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Question 7: JV Mine is in some financial difficulty as a result of the problems at its coppermine. Nevertheless the two shareholders, GML and QMNE

Question 7:

JV Mine is in some financial difficulty as a result of the problems at its coppermine. Nevertheless the two shareholders, GML and QMNE are hoping to receivea dividend. Although JV Mine did not make a profit in the financial year, itsdirectorsdecide to payadividendof$0.04per share.

Is this allowed? If the payment of the dividend causes JV Mine to becomeinsolvent,whataretheconsequencesfor thedirectors ofJV Mine?

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