Garry Donoghue has failed to return $11 million worth of shares to Plus SMS Holdings sparking legal proceedings from the company he founded.
Last September Plus SMS admitted making incorrect statements, a Securities Commission inquiry was launched and Donoghue and chairman Jim Bracknell resigned.
As part of asettlement, Plus SMS agreed to not take action and renounced all rights and claims against Donoghue, while he would resign as a director, give up all rights under a share sale deed and return 85 million shares.
At a meeting on February 2 shareholders approved the no-cost buy back and cancellation of the shares - worth more than $11 million at yesterday's closing price of 13c a share.
Under the settlement Donoghue was obliged to transfer the shares within five business days, the company said.
A statement from chief executive Chris Tiensch said: "To date PLS has not received an instrument of transfer for the Donoghue shares and believes that such a transfer will not be forthcoming.
"Accordingly, the board of PLS has resolved to immediately initiate legal proceedings against Mr Donoghue and Plus Trustee Limited to enforce its rights under the Settlement Deed."
In September Donoghue had said he would return the shares as the company had failed to achieve its goals.
