So long as there has been no decision on the legal aid application by the unknown applicant, the risk, of course, continues to exist, as we were told by to a well-known lawyer to whom we posed the question. How would he see the risk? In court and on the high seas, you never know what the outcome will be. Even if the Publity AG Company would have to live with the court proceedings, there would still be the question of how a Court would look at it. As a rule, such court cases always end up somehow with an out of court settlement. Whether that will happen in this case is, of course, purely speculative. What is it really all about? The Publity Company has itself given a notice about these proceedings on pages 28/29 of its German Securities prospectus. It is near the end of page 28 of the prospectus, but the reader of the prospectus is deemed to have also read as far as that. That means that he knew about it before he bought the Company’s shares. The prospectus states:Risks associated with litigation
Due to the activity of the publity Finanzgruppe (financial group) as issuer and manager of alternative investment funds, there is a general risk that fund investors may be unhappy with the return on the publity funds or even suffer losses on their investment. Although in the past, fund investors have not started any litigation with the publity Finanzgruppe, it cannot be ruled out that a fund investor might bring an action against the publity Finanzgruppe, for example on the grounds of prospectus liability. Such disputes can extend over long periods of time and, even if the dispute were to be ultimately resolved in favour of publity Finanzgruppe, they can result in high legal costs, which could have a negative impact on the net assets, financial position and results of publity Finanzgruppe and therefore on the Company as a whole.
Moreover, such litigation may adversely affect the reputation of publity Finanzgruppe, especially if they are the subject of discussion in specialist Internet forums. This could deter prospective investors from investing in publity fund products; so that the publity Finanzgruppe would be able attract fewer or no investors for its fund products. This would lead directly to publity AG having less or no income from sales commissions and fund management, which in turn would again have a negative effect on the net assets, financial position and results of the publity Finanzgruppe and therefore on the Company as a whole.
The Issuer was issued with a draft summons against publity AG in December 2014 with a demand amounting to EUR 30.6 million, in relation to a legal aid proceeding. The applicant claims to have concluded an oral distribution agreement with publity AG in 2009. There is a risk that the applicant may extend his claim to fund No. 7 and future funds of publity Finanzgruppe. The Company believes that an agreement to this effect has never been in existence.
They have had the draft summons checked by their lawyers and taken a position in the legal aid proceedings. The Company and the lawyers it has instructed see reasonable prospects for a successful defence of the claims that have been asserted. Nevertheless, the risk cannot be ruled out that the Court may instead grant the applicant’s request for legal aid. The conduct of court proceedings could incur high legal costs. Should there actually be an adverse outcome on the substantive issue, this would have a material adverse effect on the net assets, financial position and results of the Company.
End of extract from the German Securities prospectus
While preparing this article, we submitted a press inquiry to the company, which been answered for us today. They do not want to say who the claimant is, for data protection reasons. In reply to our request, we have been informed that, to date, there has been no decision on the legal aid application by the claimant. There is thus a continuing risk that the Publity AG Company will have to face a trial in this case. Of course, as with any court case, the outcome cannot be predicted.
Kommentar hinterlassen