Luckin Coffee announced that it would hold an Extraordinary General Meeting (EGM) in Beijing, China on 5th July 2020 to vote on new resolutions to appoint two independent directors and to remove Chairman Charles Lu and directors Sean Shao, David Li, and Erhai Liu.
The two independent directors chosen by the company for board inclusion are Ms Ying Zeng (Partner in leading international law firm Orrick Herrington & Sutcliffe LLP) and Ms Jie Yang (China University of Political Science and Law).
Luckin’s accounting scandal has weakened investors to evaluate the stock on a fundamental basis.
Also, banks, including Credit Suisse Group AG, have won court orders to liquidate tens of millions of dollars in Luckin Coffee Inc. stock owned by embattled Chairman Charles Lu. This development could weaken his control over the company as a crucial shareholder vote approaches.
Lu and his family have been the most significant shareholders in Luckin and own class B shares that carry exclusive voting rights. According to the company’s regulatory filings, Lu managed about 36.8% of Luckin’s voting rights as of March this year. The liquidation would reduce the number of class B shares he holds by about a quarter. Such shares have ten times the voting rights of Luckin’s ordinary shares.
The company’s market value, once as high as $12 billion, had fallen below $1 billion. Luckin went public on the Nasdaq Stock Market in May 2019, in an offering led by Credit Suisse and Morgan Stanley, and raised more than $2 billion from investors in several stocks and bonds issuances.
From our previous report, Nasdaq has since moved to delist Luckin.
