Marange Steelmakers Ltd is a public company which is duly registered and is operating in terms of the laws of Zimbabwe. It is a construction company whose registered address is in Harare. It started as a private limited liability company, which converted into a public company in 2005. It was registered on the Zimbabwe Stock Exchange in February 2006 after launching a very successful Initial Public Offer (IPO) to the investing public.Between 2006 and 2009 the company only made modest profits and did not declare a dividend. However, for the 2010 financial year the company made a massive profit after tax of $100 million and the directors decided to put aside $70 million to boost reserves and $30 million for dividends.The majority of the shareholders were extremely unhappy over this development and at the Annual General Meeting which was held in April 2010, they decided to reallocate half of the profits after tax ($50 million) towards dividends and the other half ($50 million) towards the company’s reserves.Required:In relation to company law, advise the board of directors as to whether or not the shareholders’ resolution to increase the dividend amount is legal. (10 marks)
