Medical Kiwi Agrees Undertakings with the FMA, views the future with confidence
22 December 2021
Medical Kiwi Limited today confirmed it has given the Financial Markets Authority (FMA) enforceable undertakings in recognition of misstatements during the company’s crowdfunding programme in August 2020.
The undertakings have been agreed between the FMA and the Medical Kiwi Board of Directors. The latter unreservedly apologises for the misstatements, made in relation to the status of the company’s Cannabis Licence at that time and to the non-binding nature of a cannabis sale agreement entered with Australia-based company Hektares.
In August 2020, Medical Kiwi raised $2 million from crowdfunding investors through the PledgeMe platform. The misstatements were made in an Information Memorandum for investors at that time, and in answer to a question on PledgeMe’s website. Since then, Medical Kiwi has raised additional capital, established a medicinal cannabis cultivation operation in Christchurch, and agreed terms for the long-term export sale of significant quantities of dried cannabis flowers to a buyer in Germany.
Commenting on the undertakings, the Medical Kiwi Board said it was pleased to have concluded matters with the FMA after inquiries spanning more than a year. “The company cooperated with those inquiries fully from the outset and it will now move promptly to implement the undertakings,” the Board said.
The undertakings include an offer to return the investment of any Medical Kiwi shareholder who joined through the crowdfunding programme and now wishes to exit. This refund offer is set at $1 per share, the sum originally paid.
The shareholders concerned will each be advised of the offer and the reasons for it in January 2022.
In addition, Medical Kiwi will pay the FMA the sum of $250,000 in lieu of a pecuniary penalty, formally adopt policies and practices for governance of company disclosures, and agree to a nine-month restriction on its ability to make further new share issues for a period of time should it choose to seek compliance listing on the NZX or another licensed securities market.
“While we acknowledge that the company breached provisions of the Financial Markets Conduct Act in two areas of information disclosure during our crowdfunding, we note that the Medical Kiwi business and its governance arrangements have moved on a long way since mid-2020. For one thing, the company now has six experienced directors,” the Board said. “We face the future with confidence and will keep all its shareholders well informed on developments.”
Note: Medical Kiwi will make no further public comment pending communication with its shareholders on the enforceable undertakings.