Luckin Chairman Lu Zhengyao steps down as Chairman of nominating and corporate governance committee

There was another personnel change at the top of Luckin Coffee. In addition to the suspensions of Chief Executive Officer Qian Zhiya and Chief Operating Officer Liu Jian, Luckin Coffee Chairman Lu Zhengyao has also stepped down from the Nominating and Corporate Governance Committee, according to documents filed with the Securities and Exchange Commission late May 12.

(Originaltitle: Luckin Chairman Lu Zhengyao steps down as Chairman of the Nominating and Corporate Governance Committee)

Journalist Wang Qifan

Although Luckin Coffee did not directly point out Lu Zhengyao’s exit in the announcement, the nomination and corporate governance committee no longer has Lu Zhengyao’s name, but by the independent director Zhuang Weiyuan, DaYu Capital founder Li Hui and Guo Jinyi.

Luckin Chairman Lu Zhengyao steps down as Chairman of nominating and corporate governance committee

The “Nomination and Corporate Governance Committee” is one of three committees set up by luckin Coffee’s board of directors, with the other two being the Remuneration Committee and the Audit Committee.

According to the announcement at the time, in January this year, the “Nomination and Corporate Governance Committee” was also made up of Lu Zhengyao, Chairman of the Company, Li Hui, founder of Otsuka Capital, and Thomas P. Meier, an independent director, who chaired the committee. It is also worth mentioning that thomas P. Meier, an independent director, resigned at the end of April this year after Luckin Coffee’s financial fraud and stepped down as a member of the Audit Committee.

In the announcement, Luckin Coffee noted that the functions of the Nomination and Corporate Governance Committee include:

to recommend candidates to the Board of Directors in the event of an election, re-election or vacancy on the board;

Annual lying of the independence, knowledge, skill, experience, professionalism, diversity and other characteristics of the composition of the board of directors, and the board of directors;

In accordance with the sec of the Securities and Exchange Commission or NASDAQ, relevant policies and procedures are presented to the Board regarding the nomination and appointment of members of the Board of Directors and its subsidiaries;

to recommend to the Board of Directors the selection of members of the Audit Committee, Remuneration Committee, Nomination and Corporate Governance Committee;

Evaluate the overall performance and effectiveness of the Board of Directors.

Luckin Coffee is headquartered in Xiamen, Fujian Province and opened in January 2018. In November 2017, Qian Zhiya stepped down as a director and COO of Shenzhou Auto, leaving the company to start a business and setting up Luckin Coffee. The two-year-old Luckin Coffee, which has been in existence through “crazy” store openings and user subsidies, not only quickly gained a foothold in The Chinese coffee market, but also launched its fastest IPO in China in May 2019 on NASDAQ.

On April 2 this year, Luckin Coffee announced that it had found that Liu Jian, the company’s chief operating officer, had made financial fraud involving about 2.2 billion yuan in transactions, and that the company’s board of directors had set up a special committee to conduct an internal investigation. In addition, several U.S. law firms have filed a class-action lawsuit against Luckin Coffee for making false and misleading statements that violate U.S. securities laws.

Luckin Coffee’s shares plunged after the news broke. The stock has been suspended since April 7, after Nasdaq asked for more information from Luckin Coffee, and its final sale was $4.39, leaving it with a market value of $1.1 billion.

The U.S. SEC is investigating financial fraud by Luckin coffee employees, according to a source familiar with the matter, as cited by the news agency. The CSRC has also publicly stated that luckin coffee has for the first time made a solemn position to the outside world since it was exposed for financial fraud and has communicated with the US SFC on cross-border regulatory cooperation. The CSRC also said the U.S. Securities and Futures Commission had responded positively.

According to Luckin Coffee’s latest shareholder stake, Lu Zhengyao currently holds 4,849 million B-shares in Luckin, of which 39.12 percent of the common B-shares have 36.86 percent of the voting rights, making him the largest shareholder.

But after luckin coffee’s black swan was revealed,media quoted a Goldman Sachs Group report saying that Haode, controlled by Lu Zhengyao, chairman of Luckin Coffee (Nasdaq: LK), Investment’s failure to meet a $518 million margin loan program will give lenders the right to sell 76.3 million shares of Luckin Coffee American Depositary Stock (ADS) through enforcement procedures.

A total of 515 million luckin coffee Class B common shares and 95.45 million Class A common shares were pledged to secure the loan, including additional pledged shares of entities controlled by Luckin Coffee CEO Qian Zhiya’s family trust, Reuters reported.

But the Wall Street Journal, citing goldman sachs, reported that even if all shares supporting the $518 million margin loan were sold, Mr. Lu’s voting interest in Luckin Coffee would not be reduced.