Novatti Group has been served a writ in Malaysia over disputed earn-out payments from its 2022 ATX acquisition, with a claim of approximately AUD 2.67 million. Despite the legal challenge, ATX’s financial performance remains on an upward trajectory.
- Novatti served writ by ATX vendors in Kuala Lumpur High Court
- Claim of approx. AUD 2.67 million plus interest and costs
- Provision for liability already made in Novatti’s accounts
- Novatti disputes claim and intends to defend legal action
- ATX’s financial performance improved in FY25 and FY26 despite dispute
Legal Dispute Emerges Over Deferred Payments
Novatti Group Limited (ASX: NOV) has disclosed it is facing legal proceedings initiated by the former shareholders of ATX Fintech Holding SB Malaysia. The writ, served in the Kuala Lumpur High Court of Malaya, relates to a disagreement over deferred and earn-out payments tied to the acquisition of ATX in January 2022.
The ATX vendors are seeking approximately RM7.38 million, which translates to around AUD 2.67 million, plus interest and legal costs. This claim centers on the timing and amount of deferred consideration linked to ATX’s post-acquisition financial performance.
Financial Provisions and Company Stance
Novatti’s directors have previously recognised a provision for the majority of this potential liability in the company’s financial statements, reflecting prudent accounting practices rather than an admission of fault. The company emphasises that it disputes the claim and is actively seeking legal counsel to defend itself robustly in the proceedings.
Despite the dispute, Novatti highlights that ATX’s financial results have shown positive momentum through fiscal year 2025 and into 2026, suggesting the underlying business remains sound and growth-oriented.
Implications for Investors and Market Confidence
This legal development introduces an element of uncertainty for investors, particularly regarding the final financial impact and potential reputational effects. However, Novatti’s transparent communication and prior provisioning may help mitigate market concerns in the short term.
The company has committed to providing further updates as the situation evolves but has refrained from additional commentary due to the ongoing nature of the legal process.
Bottom Line?
Novatti’s legal tussle over ATX payments underscores the complexities of cross-border fintech acquisitions and the fine line between accounting prudence and legal risk.
Questions in the middle?
- How will the legal outcome affect Novatti’s financial position and earnings forecasts?
- Could this dispute impact Novatti’s future acquisition strategy or vendor negotiations?
- What are the potential reputational risks for Novatti in the Malaysian fintech market?