Revolution Beauty mulls legal action against founder

Following on from its issues surrounding a faulty audit, Revolution Beauty has now outlined the legal action it could potentially be taking against one of its founders, Adam Minto.

The company said that it had sent a letter of claim to Minto alleging that he had breached an array of his duties and had contributed to the delay in the audit of the group’s FY22 results, ultimately causing the suspension of Revolution’s shares from trading on AIM.

In a regulatory filing, the British firm said it was looking to recover material sums of the “exceptional costs the company incurred as a result of the matters alleged”.

Minto, who has been set a deadline of July 7 to respond to the letter, initially came under fire after an independent review into the auditing of Revolution Beauty’s accounts found the company had inflated its sales by nine million pounds in order to meet annual targets.

An investigation was initially launched after “serious concerns” surrounding its FY22 accounts were raised by auditor BDO, after which both Minto, former CEO, and executive chair Tom Allsworth stepped down from their positions.

Both Minto and Allsworth were found to have made a number of personal loans to distributors and an unnamed employee totalling around one million pounds, while “materially larger than normal orders” had also been placed during February 2022.

Revolution preps response to Boohoo announcement

It also comes as Boohoo amps up its efforts for a possible takeover of the beauty brand, with the group opting to vote against the reappointment of Revolution’s board directors Bob Holt, Derek Zissman and Elizabeth Lake at the upcoming AGM on June 27.

Boohoo, which is a beneficial owner of approximately 26.6 percent stake in the company, is proposing new appointments in a bid to help the focus “switch to growth”.

Revolution Beauty said it was to publish a further announcement in the coming days in light of Boohoo’s revelation.