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Imagination Technologies' Disclosure Timing Challenged By Apple


07/08/2017


Imagination Technologies' Disclosure Timing Challenged By Apple
U.K. based Imagination Technologies Group Plc, one of Apple’s graphic chip suppliers was announced to be replaced by the iPhone maker recently and the U.K. chip maker had put forward a timeline of events leading up the disclosure. However, Apple Inc has now disputed that timeline by Imagination Technologies Group Plc graphics chip supplier. The announcement of the dropping had resulted in a loss of the UK company's largest customer which had also sent shares plummeting.
 
According to an investor call on Tuesday, Apple told Imagination "at the end of March" that it would no longer need its technology, Imagination Chief Executive Officer Andrew Heath was reported to have said. But Apple said it told Imagination about its plans on Feb. 9.
 
Share of Imagination went down by 70 percent when it disclosed Apple’s plans on April 3 to its shareholders. The massive slide in the share prices and the loss of Apple as a client forced Imagination to put itself up for sale eventually.
 
According to a legal expert, regulators could be spurred to examine whether Imagination improperly withheld information from shareholders, and more troubles could be b rought on the company by Apple's claims that Imagination sat on the news for weeks without telling shareholders.
 
Apple told Imagination at the end of March that Apple's new products "at some point in 2018 or early 2019 would not contain our IP and therefore, they were not required to pay us royalties on it," Imagination's Heath told investors.
 
Apple gave a final warning a month before Imagination's CEO claims and warned Imagination that it would "stop accepting new IP from them" as early as 2015, said Apple contesting that timeline.
 
"After lengthy discussions, we advised them on February 9 that we expected to wind down our licensing agreement since we need unique and differentiating IP for our products," Apple said in the statement.
 
There were no immediate comments available from Imagination. Without using some of Imagination's patents that would require royalties, he does not believe Apple can replace Imagination's technology, Heath has said.
 
In order to see whether Imagination's leaders failed to disclose material information to shareholders, European financial regulators were likely to examine the timing of Apple's discussions with Imagination, said Jonathan Parry, an attorney with UK law firm White & Case who is not involved in the dispute.
 
When Imagination's leaders decided it was "likely" that Apple would draw down its business with the company would likely be the focus of the regulators. That time line is important because following that realization, Imagination would then have been required to disclose the development to the shareholders. He however said that from the word's common usage, the legal bar for "likely" is different.
 
"The wording used in judgments is 'a realistic prospect' that something might happen," Parry said.
 
"The judge did not assign a percentage, but he made it clear that something doesn't have to be 'more likely than not'" to trigger public disclosure requirements.
 
(Source:www.reuters.com)