Behind Canaan's change of leadership: Farewell dinner, government non-interference and the future of both parties

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Everything is settled.

Wu said blockchain learned that Canaan Hangzhou members had a "farewell dinner" together on the evening of August 3. July, the eye of the storm, has passed, power has returned to Beijing, Canaan's Hangzhou system has smoothly exited and expanded into the new world of cryptocurrency.

(Group photo of Canaan at the farewell dinner in Hangzhou on August 3)

On August 3, Canaan issued an announcement in the US SEC, stating that the terms of two directors, Mr. Kong Jianping and Mr. Sun Qifeng, expired on July 31, and the terms of three independent directors expired in August. All outgoing directors will not seek reappointment or participate in the election of the company's board of directors. The company announced that the board of directors will appoint four independent directors, effective August 1, 2020. After the appointment, the board of directors will consist of six members, including four independent directors.

How to interpret?

It's very simple. Although Zhang Nangeng previously had more than 70% of the voting rights, Kong Jianping and other Hangzhou factions held 5 to 2 votes on the board of directors, which may have been a check and balance to some extent. Now that Zhang Nangeng has replaced the independent directors, the board of directors will be composed of Zhang Nangeng, Li Jiaxuan from Zhang Nangeng's faction, and four independent directors selected by him, with a ratio of 6 to 0.

In early July, Zhang Nangeng led Beijing employees to Hangzhou, took away Canaan Hangzhou's official seal and business license, and dismissed several managers of Canaan Hangzhou. The employees of Canaan Hangzhou reported the theft to the police.

Canaan's structure is that Cayman controls Hong Kong, Hong Kong controls Hangzhou, and Hangzhou controls domestic subsidiaries, which is equivalent to Beijing Bit. The lesson from the past is right in front of us. The importance of Canaan Hangzhou's position is unquestionable, and Zhang Nangeng had to adopt "thunderous means".

Zhang Nangeng holds the majority of voting rights, but the Hangzhou Group holds the majority of seats on the board of directors. After the incidents at Bitmain, Dangdang, and ARM China, is a storm coming for Canaan, the first US-listed company?

That is not the case.

After dismissing core personnel and taking away the business license and official seal, on July 19, Canaan Chairman and CEO Zhang Nangeng and his delegation visited the Jianggan District Government of Hangzhou, where Canaan Hangzhou is located, to report on Canaan's corporate governance structure optimization and business development.

Zhang Nangeng reported to the district government leaders on the reorganization of Canaan's management and Canaan's "blockchain + AI" development strategy. Lou Jianzhong, deputy secretary of the Jianggan District Committee of Hangzhou and district head, expressed the hope that Canaan would further accelerate its development in Jianggan District. Zhang Nangeng said that in order to rapidly develop and improve the governance structure of listed companies, Canaan Creative, a wholly-owned subsidiary of Canaan Technology, has recently completed a management reorganization. After the adjustment, the executive director, general manager and legal representative of all domestic subsidiaries are all held by him personally.

Behind this press release is Hangzhou's support for Canaan. Unlike Haidian, Hangzhou has chosen a relatively market-oriented approach, supporting the principle of corporate autonomy between shareholders and parent companies, rather than causing chaos in the internal governance of enterprises. However, Wu said blockchain learned that Canaan Beijing also made some promises, such as not to carry out large-scale layoffs in Canaan Hangzhou.

In the past, Canaan's investor relations, sales, blockchain and other departments were in Hangzhou, while R&D, supply chain and other departments were in Beijing. Despite the promise of not laying off employees, Canaan is expanding its Beijing office and recruiting relevant personnel in Beijing. The trend of various departments converging to Beijing is inevitable.

Looking back, Canaan Hangzhou, led by Kong Jianping, brought investment to Canaan when it was in its most difficult time, and after several failed IPOs, led the company to successfully list on Nasdaq, becoming China's first listed mining machine company. Kong Jianping and others did not choose to respond fiercely at this time, but to reconcile, thus avoiding the emergence of a second Bitmain.

It is reported that personnel related to Canaan Blockchain will follow the two outgoing directors to form a new company. After leaving Canaan's main body, they may be able to create a bigger world in the cryptocurrency world.

Beijing Canaan has now come to a good time. With the infighting in the mainland, only Samsung is left in Shenma, and Ebang and Xindong are transforming, if TSMC wants to choose a backup, it is probably only Canaan.