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Australia's corporate watchdog has taken legal action against embattled dental group Smiles Inclusive (ASX: SIL) over its inability to produce an audited financial report for the December 2019 half, delivering on a threat made three months ago.
The announcement yesterday came after the shock departure of director Peter Evans yesterday, following in the footsteps of former CFO Emma Corcoran whose position is yet to be filled, and former CEO Tony McCormack.
The situation at the group has been so woeful that McCormack no longer includes Smiles Inclusive in his LinkedIn profile.
On the same social media platform current chairman David Usasz has also distanced himself from Smiles prior to his appointment to the role in March 2019, despite having been a founding director of the Gold Coast-based company since 2017.
In a letter to shareholders this week, Usasz claimed there were "green shoots" of improvement in the business as it executes its turnaround strategy, although it missed a deadline to pay back a $12 million loan to NAB.
After the loan was due the group announced it had requested an extension, but an update on the matter is still forthcoming.
To add insult to injury, the company was served yesterday with documents filed in the Magistrates Court of Queensland by the Australian Securities and Investments Commission (ASIC), seeking orders to supply the accounts within 28 days of receiving a court order to do so.
ASIC has confirmed it will withdraw the matter if Smiles is able to comply no later than a week before a 10 November court hearing.
"The Company confirms it is still working towards launching its capital raise, and expects to be in a position to lodge its 31 December 2019 accounts before the date of the hearing," Smiles said yesterday.
Last week shareholders received a notice of meeting for a vote that is due to take place on 23 October, in which a group of requisitioning shareholders led by dentists is calling for a board overhaul.
The group led by aggrieved former partners Dr John Camacho, Dr Philip Makepeace and Dr Arthur Walsh had sought to remove Evans, but the forms also include a vote to remove any director appointed after the notice of requisition.
This means that like Usasz, CEO Michelle Aquilina and director Peter Fuller, Evans' replacement - former Pacific Smiles Group founding executive Dr Genna Levitch - will have his role in question less than one month into the job.
The full notice of meeting was not published in Smiles' announcement to the ASX this week, and included questionable information about directors' time at the company.
On the penultimate page of that document, a joint statement from the current directors states that Usasz, Fuller and Evans were appointed in November 2019 following a period of multiple changes in the leadership team.
However, ASIC records state Usasz was appointed in August 2017, Evans was appointed in August 2018, and Fuller was appointed in June 2019.
Why or how the directors could get their own starting dates wrong is a mystery shareholders will no doubt be considering at the EGM vote next month.
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