A former chief executive of Nuix has lost a court battle that could have delivered him damages worth almost much as the controversial tech stock’s current market value.
Eddie Sheehy, a co-founder of Nuix and chief executive between June 2006 and January 2017, has been locked in a long-running legal dispute with the company about whether he is entitled to 22.6 million shares in the business based on share options he was given.
These shares would have been worth as much as $268 million when the stock peaked in January 2021, which was prior to him being able to sell them. Sheehy argued he has suffered a loss of between $96.9 million and $182.4 million depending on at which point he could have sold these shares.
Nuix was floated on the ASX in December 2020 with a valuation of $1.8 billion but was worth less than $200 million as recently as November after a series of scandals and downgrades which has triggered class actions and legal action by ASIC.
The marathon Federal Court legal battle with Sheehy ended on Tuesday morning with Justice Halley determining that Sheehy failed to overcome the two fundamental hurdles he faced and dismissed the proceedings.
The first hurdles was whether the options Sheehy held in accordance with the 2008 agreement were exercisable in accordance with their terms.
The second issues was that those options were only able to be exercised on a sale of the Nuix business.
“I therefore concluded, in the circumstances, that Mr. Sheehy is precluded by the doctrine of the doctrine of Anshun estoppel from pursuing the causes of action that he seeks to advance in these proceedings,” Justice Halley said.
Nuix was the highest profile float of 2020 with Macquarie cashing in $575 million worth of shares as part of the sale and retained a 30 per cent stake in the business.
Nuix reports its results on Monday, February 20.
Last year, ASIC commenced proceedings in the Federal Court against Nuix for alleged continuous disclosure breaches and misleading or deceptive conduct. ASIC has also brought proceedings against members of the Nuix board for breaches of their directors’ duties.
The corporate regulator is alleging that Nuix made misleading or deceptive statements when reaffirming 2021 financial year forecasts for statutory revenue and for annualised contract value (ACV) – that it made in its prospectus – in announcements to the ASX on 26 February, 2021 and 8 March, 2021.
Source: Thanks smh.com