Fintech software solutions company IOUPay has been granted relief from the court after issuing 20 million shares without lodging a cleansing notice with the Australian Securities Exchange.
IOUPay, which aims to become one of the leading digital transaction processors in South East Asia, sought urgent relief from the Federal Court on Wednesday after concerns emerged that it may have breached the Corporations Act when it issued 20 million fully paid, ordinary securities to a director and his brother to raise working capital on March 3, 2020, but failed to file a cleansing notice.
During a hearing in the Federal Court on Wednesday, counsel for IOUPay, Darrell Barnett, told the court that a former professional company secretary, Mr Stewart, who was tasked with ASX compliance, was not able to provide documentation to demonstrate why a cleansing notice was not issued.
His appointed successor, Jarrod White, noticed the issue while dealing with another institutional share placement in July 2020.
An affidavit tendered to the court revealed White sought legal advice from law firm Thomson Geer and came to the “misapprehension” that he didn’t need to pursue any further action regarding the cleansing notice as the shares had not been, and presumably would not be, traded.
“[The owners of the shares] told him they had not sold the shares and promised they would not sell within a 12 month period,” Barnett said.
“There was a misunderstanding, but it was an honest and genuine misunderstanding.
“It is somewhat unusual. Usually inadvertance is solely with the failure to issue the notice then as soon as its detected there is a court application to extend the period for issuing the notice. [But] we have a second level of inadvertance – It was detected, but nothing was done.”
Barnett said had the shares not been sold, there would have been no contravention of the Corporations Act.
IOUPay, whose shares have been suspended from trading since August 15, sought relief from the court under s 1322 4(a) of the Corporations Act, which was granted by Federal Court Justice Michael Lee.
The company, which was formerly known as Isentric, provides fintech and digital commerce software and services that enable institutional customers to securely authenticate end-user customers and process banking, purchase and payment transactions.
It was first listed on the ASX in 2000 and currently has an ASX enterprise value of $110.82 million.
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