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Q：
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What is Redeemable Preference Share (“RPS”)?
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A：
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RPS is a type of preference share that issued by a Malaysia company which can be redeemed by the company at an agreed price after a specified period subject to the terms and conditions attached with the shares.
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Q：
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How can RPS be issued?
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A：
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Under the Companies Act 2016 (“the Act”), a Malaysia company may only issue RPS if its constitution clearly stated the rights attached with it, including when and how the shares may be redeemed and the redemption price.
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Q：
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What are the ways to redeem RPS?
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A：
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Malaysia company can redeem its RPS through by out of profits, new issues of shares or capital of the company.
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Q：
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Can partly unpaid preference shares be redeemed?
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A：
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No. The preference shares must be fully paid up before they can be redeemed. If the shares are only partly paid, the company must make them fully paid by either calling up the balance of issue price or capitalising the unpaid portion.
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Q：
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What is the redemption procedure for RPS?
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A：
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The procedure for redemption of RPS are as follows:
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The Board of Directors must first pass a resolution approving the redemption, specifying the redemption date, redemption price, the number of shares to be redeemed, and the source of funds for the redemption (i.e. out of profit, out of issuance new shares or out of capital).
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Where applicable, the company lodges the required statutory documents with the Companies Commission of Malaysia ("CCM"), including the Return of Allotment (out of issuance of new shares) or the solvency statement under Section 113 of the Act (out of capital).
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The company send a notice of redemption to the preference shareholder and requests the surrender of the original share certificate for cancellation. Thereafter, the company may pay the redemption amount to the preference shareholder and cancel the redeemed preference shares and share certificate.
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The company shall lodge the Notice of Redemption pursuant to Section 72 of the Act with CCM within the 14 days from the redemption date together with a copy of the cancelled share certificate and update its Register of Members and the notification pursuant to Section 51 of the Act with CCM within 14 days.
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