A party may redeem preference shares as per contract obligations, regardless of company profits, unless explicitly restricted by law.

Introduction

[1] This is a suit on recovery of investment in preference shares of a manufacturing and trading company.

[2]The Plaintiff is a Singaporean private limited company involved in the business of investments that purchased preference shares of the First Defendant.

[3] The First Defendant is a Malaysian private limited company involved in the manufacturing and trading of rubber products particularly mattresses.

[4] The Second to Fifth Defendants are individuals and directors of the First Defendant at the material time. All of them guaranteed the Plaintiff's investment.

[5] This suit has been brought by the Plaintiff for recovery of RM 4,1 72,630 owing following the termination of the share investment agreement with the First Defendant. Besides defending the Plaintiff's claim, the First Defendant counterclaimed for RM 330,000 mistakenly paid earlier to the Plaintiff as dividends.

The Trial Process

[6] Prior to the commencement of the trial, the Plaintiff withdrew its claim against the Fourth and Fifth Defendants.

[7]The trial of this suit took 2 days on 29 June 2015 and 21 July 2015. The trial documents comprised of bundles A, B1, B2, B3, C, D, E,E1 and F wherein the documentary evidence in bundles B1 to C were agreed by the parties to be of unconditional status B where the authenticity are agreed but contents disputed. In the course of the trial, exhibits P1 to P3 were admitted in evidence.

[8] The Plaintiff called the following witnesses who gave sworn evidence:

(i) Andrew Yap Lin Sin (PW1), a Singaporean advocate and solicitor who acted for the Plaintiff in reviewing the share investment agreement;

(ii) Hobart Salim (PW2), a director of the Plaintiff; and

(iii) Terence Selvarajah Peter Selvarajah (PW3), the Fourth Defendant and formerly a director and ordinary shareholder of the First Defendant.

[9] After the close of the Plaintiff's case, the First to Third Defendants submitted no case to answer and elected not to call any witness. In consequence and following Jaafar Shaari & Anor v. Tan Lip Eng & Anor, [1997] 3 MLJ 693 as well as Yoong Sze Fatt v. Pengkalen Securities Sdn Bhd; [2011] 4 MLJ 805; [2010] 1 CLJ 484, I hold that all the evidence led by the Plaintiff must hence be presumed to be correct. As held in Mohd Nor Afandi Mohamed Junus v. Rahman Shah Alang Ibrahim & Anor; [2008] 3 MLJ 81; [2008] 2 CLJ 369, the Plaintiff's case would fail if the Plaintiff has not established its case at law or that the evidence led is so unsatisfactory or unreliable that the court should hold that the burden of proof has not been discharged.

[10] The parties thereafter simultaneously submitted their written closing submissions in chief and in reply as directed. Oral clarification with counsel was held on 15 September 2015.

Background Facts

[11] By a written Subscription of Shares Agreement dated 18 December 2007 ("Agreement") executed between the parties, the Plaintiff agreed to the First Defendant's offer to allot and issue to the Plaintiff 2,500,000 redeemable convertible preference shares ("Preference Shares") of RM 1.00 each at the subscription price of RM 1.10 each subject to terms and conditions therein.

[12] The relevant terms of the Agreement are as set out in following clauses:

"3.1. The Plaintiff shall subscribe to the SI Preference Shares in the First Defendant for the sum of Ringgit Malaysia Two Million Seven Hundred and Fifty Thousand (RM2,750,000.00) only at the subscription price of Ringgit Malaysia One and Sen Ten (RM1.10) per SI Preference Share