Redeemable preference shares offer a unique avenue for companies and investors, providing flexibility and strategic options within the corporate landscape. But what happens when these redeemable preference shares reach their maturity date? Can shareholders demand redemption from financially struggling companies? The redemption of preference shares is made out of profits, a fresh issue of shares, or the company's capital . The solvency of the company plays a crucial role in this process. According to Section 112 of the Companies Act 2016, a company must enjoy: (1) cash flow solvency in that company is in position to pay off its debt; and (2) balance sheet solvency in that company must have more assets than liabilities . In respect of the solvency of the company, the directors must make a solvency statement in accordance with section 113 of the Companies Act 2016. Clearly, the ability of the company to redeem the preference shares depends on whether the company is solvent. In the legal saga of Arah Cipta Sdn Bhd v. Piala Gagasan (M) Sdn Bhd & Anor , the High Court deliberated on the implications of Section 61(3) of the Companies Act 1965 (“CA 1965”), emphasizing that preferential shareholders cannot compel redemption in contravention of this provision. Similarly, the decision by the New Zealand Court of Appeal in Mutual Life and Citizens Assurance Co Ltd v. Mosgiel Ltd underscores the need for remedies to align with legislative constraints on the sources of redemption funds. In an Australian legal case involving TNT Australia Pty Ltd v. Normandy Resources NL , the court emphasized that companies risk being wound up under the "just and equitable" rule if they fail to fulfil their contractual obligations regarding share redemption. In the recent case of Mycreative Ventures Sdn Bhd v. Tsyahmi Group Sdn Bhd & Ors , the Court acknowledged the Defendants' argument that they are not obligated to redeem the redeemable convertible cumulative preference shares simply because, at the time of redemption, they lack the requisite profits or proceeds from fresh share issuances. As each legal battle unfolds, one thing remains clear: the interplay between preference shareholders and companies in share redemption is a nuanced dance. In this complex arena, knowledge is power, and understanding the rules of engagement is crucial for navigating corporate finance effectively. As companies and shareholders navigate this terrain, the balance between legal intricacies and financial responsibilities remains at the heart of the discussion. ___________________________________________________________________________________________________________ 1. Section 72(4) of the Companies Act 2016 2. Chan Wai Meng, (2017). Essential Company Law in Malaysia: Navigating the Companies Act 2016. Kuala Lumpur, Sweet & Maxwell 3. [2010] 9 CLJ 964 4. [1994] 1 NZLR 146 at 151 5. [1989] 1 ACSR 1 at 21 6. [2022] CLJU 2269