Dee and Eff are major shareholders in, and the directors of, the public company, Fan plc. For the year ended 30 April 2009 Fan plc’s financial statements showed a loss of £2,000 for the year. For the year ended 30 April 2010 Fan plc made a profit of £3,000 and, due to a revaluation, the value of its land and buildings increased by £5,000. As a consequence, Dee and Eff recommended, and the shareholders approved, the payment of £4,000 in dividends. Required: Advise Dee and Eff as to: (a) the legality of the dividend payment; and (6 marks) (b) any potential legal liability in regard to the dividend payment. (4 marks)