The Douugh Limited (ASX: DOU) share price has returned to trade this morning after approximately six weeks in suspension.
At the time of writing, the embattled mobile app company’s shares are down 18% to 14 cents.
Why was the Douugh share price suspended?
The Douugh share price initially went into a trading halt in December as it prepared an announcement for the acquisition of the Goodments wealth management app and its 12,700 app users.
However, while it was in a trading halt, the ASX investigated the company’s backdoor ASX listing and a recent $16 million placement.
That investigation found that the parents of one of the company’s directors, Bert Mondello, were issued a significant number of shares in breach of listing rule 10.11 before selling them for a big profit.
Douugh has now advised that the company intends to hold a general meeting to seek shareholder approval to facilitate a selective capital reduction, for consideration equal to the subscription price of the breached shares. The company has entered into share cancellation deeds with each of the entities that hold these breached shares.
In addition, Douugh revealed that the profit that was made by Mr Mondello’s parents will now be donated to charity.
It has also undertaken a review of its corporate governance plan to strengthen its policies and procedures in relation to issues of equity to persons in a position of influence, related party transactions, and its risk management policy.
Finally, the company has advised that it is “considering” making changes to the composition of the current board.
Still no user numbers
One thing the company is still yet to update the market on is the number of users of its Douugh app since its launch in November.
Douugh talked up its app ahead of launch but has been very quiet on its progress since its release. And based on available app download data, it doesn’t appear to be gaining any traction in the highly competitive US market.
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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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