You have been appointed as the accountant for a small proprietary limited company Midnight Soil Pty Ltd (The Soils). The Soils conducts tests to see if soil is contaminated and whether (or not) that land can be used for approved purposes (or not). The Soils has five directors. They have all agreed that at their next board meeting they would discuss paying a dividend of 22 cents per share. However, you have identified there is a potential cash flow issue due to the companys recent loss of a major contract. You have assessed that the company is able to cover this revenue loss in the short term because it has a positive net asset position carried over from the previous financial year. Your further opinion is that cash flow problems will arise during the next quarter and you have put this in writing to the Soils Board. Based on your advice, two directors call you before the next board meeting to ask if there is anything that can stop the proposed dividend if three of the five directors vote in favour of paying the dividend now.

Advise the two directors. Use relevant cases and legislation to support your answer