Ah Chong, Baloo, Cindy and Dodo are the directors of Susah Bhd (the company), which has an issued capital of RM1 million made up of 1 million 1 RM ordinary shares. They were appointed as directors two years ago. Each of them holds 15% of the issued shares of the company. The remaining 40% is held by 10 other shareholders.Three weeks ago, following a board resolution, the directors issued 500,000 new shares to Kam Cheng, a close friend of theirs.Cindy is the managing director of the company. Two weeks ago, Cindy, who is now 71 years old, entered into a contract on behalf of the company to purchase offi ce stationery from Opis Sdn Bhd at a price of RM100,000.Last week, following an argument among the directors at a board meeting, Baloo, Cindy and Dodo decided to remove Ah Chong as a director. A notice signed by Baloo, Cindy and Dodo was sent to Ah Chong stating that he had been removed as a director with immediate effect.Required:Advise Ah Lee, a member, who wishes to know the following :
(a) whether the validity of the issue of the shares can be challenged on ground that it has not complied with the provisions of the Companies Act 1965; (4 marks)
