Reference no: EM132961660

Question - On the 1.2.2021 the board of directors of Blue Sdn. Bhd. ("the company") have decided to issue additional shares to raise capital for the company. James the Chief Executive Director informs the board that according to the Companies Act 2016, shareholder's permission is not required for the issuance of shares. Thus, on the 13.2.2021, the company proceed to issue Blake the new investor, preference shares in the company that exceed 10% of the overall existing member's shareholdings.

During the meeting of members last week, a minority shareholder of the company objected to the validity of the shares issued to Blake. James informed the shareholder that due to his value of shares, he does not have the right to participate in discussion and to vote in the meeting.

Meanwhile, the board have decided to approve the distribution of dividends though it has been revealed through the company has been struggling to pay its debts for the past 13 months.

With references to the facts above and answer the following questions:

(a) Advise the board of directors of the company if the distribution of dividends complies with the Companies Act 2016.

(b) Advise James the Chief Executive Director if the information he shared with to the board of directors and the minority shareholder complies with the Companies Act 2016.