VIA optronics AG Announces Conclusion of Internal Review and Provides Management Update

Rhea-AI Summary

VIA Optronics AG (NYSE: VIAO) discloses the findings of an internal review, resulting in the termination of its former CEO's service agreement due to material violations of fiduciary duties. The company faces potential legal claims for improper payments amounting to €300,000 to €500,000, plus consequential damages.

Positive

• None.

Negative

• The internal review revealed material violations of fiduciary duties by the former CEO, leading to a loss of trust.
• The company may face legal claims for improper payments and potential consequential damages.
• The delay in filing the form 20-F for FY 2022 with the SEC could impact investor confidence.
• The extended trading period granted by NYSE indicates ongoing regulatory concerns.
• The disclosed incidents may impact VIA's reputation and corporate governance.
• The termination of the former CEO could lead to leadership instability and operational challenges.

Insights

Legal Expert

The internal review findings suggesting potential fraud and embezzlement by VIA optronics AG's former CEO and other employee raise significant legal and governance concerns. Under German law, the company is obligated to pursue legal action to recover any misappropriated funds, which could lead to a complex and potentially costly legal process. The identification of improper payments ranging from €300,000 to €500,000, plus consequential damages, indicates a material financial impact that could affect the company's balance sheet.

Moreover, the termination of the former CEO 'for cause' is a critical step in re-establishing governance integrity and may be received positively by stakeholders who value strong ethical standards. However, this event might also trigger scrutiny from regulatory bodies, possibly resulting in fines or other sanctions that could further impact the company's financial standing and reputation.

Financial Analyst

The delay in filing the form 20-F with the U.S. Securities & Exchange Commission due to the internal review process introduces uncertainty for investors and can affect the company's stock valuation. The NYSE's extended trading period provides temporary relief, but the market typically reacts negatively to uncertainty and potential financial restatements. The revelation of financial discrepancies could lead to a reevaluation of VIA's financial health and future earnings potential.

Investors should closely monitor the eventual filing of the delayed 2022 20-F for any adjustments to past financial statements and disclosures regarding internal controls. These adjustments could provide a clearer picture of the company's true financial position and may influence investment decisions.

Corporate Governance Analyst

The internal review and subsequent management changes at VIA optronics AG reflect a significant shift in corporate governance, signaling a commitment to rectify compliance failures. The involvement of third-party advisors BDO and DLA Piper ensures an objective assessment of the situation, enhancing the credibility of the findings.

For stakeholders, the company's proactive approach to addressing these issues is crucial. It demonstrates a willingness to hold executives accountable and to strengthen compliance mechanisms. This can have long-term benefits for corporate culture and stakeholder trust, although in the short term, it may lead to volatility in the company's stock as the market digests the implications of the review's findings.

Supervisory Board discloses findings of internal review and announces management change

Company provides update on expected timing of filing its delayed form 20-F for FY 2022

NUREMBERG, Germany--(BUSINESS WIRE)-- VIA optronics AG (NYSE: VIAO) (“VIA” or the “Company”), a leading supplier of interactive display systems and solutions, today announced that its Supervisory Board has concluded its previously disclosed internal review of the Company’s application of its compliance procedures and the investigation of certain incidents regarding compliance with Company policies and guidelines.

As previously disclosed on November 17, 2023, the Company’s continuing internal review process resulted in a further delay of the filing of its form 20-F for the year ended December 31, 2022, with the U.S. Securities & Exchange Commission. At that time, the Company also disclosed that it had been granted an extended trading period by the New York Stock Exchange (NYSE) through May 16, 2024 in order to file its 20-F for FY 2022 (“2022 20-F”).

Chief Executive Officer Roland Chochoiek commented, “We are pleased that the internal review process was finalized, and that the findings were disclosed and presented to our Supervisory Board. As we have stated previously, our leadership takes these matters seriously and we believe the actions we’ve taken to address these findings support this. The conclusion of the internal review process now enables us to proceed with the finalization of our delayed 2022 20-F, which we are endeavouring to file as soon as practicable.”

Conclusion and Findings of Internal Review

The internal review was conducted by BDO AG Wirtschaftsprüfungsgesellschaft (“BDO”) and DLA Piper UK LLP (“DLA Piper” and, together with BDO, the “Advisors”), who were appointed by the Supervisory Board to investigate the potential incidents and to review compliance with Company policies and business guidelines during the period from January 1, 2017 to December 31, 2022 (the “Investigation Period”).

As previously disclosed, the Advisors’ preliminary findings indicated deviations from the Company’s compliance procedures during the Investigation Period primarily involving VIA’s former Chief Executive Officer, Jürgen Eichner.

In February 2024, the Advisors furnished a final report to the Supervisory Board which identified failures by Mr. Eichner and one other employee to comply with Company policies and business guidelines. In particular, the Advisors identified discrepancies that occurred during the Investigation Period in areas including expense recording and reimbursement, company credit card usage for personal transactions, the receipt of annual bonus payments in contravention of Mr. Eichner’s service agreement, unearned compensation for vacation days, inadequate documentation of vehicle usage, and other unapproved payments made to Mr. Eichner.

The Advisors believe that certain of these incidents may constitute fraud and/or embezzlement, and under German law, the Company is required to initiate legal claims for the reimbursement of any such improperly transferred sums. While the total value of the impermissible transactions and any consequential damages relating thereto remains under consideration, currently the Advisors have identified improper payments amounting to a minimum of between €300,000 to €500,000 that they believe could be subject to reimbursement, plus consequential damages.

Based on these findings, the Supervisory Board determined that the actions taken by Mr. Eichner in connection with his service as VIA’s former CEO were material violations of his fiduciary duties and led to a loss of trust. Accordingly, on February 23, 2024, the Supervisory Board terminated the service agreement between Mr. Eichner and VIA for “cause” and revoked the appointment of Mr. Eichner as a member of VIA’s Management Board, effective immediately.

About VIA:

VIA is a leading provider of interactive display solutions for multiple end markets in which superior functionality or durability is a critical differentiating factor. Its customizable technology is well-suited for high-end markets with unique specifications and demanding environments that pose technical and optical challenges for displays, such as bright ambient light, vibration and shock, extreme temperatures, and condensation. VIA’s interactive display systems combine system design, interactive displays, software functionality, cameras, and other hardware components. VIA’s intellectual property portfolio, process know-how, optical bonding, metal mesh touch sensor and camera module technologies provide enhanced display solutions built to meet the specific needs of its customers.

Forward Looking Statement Disclosure:

Statements in this press release about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute “forward-looking statements.” These statements include, but are not limited to, statements relating to: estimates of the monetary value and scope of improper payments and damages related thereto; recoupment of improper payments and/or damages the Company may be able to claim or successfully obtain in future or anticipated litigation based on the Supervisory Board’s findings; the anticipated filing of the 2022 20-F; and other statements that are not historical facts. The words, without limitation, “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these or similar identifying words. Forward-looking statements are based largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements involve known and unknown risks, uncertainties, changes in circumstances that are difficult to predict and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statement. Important factors that could cause actual events to differ materially from those in the forward-looking statements herein include actions taken or to be taken by the Supervisory Board or the Company’s auditors in connection with the Supervisory Board’s findings. In addition, the Supervisory Board’s findings may require additional expenses to be recorded and may continue to adversely affect the Company’s ability to file the 2022 20-F and other required reports with the U.S. Securities and Exchange Commission (“SEC”) in the anticipated time frame or at all. Other important factors include the risks described under Item 3. “Key Information—D. Risk Factors,” in our Annual Report on Form 20-F for the financial year ended December 31, 2021, as filed with the SEC. Moreover, new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this release may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. We caution you therefore against relying on these forward-looking statements, and we qualify all of our forward-looking statements by these cautionary statements. Any forward-looking statements contained in this press release are based on the current expectations of VIA’s management team and speak only as of the date hereof, and VIA specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240228810120/en/

Investor Relations for VIA:



Griffin Morris

Margaret Jones

Alpha IR Group

Phone: +1 312-445-2870

Email: VIAO@alpha-ir.com



Media Contact:



Alexandra Müller-Plötz

Phone: +49-911-597 575-302

Email: AMueller-Ploetz@via-optronics.com

Source: VIA optronics AG

FAQ

What is the ticker symbol of VIA Optronics AG?

The ticker symbol of VIA Optronics AG is VIAO.

What did the internal review conducted by BDO and DLA Piper reveal?

The internal review revealed material violations of fiduciary duties by the former CEO, Jürgen Eichner, leading to a loss of trust.

What potential legal claims does the company face?

The company may face legal claims for improper payments amounting to €300,000 to €500,000, plus consequential damages.

When was the former CEO's service agreement terminated?

The former CEO's service agreement was terminated on February 23, 2024, for 'cause' by the Supervisory Board.

What actions were taken by the Supervisory Board regarding the former CEO?

The Supervisory Board terminated the service agreement between the former CEO and VIA for 'cause' and revoked his appointment as a member of VIA's Management Board.