Activist investor Starboard Value disclosed a more than $500 million stake in Autodesk on Monday and said it would sue the design software maker to delay its annual meeting after a recent accounting probe hit its shares.

Starboard said it had "significant concerns" over Autodesk's operations, governance and accountability to investors.

Its lawsuit, set to be filed in the Delaware Court of Chancery on Monday, will seek to delay the July 16 annual meeting and reopen the company's director nomination window.

Autodesk's shares rose 4% in early trading. They are down about 7% this year, as of Friday's close.

The company said in May its audit committee had wrapped up the months-long investigation into how it handled the accounting of free cash flow and adjusted margin and that there would no reinstatement of its financial statements. It also named board member Elizabeth Rafael as its interim finance chief, succeeding Debbie Clifford who took on the role of strategy head.

The board began the investigation in March, days before the board nomination deadline.

"Autodesk decided, while knowing this material information, not to make any disclosures to shareholders about these issues until April 1, 2024," Starboard Value said in a letter.

It added that findings of the company's investigation also raised "significant questions" about its accounting and disclosure practices, as well as board oversight.

In 2022, Autodesk said it would shift enterprise customers to contracts billed annually from the multi-year upfront billings. However, the company reverted to multi-year upfront contracts in an attempt to raise reported free cash flow.

The upfront billings of enterprise customers in fiscal 2023 substantially exceeded historical levels, helping Autodesk meet its lowered free-cash flow target.

Autodesk welcomes "constructive input" from its investors and is confident in its strategy, margin opportunity and corporate governance, a company spokesperson said by mail on Monday.

There are 11 nominees for elections at the annual meeting including GoDaddy's former CEO Blake Irving and Western Digital's former boss Stephen Milligan.

  - Reuters