Roogi Bhd (public co) was incorporated in 1999. The company has suffered revenue losses exceeding RM10 million over the last three years. However, its subsidiary, Kaya Bhd (public co), has made substantial profits last year. Kaya Bhd has not distributed these profits as dividends to its own members. Cermat, the managing director of Roogi Bhd, seeks your advice on the following matters:

(a) whether Roogi Bhd can utilise the profits of its subsidiary, Kaya Bhd, to pay dividends to its (Roogi Bhd's) members; (5 marks)

(b) the legal position under the Companies Act 2016, if it is discovered that Roogi Bhd has paid a cash dividend out of capital. (5 marks)