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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
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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