Arm IPO endangered by China unit's legal issues

Arms plan for an IPO may already be in trouble before it's even started, as a long-running dispute with its division in China could endanger Softbank's offloading of the chip firm. The main problem stems from a lawsuit by joint venture head Allen Wu against Arm China, one that aims to get Wu reappointed to the Arm China board. The lawsuits started in 2020, after Arm China's board voted to remove Wu. Despite the vote, Wu refused to step down from the position, and continues to control Arm China. While the lawsuits are a problem for Arm, there is a lack of detail over Arm China's financials, which could be a bigger issue. As a byproduct of the lawsuits, Arm warned in January that it couldn't verify Arm China's revenue. In March 2021's annual report, Arm admitted it had concerns about the senior management of Arm China, such as the "Appropriateness of payments in 2019 which were previously charged against profits of Arm China." The difficulty in assessing Arm China's finances is a big problem for the IPO. According to Arm co-founder Tudor Brown, the problem is "a mess by any measure," and needed to be fixed.