RIS Group censured, fined $80,000 plus costs after repeated late filings

Thursday 16th April 2015

RIS Group, a shell company listed on the NZAX, has been publicly censured and fined $80,000 plus costs after missing the deadline to file its 2014 annual report, the third such breach since 2011.

Shares of Wellington based RIS were initially suspended from trading when it failed to lodge the report for its June 30 year by the Oct. 31 deadline but were allowed to resume trading when it finally did file the report on Nov. 24. NZ Markets Disciplinary Tribunal, in a determination published today, said reporting rules for listed companies "are fundamental to maintaining market integrity and investor confidence."

In fining RIS, the tribunal said it took into account recent penalties imposed on other companies, including a $50,000 fine for Pyne Gould Corp for being five weeks late in filing, and a $100,000 penalty imposed on Diligent Board Member Services for three successive reporting breaches. For RIS, mitigating factors included significant changes to its board at the time, when chairman Adam Lindsay and director Sachin Jain resigned at short notice. It also noted serious financial difficulties which contributed to the delay, including leaving auditor BDO unable to sign off on the accounts, and the company's attempts to keep the market informed.

"Listing is a privilege and it is incumbent on all issuers who wish to maintain their listing to comply with the rules," the tribunal said. "The tribunal notes that the ability of an issuer to pay any penalty imposed should they breach the rules, is not of itself a reason to discount the amount which the tribunal would otherwise consider an appropriate penalty having regard to the seriousness of the breach and the conduct of the issuer."

Still, in imposing the fine to be paid to the NZX Discipline Fund, the tribunal said the NZX should discuss a payment plan with RIS, allowing it to make payments by installment.

In 2012 RIS sold its Retail Information Systems, a payment systems software, to USG Tech Solutions Ltd for US$1 million, with US$150,000 in cash and the remainder in USG shares, which are listed on the Bombay stock exchange, according to its website. The shares amount to about 10 percent of USG but RIS said at the release of its first-half results last month that delays in setting up an account in India to trade the shares had left it with "extremely tight" cash flow. Its first-half net operating loss widened to $229,000 from a year earlier loss of $39,000.

The company had managed to raise $100,000 through a convertible note agreement last November, allowing it to settle some outstanding liabilities.

RIS shares trade infrequently and were last at 0.2 cents, valuing the company at $1.48 million. USG Tech Solutions shares last traded at 3.46 Indian rupees on the Bombay Stock Exchange, valuing RIS's holding at about $252,829.

BusinessDesk.co.nz

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