The JSE has again fined AYO.
- The JSE has fined Ayo Technology Solutions R1.5 million for a series of breaches of listing requirements.
- The fine refers to the disclosure of transactions and its relationship with the asset manager 3 Laws.
- Ayo Technology requested a reconsideration of the JSE’s decision, but a request for suspension of sanctions was rejected.
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Iqbal Survé-linked IT group AYO Technology Solutions has been fined R1.5 million by the JSE for a series of disclosure failures related to the way it engaged with shareholders in related party transactions .
On Wednesday, the Financial Services Court dismissed AYO’s request for a stay of JSE decisions, making them enforceable, the local stock exchange said in a statement.
AYO also requested a reconsideration of JSE’s decisions, while its shares fell more than a fifth to R2.40 in early trading on Thursday, having once again fetched more than R40.
Related parties
AYO was listed on the JSE on December 21, 2017. One day after listing, it entered into the first of three performance management agreements with an asset manager, 3 Laws, which provide for the management of funds invested for and on behalf of the company
When it entered into the agreements, 3 Laws’ majority shareholder was Sekunjalo Investment Holdings, which was founded and is chaired by Survé.
Sekunjalo owned 85% of 3 Laws, as well as 61% of African Equity Empowerment Investments, which in turn owned 49% of AYO. Therefore, 3 Laws was a related party to AYO.
After investigating the transactions between 2017 and 2019, the JSE concluded that AYO had not met its listing requirements, both in terms of disclosing to the market significant related party transactions and failing to adequately inform shareholders of the nature of the transactions. agreements.
Among the breaches, AYO failed to disclose that an amount of R400 million was paid to 3 Laws on March 5, 2018.
In addition, “the JSE identified inconsistencies in certain disclosures, information and dates contained in the AYO group’s annual financial statements for the year ended August 31, 2019 and in AYO’s correspondence with the JSE.”
The R1.5 million fine is not the first time the JSE has taken action against AYO.
In August 2020, the exchange censured AYO and fined it R6.5m for publishing a series of material errors in its 2018 interim results, while in February 2022 it disbarred two former board members from act as directors of publicly traded companies for five years. years.
Mbuso Khoza and Telang Ntsasa were disqualified for failing to carry out their responsibilities as AYO directors and audit committee members with “due care and skill.”
investment problems
AYO has also been in the spotlight since the publication of the Mpati Commission of Inquiry report in March 2020, which found that members of the boards of directors of the Sekunjalo Group of companies were “not independent”.
The report concluded that the investment of R4.3 billion by the Public Investment Corporation (PIC) in AYO demonstrated the “misappropriation of the Sekunjalo Group [and] the impropriety of the process and practice of the PIC”.
It recommended that the PIC conduct a forensic review of all transactions made with the Sekunjalo Group and take all “necessary measures” to recover the money owed to it, and then the PIC take legal action.
AYO has denied any wrongdoing and has accused the PIC, along with National Treasury officials, of conspiring to destroy it, something the PIC has denied.
Following the publication of the report, several banks began to close their accounts with Sekunjalo, citing reputational risk. But Sekunjalo also obtained provisional measures in September, when the Competition Tribunal granted the group six months of provisional measures pending an investigation by competition authorities.
Objection
On 9 December 2022, AYO applied to the Financial Services Court for a stay order on the JSE decisions, while also requesting a reconsideration of the JSE decisions related to the R1.5 million fine. The JSE will oppose AYO’s request for reconsideration, the statement on Thursday read.
The JSE did not oppose the initial AYO suspension request and agreed not to implement the decision and sanctions until the AYO offer ends.
The Court dismissed the AYO suspension request on December 21. The investigation into the conduct of the individuals who chaired the company during the periods in question and who were subject to the listing requirements is ongoing, the JSE said.
With the help of Jan Cronje.
