SHARES in Aortech, the heart valve maker which once employed 200 in Lanarkshire, have plunged to a new low after it revealed setbacks and a legal action against its former chief executive.

Last December Aortech said Frank Maguire, a board member for 13 years and latterly chief executive, had been replaced by Eddie McDaid, the Scot who co-founded the company and led it to flotation before quitting as chairman in 2002, returning as a non-executive in 2005 then finance director in 2011.

It said at the time Mr Maguire had decided to resign with immediate effect to pursue other opportunities, as part of Aortech's exit from polymer manufacturing to focus on exploiting its intellectual property.

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Yesterday, chairman Bill Brown said legal proceedings against its former chief executive had been instigated. "These proceedings relate to certain alleged activities of Mr Maguire whilst an employee of the company and are aimed at ensuring that Mr Maguire complies with his obligations under the terms of his service contract."

The shares sank from 48p to 30p before recovering to 36.5p, below their value in November 2012 when the business nearly ran out of cash and was rescued. Mr Brown, formerly an Edinburgh-based fund manager, said: "Since the resignation of the former chief executive, a considerable amount of time has been undertaken by the board to ensure that customers and licensee relationships are fully and properly established." He said the company expected to report an underlying loss of £600,000 ($1m) for 2013-14, and after its extra costs still had more than£350,000 ($600,000) in cash.