Diligent censured for third time in two years

Diligent Board Member Services [NZX: DIL] has been censured by the NZ Markets Disciplinary Tribunal for the third time in two years after the sudden departure of director Mark Weldon left the governance app developer in breach of NZX listing rules.

As a condition of its NZX listing, the New York-based company is required to have two directors resident in New Zealand but Mr Weldon's sooner-than-expected departure left the board short between April 9 and April 28, the tribunal said in its censure. In its settlement with the tribunal, Diligent admitted the breach and accepted the penalties, which includes the costs of the tribunal and $1210 toward NZX costs.

Aggravating factors for the tribunal were the three-week period Diligent was in breach of the listing rules and that it was the company's second referral to the tribunal in the past 24 months.

In September 2014 Diligent was censured and paid $100,000 to the discipline fund and costs to the stock market watchdog after it failed to file three earnings reports on time as a result of its incorrect revenue recognition, which prompted the firm to restate accounts for the 2010 through 2013 financial years. A year earlier the company was censured and paid $15,000 to the discipline fund and $3840 toward the costs of NZX after finding it had breached listing rules by failing to file required information, failing to seek authorisation for director payments and incorrectly issuing shares and options to employees.

In its most recent public censure, the tribunal said mitigating factors includes that Diligent engaged with NZX before the breach, self-reported and rectified the breach and no investors were adversely affected by it. The tribunal also noted Mr Weldon's resignation was out of Diligent's control and came before a replacement could be found.

Mr Weldon gave notice to the board in August 2014 but told Diligent he would remain a director while the company found a replacement. On April 8, Diligent announced Mr Weldon's resignation effective the following day and advised the market there would be a compliance gap in the period. Abby Foote was appointed on April 29 as an independent New Zealand-based director.

The sudden departure came after Diligent appointed Brian Stafford to replace outgoing chief executive Alex Sodi, who remains with the company as chief product strategy officer.

Diligent shares rose 1.6% to $5.57 and have gained 4.2% since the start of the year.

(BusinessDesk)