AYO TECHNOLOGY SOLUTIONS LIMITED - Censure imposed by the JSE on Mr Khalid Abdulla, former director of AYO

Censure imposed by the JSE on Mr Khalid Abdulla, former director of AYO

GEN – General – AYO Technology Solutions Limited  
Censure and penalties imposed by the JSE on Mr Khalid Abdulla, the former director of AYO Technology 
Solutions Limited ("Company" or "AYO") 
 
The JSE hereby informs stakeholders of the following findings in respect of Mr Abdulla:

1.	Stakeholders are referred to the SENS announcement dated 5 September 2023 wherein the JSE 
	imposed a public censure and a financial penalty in the form of a fine of R2 million against Mr Abdulla 
	as a result of his failure to comply with important provisions of the JSE's Listings Requirements. We 
	attach this announcement marked "A".  

2.	Mr Abdulla disagreed with the JSE's decisions, and on 20 March 2023, Mr Abdulla applied, in terms of 
	section 230(1) of the Financial Sector Regulation Act ("FSRA"), to the Financial Services Tribunal ("FST") 
	for the reconsideration of the JSE's decision (the "Reconsideration Application"). He also applied for 
	an order suspending the decision of the JSE in terms of section 231 of the FSRA. On 25 April 2023, the 
	FST dismissed the suspension application, other than in regard to the payment of the fine that the JSE 
	imposed on Mr Abdulla, pending the outcome of the Reconsideration Application.

3.	The Reconsideration Application was heard on 15 September 2023. 

4.	On 14 December 2023, the FST partially upheld the Reconsideration Application to the following 
	extent:

	4.1	The JSE's decision and finding that Mr Abdulla, in his capacity as a non­executive director of 
		AYO, breached the provisions of paragraph 10.4 of the Listings Requirements for his role in 
		facilitating and negotiating the payments directly into 3 Laws Capital (Pty) Ltd bank account in 
		respect of PMA1 and PMA2 was set aside and substituted with a decision and finding that:

			"Mr Abdulla, in his capacity as a non-executive director of AYO, is found to be in breach of 
			the provisions of paragraph 10.7 of the Listings Requirements for his role in facilitating and 
			negotiating the payments directly into 3 Laws Capital (Pty) Ltd bank account in respect of 
			PMA1 and PMA2."
	4.2	The JSE's decision to impose a fine in the amount of R2 million (two million rand) on Mr Abdulla 
		was set aside and substituted with a decision to impose a fine in the amount of R1.2 million (one 
		million, two hundred thousand rand) on Mr Abdulla.
 
5.	Save for the above, the remainder of the Reconsideration Application was dismissed. The decision by 
	the JSE that Mr Abdulla, in his capacity as a non-executive director of AYO at the time, failed to comply 
	with the following important provisions of the Listings Requirements were therefore confirmed by the 
	FST:

	5.1	Paragraph 8.57(a) as his instructions to make improper adjustments to certain line items in 
		AYO's financial statements directly resulted and/or contributed to AYO breaching the Listings 
		Requirements; and
	5.2	General Principle (v) which required him to ensure that all parties involved in the dissemination 
		of information into the marketplace, whether directly to holders of relevant securities or to the 
		public, observe the highest standards of care in doing so.

6.	In the circumstances the JSE's decision to impose a public censure on Mr Abdulla has been confirmed 
	by the FST and the fine in the amount of R 1.2 million as a result of his failure to comply with the 
	Listings Requirements is immediately due and payable.  

14 December 2023











"A"

GEN – General – Mr Khalid Abdulla – Director of AYO Technology Solutions Limited  				
Censure imposed by the JSE on Mr Khalid Abdulla in his capacity as a director of AYO 
Technology Solutions Limited ("Company" or "AYO") 
 
The JSE hereby informs stakeholders of the following findings in respect of Mr Abdulla:

BACKGROUND
1.	Stakeholders are referred to the JSE's announcement published on SENS on 27 August 2020 wherein 
	the JSE imposed a public censure and financial penalties amounting to R6.5 million against AYO as a 
	result of its transgressions of the Listings Requirements.

2.	Mr Khalid Abdulla was appointed as a non-executive director of AYO since its listing on the JSE on 21 
	December 2017 until August 2018 and he currently serves as the executive deputy chairman.

3.	Pursuant to the JSE's investigation into the conduct of certain individuals that presided at the 
	Company during the periods in question, the JSE has concluded its investigation against Mr Abdulla as 
	a director of AYO at the time of the transgressions referred to in paragraph 1 above.

4.	AYO listed on the JSE on 21 December 2017. The day after its listing on the JSE, on 22 December 2017, 
	AYO entered into the first of three performance management agreements ("PMAs") with an asset 
	manager, 3 Laws, in terms of which 3 Laws would manage funds invested for and on behalf of AYO to 
	diversify AYO's treasury risk function.

5.	At the time of entering into the PMAs, the majority shareholder in 3 Laws was Sekunjalo Investment 
	Holdings (Pty) Ltd which held 85% of 3 Laws. Sekunjalo Investment held 61% of African Equity 
	Empowerment Investment Holdings Limited which in turn held 49% of AYO. Therefore, 3 Laws was a 
	related party to AYO in terms of paragraph 10.1 of the JSE Listings Requirements.

6.	In accordance with the provisions of section 10 of the Listings Requirements, a related party 
	transaction means an acquisition or disposal, or other agreement, or any variation or novation of an 
	existing agreement, between the issuer or any of its subsidiaries and a related party, as defined.

7.	Related party transactions must be categorised to determine the percentage ratios calculated as a 
	percentage of consideration to market capitalisation or dilution of number of shares in issue. Related 
	party transactions with a percentage ratio of more than 5% requires a SENS announcement, circular to 
	shareholders incorporating a fairness opinion, and shareholder approval of the transaction (votes of 
	the related party and its associates excluded), prior to completion and/or implementation of the 
	transaction. Small related party transactions are classified as transactions with a percentage ratio of 
	more than 0.25% but less than or equal to 5% which requires that, prior to completing and/or 
	implementing the transaction, an issuer must inform the JSE of the transaction in writing, provide the 
	JSE with written confirmation from an independent professional expert that the terms of the 
	transaction are fair as far as shareholders are concerned, publish details of the proposed transaction 
	on SENS including the fairness thereof, and if the independent professional expert finds the 
	transaction to be unfair, then the usual related party transaction requirements referred to above 
	apply.

TRANSACTIONS WITH 3 LAWS CAPITAL (PTY) LTD ("3 LAWS")
8.	Details of the PMAs entered into by AYO and 3 Laws are set out hereunder:

    	PMA1
	*	Verbal agreement entered into on 22 December 2017 
	*	R70 million advanced to 3 Laws on 22 December 2017 and returned to AYO on 22 February 2019
    	PMA2
	*	Written agreement entered into on 28 February 2018 in terms of a resolution of the board of 
		directors of AYO subject to these funds being returned to AYO by 31 August 2018
	*	R400 million advanced to 3 Laws on 5 March 2018 and returned to AYO on 20 August 2018
     	PMA3
	*	Written agreement entered into on 27 November 2018 in terms of a resolution of the board of 
		directors of AYO
	*	R400 million advanced to 3 Laws on 29 November 2018 and returned to AYO on 22 February 
		2019.

9.	As confirmed by AYO and recorded as such in the PMAs, the salient terms of the PMAs highlighted the 
	following:
	*	No funds may be transferred to 3 Laws or to any account in the name of 3 Laws in carrying out its 
		duties in terms of the agreements.
	*	The funds must be placed in an AYO custodian account / AYO bank account with Nedbank for the 
		benefit of AYO as are typical with such asset management agreements.
	*	3 Laws is only entitled to earn a fee which is market related.
	*	Any investment made on behalf of AYO must be within the terms of the investment mandate set 
		out in the PMAs.
	*	Any investment instruction given by 3 Laws must be made in the name of AYO and the value of 
		the investment be recognised and recorded as part of AYO's assets in the financial statements.

10.	On 12 March 2020, the Report of The Judicial Commission of Inquiry into Allegations of Impropriety at 
	the Public Investment Corporation ("PIC Report") was released and published. The PIC Report included 
	an analysis of 3 Laws' Nedbank current account indicating the movement of monies between AYO, 
	Sekunjalo Capital (Pty) Ltd and 3 Laws. Based thereon and after robust investigation and engagement 
	with AYO, the JSE discovered that the funds were not invested by AYO with 3 Laws in accordance with 
	the terms and provisions of the PMAs and that the transfer of funds to 3 Laws therefore constituted 
	related party transactions in terms of the Listings Requirements. This was evident from the following:
	*	All funds were transferred by AYO directly into 3 Laws' proprietary and current bank account ("3 
		Laws' bank account") held with Nedbank and Standard Bank and not paid into a separate and/or 
		segregated banking account in the name of AYO, in conflict with the express provisions of the 
		PMAs.
	*	AYO did not transfer an amount of R70 million to 3 Laws in terms of PMA1 on 22 December 2017. 
		An amount of R35 million was transferred directly into 3 Laws' bank account and a further R35 
		million was transferred directly into the bank account of Sekunjalo Capital (Pty) Ltd on 3 Laws 
		instruction.
	*	AYO's bank records reflect that on 31 August 2018 an amount of R400 million previously 
		transferred to 3 laws in terms of PMA2 was returned into AYO's bank account and referenced as 
		"3 Laws Capital", however it was not returned to AYO by 3 Laws but by a different entity.
	*	3 Laws returned an amount of R470 million to AYO on 22 February 2019 in terms of PMA1 and 
		PMA3 in two separate payments. On the same day that 3 Laws returned the R470 million to 3 
		Laws, 3 Laws received payments of R35 million from Africa News Agency (ANA) and R30 million 
		from SGB Securities. The total of R470 million returned by 3 Laws to AYO included the monies 
		received from ANA and SGB Securities on the same day, further confirming that there was no 
		segregation of funds or accounts for purposes of AYO's investment. This was also a direct result of 
		AYO paying the funds directly into 3 Laws' bank account. 

11.	Mr Abdulla, in his capacity as a non-executive director of AYO at the time, facilitated the transactions 
	with 3 Laws and negotiated with 3 Laws for the payments to be made directly into 3 Laws' bank 
	account contrary to the prescripts and provisions of PMA1 and PMA2. AYO did not, prior to completing 
	and/or implementing the transactions with 3 Laws, inform the JSE and the market through SENS of the 
	details of the transactions, obtain the approval of shareholders where required or confirm to 
	shareholders that the terms of the transactions were fair, as required. Mr Abdulla, through his role in 
	these transactions, caused and/or contributed to AYO's breach of the JSE's Listings Requirements 
	regarding related party transactions.

12.	Accordingly and for these reasons, the JSE found Mr Abdulla, in his capacity as a non-executive 
	director of AYO at the time, to be in breach of the provisions of paragraph 10.4 of the Listings Requirements for 
	his role in facilitating and negotiating the payments directly into 3 Laws' bank account in respect of 
	PMA1 and PMA2.

INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2018
13.	Ms Naahied Gamieldien, AYO's former Chief Financial Officer ("former CFO"), drafted AYO's maiden 
	interim financial statements for the six months ended 28 February 2018 ("unaudited 2018 interim 
	results"). On 26 April 2018, the former CFO emailed a copy of the draft unaudited 2018 interim results 
	to Mr Abdulla and the Chief Investment Officer of African Equity Empowerment Investment Holdings 
	Limited ("AEEI"), Mr Abdul Malick Salie, before going on leave. In the former CFO's absence, Mr 
	Abdulla instructed Mr Salie, an employee and executive director of AEEI, a separately listed company 
	on the JSE and parent company of AYO, to effect adjustments to specific line items of AYO's draft 
	unaudited 2018 interim results, namely the sales commission, warranty provision, Sasol project 
	salaries, certain legal fees/listing costs and the treatment of an IFRS 2 share-based payment charge. 
	AYO management, including Mr Abdulla, approved the unaudited 2018 interim results for publication 
	which contained these adjustments.

14.	Mr Abdulla gave instructions to Mr Salie who was not a director or employee of AYO to amend specific 
	line items in the draft unaudited 2018 interim results which were improper and not in accordance with 
	the requirements of IFRS, culminating in AYO's misstated financial information that had to be 
	corrected through restatement. Furthermore, Mr Abdulla was one of the AYO board members who 
	approved the unaudited 2018 interim results which contained the improper adjustments for 
	dissemination to shareholders and the market. AYO's published unaudited 2018 interim results in 
	respect of the adjustments were subsequently restated.

15.	Mr Abdulla's role in instructing the adjustments to the specific line items in AYO's unaudited 2018 
	interim results caused and/or contributed to AYO breaching IFRS and the Listings Requirements for 
	which the JSE imposed a financial penalty.

16.	Accordingly and for these reasons, the JSE found Mr Abdulla, in his capacity as a non-executive director 
	of AYO at the time, to be in breach of the following provisions of the Listings Requirements:

	(a)	Paragraph 8.57(a) as his instructions to make improper adjustments to certain line items in 
		AYO's financial statements directly resulted and/or contributed to AYO breaching the Listings 
		Requirements; and
	(b)	General Principle (v) which required him to ensure that all parties involved in the dissemination 
		of information into the marketplace, whether directly to holders of relevant securities or to the 
		public, observe the highest standards of care in doing so.

JSE'S DECISION TO CENSURE MR ABDULLA
17.	Directors of issuers fulfil a critical role in ensuring that listed companies comply with the Listings 
	Requirements. Issuers of securities listed on the JSE are only able to comply with the Listings 
	Requirements if their directors take the appropriate actions to ensure that such issuers comply in all 
	aspects with its provisions.

18.	Directors of companies listed on the JSE are bound by and must comply with the JSE's Listings 
	Requirements, as amended from time to time, and undertake and agree to discharge their duties in 
	ensuring such compliance whilst they are directors.

19.	The accuracy and reliability of financial information published by companies are of critical importance 
	in ensuring a fair, efficient and transparent market. The provisions of the Listings Requirements, which 
	impose various important obligations on listed companies in respect of the disclosure of financial 
	information, contributes to the integrity of the market and promotes investor confidence.

20.	For these reasons and with reference to the JSE's findings of breach, the JSE has decided to impose a 
	public censure and a fine in the amount of R2 million (two million rand) on Mr Abdulla for his failure to 
	comply with important provisions of the Listings Requirements.

21.	The fine imposed against Mr Abdulla will be appropriated in accordance with section 11(4) of the 
	Financial Markets Act, 19 of 2012 read with section 1.25 of the Listings Requirements which includes, 
	inter alia the settlement of any external costs incurred by the JSE which may arise through the 
	enforcement of the provisions of the Listings Requirements and/or in furtherance thereof.

MR ABDULLA'S APPLICATION FOR RECONSIDERATION OF THE JSE'S DECISION IN TERMS OF SECTION 230 
OF THE FINANCIAL SECTOR REGULATION ACT ("FSRA"), MR ABDULLA'S APPLICATION FOR THE 
SUSPENSION OF THE JSE'S DECISION IN TERMS OF SECTION 231 OF THE FSRA, AND MR ABDULLA'S 
URGENT APPLICATION TO THE HIGH COURT

22.	On 20 March 2023, Mr Abdulla applied to the Financial Services Tribunal ("FST") for the 
	reconsideration of the JSE's decision in terms of section 230(1) of the FSRA, under reference number 
	JSE3/2023 (the "Reconsideration Application"). On the same day, Mr Abdulla applied to the FST in 
	terms of section 231 of the FSRA for an order suspending the JSE's decision, pending the outcome of 
	the Reconsideration Application (the "Suspension Application"). 

23.	The JSE opposed the Reconsideration Application and the Suspension Application. On 25 April 2023, 
	Retired Judge Harms, the Deputy Chair of the FST, suspended the financial penalty imposed by the JSE 
	on Mr Abdulla and dismissed Mr Abdulla's application for the suspension of the public censure 
	imposed on him.

24.	Mr Abdulla then launched an urgent application against the JSE in the Johannesburg division of the 
	Gauteng High Court under case no. 2023-040885, in which he sought to review and set aside the ruling 
	of Retired Judge Harms in the Suspension Application, and an interdict to prevent the JSE from 
	publishing the ruling in the Suspension Application (the "Urgent Application"). The JSE opposed the 
	Urgent Application and undertook not to impose its public censure and not to publish the ruling in the 
	Suspension Application pending the outcome of the Urgent Application.

25.	The Urgent Application was heard on 31 August 2023 and on 5 September 2023, Judge Wilson handed 
	down his judgment in which he dismissed Mr Abdulla's Urgent Application, with costs, including the 
	costs of two counsel. 

26.	The JSE's decision in respect of the public censure imposed on Mr Abdulla is therefore enforceable. 

27.	We await the outcome of Mr Abdulla's Reconsideration Application, which the JSE has opposed, and 
	which will be heard by the FST on 15 September 2023.

5 September 2023






















































	



Date: 14-12-2023 04:51:00
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