During the 2021 and 2022 financial year, gold mining company Sibanye Stillwater Ltd (Sibanye) made a profit of R33.1 bil

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During the 2021 and 2022 financial year, gold mining company
Sibanye Stillwater Ltd (Sibanye) made a profit of R33.1 billion.
The audited financial statements indicate that it could declare a
dividend of 292c per ordinary share and still maintain the required
solvency and liquidity. Price Waterhouse Coopers, Sibanye’s
auditors, certified the financial statements as accurate in March
2022. The financial statements dealt with Sibanye’s financial year
ending on the 31st of January 2022. After the publication of
Sibanye’s financial statements in February, the majority union NUM
demanded an increase in wages of the employees of Sibanye citing
the enormous profit made by the company. The demand amounts to R1
000 per month for the lowest paid worker which amount will increase
proportionately for more higher paid employees. Sibanye has made a
counteroffer which amounts to R700 per month for the lowest paid
worker with a similar proportional increase for other workers. Mr
Froneman, the CEO of Sibanye has steadfastly refused to comply with
the union’s demand. Currently the employees represented by NUM are
still on strike. Production at the mine has been suspended since
February 2022 until such time as the wage dispute has been settled.
At a board meeting on the 21st of March, Richard Menell, a board
member, suggested that they proceed to authorise the dividend of
292c per ordinary share. The board decided to mandate its internal
accounting department to draft a report dealing with the company’s
capacity to lawfully authorise a dividend and the value of such a
dividend. The board reconvened on the 10th of April for the express
purpose to consider the report produced by the accounting
department. The report recommended that Sibanye could legitimately
authorise a dividend of 150 c per ordinary share. Assume that you
act as the company secretary of Sibanye. Mr Froneman is concerned
that the strike may continue for some time. Advise Mr Froneman
regarding the legal aspects that must be considered in making such
a decision and what test must be complied with in order to avoid
any potential liability. You must express an opinion whether the
board would comply with such a test on these facts.