The AMA Group Ltd (ASX: AMA) share price has been among the worst performers on the All Ordinaries index on Wednesday.
The smash repair company’s shares crashed as much as 25.5% lower to 55 cents at one stage today.
The AMA share price has recovered a touch since then but is still down a sizeable 15% to 63.2 cents.
Why is the AMA share price crashing lower?
Investors have been selling AMA’s shares on Wednesday following the release of an announcement by the company’s board this morning in relation to its Chief Executive Officer and Executive Director, Mr Andrew Hopkins.
According to the release, in late September, the AMA board received a protected disclosure from an individual employed by the company. Allegations have been made, but no details have been provided on what they consist of.
On receipt of these allegations, the company engaged specialist advisory firm McGrath Nicol to undertake an independent forensic investigation. This forensic investigation has recently been completed.
Yesterday evening (26 January 2021), the company’s Chief Executive Officer, Mr Hopkins, made an urgent application to the Federal Court of Australia alleging that he is being oppressed as a minority shareholder.
Following this application, the Court made a temporary order that AMA may not dismiss Mr Hopkins from his employment prior to a further hearing. The date of this hearing is yet to be finalised but is expected to be fixed for some time next week.
The AMA board advised that the company is defending the legal proceedings and will not be able to comment further on the matter as it is before the Courts.
Trading update
In addition to the above, the AMA board took this opportunity to provide an update on how the company is performing.
The release explains that the company’s three core business units continue to “rebound well from the disruptions associated with the COVID-19 Pandemic under the capable leadership of the respective division heads.”
AMA will provide a full update on its performance with the release of its first half results next month.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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