CHINA BRIEF | Scandal-hit entrepreneur Charles Lu Zhengyao holds position as Luckin’s chairman

The resolution of Lu’s removal was not approved by more than two-thirds of board members.

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Charles Lu Zhengyao will maintain his position as chairman of Luckin Coffee after surviving a board vote to remove him, as part of recommendations based on the results of an internal probe on accounting fraud, the company said on Thursday.

The resolution of Lu’s removal was not approved by more than two-thirds of board members, according to a filing by Luckin with the US Securities and Exchange Commission (SEC).

Currently, the board members of the board are chairman Lu, Guo Jingyi (new acting CEO), Cao Wenbao (senior vice president), Wu Gang (vice president), Centurium Capital founder Li Hui, Joy Capital founder Liu Erhai, and two other independent director and Sean Shao.

However, on July 5, there will be an extraordinary general meeting, proposed by Haode Investment Inc, an investment company owned by Lu and stockholder in Luckin, to vote on the removal of Lu, Shao, Li, and Liu.  Shareholders will also vote on adding Zeng Ying and Yang Jie, two new independent directors proposed by Haode, to the board.

Earlier in June, Lu resigned from his chairman position at car rental firm CAR Inc (HK:0699), where he also serves as a non-executive director, following reports indicating that he might face criminal charges over his involvement in Luckin’s questionable operations, KrASIA reported.

Earlier this week, Luckin announced the results of its three-month internal investigation, which is led by Shao, confirming that its management has inflated net revenues by USD 300 million during 2019.

This article is part of KrASIA’s “China Brief” section, where KrASIA’s reporters will provide quick daily updates about the tech ecosystem in China.