Mega, the file storage and encryption firm, has raised $7.5 million, giving two relatively new shareholders majority ownership after recent accusations from its estranged founder Kim Dotcom claiming the company suffered a hostile takeover by a Chinese investor through a number of straw-men.

Beijing-based Li Zhi Min, who bought a cornerstone stake in Mega from Shen Zhao Wu in July, now owns 43 percent of the company after buying 304,530 shares at $13.135 apiece on July 29, while Yang Jianhong, joined the share register on Aug. 6, buying 228,398 at $13.135 and giving him 24 percent, according to documents filed with the Companies Office. Mega raised a further $500,000 in a two-for-one rights issue on Aug. 6, selling the shares at $1.79 each.

Read also:
Mega rings in changes after ownership shuffleAppeal Court orders Attorney-General to issue new directions on sending Dotcom's devices to US
Mega investor Shen Zhao Wu leaves board, exits shareholding; Yan's influence grows

"New and existing investors fully support Mega and this is very evident in the latest funding round," chief executive Graham Gaylard said.


"Mega now has over 22 million registered users and the rate of growth has now increased to over 1.5 million new users per month."

The transactions expanded the shares on issue by almost seven times to 951,662, to value Mega at $1.7 million at the rights issue price, a fraction of the supposed value when the company was attempting to list on the NZX. The company now has 18 shareholders on its register.

Last month, Dotcom told Slashdot users in a Q&A session that he's no longer involved in the company in a management or shareholding capacity after it "suffered from a hostile takeover by a Chinese investor who is wanted in China for fraud" though the use of "a number of straw-men and businesses to accumulate more and more Mega shares." He later claimed Bill Liu, who's also known as William Yan, controls Mega through numerous associates.

Yan's assets were frozen as part of a joint New Zealand and Chinese police investigation into an alleged money laundering ring, including the 16 per cent Mega stake held via TEY Trustee Ltd. That has been diluted to 2.4 per cent by the share issues.

In a statement to, Mega denied the accusation it had been subject to a hostile takeover, saying more than 75 per cent of shareholders supported recent equity issues.

The company's ownership and boardroom has undergone a shuffle since Shen sold in July and resigned as a director, followed closely by Australia-based Brian Clarkson. Auckland lawyer Jesse Nguy, whose firm Jesse & Associates held Yan's Mega shares before they were frozen, and investor John Sorensen, have since joined the board, which is rounded out by former chief executive Stephen Hall, who is currently Mega's chief compliance officer.

Gaylard said the recent director changes haven't altered Mega's strategy.

Cloud Innovations, an entity whose sole director and shareholder is Filipino actress Asia Agcaoili, the wife of Bram van der Kolk, Mega's chief programmer, is the company's third biggest shareholder after the capital raise, with 6.9 percent, followed by Dotcom's estranged wife Mona, via Coatesville Trustee Services, with 6.8 per cent.


Mega filed a new constitution with the Companies Office on July 6, adding specific provisions for listing the company and stating that the "board shall take all reasonable steps to prepare the company for listing on a recognised stock exchange" while setting share sale restrictions for a maximum 12 months from the date of joining a bourse unless the board determined otherwise.

Gaylard has previously said the constitution changes would make it easier for the company to list, but hasn't indicated a timeframe to do so.

In May, the Auckland-based company aborted plans to list on the NZX via shell company TRS Investments after a series of delays in gaining approvals. The transaction would have seen TRS acquire Mega for $210 million by issuing 700 million shares at 30 cents apiece to Mega shareholders once a consolidation was completed.

Mega shareholders would then have owned 99 per cent of TRS, which would have changed its name to Mega.

Mega was launched by Dotcom in 2013 to replace his Megaupload empire, which was frozen after his high profile arrest in Auckland at the behest of the US federal government in early 2012.

He stepped back from the firm to fight his extradition and bankroll the failed election campaign for the Internet Party, and has recently said he plans to launch a new non-profit, open source, free, unlimited and encrypted cloud storage service once his non-compete clause with Mega ends at the end of the year.