Yvonne, Miriam and Dorcas Mpofu are part of a group of shareholders in a mining company called ChromeTech Ltd. Together they jointly own 52% of the company’s equity. Due to an upsurge in the price of chrome on world markets, the share price has risen from US$2 per share in January 2009 to US$20 per share by the end of April 2009. The company is one of the best performers amongst the listed companies on the Zimbabwe Stock Exchange. It has a board of directors of nine people drawn from various professional disciplines including Mr Wiseman the chairman of the board, a certifi ed accountant by profession. The deputy chair Mr Knowledge is a lawyer in private practice. The company has not declared a dividend since 2007 and in spite of the fact that the most recent fi nancial year-end results show that the company is in a very healthy fi nancial position. The board has recommended that no dividend should be paid as yet and that the after tax profi ts of the company should be used for purposes of acquiring more sophisticated mining equipment from Australia and the UK. At the same time, it has been alleged that the chairman and deputy have been involved in illegal activities. No criminal charges (let alone a conviction) have been laid against the two. The three shareholders, Yvonne, Miriam and Dorcas feel a deep sense of grievance on issues pertaining to the non-declaration of a dividend. Equally, they would want to convene an emergency meeting to remove the chairman and his deputy from the board over their alleged illicit activities. The chairman and his deputy’s terms of offi ce have another two years to run.Required:In relation to company law,
(a) Explain whether the three shareholders can force the company to declare a dividend. (5 marks)
