(Yicai Global) Aug. 4 -- The struggle for control of embattled Luckin Coffee, currently in hot water for accounting fraud, has taken a further twist with two institutional shareholders calling for the return of board member Sean Shao, who was ousted in a major board reshuffle in July.

Two units under Beijing-based Centurium Capital have called for a special shareholders’ meeting on Sept. 2 to review the reappointment of Shao to the board of directors, online news outlet The Paper reported today, citing a statement made by Luckin Coffee yesterday. Lucky Cup Holdings and Fortunate Cup Holdings hold around 10 percent of voting rights.

In July, Luckin Coffee ousted Chairman Charles Lu and handed the reins of control to its previous acting chief executive officer Guo Jinyi. It also announced that institutional shareholders Centurium Capital and Joy Capital represented by their respective founders Li Hui and Liu Erhai as well as independent director Shao will no longer serve as board members.

However, the move actually left Lu in control of the Xiamen, southeastern Fujian province-based firm. Of the nine directors left on the board, five were backed by Lu. These were Guo, independent directors Yang Jie and Zeng Ying and management directors Cao Wenbao and Wu Gang.

Yang and Zeng have since departed, Luckin Coffee said yesterday. This leaves room for the separate camp represented by institutional shareholders and independent directors to wrestle back control.

Luckin Coffee was brought down by an anonymous report posted online in January by US short seller Muddy Waters Research accusing it of fraud, and has since confessed to inflating its revenue by as much as CNY2.12 billion (USD303.5 million) and its costs and expenses by CNY1.34 billion last year.

It was booted off the Nasdaq exchange on June 29, ending a 400-day listing, at a stock price of USD1.38, 90 percent of its issue price. Chief Executive and founder Jenny Qian and Chief Operating Officer Liu Jian were fired in May for the bookkeeping fraud.

Despite its woes, Luckin Coffee is still China’s biggest coffee chain brand with 4,000 stores nationwide.

Editor: Kim Taylor