ByteDance, the Chinese owner of the short video phenomenon TikTok, will add four seats to its board, bringing the total number of directors to nine.
Sources, who both declined to be identified because they are not authorized to speak to the media, told SCMP that the proposal to increase the board size was approved at its extraordinary shareholder's meeting on Tuesday, paving the way for the biggest change in its board since the company's formation.
The move comes as the firm faces an increasingly difficult global market. It is unclear whether any of the current board members will be replaced. The new board members' nationalities are likewise unclear.
As per a ByteDance representative, the business recommended changing "the maximum size of the board" at the shareholder meeting on Wednesday, without going into greater detail.
Based on a letter that TikTok CEO Shou Zi Chew sent to U.S. lawmakers in June regarding TikTok's alleged ties to the Chinese government, ByteDance's board currently consists of Bill Ford of General Atlantic, Arthur Dantchik of Susquehanna International Group, Philippe Laffont of Coatue Management, Neil Shen of Sequoia China, and ByteDance CEO Liang Rubo.
While Liang took over as chairman and CEO from his co-founder and college roommate Zhang Yiming last year, the initial four directors of the company represent significant investors. In a residential apartment in Beijing, Zhang established ByteDance in 2012.
Despite the fact that the ByteDance board, which is incorporated in the Cayman Islands, is the company's corporate decision-making body, 39-year-old Zhang still has enormous power, according to one source familiar with the issue. Zhang's influence stems from his strong relationships with Liang and a unique share structure that grants him a larger portion of voting rights.
The new line-up of ByteDance directors will have a difficult task to convince regulators, advertisers, and users that the video platform is an independent app that will not provide data to the Chinese government given TikTok's significant influence in Western markets (the app had over 1 billion users as of September last year).
A new wave of attention is brewing over TikTok's alleged Chinese connections in the U.S., a significant market for the app. The Biden administration and TikTok have drafted a preliminary agreement to address national security concerns, but the agreement faces obstacles because TikTok is attempting to maintain its ownership structure, according to a report published on Monday by The New York Times, which cited four unnamed sources.