A substantial shareholder in Diligent Board Member Services is calling for changes in the board, saying the governance of the software firm needs improvement.
Yesterday, NZX declined to give the New York based Diligent a waiver from rules which require the company's finances to be audited by a registered firm, saying it should have been aware of changes in legisation put in place last year.
Diligent had previously admitted lax in-house controls had contributed to some of its top executives receiving too many stock options, and the subsequent inquiry cost the company more than $US250,000 so far.
Milford Asset Management holds 6% in the company, and executive director Brian Gaynor says a listed company should know the rules.
He says the latest issue will not have any effect on Diligent's share price but is a sign of lax corporate governance in the company.
Mr Gaynor says there have already been some changes at management level in New York and it is hoped there will be some changes at board level.
Although it is a complex company which operates in New York but is listed on the NZX, he says, the New Zealand and US directors should be able to work out between them the rules and regulations that the company must due to follow.
He says the US law is completely different to New Zealand's, making the situation more complicated.
Mr Gaynor says fundamentally it is still a well operated company and the mistakes are reasonably minor.
Shares were unchanged at $6.30 each on Tuesday.