Being AI cofounder David McDonald.
The NZX’s compliance enforcer RegCo has suspended the quotation of Being AI’s shares until further notice after the start-up fell foul of a stock exchange rule that requires at least two independent directors.
Being AI’s website has been offline since Friday, according to an investment analyst who follows the firm. When the Herald tried to access the site this morning, an initial message read, “We’re making a few updates to our website. Please check back soon.” The site then stopped loading altogether.
The firm also advised the NZX this morning its physical address had changed to a street in a light-industrial section of Avondale, West Auckland as of Friday. Being AI was formerly in Takapuna.
Last week, Being AI announced the resignation of both of its two independent directors: Andy Higgs (who was also chairman) and Brett O’Riley as of 5pm on Friday, January 31. Being AI did not post anything about replacements.
O’Reilly had originally intended to resign on January 28, but extended his notice until January 31. Higgs gave notice on January 30. No reason was given for either resignation.
Sean Joyce resigned as executive chairman on October 23 last year, with no reason given. Joyce had been chairman since Being AI reverse-listed on April 2, 2024.
Independent directors Roger Gower and Joe Jensen both resigned on October 30 last year, each seven months into their roles, with no reasons given. They were replaced by O’Reilly and Higgs.
Chief executive and co-founder David McDonald did not immediately return a request for comment.
On January 24, Being AI said it had reached a settlement in its defamation proceedings against Clare Capital and its directors, whom it said had agreed to pay $150,000.
“The claim arose from material published by Clare Capital in April 2024, which Being AI believed contained false and highly defamatory statements regarding its business activities and leadership. After failing to resolve the matter amicably, Being AI initiated legal proceedings in April 2024,” Higgs said in an NZ filing.
Clare Capital managing partner Mark Clare said, “We have always stood behind our financial analysis of Being AI. We have not provided any admission of wrongdoing or apology.
“The unfortunate reality is that the costs for a full High Court process mean that even when we win, we lose. There would be material costs we could not recover, it is cheaper to pay to make it go away.”
On April 4 last year, Being AI was the subject of RegCo’s first “trade with caution” alert. RegCo “strongly urged” investors to read documents released by Being AI ahead of the listing, including the independent appraisal report.
Being AI was formed by a transaction that brought together three separate businesses: Send Global (”helping businesses to move and store their paper-based information” according to Being AI’s website); Age, a private school operator; and the newly formed Being Consultants.
RegCo placed Being AI in a trading halt between December 2 and December 5 as it sought more information on the sale of Being Consultants, which was ultimately confirmed. Being AI said it planned to focus on an AI marketplace and “AI-enabled learning and education platforms”.
Being AI reported a net loss of $35.6 million for the six months to September 30, 2024 on revenue of $21.4m.
The firm said in an investor presentation, “Due to headwinds and increasing strategic focus, we have agreed to return Being Consultants to 2384 LP [50/50 owned by David McDonald and his wife and business partner Courtney McDonald] in return for cancelling their Contingent Consideration. The fair value adjustment to Contingent Consideration ($32.13m) means the loss recorded in our financial statements for the period does not reflect our trading position.”
In a statement issued at 8.56am this morning, NZX NZ Product Operations said:
“NZ RegCo advises that it has exercised its discretion under the NZX Listing Rules and suspended the quotation of ordinary shares of Being AI Limited (’BAI’).
“The suspension follows announcements last week by BAI that its independent directors had resigned with effect from 5pm on Friday, January 31, 2025.
“As a result of those resignations, the board of BAI currently comprises only two directors, both of whom are not independent directors.
“This means BAI no longer meets the NZX Listing Rules governance requirements relating to board and audit committee composition, including as to the minimum number of directors and independent directors. NZ RegCo considers that a suspension is in the best interests of the market, given the intent and objectives of the NZX Listing Rules governance requirements.
“The suspension will remain in place until further notice.”
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.