The PIC says it has appointed Gwina Attorneys to assist it in recovering the R4.3bn capital it invested in AYO Technology Solutions.
The state asset manager confirmed on Tuesday that it was issued a compliance notice on February 21 which requires it to recover the capital investment made to AYO within 15 business days of the date of the notice, and provide the commissioner of the Companies and Intellectual Property Commission (CIPC) with confirmation.
According to the notice, it must also recover any interest that may have accrued on the investment within six months.
The CIPC stated that based on the available turnover figures, the PIC did not act in good faith and in the best of interest of the company when "it decided to invest the disproportionate amount of R4.3bn in AYO".
The watchdog added that the PIC failed its fiduciary responsibility and put the PIC in jeopardy. According to the CIPC, failure to comply with the notice may result in prosecution, with a maximum fine or 12 months imprisonment.
The PIC said it was looking into the matter.
On Tuesday afternoon, AYO said it believed there were no grounds for the CIPC to order the PIC to recoup its investment in the company.
It said it had not seen the compliance notice, but added that it believed the notice was possibly influenced by a disinformation campaign of "media houses and individual journalists".
In a notice to shareholders on Tuesday afternoon, AYO said: "Both the PIC and AYO should have been consulted and had sight of the notice."
It added: "AYO further believes that CIPC, by failing to inform and provide it with a copy of the Notice to the PIC, has acted contrary to the provisions of the Promotion of Administrative Justice Act."
The CIPC was established under the Companies Act to assist with registering companies, monitoring disclosure of information on business registers, licencing business rescue practitioners, and monitoring compliance with relevant financial legislation, among other things.