Allen Wu has lost the 'chop'
Published: 2nd May 2022 | Source: Financial Times | Author: Mark Campbell
Arm's finally ousting Arm China's hostage-taker CEO after two years
If you have heard anything about Arm China over the past two years, you will know that the situation is crazy. Back in 2020, Arm China's board attempted to oust then CEO Allen Wu over alleged conflicts of interest, with both Arm and Hopu (Arm's joint venture partner for Arm China) backing the planned leadership change.
Normally, the story would end here. A fired CEO is a fired CEO, no longer retaining their leadership credentials or position. That's not what happened here. Allen Wu had the company "chop", and that allowed him to simply ignore the fact that he was fired.
Over the past two years, Allen Wu has held Arm China hostage, preventing Arm from exerting control over the joint venture while also harming Arm's planned acquisition by Nvidia, and the company's planned IPO. Without any ability to look into Arm China, Arm could not effectively audit its financials, and that's a big deal.
Under Wu's "leadership", Chinese Media had reported that Arm China started its own research and development divisions and had plans to create independently created IP for the Chinese market. ARM China was effectively declaring independence from Arm ( more information here ), complicating the situation further.
What is a "chop" and why is is important?
For Chinese companies, a 'chop' is a seal stamp for a company. Official documents use the 'chop' to act like a company's signature for legal reasons. For Arm China, the company's chop (company seal) was held by Allen Wu, and Wu was Arm China's legal representative, which meant that he had the ability to ignore the orders of ARM China's board and continue running the company. Allen Wu held Arm China's chop hostage, and prevented official documents from being produced that would officially oust him. Allen Wu simply denied the fact that he was fired, and Arm China's board could not stop him.
Company chops are issued by the Chinese government. This prevented Arm China's board from issuing a new chop or voiding the chop that Allen Wu used. Wu reportedly hired security teams to prevent ARM or Hopu representatives from entering Arm China premises. Wu reportedly kept Arm China's chop on his person at all times, making him the only person that could sign Arm China's documents.
How did Arm finally oust Wu?
Arm and Hopu has been working with Chinese authorities to replace Allen Wu, instating two co-CEOs, Dr Liu Renchen and Eric Chen. In this case, two CEOs are better than one, as ARM wants to ensure that ARM China doesn't get another rogue CEO. Dr Liu has been designated at ARM China's new legal representative and has been issued with the company's new chop by Chinese authorities in Shenzhen.
Now that local Chinese authorities have issued a new chop for ARM China and have recognised a new legal representative for the company, Allen Wu no longer has the ability to circumvent the wishes of ARM China's board of directors, at least legally.
(Allen Wu, ARM China's ousted CEO)
Wu will likely attempt to challenge Arm China's re-registration
Allen Wu is not happy that Arm China is no longer under his control, and believes that the Shenzhen Administration of Market Regulation has made a mistake by registering a new chop for Arm China and recognising a new legal representative.
In a statement, Wu has commented that "This company has good reasons to believe there are serious legal flaws with the company registry change that the Shenzhen Administration of Market Regulation has handled" and that "This company will defend its legal rights through legal means."
By titling his statements as "This company", Wu is clearly implying this his words are still the words of ARM China, and that he still controls the company. He will likely appeal the decision of the Shenzhen Administration of Market Regulation to take away his control of Arm China, though it seems unlikely that Wu will ever be re-instated at Arm China's CEO.
You can join the discussion on ARM finally regaining control of its rogue Chinese joint venture on the OC3D Forums .