I work in finance, so i know just enough legals to be dangerous (seriously, our legal department hates it when our finance department has a theory on the legal side of things). Chilling Out knows the law much better.
My initial assumption though is that that's probably the way the law works. Most of the time, employees are protected. Things they do for work - if it's something illegal, the business normally is the one sued. It's an odd dynamic though, I agree. Maybe the company is at fault for disclosure issues, and the directors are at fault for breaches of the director duties (acting against shareholder interests). That's a theory, not gospel.
Could the performance shares be reclaimed? I dont know. Doesnt matter now though, because JK intentionally moved 95% of the company's assets into a non-Australian company.
Why were there no issues when the shares were issued? This I know. Its the nature of accounting and audit. A company does something, and the auditors might find it 12 months later (or they might not - a lot of auditing is sampling - they judge an issue to be medium risk and will select 5 samples out of 100. Or high risk and select 10). And thats the company paid auditors. The financial regulators have computer systems that look for anomalies. They plug in all sorts of data, including huge amounts of financial statements (remember, every public company submits financials every year). Obvious things might pop up in a few months. Otherwise, at different times, they run programs to look for certain things. I dont know whether ASIC spotted an issue in ISX financials early and just looked slowly/quietly (trust me, they're very slow), or whether they were running a compliance program looking at performance shares. Either is possible. Regardless, the timeframe is very normal for this sort of thing.
Directors do own 500m shares. Dont quote me on the exact figures, but it was a backdoor listing with a capital raise where the pre-listing owners got 200m shares upfront, then depending on performance targets, got up to another 300m shares (the idea being that if the company was already generating revenues at X level, the "purchase price" shouldve been higher)... The directors booked a huge amount of abnormal revenue in the last two months, of a type that was never repeated again (so probably not core business), outsourced all the work (almost no profit), and claimed all 300m performance shares. Directors argued it was necessary work, and it was just a fluke that it had to happen for only 4 clients, in one narrow period, just enough to hit targets, and then magically was never needed for other clients again after.
SP1 Price at posting:
$1.07 Sentiment: Sell Disclosure: Held
