Zimi Limited compliance challenge

Zimi Limited (ASX: ZMM) has encountered a compliance issue concerning its sales to GSM Electrical (Australia) Pty Ltd. This issue relates to a potential breach of ASX listing rule 10.1, which requires shareholder approval for sales transactions involving related parties. As a result, Zimi has suspended sales to GSM Electrical, significantly affecting its revenue and earnings for the current financial year. Sales to other distributors continue unaffected.

Zimi Limited compliance summary

Zimi Limited is facing a compliance issue with ASX listing rule 10.1 due to sales to GSM Electrical, a related party. The rule necessitates shareholder approval for such transactions, and Zimi has paused sales to GSM Electrical as it consults with the ASX. This suspension is expected to materially affect Zimi's financial performance this year. The transactions were part of a Distribution Agreement from 2020 and were previously disclosed in the company's financial statements. Zimi continues sales to other customers, maintaining transparency and corporate governance by fully disclosing the situation, which has been approved by its Board of Directors. The company aims to resolve this matter swiftly while ensuring compliance with regulatory requirements.

Zimi executive commentary on compliance

The Company has suspended sales to GSM Electrical pending further discussions with the ASX, which is expected to materially impact its revenue and earnings for the current financial year. Sales to other customers and distributors remain unaffected.