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Luckin Espresso withdraws chairman after accounting scandal

Charles Zhengyao Lu.

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Luckin Coffee announced Friday that its board of directors will force director and chairman Charles Zhengyao Lu out of office after an internal investigation into a financial scandal.

According to a corporate statement, a meeting will be held on July 2 to review the removal proposal.

The proposal was requested by the majority of the directors and is based on results and recommendations submitted 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 earlier in May, saying a top manager invented and overestimated up to 2.2 billion yuan ($ 311.5 million) in sales in 2019.

The announcement brought the company a cancellation notice from Nasdaq. Luckin received a second listing cancellation last week after failing to submit his annual report.

The Luckin share increased by more than 1% in expanded trading.

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