Data analytics firm Nuix [ASX:NXL] announced that the commencement of a trial involving its former CEO, Edward Sheehy.
Sheehy’s legal proceedings against Nuix have commenced today in the Federal Court of Australia.
Sheehy is seeking damages in connection to a dispute share option agreement entered in 2008.
NXL disputes Sheehy’s claim.
NXL shares were up 3% in late afternoon trade but are down 60% year to date.
Source: Tradingview.com
Nuix versus former CEO: the trial begins
A trial has commenced today between Nuix and its former CEO Edward Sheehy.
Nuix had previously settled a claim in 2019 with Sheehy, relating to options issued in 2009.
Mr Sheehy has allegedly commenced further proceedings despite the settlement based ‘on his terms’ and is now seeking to amend Nuix’s options register.
Today’s proceedings concern Mr Sheehy’s claims to declarations and an award of damages relating to his share option agreement with the company when he first joined Nuix.
Nuix rejects all new claims brought forward by Mr Sheehy.
The company stated in its November 2020 prospectus:
‘A former CEO commenced proceedings against Nuix in the Federal Court of Australia alleging that Nuix has acted in an unfairly prejudicial or unfairly discriminatory way against him and seeking orders to amend Nuix’s options register.’
Nuix also said:
‘The substance of the former CEO’s claim is that, as a result of a share split of one existing Share into 50 Shares completed by Nuix in March 2017, his options should now represent an entitlement to call for 22,663,650 unissued shares on a sale of Nuix’s business. Nuix rejects the claim in its entirety and is defending those proceedings.’
Nuix believed the share-split befitted a CEO at the time, and the Options Agreement was resolved by the NSW Supreme Court in 2019.
The technology company disagrees that Mr Sheehy is entitled to call for 22,663,650 unissued shares on a Nuix business sale.
Nuix explained that if the court were to favour Mr Sheehy, he would be issued 22,663,650 shares rather than 453,273. This represents 6.6% shares on a fully diluted basis, rather than 0.1% shares as currently reflected.
The trial is expected to be carried out until 1 July, and again from 30–31 of August.
Nuix asserted it is unable to provide updates on the proceedings as it is now a matter belonging to the Australian Court.
NXL share price outlook: lawsuits and lacklustre markets
Nuix’s current CEO, Jonathan Rubinsztein, tried to reassure staff last week that Mr Sheehy’s legal proceedings reflect the past, not the present or future of the company.
Yet, if successful, Sheehy’s claim against Nuix could see the software firm pay up to $180 million plus legal costs.
That could very much impact the present and future of the company.
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Regards,
Kiryll Prakapenka,
For Money Morning
