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Neobank Douugh (ASX: DOU) has been firing on all cylinders since its share market debut in October, entering a joint venture with Humm Group (ASX: HUM) and acquiring share trading app Goodments, but the reporting realities of listing appear to be stickier than expected.
In an announcement released today, the company revealed the ASX had raised concerns over alleged breaches of listing rules, including share issuances to related parties of a director and a former director.
The market operator noted an entity called Shelf Pty Ltd, linked to former director Salvatore Vallelonga, had participated in a recent capital raising announced on the same day as the Humm joint venture, as had two entities connected to the parents of current director Bert Mondello.
The ASX took Douugh to task over its corporate governance practices, calling into question the issuance of securities to what it deemed to be related parties in both the $6 million re-compliance raise as part of a backdoor listing in October and the $12 million capital raising in December.
Douugh complied with the ASX's demands to commission an independent review of its re-compliance register, which was undertaken by Steinepreis Paganin and only found one entity had received shares in breach of Listing Rule 10.11.
That company, Tyrrhenian Holdings Pty Ltd, is controlled by one of Mondello's parents and made an estimated $148,348 profit after tax in the week after Dough listed following a rapid rise in its share price.
Neither the ASX nor Steinepreis Paganin suggested there was anything untoward in those transactions, but the listing rules do state that without certain exceptions a related party can only be issued shares with approval from holders of ordinary securities.
The independent reviewer concluded the issuance to Tyrrhenian had been an "administrative oversight".
"In an administrative error, the Breach Entity was not identified within the 345 entries listed in the Register," the review stated.
"Upon approval by the Company, the Register was sent to the Company's share registry (Automic) and by the Company's legal advisor (Hopgood Ganim) to the ASX for confirmation of the spread requirement.
"The capital raising was overseen by Canaccord Genuity, who sent the final list of investors to the Company at which point the Directors reviewed this information to amongst other things ensure, to the best of their knowledge, no related parties took part in the capital raising without all necessary approvals.
"That participation by a former director was overlooked as constituting a related party transaction."
Some 232,500 shares owned by Tyrrhenian, or around 0.1 per cent of shares on issue, are all at sea as they've been placed under a holding lock in response to ASX requests.
Douugh stated ASX's enquiries into the matters dealt with in correspondence are ongoing.
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