[ZTE A+H shares will resume trading on the morning of June 13th] ZTE announced that it will pay a total of US$1.4 billion in civil fines. The BIS will terminate its April 2018 payment after ZTE pays US$1 billion in full in time under the agreement and order (1) of June 8, 2018 and (2) will pay an additional US$400 million to a US bank escrow account. The 15th (U.S. time) activated refusal order removed ZTE from the List of Forbidden Exporters. ZTE will replace all members of the board of directors of the company and ZTE Kangxun within 30 days after the BIS issued the order of June 8. ZTE will reorganize and disclose the first quarterly report of 2018.
ZTE will dismiss and replace all senior vice presidents
Within 30 days after BIS issues the order of June 8, 2018, it is with the current senior vice president of the company and ZTE Kangxun and all senior leaders above, as well as any allegations of participation in the supervision of BIS issued in March 2017 or 2018 On April 15th, the management or senior staff who refused to make the behavior involved or other responsible for the behavior involved rescind the contract, and prohibited ZTE, its subsidiaries or affiliates from employing the above personnel.
The following is the announcement of ZTE:
Announcement of ZTE Corporation's Progress on Major Events and Resumption of Trading
The company and all members of the board of directors ensure the truthfulness, accuracy, and completeness of the information disclosed, and there are no false records, misleading statements or major omissions.
ZTE Corporation (hereinafter referred to as "the company") April 17, 2018, April 2018, April 2018, April 2018, April 2518, April 2018, 2018 , May 1, 2018, May 6, 2018, May 9, 2018, May 16, 2018, May 23, 2018, May 2018, May 2018, and June 2018, respectively Issued announcements concerning the suspension of the A shares of the company, the BIS activation refusal orders and related influences, actions taken by the company and related parties, the continued suspension of the A shares of the company and the company's first quarterly report in 2018 (collectively referred to as "" Announcement ”). Unless otherwise specified, the specific vocabulary of this announcement is the same as that defined in these announcements.
The company and its wholly-owned subsidiary, Shenzhen Zhongxing Kangxun Electronics Co., Ltd. (hereinafter referred to as "Zhongxing Kangxun", together with the company, "ZTE") have reached an "alternative settlement agreement" (below) with BIS. The abbreviation "Agreement" is to replace the "Reconciliation Agreement" reached by ZTE in March 2017 with BIS. BIS passed the “Alternative Order for ZTE Corporation” (hereinafter referred to as “Order of June 8, 2018”) approval agreement immediately on June 8, 2018 (U.S. time). According to the agreement, ZTE will pay a total of US$1.4 billion in civil fines, including a one-time payment of US$1 billion within 60 days after the BIS issued the order of June 8, 2018, and payment within 90 days after the BIS issued the order of June 8, 2018. To the additional US$400 million fine that was selected by ZTE and approved by the BIS for a U.S. bank custodian account and suspended during the monitoring period (as defined below) (if the ZTE Corporation observes the monitoring conditions agreed in the agreement and June 2018 On the 8th order, a fine of 400 million U.S. dollars after the expiration of the inspection period will be exempted from payment.) The BIS will terminate its April 2018 payment after ZTE pays US$1 billion in full in time under the agreement and order (1) of June 8, 2018 and (2) will pay an additional US$400 million to a US bank escrow account. The 15th (U.S. time) activated refusal order (hereinafter referred to as "decision on April 15, 2018") and removed ZTE from the List of Forbidden Exporters. If the above conditions are satisfied and ZTE has removed from the List of Forbidden Exporters, BIS will announce it to the public.
The agreement also includes the following main terms:
1. BIS will make a new Decline Order (hereinafter referred to as “ New Refuse Order) for 10 years from its order dated June 8, 2018 (hereinafter referred to as "the Guardian Period"), including restrictions and prohibitions. ZTE Corporation applies for, obtains, or uses any licenses, license exceptions, or export control documents, and in any way engages in any articles, software, or products that are subject to the US Export Administration Regulations (hereafter referred to as "Regulations"). Or technology and other transactions, but under the premise of ZTE's compliance with the agreement and the order of June 8, 2018, the new refusal order will be suspended during the inspection period and will be exempted after the monitoring period expires.
2. ZTE will replace all members of the board of directors of the Company and ZTE Kangxun within 30 days after the BIS issues the order of June 8, 2018. Within 30 days after the change of board members, ZTE shall set up a special audit/compliance committee consisting of three or more new independent directors on the board of directors. The chairman may serve as a member of the committee but may not serve as chairman of the committee.
3. ZTE will cooperate with the current senior vice president of the company and ZTE Kangxun and all the above senior leaders within 30 days after BIS issues the order of June 8, 2018, and any participation in and supervision of BIS issued in March 2017. Proposal letter of allegation or the refusal of the management or senior staff who was responsible for the acts or other acts involved in the contract to terminate the contract on April 15, 2018, and forbid ZTE, its subsidiaries or affiliates to employ such personnel again . ZTE shall promptly notify BIS of the implementation of this clause. BIS may discretionarily waive the relevant personnel.
4. ZTE will hire an independent special compliance coordinator (hereinafter referred to as “coordinator”) within 30 days after the BIS issues the order of June 8, 2018. The coordinator will be responsible for coordination, monitoring, evaluation and reporting. During the monitoring period, ZTE Corporation and its global subsidiaries or affiliates comply with the 1979 US Export Administration Act, regulations, agreements, and orders of June 8, 2018, and report to ZTE's president and the board of directors and BIS on an equal basis.
5. ZTE will complete and submit nine audit reports on compliance with U.S. export control laws, based on agreements reached between the company and the U.S. Department of Justice (see the announcement of the company on March 7, 2017) and any related courts. Upon the expiry of the mandate of the independent Compliance Ombudsman, the remaining six audit reports will be completed by the Coordinator.
6. ZTE will provide a wide range of applicable export control training for leaders, management and employees, global subsidiaries, affiliates, and other entities controlled by ZTE and controlled and other entities.
The Company will resume business activities affected by the refusal orders of April 15, 2018 as soon as possible after BIS terminates its refusal order on April 15, 2018. The company will fully evaluate the effect of the April 15, 2018 refusal order and agreement on the first quarterly report of 2018, and re-prepare and disclose the first quarterly report of 2018.
Upon the application of the company, the A shares of the company were suspended from the Shenzhen Stock Exchange on April 17, 2018. Upon the application of the company to the Shenzhen Stock Exchange, the A shares of the Company will resume trading on the morning of June 13, 2018.
The Company will promptly announce on the websites of the Shenzhen Stock Exchange and the Hong Kong Stock Exchange Limited in accordance with the important progress of the above matters. China Securities Journal, Securities Times, Shanghai Securities News and http://www.cninfo.com //www.cninfo.com.cn) is the designated disclosure media for the company's announcement. Investors are kindly requested to pay attention to the company's follow-up announcements and pay attention to investment risks.
ZTE Corporation Board of Directors
June 12, 2018