PIC seeks legal review of AYO dividend payments
The Public Investment Corporation (PIC) has indicated its displeasure with AYO Technology Solutions’ decision to issue a whopping dividend despite swinging into a loss, saying the dividend payments ‘will be subject to legal review’, notes a Daily Maverick report.
AYO’s financial situation is of particular concern for the PIC, since it invested R4.2bn for a 29% stake in the company when it listed in 2018.
AYO’s share price has since collapsed, with the company trading at around R4 after listing at R45, indicating the PIC has already lost R3.5bn.
The PIC is in a legal dispute with AYO, claiming misrepresentation on the part of AYO when the transaction was concluded and also on the basis of the principle of legality.
During the current financial year, AYO has issued dividends to the value of R320m, about a quarter of its current market value, despite incurring a pre-tax loss of R201m.
Although the payment of a dividend is the most eye-popping item in the results announced on 29 September, the issue of financial assistance to associates is also noteworthy, says the DM.
The results include a statement by the auditors Crowe JHB and Thawt Inc concerning a reportable irregularity.
The auditors said: ‘The company has provided financial assistance to certain related companies without complying with the requirements of the Companies Act,’ without elaborating.
The matter had been reported to the Independent Regulatory Board for Auditors. In a statement in response to the decision to issue dividends, the PIC said ‘all financial transactions, including dividend payments, will be subject to legal review’.
Meanwhile, the company has denied claims by a whistle-blower who was a member of AYO’s financial team that the company’s February interim results were incorrect, saying ‘the company is considering its legal position and has since written to the JSE Limited and other relevant parties in order to provide the facts relating to the allegations as well as to seek a retraction and apology’.
The whistle-blower, Zama Mlaba, stands by his version of the events, notes the DM report.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
