Ayo Technology Solutions has hit back at the JSE after the bourse censured and fined the software and technology group for not disclosing key information.
The company said in a statement on Friday it is considering taking the JSE to court for violating an alleged agreement not to publish the censure and fine until the Financial Services Tribunal has heard Ayo’s suspension and reconsideration applications.
It also disputed its R1.5m fine, saying the JSE’s earlier penalty of R6.5m was for the “same alleged contraventions” of the bourse’s listing requirements.
“Needless to say, the publication of the censure has caused, and will continue to cause, Ayo and its business significant and irreparable harm,” Ayo said. The JSE’s actions are “unfortunate and contrary to the courtesy and co-operation that has existed thus far”.
The saga stems from three performance management agreements (PMAs) Ayo entered into on December 22 2017, the day after listing, with asset manager 3 Laws Capital to manage money invested on behalf of Ayo.
Independent Media owner Iqbal Survé’s Sekunjalo Investment Holdings was the majority shareholder in 3 Laws, with an 85% stake, while it also held a 61% interest in African Equity Empowerment Investment Holdings Limited (AEEI), which owned 49% of Ayo.
That meant 3 Laws was related to Ayo in terms of the JSE’s listing requirements and had to disclose dealings between them on the JSE’s stock exchange news service (Sens).
Altogether R870m was paid to 3 Laws in terms of the PMAs, which stated no funds could be transferred to 3 Laws or to any account in the name of 3 Laws for its duties, but must be placed in a custodian or bank account of Ayo for the benefit of the software and technology group as are “typical with such asset management agreements”, according the JSE’s statement on Thursday.
However, Ayo’s accounting came under scrutiny during the Mpati commission of inquiry into the Public Investment Corporation (PIC), which invested money in Ayo, and found money was moved between Ayo, Sekunjalo Capital and 3 Laws, but not in line with the PMAs.
Ayo later applied to the FST to overturn the JSE’s decision, but on Wednesday judge Louis Harms, Financial Services Tribunal deputy chair, dismissed Ayo’s suspension application.
According to Ayo’s statement on Friday, the JSE first informed the company of its plans to censure and fine it on August 31 2022. Ayo said that on October 31, the JSE told the company it will not publish the censure and fine until the company’s applications were finalised at the Financial Services Tribunal.
Ayo said that while the suspension application was dismissed, its reconsideration application, filed on December 9, will be heard in the next few months, so it believes the JSE went against the agreement on publishing the fine and censure.
“Ayo finds the JSE’s actions extremely disappointing, given that the JSE’s investigation has spanned a period of more than three years and is still ongoing,” it said. It did not have enough time to seek legal advice on the Financial Services Tribunal’s decision.
Former Ayo CFO Naahied Gamieldien and Abdul Malick Salie, a former director of AEEI, were fined in the same transaction in November.
Meanwhile, the Cape Town-based group said its present CFO, Isaiah Tatenda Bundo, had since December 13 also taken up the role of acting CEO. This follows the retirement of Howard Plaatjes.
The board said it has begun the process of appointing a permanent successor and expects to fill the CEO position in the first quarter of 2023.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.