DroneShield Ltd (ASX: DRO) shares are being sold off on Tuesday.
In morning trade, the counter-drone technology company's shares are down 16% to $2.95.
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Why are DroneShield shares crashing?
Investors have been rushing to the exits on Tuesday after the company made an announcement.
According to the release, the company has advised that it has received a notice from the Australian Securities and Investments Commission (ASIC).
The notice reveals that ASIC is requesting for it to provide reasonable assistance in connection with an investigation under the Corporations Act.
What is the investigation?
The investigation relates to announcements made between 1 November 2025 and 20 November 2025, as well as share trading between 6 November 2025 and 12 November 2025. It said:
DroneShield advised that it will cooperate fully with the investigation regarding announcements and information provided to the Australian Securities Exchange between 1 and 20 November 2025, and trading in Droneshield shares between 6 and 12 November 2025 (inclusive).
What was announced during this time?
Between 1 November and 20 November, DroneShield made a number of announcements.
However, a release that stands out is one that it made on 10 November, which was subsequently withdrawn.
On that date, DroneShield announced the receipt of a package of three standalone contracts totalling $7.6 million for handheld systems for delivery to the U.S. Government.
However, it later withdrew this announcement after realising that it had made a mistake and that the contracts were not new orders. It stated:
DroneShield advises that the November Contracts do not represent new orders. The November Contracts were orders that were reissued by the customer due to regulatory updates. The November Contracts were previously issued to DroneShield this year. One of the November Contracts was previously announced by DroneShield to the ASX on 17 September 2025.
And during 6 and 12 November 2025, several executives were selling DroneShield shares through on-market trades.
It is unclear if any of these sales were made during the short window between the release of the announcement and its withdrawal. And that may be the reason why ASIC is looking into the company today.
With respect to action, DroneShield revealed that it doesn't know what may come of the investigation. It advised:
It is not clear what action, if any, may result from ASIC's investigation.
