Rex in 1972. The company have many branches in

Rex Industry Berhad is an investment holding company incorporated in 1972. The company have many branches in Europe, United Stated and Asia countries such as Malaysia. It engages in manufacture, trading and export of canned food, frozen food, and drinks to other countries. The company’s products include meat, seafood, and vegetables. It also trades in manufactures biscuits and shelf stable convenience food.The company’s current financial standing is doing well compare to last year 2016. In 2017, Total assets RM196,825,219 consists of non-current assets RM72,509,127 and current asset RM124,316,052.  Its total liabilities RM54,359,206 included non-current liabilities of RM3,632,880 and current liabilities are RM50,726,326. Its current ratio is 2.45 which mean the company could pay their debts with its assets. The equity of company is RM 142,466,013 mainly contributes by share capital and retained earnings. In 2016, company’s profitability had an excellent improvement. On the other sides, Rex Industry Berhad has capability in managing its cash flow. Compare with past, company’s cash flow had increase from RM 12,323,012 to RM 15,412,633, means that company have sufficient cash to pay cash dividend, interest or to retained to provide future financial support for expansion of the company.The intention for Rex Industry Berhad to raising funds is to widen its product line and expand into export market. This financial year, company introduced new beverages, canned foods and confectionery products. It keeps the company of driving growth, and gaining tractions in the consumer markets. The marketing and promotional initiatives is the aim for company to raising funds. Thus, company raising funds to promote its new products to strengthen their market share and anticipate the export market in the following years (Annual Report,2017).Rex Industry Berhad raised their capital through issued ordinary shares. The company issued total number 61,656,617 units of ordinary shares at par ringgit RM1 per unit since it listed on Bursa Malaysia. Besides, company had remained a big portion of retained earnings in year of 2016 and 2017. In year 2016, company retained earnings is RM53,421,476. Now, it is increased to RM69,494,897.Based on my opinion, the current method that Rex Industry Berhad to raise capital is not suitable to the company. The issue of ordinary shares will cause the company loss of control. Ordinary shareholders allowed to involve in company management. Section 71(1) Companies Act 2016 stated that ordinary shareholders has the right to attend meeting and vote on any resolution of the company. It might be gaining power to others to control the company. The existing shareholders may lose their power of control if publics subsequently subscribe shares to become ordinary shareholders and make company decision. From my perspective, I will suggest Rex Industry Berhad issue preference shares to raise their capital. Under Section 72(1) Companies Act 2016 states that a company having a share capital may issue preference shares. I prefer to issue non-cumulative preference shares rather than ordinary shares are because company does not need to gain power to others to make company’s decision. Preference shares give the flexibility to company in making dividend payments. If Rex Industry Berhad is running into cash issues, the company can suspend the dividend payments to help company to overcome cash issues. Non-cumulative preference shares provide a selection to company, the company only allow to pay dividend to its shareholders if it makes profits. In addition, issue preference share does not increase company’s liability. Company does not need to worry about high interest and repayment of principal amount like debt finance. In this case, non-cumulative preference is adequate to Rex Industry Berhad if company plans to expand its product line and exports to overseas.


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