Minutes of Aqualon Ltd Board Meeting held on 20 February 20231. IntroductionMr Vaisala the chair of the board of directors, noted that although the MOI states that the directors should be given ten full business days’ notice of a board meeting, he was grateful that the directors managed to attend the meeting after only sending the notice out at 10am on 15 February.2. AttendanceAll directors were physically present, except Mrs Homier who joined via Zoom while on vacation in Dubai. Mr Vaisala indicated that as she is not physically present, she will not be allowed to participate or vote on any matters. Instead as a chair of the board he will vote on her behalf.3. PurposeThe purpose of todays meeting is to vote on the following three items:Item 1 – Appointment of Mr Reddy to Aqualon’s Audit CommitteeThere was a recent vacancy on the audit committee. The audit committee appointed Mr Reddy, Aqualon’s previous CFO who resigned 6 months ago, as the new member of the audit committee.Item 2 – New contract from the Department of Water and SanitationMr Sternly, on of the non-executive directors, explained that the company was approached by the South African Ministry of Water and Sanitation to tender for a contract to supply drought-stricken Northwest with 1000 kilolitres of bottled water. As the director general of the Department of Water and Sanitation, Mr Sternly encouraged all directors to vote in favour of this tender. He also added that to secure the tender contract, Aqualon will need to pay a tender fee of R500 000 to the Minister of Water and Sanitation. All directors agreed to the proposed tender contract.Item 3 – Declaration of a dividendFor the past three years, the Board has not declared a dividend to Aqualon’s shareholders, as there were concerns about the business’s ability to settle its shortterm debts as they fall due in the next 12 months. Mr Sternly proposed that, to keep shareholders happy, he will lend Aqualon R3 000 000 from his personal cash to pay the dividends. While directors were discussing the proposal, Mr Sternly remained in the meeting and participated in the discussions, which concluded in directors accepting his offer. Required:a) Based on the minutes of the board meeting, discuss statutory concerns in terms of the Companies Act of 2008.b) With reference to Aqualon’s loan from its director, Mr Sternly, describe substantive procedures that should be performed to confirm that is complies with the Companies Act of 2008
Minutes of Aqualon Ltd Board Meeting held on 20 February 2023
1. Introduction
Mr Vaisala the chair of the board of directors, noted that although the MOI states
that the directors should be given ten full business days’ notice of a board meeting,
he was grateful that the directors managed to attend the meeting after only sending
the notice out at 10am on 15 February.
2. Attendance
All directors were physically present, except Mrs Homier who joined via Zoom while
on vacation in Dubai. Mr Vaisala indicated that as she is not physically present, she
will not be allowed to participate or vote on any matters. Instead as a chair of the
board he will vote on her behalf.
3. Purpose
The purpose of todays meeting is to vote on the following three items:
Item 1 – Appointment of Mr Reddy to Aqualon’s Audit Committee
There was a recent vacancy on the audit committee. The audit committee appointed
Mr Reddy, Aqualon’s previous CFO who resigned 6 months ago, as the new member
of the audit committee.
Item 2 – New contract from the Department of Water and Sanitation
Mr Sternly, on of the non-executive directors, explained that the company was
approached by the South African Ministry of Water and Sanitation to tender for a
contract to supply drought-stricken Northwest with 1000 kilolitres of bottled water.
As the director general of the Department of Water and Sanitation, Mr Sternly
encouraged all directors to vote in favour of this tender. He also added that to secure
the tender contract, Aqualon will need to pay a tender fee of R500 000 to the Minister
of Water and Sanitation. All directors agreed to the proposed tender contract.
Item 3 – Declaration of a dividend
For the past three years, the Board has not declared a dividend to Aqualon’s
shareholders, as there were concerns about the business’s ability to settle its shortterm debts as they fall due in the next 12 months. Mr Sternly proposed that, to keep
shareholders happy, he will lend Aqualon R3 000 000 from his personal cash to pay
the dividends. While directors were discussing the proposal, Mr Sternly remained in
the meeting and participated in the discussions, which concluded in directors
accepting his offer.
Required:
a) Based on the minutes of the board meeting, discuss statutory concerns in terms of the
Companies Act of 2008.
b) With reference to Aqualon’s loan from its director, Mr Sternly, describe substantive
procedures that should be performed to confirm that is complies with the Companies
Act of 2008
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