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The stock exchange's disciplinary body has hit troubled Dominion Finance Holdings with a $65,000 penalty for failing to produce its annual report within the required time.
The listed company's subsidiary Dominion Finance Group was placed in receivership earlier this month, while a moratorium proposal has been prepared to put to stockholders for another subsidiary, North South Finance.
NZX Discipline said it did not accept DFH's argument that its security holders suffered no harm by the delay in providing the annual report. It did not consider that disclosures made by DFH from May 14 until the annual report was released on August 29 were adequate, having regard to the information DFH was privy to at different times.
"In particular, NZX Discipline considers that disclosures regarding its loan provisioning, and the implications of the same for the carrying value of other assets, were inadequate over that period," the decision said.
DFH had been unable to demonstrate at a hearing a legitimate reason to explain the delay in disclosing the information.
NZX Discipline said it did not consider the breach of the rule requiring companies to provide an annual report within three months of the end of their financial year was unintentional. Avenues, such as an application for a waiver, were available to DFH to prevent it breaching the rule.
"The respondent [DFH] made a commercial decision not to pursue these."
NZX Discipline noted no evidence before it of any previous non-compliance of the rules by DFH. It also said it considered the $65,000 sought by NZX was the appropriate financial penalty to impose, but it said it would have been inclined to impose a higher financial penalty had it been sought by NZX.
DFH is also being publicly censured for the rule breach.
"The deadlines provided in the rules exist in part to compel issuers to confront adverse circumstances efficiently. In the present case that was not done," NZX Discipline said.
The breach by DFH was particularly culpable, because had auditors been provided with information in good time they would have been able to complete their audit, admittedly with qualifications, in time for DFH to release its report. DFH's report had been due on June 30, after its financial year ended on March 31, but was not filed until August 29.
DFH told NZX Discipline that had it filed its annual report within the time required, it would have been impossible for the financial statements to be prepared in a way that presented a true and fair view and that those statements would have been misleading.
NZX Discipline found it was not impossible for DFH to have filed financial statements within the required time.
- NZPA
