A E C I LIMITED - Notification in terms of section 45(5) of the Companies Act, No. 71 of 2008

Evidence from the filing

• AECI's notification in terms of Section 45(5) of the Companies Act demonstrates robust corporate governance and transparency in its financial dealings, reassuring shareholders of compliance with regulatory requirements.

  “Notification in terms of section 45(5) of the Companies Act, No. 71 of 2008”

• The financial assistance, in the form of guarantees to present or future subsidiaries and associates, reflects AECI's ongoing commitment to support the operational and strategic stability of its group entities, enabling their continued growth and functioning as part of the broader organization.

  “The said resolutions adopted by, and on behalf of, the Board relate to financial assistance in respect of a guarantee by AECI in respect of the obligations of certain subsidiaries and associates of AECI”

• Shareholder approval for this type of financial assistance was secured via a special resolution passed at the May 2025 Annual General Meeting, indicating a mandate for the Board to provide such support to the group.

  “pursuant to the special resolution passed at the annual general meeting of the Company held on Tuesday, 27 May 2025 authorising the board of directors (Board) to provide financial assistance to the Company's present or future subsidiaries and associates”

• Increased Contingent Liability Exposure: AECI's board has resolved to provide financial assistance, specifically guarantees, for the obligations of certain subsidiaries and associates. This directly increases the company's contingent liabilities, exposing AECI to potential financial outlays should these related entities default.

  “financial assistance in respect of a guarantee by AECI in respect of the obligations of certain subsidiaries and associates of AECI”

• Indicators of Underlying Financial Strain: The provision of financial assistance through guarantees to "certain subsidiaries and associates" indicates a reliance on the parent's balance sheet, which may signal underlying financial strain or an inability for these related entities to secure independent financing on favorable terms, thus representing a subtle sign of corporate weakness within the group.

  “financial assistance in respect of a guarantee by AECI in respect of the obligations of certain subsidiaries and associates of AECI”

• Disclosure Threshold Breach Indicates Materiality: The fact that the cumulative financial assistance provided, including these new guarantees, "exceeds one-tenth of 1% of AECI's net worth" indicates that while a small percentage, the aggregate amount is material enough to trigger a regulatory disclosure under Section 45(5), highlighting a non-trivial commitment of the parent's financial strength.

  “the total value of which, together with previous resolutions to provide financial assistance during the current financial year, exceeds one-tenth of 1% of AECI's net worth as set out in section 45(5)(a) of the Companies Act.”

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