Delaware-based Diligent Board Member Services, the developer of BoardBooks software for company boards, has been publicly censured by the New Zealand Stock Exchange's (NZX) market regulator.
The company has also agreed to pay NZ$100,000 to the NZX's discipline fund, plus the regulator's costs.
Last year, Diligent was forced to restate its financial statements for the years ending December 31 in 2010, 2011, and 2012, and the fiscal quarter ended March 31, 2013, after it discovered an error in the way it was recognising revenue. The financial statements also had to be audited again.
The errors and adjustments did not affect total revenues, the amount or timing of cash received, liquidity, or overall cash flow. However, the New Zealand-listed company was unable to fulfil its reporting requirements for the 2013 financial year until the restatements and re-audits were completed, and therefore could not meet a series of other reporting obligations.
The NZX's regulatory tribunal said it considered Diligent's failure to meet three successive reporting requirements to be "very serious".
"This failure was as a direct consequence of an accounting error made by Diligent. The error was significant, effectively taking Diligent six months to rectify," the tribunal said. "During that six-month period, investors continued to trade in the securities of Diligent without the benefit of all the information they were entitled to have under the rules."
The periodic reporting requirements are fundamental to the integrity of the market, it said.
Diligent had also been the subject of earlier disciplinary action by the tribunal when it failed to comply with a number of its obligations.
"The tribunal noted in that instance that Diligent's internal controls and procedures were insufficient to ensure compliance with the rules," the tribunal said.
The NZX and Diligent have now settled, agreeing to a public censure. Diligent will also pay the NZX Discipline Fund NZ$100,000 and pay the costs of the tribunal and the market.