Harvey Norman directors dump stock after listing breach
Executives at Harvey Norman have come under fire this week, after a breach of the Australian listing rules was identified by the ASX.
The company’s latest raise saw shareholders offered a discounted new share rate for every 17 owned, with those who owned more, offered further discounts.
Directors David Ackery, Gerry Harvey, Katie Page, John Slack-Smith, Chris Mentis, Michael John Harvey, Solicitor Christopher Brown, Kenneth Gunderson-Briggs and Graham Paton were all among those offered the ‘Top Up Shares’.
However, the Australian Financial Review (AFR) revealed that after the market closed on Friday, Harvey Norman quietly announced that the ASX had raised concerns about the arrangement, citing a breach of listing rule 10.11.
The rule pertains to the awarding of discounted equities to company owners and leaders, which is forbidden unless approved by shareholders, or the result of a pro-rata capital rise.
Harvey Norman admitted that it had “inadvertently” breached the listing rule and announced that all directors would sell the shares received through the ‘Top-Up Facility”.
“On 22 October 2018 Harvey Norman Holdings Limited (HVN or the Company) issued 65,547,679 ordinary shares (New Shares) pursuant to the terms of a pro-rata renounceable rights offer (Entitlement Offer) announced to ASX on Friday 31 August 2018,” company secretary, Chris Mentis said in a statement.
“Details of the Entitlement Offer were set out in the information booklet, included a ‘Top Up Facility’ through which eligible shareholders had the opportunity to apply for additional New Shares, subject to availability.”
“Despite adhering to the terms of the Entitlement Offer set out in the information booklet for the allocation of ‘Top Up Shares’ and participation by the directors, the issue of 1,926,017 ‘Top Up Shares’ to directors has resulted in an unintentional and inadvertent breach of listing rule 10.11.”
A resulting “corrective measure” from Harvey Norman sees the funds raised through the director ‘Top-Up Shares’ sale donated to the Western Sydney University Scholarship Fund.
“Harvey Norman believes in the life changing impact that education can have and the difference it can make. Western Sydney is where Harvey Norman’s success began in Auburn, and we know this contribution will have a positive impact to people’s lives,” Mentis said.
The latest news caps off a difficult year for the Australian retail giant, which reported a 16 per cent dive in full-year net profit in September.