Mega rings in board changes after ownership shuffle

Mega, the file storage and encryption firm, has reshuffled its board after last week's ownership changes, with Auckland lawyer Jesse Nguy and investor John Sorensen appointed directors.

Mr Nguy, whose firm Jesse & Associates holds the frozen Mega shares owned by Auckland businessman William Yan, and Mr Sorensen, replace Shen Zhao Wu, who was Mega's biggest investor until he exited this month, and Australia-based Brian Clarkson, who left the board today, according to Companies Office filings.

The boardroom shuffle comes after Mr Shen transferred his holding to Beijing-based Li Zhi Min on July 10, and LY Investment No 1 took a 1.9% stake. LY Investment's sole director is Wei You, the wife of William Yan, whose assets were frozen as part of a joint New Zealand and Chinese police investigation into an alleged money laundering ring. Mr Yan's 16% stake in Mega, via TEY Trustee Ltd, is subject to the freeze, and he has denied the allegations levelled against him.

Mega filed a new constitution at the Companies Office on July 6, adding specific provisions for listing the company, and stating that the "board shall take all reasonable steps to prepare the company for listing on a recognised stock exchange" while setting share sale restrictions for a maximum 12 months from the date of joining a bourse unless the board determined otherwise.

In May, the Auckland-based company aborted plans to list on the NZX via shell company TRS Investments after a series of delays in gaining approvals. The transaction would have seen TRS acquire Mega for $210 million by issuing 700 million shares at 30c apiece to Mega shareholders once a share consolidation was completed. Mega shareholders would then have owned 99% of TRS, which would have changed its name to Mega.

Mr Sorensen has been involved in a number of reverse listings on the NZX, and most recently put forward the idea of listing on the NZAX to cervical cancer test developer TruScreen, which joined the bourse for small-cap companies in November. It's unclear whether Mr Sorensen directly owns shares in Mega, though Vig Ltd holds 9% and is ultimately owned by Michael John Sorensen, who is registered at the same Campbells Bay address as director John Andrew Sorensen.

Mega was launched by internet entrepreneur Kim Dotcom in 2013 to replace his Megaupload empire, which was frozen after his high-profile arrest in Auckland at the behest of the US federal government in early 2012. He has since stepped back from the firm to fight his extradition and last year bankrolled the election campaign for the Internet Party, which failed to gain seats in Parliament at last year's general election.

Earlier this year, PayPal stopped processing payments for Mega after NetNames, a US group with funding from the Motion Pictures Association of America, claimed it was among companies whose services were not legitimate or legally compliant.

Mega rebutted the claims with a legal opinion by international law firm Olswang, which found no evidence that: the bulk files stored by Mega infringe on copyright holders; the firm's target audience is different from typical 'cyberlocker' users as its services wouldn't benefit them; that the platform isn't attractive for mass distribution; and that its business model is different from 'cyberlockers'.

(BusinessDesk)