e-commerce company, Alibaba.com.
Four directors make up Alibaba's board, including Yahoo co-founder and director Jerry Yang and Softbank founder and major shareholder Masayoshi Son.
Yahoo invested $1 billion in the Alibaba Group in 2005.
Yahoo Chief Executive Carol Bartz, who took the company's helm in January 2009, told Reuters in September that Alibaba constantly approaches Yahoo about repurchasing its stake but said Yahoo had no plans to sell it.
I just don't trust them, Alibaba's Ma told Forbes in an April 11 edition. I've been working with them for years, and I'm disappointed.
Yahoo shares were down $1.17 to $16.00 on Friday.
(Reporting by Jennifer Saba in New York and Aditi Sharma in Bangalore; editing by John Wallace)