AYO Technology Solutions is facing a legal challenge from a minority shareholder who holds 0.13% of the company’s shares and is seeking to have it wound up.
The application was lodged in the Western Cape High Court by the shareholder who is believed to be acting as the executor of his late father’s estate. It is reported to relate to the depreciation of AYO’s shares, prompting the move to seek the company’s liquidation.
In a statement on Friday, AYO expressed opposition to the application, calling the claims “unfounded, opportunistic and entirely devoid of merit”. The group argued that the application is a deliberate attempt to harm its reputation and manipulate public perception for financial gain.
AYO said the application was based on a misapplied and narrow interpretation of the Companies Act and hinged on speculative reasoning.
AYO said its share price fluctuations were part of the inherent risks associated with investing in listed companies.
“AYO also notes that its share price performance has been influenced by external factors such as discriminatory practices, inaccurate media reporting, broader economic conditions and legitimate market dynamics. This context further undermines the legitimacy of the shareholder’s claims,” the group said.
AYO has engaged legal advisers and is confident in its ability to successfully oppose the application in court. The company is considering taking legal action against the minority shareholder for defamation and potential damages resulting from the reputational harm caused by the application.
In the spirit of transparency and to safeguard the integrity of the capital markets, AYO has elected to issue a voluntary announcement via the JSE’s Sens service.
The group assured its stakeholders that the application does not affect its day-to-day operations or those of its subsidiaries, which will continue as normal.
“After careful consideration, and following consultation with its legal advisers, the board has determined the information to not be price sensitive. This determination is based on a qualitative and quantitative assessment of the specificity, preciseness and materiality of the potential impact of the application, in combination with the assessed probability of the application’s success,” it said.
Over the past five years the group’s valuation has dropped by 58.68% and it has had an even steeper decline of 85.71% over the past three years. These valuation struggles are not limited to the long term but extend to the short term as well. It has seen a 27% decline in value over the past year and a 22% drop in the past six months.
The group, valued at R163.5m, closed at 50c on Friday.
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