Q P - A S R - 0 0 1 | R e v 0 0 0 E f f D a t e : 1 7 - 0 5 - 2 0 2 1 Page 2 of 5 Section A for 40 Marks (Answer All Questions) Global Trade Limited is an ISO 9001 certified public company intended to be listed on the Botswana Stock Exchange. The Board of directors of the company, who were appointed by shareholders at the last Annual General Meeting, consists of seven directors. Five of them hold the office of Finance director, Marketing director, Production & technology director, and Human resource director. One of the directors, Itumelang Ggosi, the company's major shareholder, is acting as the managing director, but the Board has never discussed or appointed a managing director. The constitution of the company articulates that the directors of the company should appoint one of them to the office of the Managing director. The Board of directors holds its meetings when the necessity has arisen. According to the minutes of the meetings, they had two meetings last year. At the beginning of the financial year, the Board of directors discussed the company's Corporate Social Responsibility (CSR) practices. Still, the minutes say that the directors were indifferent, and the meeting had concluded inconclusively about CSR practices. Minutes say there were more than two meetings, but minutes are maintained for important meetings such as the board meeting just before the Annual General Meeting. One of the directors who was present at the meeting prepared minutes, and the Managing Director signed them. All the minutes are summarized, but the director who has taken the minutes was available for further explanation. The company produces pharmaceutical products and supplies to local and abroad hospitals. The company has obtained all the permits and licenses needed for producing and supplying the medicine. These permits provide various standards for manufacturing, storage, marketing, and transporting pharmaceutical items. One of the criteria is that the expiry dates of these medicines are three months from the date of manufacture. Hence, they are delivered to the customers within one week from the date of manufacture. A few hospitals have recently complained that the medicine supplied became outdated while used for one month. The production director explains that the factory has released them four to five weeks delay because of Covid-19 travel restrictions. The marketing manager also explained that the delivery time was delayed by further three weeks. The quality control department has been unable to generate reports in time. Another hospital complained that the pharmaceutical products they supplied were below industry standards. The production manager defends the Production blaming the suppliers of material. However, these issues have created a situation where the issuing authorities will withdraw the permits and licenses. They have issued notices of investigation. The minority shareholders who possess 5% of the share capital knew about their company's issues through a newspaper article and video clip published on the TY and Youtube. They hoped to discuss and evaluated the decision-making behavior of the Board of directors and understood that the Board of directors has been biased and not seriously assessed the issues of the production director and the marketing director. The marketing director has been in the company's long service and contributed immensely to the continuous growth of the company. However,

Q P - A S R - 0 0 1 | R e v 0 0 0 E f f D a t e : 1 7 - 0 5 - 2 0 2 1 Page 3 of 5 the production and finance directors have risen to their current positions by experience rather than scientific knowledge supported with qualifications. Shareholders have frequently raised the issue of competency for these two directors. The managing director, who answered the issue of competence, responded that the executive directors are paid below the market rates. Hence, these executive directors should be continued in their offices. Nonetheless, shareholders believe the company desperately needs competent directors to bring the company to the next advanced competitive level. Question1 Advise the Board of directors on what type of audit is required to mitigate the risk of not following the industry regulations/standards/Guidelines. (5 marks) Question 2 Advise shareholders on how the Board of directors should be constituted for making unbiased decisions. (5 marks) Question 3 Advise shareholders on how they can find competent directors. (5 marks) Question 4 Identify five good board practices for their meetings that the Board of directors of the company did not have but should have had practiced. (5 marks) Question 5 Discuss your opinion about the inconclusive decision made by the Board of directors at their first board meeting. (5 marks) Question 6 Can Itumelang Kgosi be considered the company's managing director before the law? (5 marks) Question 7 Itumelang Kgosi and his allies hold 95% of the share capital. They rely on Itumelang Kgosi rather than the Annual General Meeting (AGM). Does the minority shareholders have the right to discuss the issues mentioned above at the AGM? What are their rights as shareholders? (5 marks) Question 8 The Board of directors seeks your advice under what five circumstances they would be personally liable for actions and decisions are taken by them on behalf of the company. (5 marks)