Merah Sdn. Bhd. is a company deals with oil palm estates. The company has recently decided to expand its business to Johore. The expansion of the business requires a huge capital. Thus, Merah Sdn. Bhd. decided to issue 2 million shares for this new project. Mikael is interested to buy some of the shares from Merah Sdn. Bhd. He discussed the matter with Mr. Momo, one of the directors in Merah Sdn Bhd. Momo agreed to allot shares to Mikael directly. Mikael also cannot decide to take ordinary shares or preference shares. You are required to discuss the validity of the action done by Mr. Momo and advise Mikael on the advantages and disadvantages of these two classes of shares. Support your answer with relevant sections in Companies Act 2016 and decided cases (if any). (20 marks)

(Company law and factorial law)