First Alibaba, now Pinduoduo: Top leaders of China’s superstar tech firms may seem to be bowing out, but have kept significant control over their companies by forming powerful “Partnerships," superboards which have the potential to control the board of directors. When Alibaba’s Jack Ma and Pinduoduo’s Colin Huang retired from their CEO positions, the two founders simply stepped into new roles at Alibaba Partnership and Pinduoduo Partnership.

In publicly listed US companies, a board consisting of independent directors oversees the firm’s direction, making important decisions such as hiring C-level executives. The boards are elected by shareholders to represent their interests; a democracy of sorts. For some Chinese tech companies, this model has been overridden by a self-selected oligarchy.

Alibaba and Pinduoduo's Partnerships are, in effect, a second board of directors, a group of experienced leaders plucked from within the company that guides the company's development—a superboard. They wield concrete powers that can supersede the board of directors at the expense of shareholder control. Some of these powers include choosing board members and future CEOs.

Bottom Line: The e-commerce companies' superboards were formed to address concerns about one-man rule. Critics argue that the elite nature and range of powers granted to these superboards do little to address oversight concerns; they give power to those they were supposed to take it from. Yet these superboards have done little to dissuade investor interest.

Alibaba consolidates top talent: Alibaba's Partnership launched in 2010 with the goal of allowing “senior managers to collaborate and override bureaucracy and hierarchy.” The company said it was formed to preserve Alibaba’s vision and mission: building the future infrastructure of commerce and making business everywhere easier.

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