Luckin Coffee Inc (LK.O) said on Friday its board had proposed to remove its chairman, Charles Zhengyao Lu, following an internal probe into the fabrication of the embattled coffee chain’s annual sales numbers.
The China-based company’s stock closed 54% down on Friday after it said that its shares would be suspended from trading on the Nasdaq from next week as it withdrew a request for a hearing with the U.S. stock exchange on a delisting notice.
The Nasdaq’s (NDAQ.O) reasons for delisting include public concerns raised by the fabricated transactions, the company’s failure to disclose material information and to file its annual report.
The company disclosed in April that its chief operating officer and other staff had fabricated as much as $310 million worth of sales last year, prompting inquiries from regulatory agencies in both the United States and China.
Luckin, which has already fired its chief executive and chief operating officers, said the special committee running the internal probe into the fraud had recommended Lu’s removal based on evidence from its investigation and the chairman’s degree of cooperation.
A majority of Luckin’s board have requested the resignation and removal of Lu as both chairman and director, the company said. A meeting of the board will be held on July 2 to consider the proposal.
Lu held about 37.2% of the voting power of the Luckin’s equity stocks as of June 26.
Luckin also said its board would recommend shareholders vote against a proposal to remove Sean Shao, currently serving as the chairman of the special committee, from his position as an independent director.