Luckin Coffee co-founder Charles Lu tightens grip in boardroom fight after accounting scandal

Shareholders removed four directors, appointed Charles Lu’s nominees on board at Sunday’s special meeting of shareholders, according to local media

Lu’s offshore family trust Haode Investment, which controls 37.2 per cent of voting power in Luckin, is being targeted by lenders seeking to recoup their loans

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A Luckin Coffee outlet in central business district of Beijing, taken in 2018. Photo: Simon Song

Published: 2:35pm, 6 Jul 2020Updated: 8:06pm, 6 Jul 2020

Charles Lu Zhengyao, chairman of scandal-ridden Chinese start-up Luckin Coffee, is tightening his grip on the company in a boardroom fight by appointing his nominees and ousting opponents, after surviving an internal revolt last week.

Luckin convened an extraordinary general meeting of the shareholders on Sunday afternoon and passed all eight special resolutions requisitioned by Lu, according to Chinese media outlets including TMT Post, Sina News and 36Kr, citing unidentified sources.

Shareholders removed four directors including Lu; the head of Luckin’s internal investigation into the company’s accounting fraud, Sean Shao; and two representatives from its biggest institutional shareholders. They also installed two directors deemed to be Lu’s associates, the reports said.

Luckin Coffee did not immediately reply to emails seeking to confirm the outcome of the vote.

Lu’s gambit reflects his effort to control the start-up coffee chain, as he risks losing his family trust to lenders. Credit Suisse has sought to liquidate his assets offshore to recoup their margin loans. Local news reports also suggested Sunday’s victory could help staunch any deeper probe into the accounting scandal.

Charles Lu Zhengyao, co-founder and chairman of Luckin Coffee. Photo: Simon Song

Much of Lu’s worth has been decimated by the plunge in Luckin’s market value. Shares of Luckin were halted from trading last week, and likely to be delisted from Nasdaq soon. Its market value plunged by more than 95 per cent since January, erasing US$11 billion, when an anonymous short seller accused it of cooking the books.

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