Kevin O’Leary warns TikTok’s fate could be decided by ‘secret golden quota’ that gives Beijing ‘veto power’

TikTok’s fate could be left up to Beijing thanks to a “secret” arrangement that gives the Chinese government leverage over any potential deal involving the platform, “Shark Tank” investor Kevin O’Leary told FOX Business on Monday.

“There is a so-called secret golden quota that every Chinese company must issue to the leadership of the Chinese Communist Party. This is Xi [Jinping] “It turns out that ByteDance can’t negotiate anything unless it makes a decision,” the O’Leary Ventures president told “Mornings with Maria” host Cheryl Casson.

“The secret share represents a veto power over all other shareholders,” he explained. “They don’t have any rights once the secret shares are issued, so now we’re dealing with what to do with the secret shares, because until you decide what’s going to happen, it doesn’t matter what the shareholders or the CEO or any of the management think, it doesn’t matter, it’s the secret golden share that You decide the fate of TikTok now.”

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like The New York Times explainedIn this arrangement, “the Chinese government buys a small portion of a company’s shares in exchange for a seat on its board of directors and veto power over some company decisions.”

Speaking later on the “Varney & Co.” show, O’Leary said the news may come as a surprise to other investors involved in Chinese companies.

“They’re all subject to a secret golden share holder, and I think that goes against some U.S. securities laws, if you’re listed on the New York Stock Exchange or the Nasdaq or any other exchange,” he said.

“There are rumors today, here in Washington, that Lindsay [Graham]… We will be launching a bill on this very soon because we are learning a lot from this TikTok situation. There is no agreement yet. This deal is now in Trump’s hands and will be his deal. Unfortunately, the option for a 90-day extension does not currently exist in current law. So Congress will have to adjust that. “And the option to acquire any Chinese property is not permitted under the Supreme Court’s 9-to-0 order. So… our hands are tied as buyers, and we will have to abide by the law unless President Trump can change it.”

However, TikTok by contrast said that “a Chinese government entity owns 1% of ByteDance’s Douyin Information Service,” and says the ownership “has no impact on ByteDance’s global operations outside of China, including TikTok.” According to Reuters.

The popular short-form video platform went dark for millions of users across the United States late Saturday after the Supreme Court, citing national security concerns, upheld a bipartisan law signed by President Biden last spring that requires the app’s parent company, ByteDance, based in China, is selling the app. The platform or face the US ban.

While the app was briefly shut down, the app featured a tribute to Trump, who previously said he would “probably” give TikTok a 90-day extension as of Sunday’s deadline after he takes office.

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The app returned hours later, but its future remains in limbo.

Just minutes after the Supreme Court ruling, O’Leary floated a $20 billion cash offer for the app, arguing that a sale to a US union was the “obvious solution.”

He told Cassone that he had not conducted any negotiations with ByteDance thanks to the “golden share.”

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Alexandra Koch, Bradford Betz and Landon Munn of Reuters and Fox Business contributed to this report.