A firm controlled by a parent of Creso Pharma’s former chairman Adam Blumenthal has been ordered to sell 14.5 million shares in the company following a breach of ASX rules.
Suburban Holdings received the shares as part of a placement in February which saw Creso raise A$5 million.
Despite becoming aware that Suburban was controlled by a parent of Blumenthal – and therefore required shareholder approval before participating in the raise – the firm was issued with the stock.
“Under the Corporations Act, a holding controlled by a parent of a director is deemed to be a related party of the company,” Creso said in a statement. “Therefore, Suburban’s participation in the placement required prior shareholder approval.”
Creso blamed the blunder on “an administrative oversight during the direct settlement of the placement between the broker who managed the placement, and the company’s share registry”.
Suburban has now been instructed by the ASX to sell its shares within six weeks, with any profit donated to charity.
In addition, Suburban will not be issued with additional options in relation to the share placement.
Creso said it has reviewed internal processes and “implemented appropriate controls to ensure such a breach does not happen in the future”.
Blumenthal stepped down as a board member of Creso earlier this month.
He had previously relinquished his role as chairman following an investigation launched by the Australian Securities and Investments Commission (ASIC) in late 2021.