ZTE is nearly ready to install a new board of directors, a step required by the U.S. Department of Commerce if the company wants to end the ban on U.S. supplies.
The company held its annual general meeting in Shenzhen this week where shareholders voted on this and other matters. ZTE is expected to name eight new members to its board. In April, the Commerce Department banned ZTE from using U.S. parts and software, crippling the company.
On June 7, the Commerce Department said it would end the ban as long as ZTE pays $1 billion fine, puts $400 million into escrow, and replaces its leadership. In addition to the new board, the Commerce Department wants all executives at or above the senior vice president level to be fired, along with any execs who played a role in the wrongdoing.
ZTE will also have to put in place a U.S.-appointed compliance officer. The company has already paid the $1 billion fine. Once all these steps are taken, ZTE will have met the Commerce Department’s conditions. Even if it does, it is unclear when the company might be allowed to get back to business.
A number of senators and congressmen want the ban to remain in place. Since the ban went into effect, ZTE has been largely idle. Its shares have dropped 60%, erasing $11 billion from its valuation. The new board may be voted in as soon as today.
