Cape Town – JSE-listed AYO Technology Solutions has launched a court application on constitutional grounds against First National Bank (FNB) after the bank gave the technology firm notice to close its transactional banking facility from May 3, according to a Sens statement on Thursday.
The black-owned firm said that despite its best efforts, FNB had not provided them with what they regarded as valid reasons for termination.
“The company believes that it is entitled to fair treatment and as a result is in the process of instituting legal proceedings against FNB for its decision to close the company’s transactional banking facility.”
AYO does not have any lending facilities with FNB and is in the process of reviewing its options for transactional banking.
The tech firm issued a cautionary to shareholders: “As a result of FNB’s decision to close the company’s transactional banking facilities, shareholders are advised to exercise caution when dealing in the company’s securities until a further announcement is made.”
In its application for urgent interdictory relief, AYO raised the issue of FNB taking a unilateral decision to close the black-owned company’s bank accounts in the absence of good cause. AYO says it suspected that FNB’s decision was political and a new form of restricting black businesses from participating in the economy, in particular in the ICT sector.
AYO Group chief executive Howard Plaatjes argued in his court papers that the consequence of AYO not having transactional banking facilities in place would put significant limitations on the tech firm and would ultimately lead to it not being able to operate.
This would in turn result in the loss of jobs and a decline in socio-economic spend.
“As at the latest reporting period, 31 August 2020, the AYO Group employed more than 1 200 people. The total salary bill of the group exceeded R430 million annually and payment was made to the fiscus via taxation in excess of R495m, including R289m in VAT, R98m in income tax and R108m in PAYE,” said Plaatjes.
AYO said on Thursday that it considered the decision by FNB to be discriminatory, restrictive of trade and in violation of its constitutional rights.
The tech firm argued in its court papers that FNB is a banking institution and is governed by the Prudential Authority and public policy.
“AYO has never been found wanting in any respect other than the fact that it was one of the companies subjected to an inquiry at the Mpati Commission. No adverse findings were made against AYO at the Mpati Commission,” the company said.
AYO is challenging FNB in terms of Section 22 of the Constitution, freedom of trade occupation and profession; Section 23, the rights to fair labour practices; Section 25, the rights against arbitrary deprivation of property; and Section 9, the right to equality and non-discrimination.
“AYO is asking our courts to protect our rights in terms of the Constitution. AYO insists that its constitutional rights are binding on FNB and if necessary, the courts must develop the common law to the extent that legislation does not give effect to that right.
“AYO has conducted its banking affairs with the utmost integrity, with due regard to the Financial Intelligence Center Act. AYO regards FNB’s decision as causing irreparable harm to the business … its employees, customers, partners and to the fiscus as well as to transformation in the country,” the company said.
The financial sector plays a central role in enhancing a country’s economic growth and development. According to the Financial Services Charter, which came into effect in January 2004, the sector had not effectively provided credit to entrepreneurs, particularly black businesses and there had been an inadequate response by the sector to the increasing demand for access to financial services.