The struggle for control over Solana ecological currency entity Solmate continues to escalate. For its part, RockawayX alleged that the company ' s board of directors diluted shareholders ' interests through low-priced shares, equity-recognition arrangements and consultancy agreements, totalling approximately $18 million, and that both parties had instituted proceedings in Delaware and New York, respectively.

Shareholders sue the board for self-dealing.

According to a petition filed by RBCH, an associate party of RockawayX, before the New York State Court, the management and board of the Solmate were accused of breaching fiduciary responsibility, oppressing shareholders and continuing related transactions. RBCH stressed that the litigation was initiated in the name of shareholders holding more than 10 per cent of shares, rather than the individual actions of the founders of RockawayX.

RBCH noted that, after a round of internal subscriptions of $4.97 per share, the Board rejected, in only five days, the buy-in programme proposed by Forward Industries. On the other side ' s offer, Solmate ' s valuation was approximately $7.19 per share, 30.7 per cent higher than the aforementioned subscription price. In RBCH ' s view, this meant that the Board rejected the offer, which was more favourable to all shareholders, after a low-cost in-house entry.

Focus on consultancy agreements and equity

The complaint also refers to the fact that Solmate had replaced five CEOs within less than 12 months and that the current CEO Ron Sade ' s employment agreement had allegedly not been disclosed, which could raise issues of disclosure.

RBCH also questioned a consultancy agreement related to Pulsar, stating that the total value of the contract was approximately $6 million and that some directors could charge an annual fee of more than 0.85 per cent to the size of the company ' s treasury asset management, in addition to remuneration, contractual bonuses and directors ' fees.

In addition, RBCH stated that four internal persons obtained an equity recognition equivalent to over 15 per cent of the company ' s equity under a strategic consultancy agreement, but did not see a written record of the content of the service. This is also one of the central grounds for its allegation that the board of directors has diluted shareholders ' rights through arrangements.

ISS questions the independence of the Board

The governance structure of Solmate has also been criticized by the independent advisory body ISS. According to RBCH disclosures on the same day, the main observations of ISIS included the fact that the board of directors was not in the majority of independent directors, the company's lack of formal remuneration and nomination committees, and the company's low short-term “traps” clause.

  • Solmate claims to hold 1.2 million SOLs
  • Forward quote corresponds to $7.19 per share
  • Internal subscription price is $4.97 per share.

Such a board structure, in the view of shareholders, would further strengthen management control, especially when the relevant shareholdings and voting arrangements themselves have been challenged by law.

Upgrade of proceedings after merger breakdown

Solomonate had previously publicly countered RockawayX, claiming that the latter had attempted to sell itself to Solmate with a valuation of approximately $200 million, and that, in doing so, the company had found misleading elements in its financial data, thus terminating the transaction and initiating a fraud and wilful misrepresentation suit in Delaware.

At present, the dispute has evolved from a breakdown in merger negotiations to a multi-line litigation around board control, information disclosure and shareholder interests. In the case of Solmate, governance disputes, which add to the volatility of asset prices, continue to stifle the market ' s judgement of its valuation.