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Screenshot of a breaking news alert e-mail from Q2 2017
The Ontario Securities Commission (OSC) announced that has approved a settlement agreement with Electrovaya Inc. and its President and Chief Executive Officer, Dr. Sankar Das Gupta, in connection with the company’s failure to comply with disclosure obligations, including its failure to update forward-looking information.
This settlement agreement follows allegations by OSC Staff that Electrovaya issued unbalanced press releases and failed to update its disclosure record, and that Dr. Das Gupta authorized, permitted or acquiesced in such conduct.
In 2016, Electrovaya issued five press releases announcing significant new business relationships. None of the press releases contained balanced disclosure discussing the nature of the arrangements (which were often non-binding) or the related risks, contingencies or barriers to realization. Electrovaya also failed to update its disclosure record in respect of two other customer arrangements, when subsequent events made it clear that previously disclosed revenue estimates would not be met.
We expect public companies and their directors and officers to provide factual and balanced information to investors, and to disclose any events or circumstances that are likely to cause actual results to materially differ from previously-disclosed forward-looking information,” said Huston Loke, Director of Corporate Finance at the OSC. “This protects the integrity of the capital markets and is information that is critical to enabling investors to make an informed decision about whether to buy, sell or continue to hold securities in the company.
In connection with the settlement, a consultant will review Electrovaya’s corporate governance framework and its disclosure controls and procedures. The review, which is estimated to cost between $85,000 and $100,000, will be paid for by Dr. Das Gupta, who will also pay an administrative penalty of $250,000, which will be used to advance the OSC’s mandate of protecting investors. Dr. Das Gupta will also be prohibited from becoming or acting as a director or officer of a reporting issuer (other than Electrovaya or an affiliate) for a period of one year.