Luckin Coffee (OTC:LKNC.Y) chairman Charles Zhengyao Lu survived one attempt to have him removed when the Chinese coffee shop's board failed to eject him from the scandal-scarred company, but shareholders who have seen their investment all but wiped out did the deed.
Bloomberg reports an extraordinary shareholders meeting held in Beijing on Sunday saw investors vote to remove Lu from his position along with three other directors, a rarity for companies in China.
Taking matters into their own hands
The board of directors conducted an internal investigation into accounting fraud and found sales had been inflated by $300 million and expenses were falsely increased by $190 million. Although they asked the chairman to resign, they could not achieve the two-thirds majority necessary to remove him after he refused to voluntarily step down.
Lu is the founder and controlling shareholder of Luckin, and also founded auto-rental company CAR and Chinese rideshare company Ucar.
Luckin has fired its CEO, COO, and some employees who reported to them who participated in the scheme, and has said it plans to fire as many as 12 additional workers and discipline 15 others caught up in the fraud.
In addition to removing the chairman and directors, shareholders also voted to install two independent directors to the board, Ying Zeng and Jie Yang.
Shares of Luckin Coffee debuted on the Nasdaq exchange a little over a year ago and rocketed to $51 a share as it was seen as the answer to Starbucks in China.
The stock has since lost 94% of its value and was delisted from the Nasdaq exchange. It now trades over the counter for around $2.50 per share.