Allan Gray, the second biggest shareholder in Net1 UEPS Technologies, said it will work with the company’s board after it highlighted concerns about its communication with its investors about deductions it makes from the welfare payments to clients in South Africa.

On 17 March, the constitutional court ordered the nation’s welfare agency to extend Net1’s contract, which it had previously ruled invalid, to distribute monthly grants to more than 17m people for a year to avoid an interruption to the disbursement of more than R150bn in payments annually.

Net1, which won the payment contract in 2012, has been accused by human rights groups of making illegal deductions from the payments for goods and services its subsidiaries sell. It has denied the allegations.

“Allan Gray has written two letters to Net1’s board,” Andrew Lapping, the fund manager’s chief investment officer, said in an interview. “Allan Gray wants to drive change from inside rather than a hostile way from outside.”

In its ruling last week, the court said that Net1 is barred from using data gathered on welfare beneficiaries to market products its subsidiaries sell such as mobile phone airtime and loans.

The expansion of welfare payments is a signature programme of the ANC government.

While Allan Gray holds about 16% of Net1, its biggest shareholder is the International Finance Corp with 18%.

The IFC has asked Net1 to hire third parties to investigate whether it contravened the South African Social Security Agency Act, Johannesburg’s Mail & Guardian reported on Friday. The IFC said it wasn’t immediately able to comment.

Serge Belamant, Net1’s chief executive officer, declined to comment.