The A2 Milk Co Ltd (ASX: A2M) share price is rangebound so far on Wednesday, now trading 0.24% higher at $4.16.
Reports have surfaced that A2 Milk is set to face a further class action from shareholders for allegedly engaging in misleading and deceptive conduct.
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What's the situation?
Shine Lawyers has launched a class action on behalf of Australian and, now, New Zealand A2 Milk shareholders.
Shine had previously filed a class action proceeding against the company in the Supreme Court of Victoria in November last year. It followed similar action by Slater & Gordon lawyers in October.
Today, Shine Lawyers is moving to include New Zealand shareholders in its class action. It said the proceedings apply to shareholders "who suffered losses after acquiring A2 Milk shares (A2M) on the ASX or on the NZX following a 62% drop in market value in FY21".
Shine advised shareholders who acquired shares between 19 August 2020 and 7 May 2021 may be eligible to join the class action.
A statement from the legal firm said:
The class action alleges that between 19 August 2020 and 7 May 2021, A2M engaged in misleading and deceptive conduct, breaching its continuous disclosure obligations, and failing to adequately disclose future trade plans.
It is further alleged that by 19 August 2020, A2M was, or ought to have been aware that their FY21 guidance, and subsequent representations, did not adequately take into account a number of factors known to A2M which ultimately impacted the Company's financial performance, resulting in a 62% drop in market value in FY21.
These include a decline in daigou sales from the company's cross border e-commerce channel (CBEC) and the corresponding decline in CBEC business due to this impact, Shine says.
Philip Skelton QC said that investors were "unable to make informed decisions as to whether to buy, sell or retain A2 Milk shares" due to the company's moves, meaning "many investors lost substantial sums as a result of acting on that misleading information", as reported by The Australian.
A2 Milk response
A2 Milk issued a statement today, confirming it has been notified a proceeding has been filed against the company in the High Court of New Zealand. It said:
The Company considers that it has at all times complied with its disclosure obligations, denies any liability and will vigorously defend the proceedings.
A2 Milk share price snapshot
In the last 12 months, the A2 Milk share price has slipped more than 19% into the red after incurring a 24% loss this year to date.
Losses have extended over the past month of trade too with shares sliding another 11.5% in that time.
