i) Agency Costs Avoided by NSL:

1. Monitoring Costs:
   Since the Martinsons are both shareholders and managers, NSL can avoid costs related to monitoring management’s actions. There is no need to monitor the management, as the same individuals own and manage the business. Monitoring costs usually involve producing reports and hiring external auditors to ensure management is acting in the best interest of shareholders. At NSL, these costs are minimized because there is no separation between ownership and management.
2. Bonding Costs:
   NSL can avoid expenses related to aligning the interests of shareholders and managers. In larger companies, managers may be offered performance bonuses, share options, or other incentives to ensure their interests align with those of shareholders. However, since the owners of NSL are the same people running the company, there is no need for such bonding mechanisms.

(Marks allocation: 2 points @ 2.5 marks each = 5 marks)

ii) Roles of Non-Executive Director (Higgs Guidance):

1. Scrutinizing Executive Management Performance:
   As per the Higgs Guidance, non-executive directors should actively assess and challenge the performance of the executive management team. Daniel Aidoo’s role would include ensuring that the CEO and other executives are achieving their targets and that the company is on track. By providing objective oversight, Daniel can contribute to strengthening NSL’s governance and decision-making.
2. Providing Independent Judgment:
   Non-executive directors should offer independent perspectives on the company’s strategy, risks, and resources. Daniel Aidoo, as a non-executive director, is expected to bring an impartial view to the boardroom, which could help NSL mitigate risks and ensure that decisions are made in the best interest of the company and all stakeholders.

(Marks allocation: 2 points @ 2.5 marks each = 5 marks)