Steven and Natalie set up a company after graduating from Tunku Abdul Rahman University College.

Their company is named SN Investment Sdn Bhd. Both Steven and Natalie invested RM25,000 each

into the company. They became the shareholders and directors of the company with the combined paid

up capital of RM50,000.

Steven wanted to apply for a Small and Medium size Enterprise (SME) loan. But in order to qualify,

the company needs to have a paid up capital of RM100,000. Steven arranges for the company to allot

an additional 50,000 shares in order to raise the paid-up capital to RM100,000.

However, Steven does not have any money to pay for the newly allotted shares. He proposed that the

company lends him RM50,000 to enable him to pay for the new shares. Natalie is not so sure about this

arrangement. She thinks that this is wrong.

Advise Natalie under company law with reference to decided cases and relevant statutory provisions on

the following matters:

(a) Discuss the legal consequences of the company lending RM50,000 to Steven for him to pay for

the new shares. In your answer, explain the doctrine of maintenance of capital.