IN THE HIGH COURT OF SOUTH AFRICA

WESTERN CAPE DIVISION, CAPE TOWN

CASE NO.: 9141/19

In the matter between:

PUBLIC INVESTMENT CORPORATION SOC LIMITED First Plaintiff

GOVERNMENT EMPLOYEES PENSION FUND

("THE GEPF") Second Plaintiff

( and

AYO TECHNOLOGY SOLUTIONS LIMITED Defendant

DEFENDANT'S PLEA

( AD "THE PARTIES"

Ad paragraph 1

1. The Defendant pleads that the Public Investment Corporation SOC Limited ("the PIC")

is not an organ of state and, in any event, when it takes decisions to invest, such decisions

fall outside the purview ofreview, whether as administrative action and/or the principle

of legality.

2. Save to admit that the First Plaintiff is:

llPage
 2.1. the PIC which is established in terms of section 2 of the Public Investment

Corporation Act No 23 of2004 ("the PIC Act"); and

2.2. an entity listed in Schedule 3 of the Public Finance Management Act No 1 of

1999 ("the PFMA"), and therefore the PFMA applies to it to the extent

indicated in the PFMA; and

2.3. carries on business as a financial services provider and in particular as an asset

manager in terms of the Financial Advisory and Intermediary Services Act No

( 37 of 2002 ("the FAIS Act"),

the Defendant has no knowledge of the remaining content hereof, does not admit same

and puts Plaintiffs to the proof thereof.

Ad paragraph 2

3. Save to admit that the Second Plaintiff is the Government Employees Pension Fund

("the GEPF"), the Defendant has no knowledge of the remaining content hereof, does

not admit same and puts Plaintiffs to the proof thereof.

(
Ad paragraph 3

4. Save to plead that the Defendant's principal place of business is at Second Floor, Old

Warehouse Building, Black River Park, No 2 Fir Street, Observatory, Cape Town, the

remaining content hereof is admitted.

21P a!! e
 Ad paragraph 4

5. The contents hereof are admitted.

AD "THE PRIVATE PLACEMENT"

Ad paragraph 5

6. Save to plead that the process pursuant to which the private placement occurred in

December 2017, commenced prior to December 201 7, the remaining content hereof is

admitted.

Ad paragraph 6

7. The Defendant pleads that:

PLURAL

7.1. The object of the private placement was to offer invited investors the

opportunity to subscribe for private placement shares in the Defendant at the

placement price.

l
7.2. The subscription was implemented by the Defendant issuing 99 782 655 new

shares to invited investors at an issue price of R 43 per share, thereby raising R

4.3 billion.

Ad paragraphs 7 and 8

8. Save to plead that:

8.1. The PIC was represented (as opposed to ''purportedly represented") by its Chief

31 Pa ge
 Executive Officer at all material times, Dr Daniel Matjila;

8.2. The first subscription application (attached as "APl") for an amount of

R 858 130 833 (for 19 956 531 shares) was signed by Mr Molebatsi (in his

capacity as Acting Executive Head: Listed Investments);

8.3. The second subscription application (which replaced the first subscription

application) for an amount of R 4 290 654 165 (for 99 782 655 shares) was

signed by Mr Molebatsi (in his capacity as Acting Executive Head: Listed

( Investments) and co-signed by Dr Matjila (attached as "AP2"),

the remaining content hereof is admitted only to the extent that it is consistent with the

subscription applications referred to.

Ad paragraph 9

9. Save to plead that the subscription agreement was concluded (as opposed to

''pwportedly concluded''), the content hereof is admitted.

( AD "THE NEGOTIATIONS AND THE MISREPRESENT A TIO NS"

Ad paragraph 10

10. The Defendant denies that prior to the conclusion of the subscription agreement and

pursuant to an approach from the Defendant, Dr Iqbal Surve entered into negotiations

with the PIC on behalf of the Defendant.

11. Save to plead that the individuals named in this paragraph do not exhaustively represent
 the individuals who represented the Defendant in the negotiations, the remaining

content hereof is admitted.

Ad paragraph 11

12. The Defendant pleads that:

12.1. The documents referred to herein do not constitute an exhaustive list of the

documents that it provided to the PIC.

( 12.2. All prior statements and information that it provided to the PIC (to the extent

that they were inconsistent with the PLS), were superseded by the Pre-listing

Statement that was issued on 13 December 2017 ("the PLS").

13. Subject to what is pleaded in the preceding paragraph, the content hereof is admitted.

Ad preamble to paragraph 12

14. The Defendant denies the content hereof.

(
15. In amplification of the aforesaid denial, the Defendant pleads that:

15.1. First, prior to the conclusion of the subscription agreement on or about 18

December 2017 ("subscription agreement"), the Defendant was at all

material times represented by the following persons and I or entities and in

the following capacities:

15.1.1. Mr Salim Young (Chairman) and I or Mr Kevin Hardy (CEO)

and / or Mr Khalid Abdulla (non-executive director) of the

5 JP agr
 Defendant; and

15.1.2. Mr Malick Salie in his capacity as Head of AEEI Corporate

Finance.

15.2. Second, the PLS constituted the sole final and binding offer by the Defendant

to the PIC and that:

15.2.1. Any representations made prior to the publication of the final

PLS, whether oral or written constituted part of the preliminary

(
alternatively introductory negotiations.

15.2.2. To the extent that there was any inconsistency between

representations made by and on behalf of the Defendant prior to

the PLS, these were superseded and replaced by what was stated

in the PLS.

15.3. Third, the PLS specifically and expressly stated the following at page 1 thereof,

under the heading of"IMPORTANT LEGAL NOTES" :

15.3.1. The PLS contains statements about the Defendant and Defendant

Group:

"that are or may be forward-looking statements. All

statements other than statements of historical fact are, or
may be deemed to be, forward-looking statements . "

15.3.2. The forward-looking statements (as defined above):

61 Pa ge
 are not based on historical facts, but rather reflect
current expectations concerning future results and
events and generally may be identified by the use of
forward-looking words or phrases such as "believe",
aim ", "expect", "anticipate ", "intend", foresee",
forecast" ; "likely", "should" , "planned", may",
"estimated" , ''potential" or similar words and phrases . "

15.3.3. By their nature, forward-looking statements involve risks and

uncertainties because they relate to events, and depend on

circumstances, that may or may not occur in the future.

15.3.4. The Defendant "cautions that forward-looking statements are

(
not guarantees of future performance."

15.3.5. Actual results, financial and operating conditions, liquidity and

the developments within the industries in which the Defendant

operates may differ materially from those made in, or suggested

by, the forward-looking statements contained in the PLS.

15.3.6. All these forward-looking statements are:

( "based on estimates and assumptions made by Ayo

Technology. Although Ayo Technology believes them to
be reasonable, they are inherently uncertain. Such
estimates, assumptions or statements may not eventuate.
Factors which may cause the actual results, performance
or achievements to be materially different from any
future results, performance or achievements expressed
or implied in those statements or assumptions include
other matters not yet known to Ayo Technology or not
currently considered material by Ayo Technology.

Shareholders should keep in mind that any forward-

looking statements made in this Pre-listing Statement or
elsewhere is applicable only at the date on which such
forward-looking statement is made. New factors that
could cause the business of Ayo Technology not to

71P ;1 g e
 develop as expected may emerge fi·om time to time and it
is not possible to predict all of them. Further, the extent
to which any factor or combination of factors may cause
actual results to differ materially from those contained in
any forward-looking statement is not known. Ayo
Technology has no duty to, and does not intend to, update
or revise the forward-looking statements contained in
this Pre-listing Statement after the date of this Pre-listing
Statement, except as may be required by law. "

15.4. Fourth, the statements that the Plaintiffs rely on to found a misrepresentation

(as pleaded in paragraphs 12.1, 12.2, 12.4, and 12.5 of the Particulars of Claim)

is not actionable as a misrepresentation in law because it does not relate to an

ascertainable fact and was clearly and unequivocally qualified by the Defendant

as forward-looking statements, as pleaded in the preceding subparagraph.

15.5. Fifth, the Defendant denies that the remaining representations pleaded in

paragraph 12.3 and 12.6 of the Particulars of Claim were in fact false. To the

extent that the representations are found to be false, then in that event:-

15.5.1. The representations were not material facts; and/ or

(
15.5.2. The representations did not induce the subscription agreement;

and/or

15.5.3. The PIC sustained no loss on account of thereof.

15.6. Sixth, the forecasts were examined by Grant Thornton, Cape Incorporated as

appears from Annexures 2 and 4 to the PLS ("the Grant Thornton Report")

which provided a limited assurance report on the forecast information provided.

According to the Grant Thornton Report in Annexure 2 of the PLS:

s 111a ge
 15.6.1. Based on its examination of the evidence, nothing had come to

its attention which caused it to believe:

15.6.1.1. The assumptions, barring unforeseen

circumstances, do not provide a reasonable basis

for the preparation of forecast information.

15.6.1.2. The forecast information had not been properly

compiled on the basis stated.

(
15.6.1.3. The forecast infonnation had not been

appropriately presented and all material

assumptions were not adequately disclosed.

15.6.1.4. The forecast information was not presented on a

basis consistent with the accounting policies of

the Defendant.

15.6.2. The Grant Thornton Report further stated:

(
"Actual results are likely to be differentfrom theforecast
information since anticipated events frequently do not
occur as expected and the variation may be material;
accordingly no assurance is expressed regarding the
achievability of the forecast . "

15.7. Seventh , the forecast financial information must be read and understood in light

of:

15.7.1. The express qualifications contained in the notes accompanying

the forecast financial infonnation in Annexure 1 to the PLS.

 15.7.2. The relevant financial and contractual information provided

elsewhere in "POC2", including the remaining Annexures.

15.7.3. The fact that no contractual warranties were given in relation to

the allegations pleaded.

15.8. Finally, the representations made by the Defendant to the PIC were :

15.8.1. To the best of its knowledge and belief;

(
15.8.2. On the basis of professional advice disclosed in the PLS;

15.8.3. With the approval of the Johannesburg Stock Exchange ("JSE")

in tenns of its Listing Requirements;

15.8.4. Genuinely held and represented reasonable and achievable ,

though not guaranteed outcomes.

Ad paragraph 12.1.

16. The Defendant denies that it misrepresented that it was a foregone conclusion that the

30% effective shareholding in BT Communications Services (South Africa) (Pty) Ltd

("BTSA") held by African Equity Empowerment Investment Ltd ("AEEI") would be

transferred to the Defendant ("the BT transaction" or "the BT share transfer"). The

Defendant repeats it plea in response to the Preamble of paragraph 12 of the Particulars

of Claim as appears from paragraph 15 hereinabove .

17. In amplification of the aforesaid denial, the Defendant pleads as follows:

10 IP ,, ~ c
 17.1. First, the background to the BT transaction was that:

17.1.1. Kilomix Investments (Pty) Ltd (registration number 2008 /

023006/07) ("Kilom.ix")holds 30 000 ordinary shares, constituting

30% of the issued ordinary shares in BTSA.

17.1.2. The Sekunjalo Group (which includes Kilomix and which company

forms part of the AEEI Group) is entitled to sell some or all of its

shares in BTSA to its Affiliates.

(
17.1.3. Kilomix notified BT and BTSA on 18 July 2017 that it intended

selling its shares to the Defendant; the Defendant being an Affiliate

of AEEI and a member of the Sekunjalo Group.

17.1.4. In accordance with the Shareholders' Agreement, the Defendant

signed a Deed of Adherence which stated inter alia as follows:

"Ayo hereby agrees and undertakes that, with effect from

the date of acquisition of any shares in the Company
(which acquisition shall be subject to the provisions of the
( Shareholders ' Agreement), Ayo will be bound by all the
provisions of the Shareholders ' Agreement and all the
terms thereof will be enforceable against it by all the
parties to the Shareholder Agreement as if it had been an
original party thereto.

All the rights and obligations of BEECo [Kilomix} under

the Shareholders' Agreement will vest in Ayo."

17.2. Second, both BTSA and the Defendant genuinely intended for the transfer of

AEEI's investment in BTSA (held through Kilomax Investments) (30%),

from Kilomax to the Defendant.

lll P a!-(C'
 17.3. Third, a non-binding AEEI MOU dated 28 November 2017 was concluded

between Ayo, Kilomix Investments, AEEI and Kilomax Investments in

pursuance of the BT transaction.

17.4. Fourth, consistent with and in light of the aforegoing, the PLS stated that in

terms of the non-binding AEEI MOU dated 28 November 2017, the

Defendant intended to subscribe for 99% of the issued share capital in

Kilomix, which was the entity that held 30% of the issued share capital of

BTSA, subject to certain conditions precedent (PLS, clause 4.2 read with the
(
definition of "AEEI MOU"). Annexure 16 to the PLS listed the material

conditions precedent in relation thereto.

17.5. Fifth, the Defendant's acquisition of AEEI's 30% stake in BTSA was never

imposed as a condition precedent to the PIC's share subscription.

18. In light of the aforegoing, the Defendant pleads that: (a) full disclosure was made in

respect of the BT transaction; and (b) no reasonable person, including the PIC, could

have genuinely held the belief that "it was a foregone conclusion" that the 30% effective

shareholding in BTSA held by AEEI would be transferred to Ayo.

19. In any event, the Defendant pleads that the BT transaction did not materialise on account

of the conduct of the PIC, which advised BTSA and the Defendant that the First Plaintiff

did not support the BT transaction.

Ad paragraph 12.2.

20. The Defendant denies that it represented that "it was aforegone conclusion that certain

121 Pn gr
 of BT's existing prima,y customers would move to Ayo and would transfer their existing

contracts and conclude further contracts with Ayo." The Defendant repeats it plea in

response to the Preamble of paragraph 12 of the Particulars of Claim as appears from

paragraph 15 hereinabove.

21. In amplification of the aforesaid denial, the Defendant pleads that the PLS states, inter

alia, as follows as regards the existing customer base of BT:

21.1. That as per the BT Alliance Agreement referred to in clause 4.2. of the

Prelisting Statement, "it is anticipated that that certain of BT's existing

prima,y customers will move to Ayo Technology, in order to leverage off Ayo

Technology's preferential procurement position, as a result of the company

being 51% black-owned and 30% black women owned." (PLS; page 44; par

2.1.)

21.2. "The expected GP margin percentage on this revenue is 35% which is based

on preliminary discussions between BT and its existing customers regarding

the new structure and the intended transfer of contracts to Ayo Technology."
( (PLS; page 44; par 2.1.)

21.3. "The revenue to be generated from the existing BT customers is based on the

revenue currently earned by BT directly from these customers. The revenue

was recognised by BT in 2017 and is forecasted to be recognised by AYO

Technology from 2018 onwards. Based on historical information, the

revenue spend is expected to increase by between 8% to 10% year on year.

This increase has been factored into the forecasted revenue." (PLS; page 44;

par 2.1.)

13ll' H gt'
 21.4. "The forecast was performed focusing on the transfer of services and

products over time to service BT 's existing prima,y customers, those being

customer A and B, where they may derive benefit from these services and

subject to BT's internal approval processes. ..." (PLS; page 44; par 2.1.)

22. The Defendant pleads further that: (a) the percentages provided for in the forecast are fair

and reasonable considering the planning process concluded; and (b) different categories

of customers which reflected the Directors' "best estimation of the existing customers'

revenue, that is envisaged to be transferred" to the Defendant in the 2018/9 forecast

(
period.

23. In light of the aforegoing, the Defendant pleads that: (a) full disclosure was made in

respect of certain of BT's existing primary customers moving to Ayo, transferring their

existing contracts and concluding further contracts with Ayo and (b) no reasonable

person, including the PIC, could have genuinely held the belief that "it was a foregone

conclusion" that "certain of BT's existing primary customers would move to Ayo and

would transfer their existing contracts and conclude further contracts with Ayo."

(
Ad paragraph 12.3.

24. The content hereof is denied. The Defendant repeats it plea in response to the Preamble

of paragraph 12 of the Particulars of Claim as appears from paragraph 15 hereinabove.

25. The Defendant pleads further:

25.1. The information disclosed in the PLS was made available to the Defendant by

BTSA.

14 I ,, "g e
 25.2. BTSA expressly, alternatively tacitly consented to the disclosure of the financial

information.

25.3. In any event, the Plaintiffs sustained no loss on account of the BT financial

information having been disclosed.

Ad paragraphs 12.4. and 12.5.

26. The Defendant repeats it plea in response to the Preamble of paragraph 12 of the

Particulars of Claim as appears from paragraph 15 hereinabove.

(

27. The Defendant denies that the forecasts referred to herein: (a) did not represent the

genuinely held views of the Defendant in respect of the Revenue and Profit Forecasts;

or (b) had no realistic prospect of being achieved.

28. In amplification of the aforesaid denial, Defendant pleads that the forecasts referred to

herein were fair and reasonable and capable of being achieved in that:

28.1. As regards BT's existing customer base: the PLS stated that the forecasts were

based on: (a) the anticipation that certain of BT's customers would move over

to the Defendant on account of the latter's empowerment credentials; (b) the

expected GP margin percentage on revenue being 35% which was based on

preliminary discussions with BT and its existing customers regarding the new

structure and intended transfer of contracts to the Defendant; (c) the revenue as

earned by BT at that time with a reasonable increase of 8% to 10% year on year;

(d) the transfer of services and products over time to services BT's existing

primary customers, those being customer A and B where they may derive

15I P:i ge
 benefit from these services and subject to BT's internal approval processes.

Customer C was factored into the forecast to a lesser extent which was reflected

as being management's best estimate considering the client's budget.

28.2. As regards the expected revenue increase through empowerment: the PLS

stated that the forecasts were informed by: (a) Ayo's empowerment credentials,

which presented a significant competitive advantage; (b) market research was

undertaken in collaboration with BT, engaging their existing primary customers,

which research indicated that those customers are likely to shift services to those
C suppliers would improve preferential procurement.

28.3. As regards Ayo's existing customers: the PLS made clear that the revenue from

existing AYO customers is forecasted based on historical trends and does not

include the potential growth of synergies from the BT strategic relationship,

except for the increase of20% and 25% in 2018 and in 2019 respectively in the

cyber security service offering. Specific forecasts were done in respect of: (a)

unified communications and cyber security spaces in which field Ayo had

acquired services and products and in the increase in turnover during the 2017
(
financial year; (b) software and mobile development and Ayo's development

and launch of an asset tracking system; and (c) growth in the digital

transformation segment.

28.4. Provision was made for an additional market share. Factored into this element

were Ayo's intended development; consequent new revenue streams; and

diminishing competitor numbers.

29. The remaining allegations made herein are admitted only to the extent that they are

16IP ag c
 consistent with what is stated in the PLS and this Plea.

AD PARAGRAPH 12.6

30. It is admitted that there was a degree of urgency in the listing of the Defendant. The

urgency notwithstanding, the Defendant pleads that the PIC was vested with a choice

as to whether to conclude the subscription agreement or not; the PIC exercised that

choice freely and voluntarily.

AD PARAGRAPH 13
(

31. The Defendant:

31.1. Denies that it made any misrepresentations as alleged;

31.2. Pleads that all prior statements and information that it provided to the PIC (and

to the extent that same was inconsistent with the PLS) were superseded by the

PLS;

( 31.3. Repeats its plea as made in paragraph 15 hereof.

32. Subject to the aforegoing, the remaining content hereof is admitted only to the extent

that it is consistent with the source documents referred to.

AD PARAGRAPH 14

33. The content hereof is denied. The Defendant repeats it plea as made in paragraphs 15

to 29 hereinabove .

17I P ,1!_!,e
 AD PARAGRAPH 15

34. The Defendant denies that it omitted to disclose the facts as alleged or at all. The

Defendant repeats it plea as made in paragraphs 15 to 29 hereinabove.

AD PARAGRAPH 16

35. The allegations herein are denied. The Defendant repeats it plea as made in paragraphs

15 to 29 hereinabove.

(
AD "DUTY OF CARE AND ITS BREACH"

AD PARAGRAPH 17

36. The content hereof is denied. In amplification, the Defendant repeats it plea as made in

paragraphs 15 to 29 hereinabove.

37. Without derogating from the generality of the aforesaid denial, the Defendant specifically

denies : (a) that it made misrepresentations as alleged or at all; or (b) that it failed to

disclose material facts.

AD PARAGRAPH 18

38. The Defendant denies that it made misrepresentations to the PIC as alleged or at all prior

to the conclusion of the subscription agreement and the payment of the subscription price

by the PIC.

181 Pn!l e
 AD PARAGRAPH 19

39. The content hereof is denied.

AD PARA GRAPH 20

40. The content hereof is denied.

AD PARAGRAPH 21

( 4 l. The content hereof is denied.

AD PARAGRAPHS 22 AND 23

42. The content hereof is admitted.

AD "CLAIM A: THE DUTIES, OBLIGATIONS AND REQUIREMENTS OF THE PIC

AND THE GEPF"

AD PARAGRAPH 24
(

43. The Plaintiffs do not plead the basis on which it is alleged that the PIC is an organ of

state. The Defendant denies the allegation and pleads as follows :

43.1. The PIC is not "any department of state or administration in the national,

provincial or local sphere of government'' (section 239(a) of the Constitution).

43.2. The PIC does not exercise a power or perform a function in terms of the

Constitution or a provincial constitution (section 239(b)(i) of the Constitution).

19 1P a ~e
 43.3. The PIC does not exercise a public power or perform a public function in terms

of any legislation (section 239(b )(ii) of the Constitution).

43.4. The PIC is established in terms of section 2 of the PIC Act.

43 .5. In terms of section 2 of the PIC Act, the PIC is established as a juristic person

and an institution outside the public service.

43.6. While the State is the sole holder of the shares in the PIC and the rights attached

to the shares must be exercised by the Minister on behalf of the State, the main
(
object of the PIC is to be a financial services provider in terms of the FAIS Act

(section 3 of the PIC Act).

43.7. The PIC therefore is a financial services provider and is bound to act in terms

of Chapter 5 of the FAIS Act as all other financial services providers are

required to act.

43.8. Furthermore and in any event, although the PIC is incorporated pursuant to a

statute, the decision to conclude the subscription agreement is not a decision

taken in terms of legislation and /or regulation, and nor is it the exercise of a

public power or public function.

43.9. Moreover, the Defendant pleads that in making a decision to invest in the

Defendant, PIC exercised a private power within its mandate and in any event

Defendant could lawfully rely upon such decision undertaken by PIC and give

effect thereto.

20 IP~,g e
 44. Save for pleading that the PIC is bound by the Constitution and that it may not act in a

manner that is inconsistent with constitutional prescripts, the remaining allegations made

herein are denied.

AD PARAGRAPH 25

45. The content hereof is admitted to the extent that it is consistent with the PFMA.

AD PARAGRAPHS 26 TO 28

C 46. The content hereof is admitted to the extent that it is consistent with the FAIS Act and

the PIC Act.

4 7. Save as aforesaid, the remaining allegations are denied.

AD PARA GRAPHS 29 TO 32

48. The Defendant has no knowledge of the allegations made herein, does not admit same

and puts the Plaintiffs to the proof of these allegations.

C
AD PARAGRAPH 33

49. The Defendant has no knowledge of the content hereof, does not admit same and puts

Plaintiffs to the proof thereof.

AD PARAGRAPHS 34 TO 37

50. The Defendant has no knowledge of the allegations made herein, does not admit same

and puts Plaintiffs to the proof thereof.

21 1P ng e
 AD "THE DECISION WAS UNLAWFUL"

AD PARAGRAPH 38

51. The allegations herein are denied.

52. Without derogating from the generality of the aforesaid denial, the Defendant specifically

pleads that a decision by the PIC to make an investment (which includes the conclusion

of a subscription agreement) is regulated by a private law framework that is applicable

to all financial services providers, which framework includes but is not limited to: (a) the
(
FAIS Act; (b) the Companies Act 71 of 2008; and (c) private client mandates pursuant

to (a) and (b) above.

53. The Defendant pleads that PIC took a decision which was, in the circumstances, lawful

and Plaintiffs are bound by such decision.

AD PARAGRAPH 39

54. The content herein is denied.

AD PARAGRAPH 40

55. The content herein is admitted .

AD PARAGRAPHS 41 AND 42

56. The allegations herein are denied.

22jl' n g <:
 AD PARAGRAPH 43

57. The Defendant admits only that Dr Matjila represented and acted on behalf of the PIC

in concluding the subscription agreement.

58. Save as aforesaid, the remaining allegations in this paragraph are denied.

AD PARAGRAPHS 44 TO 46

59. Save to allege that the PIC was bound and not ''purportedly bound'', the allegations
( herein are admitted .

AD PARAGRAPHS 47 TO 52

60. The content hereof is denied.

61. In amplification of the aforesaid denial, the Defendant pleads:

61.1. First, that in terms of the PIC's Delegation of Authority Framework for Listed

Investments ("DoA") Dr Matjila had actual authority (express, alternatively

implied) to conclude the subscription agreement.

61.2. Second and in the alternative, the Turquand Rule and/or the provisions of

section 20(7) and (8) of the 2008 Companies Act No 71 of 2008 provide that it

is to be presumed that the PIC exercised its powers validly and in compliance

with its internal formalities (including management rules and requirements).

23 IP a g r
61.3. Third and in the further alternative, Dr Matjila and / or Mr Molebatsi had

ostensible authority to conclude the subscription agreement prior to approval

from the PMC-Li by virtue of the surrounding circumstances including:

61.3.1. Dr Matjila informing the Defendant that he was duly authorised

in terms of the DoA to conclude the subscription agreement in

that the value of the investment decision/s fell within a category

of investments in terms of which he had the final authority to

approve.

61.3.2. The PIC knew, alternatively ought to have reasonably known that

Mr Matjila, by virtue of his position as CEO, purported to act as

he did and that the Defendant would act on the strength of the

representation made to it.

61.3.3. The Defendant acted on the strength of the representation made

to it that Dr Matjila was duly authorised to contract with it and to

conclude the subscription agreement.

61.3.4. The Defendant acted reasonably in having relied on the

representation, particularly in light of Dr Matjila' s position as

CEO of the PIC.

61.4. Fourth and in the further alternative, the PIC is estopped from denying that Dr

Matjila had the requisite authority to bind the PIC to the subscription agreement

in that:

24 IP:1 g e
 61.4.1. Dr Matjila and the Plaintiffs made a representation to the

Defendant as pleaded in paragraph 61.3.1 above.

61.4.2. Dr Matjila must reasonably have expected that his conduct may

mislead the Defendant.

61.4.3. The Defendant reasonably acted on the representation to its own

prejudice.

61.5. Finally and in any event, Defendant pleads:

61.5.1. The subscription agreement and the investment decision were

ratified by the First PIC's Portfolio Management Committee of

Listed Investments ("PMC: Li") on or about 20 December 2017.

61.5.2. The subscription agreement and investment decision were again

ratified on 11 May 2018 by the PMC:Li.

61.5.3. At all times subsequent to the conclusion of the subscription

agreement and the investment decision, the PIC acted in

accordance with the subscription agreement and: (a) participated

in the Defendant's Annual General Meeting on 18 June 2018; (b)

requested the Defendant's cooperation in the management of its

risk; (c) engaged the Defendant on corporate governance issues,

which resulted in changes to its board composition on 22 August

2018.

25 IPa ge
 AD PARAGRAPHS 53 AND 54

62. The Defendant denies that the process stipulated herein ought to have been followed by

the PIC and repeats its plea in paragraph 611.

AD PARAGRAPHS 55 AND 56

63. The allegations herein are denied. In any event, the Defendant repeats it Plea as contained

in paragraph 15 hereinabove.

( AD PARAGRAPHS 57 TO 62

64. The Defendant has no knowledge of the allegations made in these paragraphs, does not

admit same and puts Plaintiffs to the proof thereof.

65. The Defendant pleads that Plaintiffs represented by their conduct that the decision to

invest was lawful and Defendant lawfully acted thereupon. In any event, Defendant

repeats its plea in paragraph 61.5 above.

AD PARAGRAPH 63

66. The allegations herein are denied. Defendant repeats its plea in paragraph 611

hereinabove, and in particular reiterate the contents of paragraph 61.5 above and prays

that its contents be specifically incorporated herein.

AD PARAGRAPH 64

67. The allegations herein are denied.

26 IPa ge
 AD PARAGRAPHS 65 TO 67

68. The allegations herein are denied.

69. The Defendant denies that the Plaintiffs have made out a case for the relief sought and

specifically pleads as follows in this regard:

69.1. First, the principle of legality does not apply to the investment decision/s and /

or the PIC's decision to conclude a subscription agreement because this was a

contractual matter concluded between parties contracting on equal terms in

(

circumstances where no public law obligations were imposed.

69.2. Second, to the extent that this Court finds that the the investment decision/sand

/or the PIC's decision to conclude a subscription agreement is reviewable in

terms of the principle oflegality, then the Defendant pleads that the PIC conduct

was not in breach thereof.

69.3. Third, to the extent that this Court finds that the principle of legality applies,

and the PIC's conduct is in breach thereof, the Defendant pleads that Claim A

must, in any event, fail. This is so because the causa under Claim A is premised

on the alleged non-compliance with the PIC's own internal remedies and not

the principle of legality. Both the Companies Act 71 of 2008 and the common

law's Turquand-rule preclude the PIC from resiling from an agreement on the

ground of non-compliance with internal management rules and requirements.

27 IP :1 g e
 69.4. Fourth and in any event, it would not be just and equitable to review and set

aside the subscription agreement and order the Defendant to return

R4 290 654 165.00 to the PIC on the following grounds:

69.4.1. The PIC was aware of this alleged non-compliance as early as on or

about 19 December 201 7, yet failed to take any measure to set aside

the subscription agreement until the issue of Summons on 27 May

2019. The Plaintiffs have delayed unreasonably in seeking to set

aside the subscription agreement.

(
69.4.2. The First Plaintiff ratified any purported non-compliance with the

legislative and regulatory framework on at least two occasions.

69.4.3. The effect of the relief sought on the basis of Claim A is to result in

a patently inequitable state of affairs by allowing:

69.4.3.1. The PIC to extricate itself from any contractual

arrangement and investment decision after the fact on

the basis that the investment does not yield the PIC's

expected returns; this is based on an after the fact

contention that the investment was irrational.

69.4.3.2. The PIC to remain in investments only that yield the

desired return.

28 IP n g e
 r

69.4.4. The consequence of Claim A is to cause grave prejudice to Ayo and

its other shareholders in that the effect of a cancellation of the

subscription agreement and return of the funds will result in:

69.4.4.1. A plummeting of the Ayo share price.

69.4.4.2 . Ayo not being able to meet its acquisition pipeline .

69.4.4.3. The the inevitable and imminent demise of Ayo.

r
(
69.4.5. The Defendant has been and intends continuing to invest the funds

received from the subscription agreement in accordance with its

objectives as set out in the PLS. The Defendant bore no obligation

to inform the GEPF of the investment or to give it forewarning

thereof.

AD PARAGRAPH 68

70. The Defendant denies that the Plaintiffs have instituted these proceedings without
(
unreasonable delay and further denies that condonation should be granted.

AD PARAGRAPHS 69 TO 70

71. The content hereof is denied.

AD PARAGRAPH 71

72. The allegations herein are denied. The prejudice that the Defendant will suffer is

axiomatic and in any event includes the following: (a) plummeting of the Ayo share

291 P a ~ e
 price; (b) Ayo not being able to meet its acquisition pipeline; (c) the inevitable and

imminent demise of Ayo; and (d) the Defendant will be precluded from continuing to

invest the funds received from the subscription agreement in accordance with its

objectives as set out in the PLS.

AD "CLAIM B, ALTERNATIVELY TO CLAIM A"

Ad paragraphs 72 and 73

73. The contents hereof are denied.

(

74. The Defendant refers the above Honourable Court to paragraph 61 above and prays that

the contents thereof be incorporated herein.

75. The Defendant, in particular, denies that there was any mistake in effecting the payment

referred to herein. The payment was made by PIC pursuant to a well informed decision

taken by the PIC to pursue a business investment.

Ad paragraphs 74 and 75
I
\

76. The Defendant denies that there is any basis for the setting aside of the subscription

agreement, return of the funds or the tender of the shares to Ayo.

AD "CLAIM C"

Ad paragraph 7 6

77. The content hereof is denied.

30 IP il "'e
 Ad paragraph 77

78. The Defendant denies that there is any basis for the setting aside of the subscription

agreement, return of the funds or the tender of the shares to Ayo.

79. The Defendant, in particular, denies "positive misrepresentations" and further denies

failure to make disclosure as is alleged and puts Plaintiffs to proof thereof.

80. The payment was made by PIC pursuant to a well informed decision taken by the PIC to

pursue a business investment.

WHEREFORE, Defendant prays that Plaintiffs' claims against it be dismissed with costs,

such costs to include the costs of three counsel and that judgment be entered in its favour.

Dated at Cape Town this 5th day of AUGUST 2019.

31IP ,,gc
 ABRAHAMS KIEWITZ ATTORNEYS

Per :

Defendant's Attorneys
6th Floor
Imperial Terraces
Carl Cronje Drive
Bellville
( C/O Z. ABDURAHMAN ATTORNEYS
Ground Floor, Waalburg Building
28 Wale Street
CAPETOWN

TO:- THE REGISTRAR

High Court
CAPETOWN

AND TO : GWIN A ATTORNEYS IN CORPORA TED

Plaintiffs' Attorneys
Suite 22, Second Floor
135 Daisy Street
SANDOWN
Tel: (011) 666 7300
Email: makukunzvab@gwinaattorneys.co.za DUNSTERS
IIU] ATTO R NEYS · CONVE YAi,\.. ,. •·
(REF: B. Makukunzva / MAT183)
C/O DUNSTER ATTORNEYS
4th Floor, Suite 405
Suite 405, Fourth Floor 42 Keerom Street , Car)e Town,
T +27(0)21 422 3020
42 Keerom Street
CAPETOWN ~I#- OS/0-8/2.J::,
~ tbh~
Tel: 021 422 3020
Email: ren@dunster.co .za

32 I P ,i g e
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