Plaintiff Orkhan Guliyev filed a complaint against Asure Software and its Board for securities violations in relation to allegedly providing false and misleading statements in its proxy statement to the SEC. Asure provides human capital management (HCM) software to businesses.
Guliyev owns Asure stock, and filed the complaint against the defendants as a result of their “solicitation of stockholder approval of an amendment to the Restated Certificate of Incorporation of Asure Software.” If the proposed amendment is approved, it “would increase the total number of authorized shares of Asure’s capital stock from 23,500,000 to 45,500,000 and the number of authorized shares of Asure’s common stock from 22,000,000 to 44,000,000.” Asure filed a proxy statement with the SEC in April and has urged stockholders to vote in favor of the proposal at the annual meeting. The proxy statement said approving the proposal “requires the affirmative vote of the shares which are present or represented by proxy at the Annual Meeting.” However, the plaintiff argued that this was materially false and misleading because “Delaware General Corporation Law (DGCL) specifies a statutory standard for amendment to corporate charters [which require] ‘a majority of the outstanding stock entitled to vote thereon.’” The plaintiff said the “disclosure in the Proxy concerning the threshold for approval of the Certificate Proposal is at odds with the standard specified in the DGCL.” i
Asure has outstanding stock and it wants to increase its shares to support its growth. It currently has 23,500,000 shares of capital stock, made up of 22,000,000 common stock shares and 1,500,000 preferred stock shares. “As of April 22, 2020, 15,743,199 shares of the Company’s common stock were outstanding, net of 384, 159 treasury shares, and no shares of preferred stock were outstanding.” Additionally, for the authorized common stock 1,214,647 common stock shares are reserved for reserved stock, 1,898,555 shares were reserved for future issuing with Asure’s incentive plan and 300,605 shares available for issuance under Asure’s Amended Purchase Plan. Therefore, 2,458,835 common stock shares were unreserved and available for future use as of April 22. The plaintiff stated that he and other stockholders “have not been accurately apprised of the applicable statutory standard that must be satisfied for the Certificate Proposal to carry” because of the differences in the Proxy and DGCL. They added that the Board misrepresented this information, which is “at direct odds with the DGCL.” As a result, the plaintiff concluded that stockholder votes could be compromised.
Guliyev alleged that defendants have violated Section 14(a) of the Securities Exchange Act and Rule 14a-9 for the false and misleading statements in the proxy. Guliyev claimed that the Board is responsible for failing to disclose accurate information and for their negligence. He also accuses the defendants of breaching their fiduciary duty by producing a proxy statement with allegedly false and information.
The complaint was filed in the Delaware District Court. Guliyev is represented by Farnan.