Luckin Coffee moves to remove chairman after accounting scandal

Luckin Coffee announced Friday that its board of directors is moving to force out director and Chairman Charles Zhengyao Lu following an internal investigation of a financial scandal.

A meeting will be held July 2 to consider the resignation removal proposal, according to a company statement. 

The proposal was requested by the majority of the board’s directors and based on findings and recommendations presented by a special committee, according to Luckin. The Chinese coffee chain said the special committee based its recommendation on evidence gathered through an ongoing internal investigation and on Lu’s level of cooperation during the investigation.

Luckin previously announced an internal investigation in May and said a top executive fabricated and overestimated as much as 2.2 billion yuan ($311.5 million) in 2019 sales.

The announcement earned the company a de-listing notice from Nasdaq. Luckin received a second de-listing notice last week after it failed to file its annual report.

Luckin shares were up more than 1% in extended trading.