Aqua Storage Ltd (AS Ltd.) specialises in the manufacture of water tanks for use by domestic households. It also designs and produces custom made water storage and recirculation systems for industrial and agricultural use. With the impact of climate change, the demand for its products has been overwhelming with the company experiencing substantial growth over the past 3 years.

Presently the company's share capital is comprised of one million $1 ordinary shares and two million $2 preference shares. The directors of the company believe it is now viable to float the company on the ASX (Australian Stock Exchange) and seek public investment. In light of this, the directors are proposing to divide the preference shares into classes A and B. Class A shares will entitle shareholders to one vote per share. Class B shares will entitle shareholders to 2 votes per share and a fixed rate of dividend.

All preference shares issued to date will fall within Class A. Preference shares to be issued at the time of the proposed float will fall within Class B. The Class B shares will not be ranked equally with the Class A shares.

i. Advise the directors of AS Ltd. of any legal procedures under theCorporations Act2001 that must be complied with before proceeding with the division of the preference shares into Classes A and B. Discuss fully.

ii. Assume for the purposes of Part A that AS Ltd. has complied with theCorporations Act2001. Leah is an existing preference shareholder and holds 12% of issued shares. She is rather upset by the creation of the Class B preference shares and believes Class A shareholders (as she has now been reclassified) are disadvantaged by not having 2 votes per share and not being entitled to a fixed rate of dividend. Are there any legal steps she could take to have the newly created Class B preference shares set aside? Advise.