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Luckin Coffee asked to reverse boardroom changes after co-founder’s ouster, as China prepares to wield big stick for accounting fraud
- Shareholders linked to Centurium Capital requisition for meeting to undo some boardroom changes at July 5 meeting
- Move follows the ouster of co-founder Charles Lu Zhengyao while Chinese authorities ready punishment for accounting scandal
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Luckin Coffee, the coffee chain dubbed as China’s Starbucks, has been asked by some shareholders to reverse some of its boardroom changes in July following the ouster of its co-founder and chairman, as Chinese regulators prepare to clamp down on accounting fraud.
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Hong Kong-based Centurium Capital is seeking to reinstate Sean Shao as a director and remove Jie Yang and Ying Zhen as independent directors, the company said in US exchange filings on Monday. These would undo the changes that took place at a shareholders’ meeting on July 5.
The two independent directors, however, have resigned from the board with immediate effect, Luckin said in a separate filing. The duo were both reported by local Chinese media to be the nominees Haode Investment, the family trust of co-founder Charles Lu Zhengyao. Lu was separately removed as chairman at a board meeting on July 12.
Luckin has called for an extraordinary general meeting in Beijing on September 2 to consider Centurium Capital’s request. After the two resignations, however, it will thus ask shareholders to vote only on Shao’s reappointment, it said.
The special meeting was requisitioned on July 30 by Centurium Capital on behalf of its units Lucky Cup Holdings and Fortunate Cup Holdings. Centurium Capital is ultimately controlled by investor Li Hui, who was last reported to own 11.7 per cent of voting power in Luckin, according to its IPO prospectus.
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The circumstances around the July 5 meeting “caused concerns over the independence of the directors” nominated by Haode and elected then, Centurium said. The reinstatement of Shao will allow for the board to fully implement the remedial measures recommended by a special investigation committee, it added.
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