CHEMICAL COMPANY OF MALAYSIA BERHAD (5136-T) (Incorporated in Malaysia)

Transcription

1 0xx THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to the course of action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. Bursa Malaysia Securities Berhad takes no responsibility for the contents of this Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular. CHEMICAL COMPANY OF MALAYSIA BERHAD (5136-T) (Incorporated in Malaysia) CIRCULAR TO SHAREHOLDERS in relation to PROPOSED RENEWAL OF EXISTING SHAREHOLDERS MANDATE AND PROPOSED NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (REFERRED TO AS PROPOSED SHAREHOLDERS MANDATE) Notice of the 53 rd Annual General Meeting which will be held at Ballroom 3, InterContinental Kuala Lumpur, 165 Jalan Ampang, Kuala Lumpur on Wednesday, 27 May 2015 at 2.30 p.m. together with the Form of Proxy are enclosed together in the 2014 Annual Report. The Form of Proxy must be lodged with the Company s Registrar, Symphony Share Registrars, Level 6, Symphony House, Block D13, Pusat Dagangan Dana 1, Jalan PJU 1A/ 46, Petaling Jaya, Selangor at least 48 hours before the time appointed for holding the meeting or at any adjournment thereof. This Circular is dated 30 April 2015

2 DEFINITIONS Except where the context otherwise requires, the following definitions apply throughout this Circular:- Act : Companies Act, 1965 AGM : Annual General Meeting Annual Report : Annual Report of Chemical Company of Malaysia Berhad for the financial year ended 31 December 2011 Articles : Articles of Association of CCM Board or BOD : Board of Directors of CCM Bursa Malaysia : Bursa Malaysia Securities Berhad ( W) CCM or the Company : Chemical Company of Malaysia Berhad CCM Group or Group : CCM and its subsidiaries CCMC : CCM Chemicals Sdn Bhd CCMD : CCM Duopharma Biotech Berhad CCMF : CCM Fertilizers Sdn Bhd CCMA : CCM Agriculture Sdn Bhd CCMA (S) : CCM Agriculture (Sabah) Sdn Bhd CCMAM : CCM Agri-Max Sdn Bhd CCMP : CCM Pharmaceuticals Sdn Bhd CCMI (P) : CCM International (Philippines), Inc. CCMIS : CCM Innovative Solutions Sdn Bhd CCMSPL : CCM Singapore Pte Ltd CCMUK : CCM Usaha Kimia (M) Sdn Bhd Director : For the purpose of this definition, Director shall have the meaning given in Section 4 of the Act and includes any person who is or was within the preceding 6 months of the date on which the terms of the transaction were agreed upon, a Director of CCM (or any other company which is its subsidiary or holding company or Chief Executive Officer of the Company, its subsidiary or holding company) EGM : Extraordinary General Meeting EPF : Employees Provident Fund Board

3 Listing Requirements : Listing Requirements of Bursa Malaysia Securities Berhad LTH : Lembaga Tabung Haji (ACT ) Major Shareholder (s) : A person who has an interest or interests in one or more voting shares in the Company and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is:- (a) equal to or more than 10% of the aggregate of the nominal amounts of all the voting shares in the company; or (b) equal to or more than 5% of the aggregate of the nominal amounts of all the voting shares in the company where such person is the largest shareholder of the Company (or any other company which is its subsidiary or holding company) and includes any person who is or was within the preceding 6 months of the date on which the terms of the transactions were agreed upon, a Major Shareholder of the Company. For the purpose of this definition, interest in shares shall have the meaning given in Section 6A of the Act. Person(s) connected : Such person, in relation to the Director or Major Shareholder, who falls under any one of the following categories:- (a) A member of the Director s or Major Shareholder s family; (b) A trustee of a trust (other than a trustee for an employee share scheme or pension scheme) under which the Director, Major Shareholder or a member of the Director s or Major Shareholder s family is the sole beneficiary; (c) A partner of the Director, Major Shareholder or a partner of a person connected with that Director or Major Shareholder; (d) (e) (f) A person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the Director or Major Shareholder; A person in accordance with whose directions, instructions or wishes the Director or Major Shareholder is accustomed or is under an obligation, whether formal or informal, to act; A body corporate or its Directors which/who is/are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the Director or Major Shareholder;

4 (g) A body corporate or its Directors whose directions, instructions or wishes the Director or Major Shareholder is accustomed or under an obligation, whether formal or informal, to act; (h) A body corporate in which the Director or Major Shareholder and/or persons connected with him are entitled to exercise, or control the exercise of, not less than 15% of the votes attached to voting shares in the body corporate; or (i) A body corporate, which is a related corporation. PNB : Permodalan Nasional Berhad (38218-X) PTCCMI : P.T. CCM Indonesia PTCCMA : P.T. CCM Agripharma Proposed Renewal of : Proposed renewal of existing Shareholders Mandate for Shareholders Mandate the RRPT as set out in Section herein Proposed New : Proposed new Shareholders Mandate in respect of the Shareholders Mandate additional RRPT as set out in Section herein Recurrent Transactions : Recurrent Related Party Transactions of a revenue and/or trading nature with related parties of CCM and/or its subsidiaries which are necessary for the day-to-day operations of CCM Group and have been made or will be made at least once in three (3) years in the course of CCM Group s business RRPTs : Recurrent Related Party Transactions Related Party(ies) : Director(s), Major Shareholder(s) or person connected with such Director(s) or Major Shareholder(s) and include the Chief Executive Officer who is not a Director RM and sen : Ringgit Malaysia and Sen respectively Share(s) : Ordinary Share(s) of RM1.00 each Shareholders Mandate : Shareholders approval for a general mandate in relation to RRPT of a revenue or trading nature which are necessary for CCM Group s day-to-day operations Subsidiaries and : As per Appendix II Associate Companies UPHA : UPHA Pharmaceutical Manufacturing (M) Sdn Bhd

5 Words denoting the singular shall, where applicable, include the plural and vice versa and words denoting the masculine gender shall, where applicable, include the feminine and neuter gender and vice versa. Reference to persons shall include corporation. Any reference in this Circular to any enactment is a reference to that enactment as amended or re-enacted from time to time. Any discrepancy in the tables between the amounts listed and the totals in this Circular are due to rounding. Any reference to a time of day in this Circular shall be a reference to Malaysian time, unless otherwise stated.

6 TABLE OF CONTENTS LETTER TO SHAREHOLDERS IN RELATION TO THE PROPOSED RENEWAL OF EXISTING SHAREHOLDERS MANDATE AND PROPOSED NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS CONTAINING:- Page 1. INTRODUCTION 1 2. DETAILS OF THE PROPOSED SHAREHOLDERS MANDATE 2.1 The Proposed Shareholders Mandate The Recurrent Related Party Transactions Review Procedures for Recurrent Related Party Transactions Statement by the Audit and Compliance Committee Validity Period of the Proposed Shareholders Mandate Rationale of the Proposed Shareholders Mandate and Benefits 10 to the Group 3 FINANCIAL EFFECTS 11 4 DIRECTORS' AND MAJOR SHAREHOLDERS INTERESTS 11 5 DIRECTORS STATEMENT AND RECOMMENDATION 12 6 ANNUAL GENERAL MEETING 12 7 FURTHER INFORMATION 13 APPENDIX I : FURTHER INFORMATION APPENDIX II : SUBSIDIARIES AND ASSOCIATE COMPANIES APPENDIX III : EXTRACT OF NOTICE OF 53 rd ANNUAL GENERAL MEETING 20-21

7 PROPOSED RENEWAL OF EXISTING SHAREHOLDERS MANDATE AND PROPOSED NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (REFERRED TO AS PROPOSED SHAREHOLDERS MANDATE )

8 CHEMICAL COMPANY OF MALAYSIA BERHAD (5136-T) (Incorporated in Malaysia) Registered Office: 13 th Floor, Menara PNB 201-A Jalan Tun Razak Kuala Lumpur 30 April 2015 BOARD OF DIRECTORS Dato Sri Azalina bin Othman (Non-Independent Non-Executive Chairman) Leonard Ariff bin Abdul Shatar (Group Managing Director) Khalid bin Sufat (Senior Independent Non-Executive Director) Dato Azmi bin Mohd Ali (Non-Independent Non-Executive Director) Dr. Leong Chik Weng (Independent Non-Executive Director) Dato Seri Ir. Dr. Zaini bin Ujang (Non-Independent Non-Executive Director) Datin Paduka Kartini binti Hj Abdul Manaf (Non-Independent Non-Executive Director) Datin Paduka Siti Sa diah binti Sh. Bakir (Independent Non-Executive Director) To: The Shareholders of CCM Dear Sir/ Madam, PROPOSED RENEWAL OF EXISTING SHAREHOLDERS MANDATE AND PROPOSED NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (REFERRED TO AS PROPOSED SHAREHOLDERS MANDATE ) 1. INTRODUCTION At the AGM held on 27 May 2014, your Board obtained shareholders approval for CCM Group to enter into RRPTs. The authority obtained for the RRPTs shall continue to be in force (unless revoked or varied by the Company in general meeting) until:- (a) (b) the conclusion of the next AGM of the Company (and will be subject to annual renewal) following the AGM at which such RRPTs mandate was passed, at which time it will lapse, unless by a resolution passed at a general meeting whereby the authority is renewed; or the expiration of the period within which the next AGM of CCM subsequent to the date it is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or (c) revoked or varied by resolution passed by the shareholders in an AGM or EGM; whichever is the earlier. 1

9 On 18 March 2015, CCM announced that it proposes to seek a Shareholders Mandate at the forthcoming AGM for the following: i) proposed shareholders approval for the renewal of Shareholders Mandate in relation to RRPTs as set out in section herein. This is in view of the fact that the existing mandate for the RRPTs obtained from the shareholders of the Company at the Company s AGM held on 27 May 2014 will lapse at the conclusion of the forthcoming AGM on Wednesday, 27 May 2015; and ii) proposed shareholders approval for the new Shareholders Mandate in respect of the additional RRPTs as set out in section herein Disclosure has been made in the 2014 Annual Report of the Company of the actual breakdown of the aggregate value of such transactions conducted, pursuant to the existing Shareholders Mandate, for the financial year ended 31 December The purpose of this Circular is to provide you with information on the Proposed Shareholders Mandate and to seek your approval for the Ordinary Resolution pertaining to the Proposed Shareholders Mandate to be tabled at the forthcoming AGM. 2. DETAILS OF THE PROPOSED SHAREHOLDERS MANDATE 2.1 The Proposed Shareholders Mandate Under paragraph 10.09(2), Part E of Chapter 10 of the Listing Requirements, CCM may seek a Shareholders Mandate in respect of RRPTs involving Recurrent Transactions of a revenue or trading nature which are necessary for its day-to-day operations subject to the following:- i) the transactions are in the ordinary course of business and are on terms not more favourable to the Related Party than those generally available to the public and are not to the detriment of the minority shareholders; ii) iii) iv) the Shareholders Mandate is subject to annual renewal and disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the Shareholders Mandate during the financial year; interested Directors, interested Major Shareholders, interested persons connected with a Director or Major Shareholder, Chief Executive Officer and where it involves the interest of an interested person connected with a Director or Major Shareholder, such Director or Major Shareholder, must not vote on the resolution approving the transactions. An interested Director or interested Major Shareholder must also ensure that persons connected with them abstain from voting on the resolution approving the transactions; the Company s Circular to Shareholders for the Shareholders Mandate shall include information set out in the Listing Requirements; and v) the Company immediately announces to Bursa Malaysia when the actual value of a Recurrent Related Party Transaction entered into by the Company, exceeds the estimated value of the Recurrent Related Party transaction disclosed in the circular by 10% or more and must include the information as may be prescribed by Bursa Malaysia in its announcement. 2

10 Notwithstanding the above, the Proposed Shareholders Mandate sought does not cover any Recurrent Transactions of a revenue or trading nature involving companies in which the EPF and PNB and/or funds managed by PNB are interested, in view of the following:- (i) (ii) the conditions set out in paragraph 10.08(11)(m) of the Listing Requirements are expected to be fulfilled, and therefore, transactions involving companies in which EPF is interested would not be regarded as related party transactions; and Bursa Malaysia had on 11 October 2006, pursuant to an application made by CCM, granted a waiver to CCM Group from having to comply with paragraphs and of the Listing Requirements in respect of future RRPTs between CCM group and companies in which PNB and/or the unit trust funds managed by PNB are interested, subject to the condition that all such RRPTs are based on terms not more favourable to the Group than those generally available to the public and are not detrimental to the minority shareholders of the Company. (iii) The Minister of Domestic Trade and Consumer Affairs had also issued a prescription effective from 28 February 2002, prescribing any right in respect of shares of a company in which PNB or any unit trust managed by PNB or its related companies is deemed to have an interest in, by virtue of Section 6A(4) of the Act, as not having an interest in the shares of the company. 2.2 The Recurrent Related Party Transactions The Company is principally an Investment Holding and Management Company with subsidiaries and an associate company engaged in the manufacturing, marketing and supply of fertilizers, chemicals and pharmaceuticals products and services as listed in Appendix II: It is anticipated that the companies within the CCM Group, have from time to time, would in the ordinary course of business, enter into various Recurrent Transactions at arms length and on the Group s normal commercial terms, which are not more favourable to the Related Parties than those generally available to the public and not to the detriment of the minority shareholders. It is also likely that such transactions will occur with some degree of frequency and could arise at any time. 3

11 2.2.1 Details of existing RRPTs for the Proposed Renewal of Shareholders Mandate, including the classes of Related Party with whom the transactions will be carried out and the nature of such transactions contemplated, include those described below The method or procedure on which the transaction prices are determined are based on prevailing market price transacted at arms length and on the Group s normal commercial terms, which are not more favourable to the Related Parties than those generally available to the public and not to the detriment of the minority shareholders. Existing Mandate* Nature of RRPTs Vendor/ Provider Purchaser/ Recipient Estimated Aggregate Value from 27 May 2014 to 27 May 2015 (as disclosed in the Circular to Shareholders on RRPT dated 2 May 2014) (RM 000) Actual value transacted since last AGM to 15 April (being the Last Practicable Date) (RM 000) Estimated Aggregate Value from 27 May 2015 to the next AGM 1 (RM 000) Related Parties Sale of fertilizers CCMF CCMA 20, ,000 Interested Major Shareholder: LTH 3 Sale of fertilizers CCMF PTCCMA 20, Interested Major Shareholder: LTH 3 Sale of fertilizers CCMF TH Plantations Berhad 50,000 33,000 35,000 Interested Major Shareholder: LTH 3 Sale of fertilizers CCMAM CCMF 5, Interested Major Shareholder: LTH 3 4

12 Existing Mandate* Nature of RRPTs Vendor/ Provider Purchaser/ Recipient Estimated Aggregate Value from 27 May 2014 to 27 May 2015 (as disclosed in the Circular to Shareholders on RRPT dated 2 May 2014) (RM 000) Actual value transacted since last AGM to 15 April (being the Last Practicable Date) (RM 000) Estimated Aggregate Value from 27 May 2015 to the next AGM 1 (RM 000) Provision of Shared/ Management CCM CCMF 2,500 1,829 2,500 Services 5 Sale of fertilizers CCMF CCMA (S) 10,000 3,000 5,000 Sale of fertilizers CCMA CCMF 95,000 67, ,000 Sale of fertilizers CCMA (S) CCMF 55,000 29,000 60,000 *There was no deviation from the Actual Value exceeding the Estimated Aggregate Value by 10% or more in the Existing Mandate Related Parties4 Interested Major Shareholder: LTH 3 Interested Major Shareholder: LTH 3 Interested Major Shareholder: LTH 3 Interested Major Shareholder: LTH 3 5

13 2.2.3 There is no sum due and owing to CCM by its Related Parties pursuant to an RRPT as at the financial year ended 31 December 2014 which exceeded the credit terms of a period of 1 year or less, a period of more than 1 to 3 years, a period of more than 3 to 5 years and a period of more than 5 years In addition to the above, the Company also seeks the mandate from its shareholders for a Proposed New Shareholders Mandate for additional Recurrent Transactions expected to be entered into by the Company and/or its subsidiaries from the date of the forthcoming AGM to the conclusion of the next AGM of the Company (and will be subject to annual renewal) as set out in Section below Details of new additional RRPTs for which the mandate of the shareholders are sought, shall include those described below: Nature of Transactions Vendor / Provider Purchaser / Recipient Related Parties Method or procedure on which transaction prices are determined Estimated Aggregate Value from 27 May 2015 to the next AGM (RM 000) Provision of Shared/ Management Services 5 CCM CCMC Interested Director/ Interested person connected: Prevailing market rate 2,800 Leonard Ariff bin Abdul Shatar 4 Provision of Shared/ Management Services 5 CCM PTCCMI Interested Director/ Interested person connected: Prevailing market rate 130 Leonard Ariff bin Abdul Shatar 4 Sale of Chemicals CCMC CCMIS Interested Director/ Interested person connected: Prevailing market rate 30,000 Leonard Ariff bin Abdul Shatar 4 Sale of Chemicals CCMIS CCMC Interested Director/ Interested person connected: Prevailing market rate 20,000 Leonard Ariff bin Abdul Shatar 4 6

14 Nature of Transactions Vendor / Provider Purchaser / Recipient Sale of Chemicals CCMUK CCMC Sale of Chemicals CCMC CCMUK Sale of Chemicals CCMC CCMSPL Sale of Chemicals CCMSPL CCMC Sale of Chemicals CCMC PTCCMI Sale of Chemicals CCMC CCMI (P) Sale of Chemicals CCMC UPHA Related Parties Interested Director/ Method or procedure on which transaction prices are determined Estimated Aggregate Value from 27 May 2015 to the next AGM (RM 000) Interested person connected: Prevailing market rate 10,000 Leonard Ariff bin Abdul Shatar 4 Interested Director/ Interested person connected: Prevailing market rate 30,000 Leonard Ariff bin Abdul Shatar 4 Interested Director/ Interested person connected: Prevailing market rate 26,000 Leonard Ariff bin Abdul Shatar 4 Interested Director/ Interested person connected: Prevailing market rate 5,000 Leonard Ariff bin Abdul Shatar 4 Interested Director/ Interested person connected: Prevailing market rate 5,000 Leonard Ariff bin Abdul Shatar 4 Interested Director/ Interested person connected: Prevailing market rate 5,000 Leonard Ariff bin Abdul Shatar 4 Interested Director/ Interested person connected: Prevailing market rate 5,000 Leonard Ariff bin Abdul Shatar 4 7

15 Notes:- 1. The values are estimates based on the audited financial statements for the financial year ended 31 December Due to the nature of the transactions, the actual value of transactions may vary from the estimated value disclosed above. 2. The values are actual values transacted from the date of the last AGM until the last practicable date i.e. 15 April Disclosure is made in CCM s 2014 Annual Report of the actual breakdown of the aggregate value of transactions conducted during the financial year ended 31 December 2014, as required under Paragraph of Practice Note 12 of the Listing Requirements, pursuant to the Proposed Shareholders Mandate. 3. LTH holds direct interest of 49.9% in the issued share capital of CCMF and 5.07% in the issued share capital of CCM. LTH holds a direct interest of 71.18% in TH Plantations Berhad and therefore, has interest in the transaction. 4. Leonard Ariff bin Abdul Shatar ( LAAS ) is the Group Managing Director of CCM effective 9 January LAAS is the Chief Executive Officer of CCMD and the Division Director of CCM s Chemicals Divisions and has no direct interest in any of the companies within the CCM Group, nor its subsidiaries. 5. Provision of Shared/ Management Services refers to support services covering areas of accounting, treasury, procurement, security, company secretarial, corporate affairs, legal, internal audit, human resource, information technology services etc. 8

16 2.3 Review Procedures for Recurrent Related Party Transactions To ensure that the RRPTs contemplated under the Proposed Shareholders Mandate are undertaken on terms not more favourable to the Related Party than those generally available to the public and are not to the detriment of the minority shareholders and they are conducted at arms length and on normal commercial terms consistent with the Group s usual business practices and policies and will not be prejudicial to shareholders, the management will ensure that all transactions with Related Parties will only be entered into after taking into consideration the pricing, level and quality of products or services. The pricing of products or services shall be comparable with those offered by/ to other unrelated parties for the same or substantially similar type of transactions. The Company has no specific threshold for RRPTs. However, the Company has in place the Group s Limits of Authority which covers for RRPTs and non-rrpt, as approved by the Board. The review procedures shall include the following:- i) Records will be maintained to capture all RRPTs. ii) The terms and conditions of the RRPTs are based on prevailing market forces and on the same commercial terms as for transactions with other third parties and consistent with normal trade practices. iii) iv) At least two other contemporaneous transactions with unrelated third parties for similar products/ services will be used as comparisons, wherever possible, to determine whether the price and terms offered to/ by the related parties are fair and reasonable and comparable to those offered to/ by other unrelated third parties for the same or substantially similar type of products/ services and/ or quantities. Where quotation or comparative pricing from unrelated third parties cannot be obtained, the transaction price will be determined by the Group in accordance with the applicable industry norms, prevailing commercial rates and at rates not more favourable to the Related Parties than those generally available to the public. The internal audit functions of the CCM Group will conduct an annual review of all the records of RRPTs to ensure that procedures in respect of RRPTs are adhered to. v) The Audit and Compliance Committee shall review on an annual basis to ascertain that the procedures established to monitor RRPTs have been complied with. vi) vii) The Board shall have overall responsibility for the determination of the procedures in respect of RRPTs, including addition of new procedures. Where a member of the Board or Audit and Compliance Committee has an interest (direct or indirect) in the related party transactions, he shall declare his interest in the RRPTs and abstain from participating and deliberating in decisions of the Board or Audit and Compliance Committee on the said RRPTs. 9

17 The Board may at its discretion, adopt new review and disclosure procedures and/or amend the existing procedures to ensure that the RRPTs are at all times on terms consistent with the Group s usual business practices and policies. 2.4 Statement by Audit and Compliance Committee The Audit and Compliance Committee has seen and reviewed the terms of the Proposed Shareholders Mandate and is satisfied that the procedures for RRPTs are sufficient to ensure that RRPTs will be made at arm s length terms and in accordance with the Group s normal commercial terms, and on terms which are not more favourable to the Related Party than those generally available to the public and hence, will not be detrimental to the minority shareholders or disadvantageous to the Group. The Audit and Compliance Committee is of the view that the Group has in place adequate procedures and processes to monitor, track and identify Recurrent Related Party Transactions in a timely and orderly manner and of which the procedures and processes would be reviewed on an annual basis. 2.5 Validity Period of the Proposed Shareholders Mandate If approved at the forthcoming AGM, the Proposed Shareholders Mandate is subject to annual review. In this respect, any authority conferred by the Proposed Shareholders Mandate shall only continue to be in force until: (a) (b) (c) the conclusion of the next AGM of the Company (and will be subject to annual renewal) following the AGM at which such RRPTs mandate was passed, at which time it will lapse, unless by a resolution passed at a general meeting whereby the authority is renewed; or the expiration of the period within which the next AGM of CCM subsequent to the date it is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or revoked or varied by resolution passed by the shareholders in an AGM or EGM; whichever is earlier. 2.6 Rationale of the Proposed Shareholders Mandate and Benefits to the Group The Recurrent Transactions are carried out in the ordinary course of business on arms length basis and on terms which are no more favourable to the Related Parties than those generally available to the public and which are not prejudicial to the interests of the minority shareholders of CCM. The Recurrent Transactions are intended to meet the business needs of the CCM Group and to ensure smooth running of businesses within the Group. The Proposed Shareholders Mandate when obtained shall eliminate the need to announce to Bursa Malaysia and to convene separate general meetings to seek shareholders approval, as and when the Recurrent Transactions occur. 10

18 This will substantially reduce the administrative time and expenses for convening such general meetings, improve administrative efficiency and allow CCM to channel such resources towards attaining other corporate objectives and business opportunities available to the CCM Group. The benefit to the CCM Group of the Recurrent Transactions entered into with the Related Parties is that the Recurrent Transactions meet the business needs of the CCM Group and provides ready seller/buyer to the Group. The relationships and close co-operation with Related Parties has also reaped mutual benefits, which is expected to continue to be beneficial to the whole Group. 3. FINANCIAL EFFECTS The Proposed Shareholders Mandate is not expected to have any material effect on the share capital, shareholdings and net assets of CCM Group. However, the Proposed Shareholders mandate is expected to contribute positively to the earnings of CCM Group for its financial year ending 31 December DIRECTOR AND MAJOR SHAREHOLDER INTERESTS LTH, being the interested Major Shareholder, has and will abstain from voting in respect of its direct and/or indirect shareholding in CCM, and shall undertake to ensure that persons connected to them will also abstain from voting on the resolution approving the Proposed Shareholders Mandate at the forthcoming AGM. Leonard Ariff bin Abdul Shatar is the Group Managing Director of CCM, Chief Executive Officer of CCMD and the Division Director of CCM s Chemicals Division, and by virtue of him holding these positions, Leonard Ariff bin Abdul Shatar is an interested director/ interested person connected and is deemed interested in the Proposed Shareholders Mandate. Hence, Leonard Ariff bin Abdul Shatar has abstained and will continue to abstain from Board deliberations and voting on the Proposed Shareholders Mandate at all Board meetings and the forthcoming AGM, in respect of his direct and indirect shareholdings in CCM (if any), and shall undertake to ensure that person(s) connected to him (if any) will also abstain from voting on the resolution approving the Proposed Shareholders' Mandate at the forthcoming AGM. Details of interested major shareholder(s)/ interested director(s)/ person(s) connected are tabulated below. 4.1 The direct interest of the interested major shareholder(s)/ interested director(s)/ Person(s) connected in CCM Group as at 15 April 2015 are as follows:- Name of interested major shareholder/ interested director /interested person connected No. of Shares CCM CCMC CCMF CCMD % No. of Shares % No. of Shares % No. of Shares LTH 23,221, ,461, % 11

19 4.2 The indirect interest of the interested major shareholders/ interested director/ person connected in CCM Group as at 15 April 2015 are as follows: Name of interested major shareholder/ interested director /interested person connected CCM CCMC CCMF CCMD No. of Shares % No. of Shares % No. of Shares % No. of Shares % Leonard Ariff bin ,000, ,539, ,332, Abdul Shatar* * by virtue of him being an interested director/ interested person connected Save as aforesaid, none of the Director(s) and/or Major Shareholder(s) of CCM Group and/or Person(s) connected to them has any interest, direct or indirect, in the Proposed Shareholders Mandate. 5. DIRECTORS STATEMENT AND RECOMMENDATION Save for Leonard Ariff bin Abdul Shatar, the Board, having considered all aspects of the Proposed Shareholders Mandate, is of the opinion that the Proposed Shareholders Mandate is in the best interest of CCM Group and accordingly, the Board (except for Leonard Ariff bin Abdul Shatar) recommends that you vote in favour of the resolution pertaining to the Proposed Shareholders Mandate to be tabled at the forthcoming AGM. 6. ANNUAL GENERAL MEETING The notice of AGM that contains the resolution in respect of the Proposed Shareholders Mandate has been incorporated into the Annual Report of the Company for the financial year ended 31 December 2014 that is circulated to you together with this Circular. You will also find enclosed in the Annual Report, a Form of Proxy which you are requested to complete, sign and return in accordance with the instruction printed thereon as soon as possible, so as to arrive at the Company s Registrar not later than forty-eight (48) hours before the time fixed for the AGM should you wish to appoint a proxy/proxies to attend and vote for you and on your behalf, at the AGM or at any adjournment thereof. The completion and return of the Form of Proxy does not preclude you from attending and voting in person at the AGM should you subsequently wish to do so, but if you do, your proxy shall be precluded from attending the AGM. 12

20 7. FURTHER INFORMATION Shareholders are requested to refer to Appendix II for further information. Yours faithfully For and on behalf of the Board of Directors of CHEMICAL COMPANY OF MALAYSIA BERHAD DATO SRI AZALINA BINTI OTHMAN (Non-Independent Non-Executive Chairman) 13

21 FURTHER INFORMATION APPENDIX I 1. RESPONSIBILITY STATEMENT This circular has been seen and approved by the Board of Directors of CCM and they collectively and individually accept full responsibility for the accuracy of the information given and confirm that after making all reasonable inquiries and to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement herein misleading. 2. MATERIAL CONTRACTS AND COMMITMENTS FOR CAPITAL EXPENDITURE Save as disclosed below, there is no other material contract entered into by the CCM Group during the two (2) years preceding the date of this Circular, other than contracts entered into in the ordinary course of business: a) On 30 September 2013, the Company had entered into a sale and purchase agreement with Permodalan Nasional Berhad ( PNB ) for the disposal of 2 contiguous parcels of freehold land together with 3 units of double-storey detached houses erected on Geran 25607, Lot 17, Seksyen 71, Bandar dan Daerah Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur and Geran 14977, Lot 332, Seksyen 71, Bandar Kuala Lumpur, Daerah Wilayah Persekutuan ( Properties ) in favour of PNB for a total cash consideration of RM74,814,000. The disposal has been completed and vacant possession of the Properties had been delivered to PNB on 13 February b) On 27 November 2014, the Company has entered into the following Share Sale Agreements ( SSA ) (hereinafter referred to as the Proposed Disposals ) in relation to the following: SSA 1: (i) Proposed disposal of 8,000,000 CCM Pharmaceuticals Sdn Bhd ( CCMP ) Shares, representing 100% of the issued and paid-up share capital of CCMP, for a disposal consideration of RM17,599,000 and the settlement of outstanding inter-company advances owed by CCMP to CCM Group as at 30 September 2014; and (ii) Proposed disposal of 200,000 Innovax Sdn Bhd ( Innovax ) Shares, representing 100% of the issued and paid-up share capital of Innovax, for a disposal consideration of RM1,000 and the settlement of outstanding inter-company advances owed by Innovax to CCM Group as at 30 September 2014; SSA 2: (i) Proposed disposal of 3,300,000 CCM Pharma Sdn Bhd ( CCM Pharma ) Shares, representing 100% of the issued and paid-up share capital of CCM Pharma, for a disposal consideration of RM34,942,000 and the settlement of outstanding inter-company advances owed by CCM Pharma to CCM Group; and 14

22 (ii) Proposed disposal of 30,000,000 UPHA Pharmaceutical Manufacturing (M) Sdn Bhd ( UPHA ) Shares, representing 100% of the issued and paid-up share capital of UPHA, for a disposal consideration of RM78,365,000 and the settlement of outstanding inter-company advances owed by UPHA to CCM Group as at 30 September 2014; SSA 3: (i) Proposed disposal of 1,600,000 CCM Singapore Pte Ltd ( CCMSPL ) Shares, representing 100% of the issued and paid-up share capital of CCMSPL, by CCM International Sdn Bhd ( CCMI ) for a disposal consideration of RM2,417,000 and the settlement of outstanding intercompany advances owed by CCMSPL to CCM Group as at 30 September 2014; and SSA 4: (i) Proposed disposal by CCM Investments Limited (BVI) ( CCM Investments ) of the entire enlarged issued and fully paid-up share capital of CCM International (Philippines), Inc. ( CCMI (P) ) including 5 CCMI (P) Shares held by five (5) directors of CCMI (P) for CCM Investments for a disposal consideration of RM1,000 and the capitalisation of intercompany advances made by CCM Investments or CCM Group to CCMI (P) and for that purpose, issuance of new shares in CCMI (P) to CCM Investments. The completion of the transactions is currently pending the fulfillment of the Conditions Precedents. c) On 24 December 2014, the Company has entered into Supplementary Agreement 1 and Supplementary Agreement 2 pertaining to the Proposed Disposals to amend the terms of SSA 1 and SSA 2, respectively. As at 31 December 2014, the Group has material commitments for capital expenditure of RM31,498,000 (contracted but not provided for) and RM28,543,000 (authorized but not contracted for), amounting to a total of RM60,041, MATERIAL LITIGATION, CLAIMS OR ARBITRATION Save for the following, neither CCM nor any of its subsidiaries are engaged in any material litigation, claims or arbitration proceedings, either as plaintiff or defendant, which will have a material effect on the financial position of the CCM Group and the Board is not aware of any proceedings pending or threatened against CCM and/or its subsidiaries or any facts likely to give rise to any proceedings which might materially affect the financial position and business of the CCM Group: a) PT CCM Indonesia ( PTCCMI ) a subsidiary of CCM, had on 23 September 2014 submitted five (5) letters of appeal to the Indonesian Tax Court against the objection decisions of the Director-General of Tax, Indonesia ( DGT ) on several tax adjustments/ corrections made by the tax auditor totaling IDR36.1 billion (or equivalent to RM9.7 million) in aggregate. The DGT has filed his replies to the letters of appeal and PTCCMI has filed its rebuttals in relation thereto. The Indonesian Tax Court has informed that the appeals will be heard on 6 May

23 4. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents will be available for inspection at the Registered Office of the Company, at 13 th Floor, Menara PNB, 201-A Jalan Tun Razak, Kuala Lumpur, Malaysia, during normal business hours from Monday to Friday (except for public holidays) from the date of this Circular up to and including the date of the AGM. (i) (ii) Memorandum and Articles of Association of the Company; Audited accounts of the CCM Group for the past two (2) financial years ended 31 st December 2013 and 31 st December

24 SUBSIDIARIES AND ASSOCIATE COMPANIES APPENDIX II The particulars of the subsidiaries and associate companies of CCM as at 15 April 2015 are as follows: Name Subsidiaries Effective Equity Interest (%) Principal Activities CCM Agri-Max Sdn Bhd ( W) ( CCMAM ) Trading of wide range of fertilizers CCM Fertilizers Sdn Bhd (11831-W) ( CCMF ) and its subsidiaries: Max Agriculture Sdn Bhd (25103-U) ( MASB ) CCM Agriculture (Sabah) Sdn Bhd ( K) ( CCMA (S) ) 50.1 Manufacture and marketing of wide range of fertilizers 50.1 Dormant Manufacturing and marketing of wide range of fertilizers CCM Agriculture Sdn Bhd ( A) ( CCMA ) Manufacturing and marketing of wide range of fertilizers CCM Usaha Kimia (M) Sdn Bhd ( P) ( CCMUK ) and its subsidiary: CCM Water Systems Sdn Bhd ( A) ( CCMWS ) CCM Innovative Solutions Sdn Bhd ( D) ( CCMIS ) and its subsidiaries: Innovative Polymer Systems Sdn Bhd ( D) ( IPS ) Delta Polymer Systems Sdn Bhd ( P) ( DPS ) CCM Chemicals Sdn Bhd ( A) ( CCMC ) and its subsidiaries: CCM Watercare Sdn Bhd ( P) ( CCMWC ) Engage in trading as an agent in chemicals and other commodities Designing, manufacturing, installing, commissioning and providing maintenance services for water purification and waste water treatment plant systems and sale of its related products Manufacturing and selling of industrial cleaner and hydrogel coating products Dormant Dormant 80.0 Manufacture and marketing of chlor-alkali and coagulant products and marketing of industrial and specialty chemicals 80.0 Dormant CCM Singapore Pte.Ltd ( CCMSPL ) 80.0 Marketing of chlor-alkali and coagulants products P.T. CCM Indonesia ( PTCCMI ) 80.0 Marketing of chlor-alkali and coagulants products and industrial chemicals 17

25 Name Effective Equity Interest (%) Principal Activities Innovative Resins Sdn Bhd ( T) ( IR ) Investment Holding CCM Marketing Sdn Bhd ( T) ( CCMM ) and its subsidiaries: Investment holding CCM Duopharma Biotech Berhad ( W) ( CCMD ) and its subsidiary: Duopharma (M) Sendirian Berhad (42991-M) ( DMSB ) CCM Pharmaceuticals Sdn Bhd (27754-W) ( CCMP ) and its subsidiaries: CCM Biopharma Sdn Bhd (88895-U) ( CCMBio ) Sentosa Pharmacy Sdn Bhd (69958-V) ( SP ) Unique Pharmacy (Ipoh) Sdn Bhd ( T) ( UPI ) Unique Pharmacy (Penang) Sdn Bhd ( P) ( UPP ) Negeri Pharmacy Sdn Bhd (79732-D) ( NP ) Investment holding Manufacturer, distributor, importer and exporter of pharmaceutical products and medicines Marketing and sales of medicine and pharmaceutical products Dormant Distributor of pharmaceutical products Trading of pharmaceutical products Distributor of pharmaceutical products Dormant Innovax Sdn Bhd ( V) ( Innovax ) Research & Development of pharmaceutical products UPHA Pharmaceutical Manufacturing (M) Sdn Bhd (53667-M) ( UPHA ) CCM Pharma Sdn Bhd (4672-U) ( CCM Pharma ) Contract Manufacturing of pharmaceutical products and sales of medicines Property management and services CCM Investments Limited (BVI) ( CCM Investments ) and its subsidiary: CCM International (Philippines), Inc. ( CCMI (P) ) Investment holding Distribution, importing and exporting of pharmaceuticals and chemicals product CCM International Sdn Bhd ( A) ( CCMI ) and its subsidiaries: CCM Pharmaceuticals (S) Pte Ltd ( CCMSPL ) Investment holding P.T. CCM AgriPharma ( PTCCMA ) Ceased operation CCM Siam Ltd ( CCMSL ) Dormant Distribution, wholesaler of medicinal and pharmaceutical products Yayasan CCM ( D) (Limited by Guarantee) To receive and administer funds for education and charitable purposes, all for the public welfare. 18

26 Name Effective Equity Interest (%) Principal Activities Associate Company Orica - CCM Energy Systems Sdn Bhd ( U) ( ORICA ) 36.0 Engaged in the manufacturing/ blending of bulk emulsions, the trading of blasting products and the provision of blasting related services and technology to the mining, quarrying and construction industries. 19

27 APPENDIX III EXTRACT OF NOTICE OF FIFTY THIRD ANNUAL GENERAL MEETING Notice is hereby given that the Fifty Third Annual General Meeting of the Company will be held at Ballroom 3, InterContinental Kuala Lumpur, 165 Jalan Ampang, Kuala Lumpur on Wednesday, 27 May 2015 at 2.30 p.m. for the following purpose:- ORDINARY RESOLUTION 7 Proposed Renewal of Existing Shareholders Mandate and Proposed New Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature ( Proposed Shareholders Mandate ) That subject to the Listing Requirements of the Bursa Malaysia Securities Berhad ( Bursa Securities ), the Company and/or its subsidiary shall be mandated to enter into the recurrent related party transactions of a revenue or trading nature with the related party as specified in Sections and of the Circular to Shareholders dated 30 April 2015 which are necessary for the Company and/or its subsidiary s day-to-day operations subject further to the following: (i) (ii) the transactions are in the ordinary course of business and are on terms not more favourable to the related party than those generally available to the public, and the transactions are undertaken on arm s length basis and are not to the detriment of the minority shareholders; the approval is subject to annual renewal and shall continue to be in force until:- (a) (b) (c) the conclusion of the next Annual General Meeting ( AGM ) of the Company following the forthcoming AGM at which such mandate was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed; the expiration of the period within which the next AGM after the date it is required to be held pursuant to Section 143[1] of the Companies Act, 1965 but shall not extend to such extension as may be allowed pursuant to Section 143[2] of the Companies Act; 1965 or revoked or varied by resolution passed by the shareholders in a general meeting, whichever is the earlier; and (iii) the disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the Proposed Shareholders Mandate during the financial year. And that the Directors and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) to give effect to the transactions contemplated and/or authorised by this Ordinary Resolution. 20

28 NOTES: 1. A member entitled to attend and vote at the meeting is entitled to appoint not more than two (2) proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 2. Where a member of the Company appoints two (2) proxies, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy. 3. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the company for multiple beneficial owners in one securities account ( omnibus account ), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. 4. An exempt authorised nominee refers to an authorised nominee defined under the Securities Industry (Central Depositories) Act 1991 ( SICDA ) which is exempted from compliance with the provisions of subsection 25A(1) of SICDA. 5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or, if the appointer is a corporation, either under seal or under the hand of an officer or attorney duly authorised. 6. The instrument appointing a proxy must be deposited at the Company s Registrar, Symphony Share Registrars Sdn. Bhd., Level 6, Symphony House, Block D13, Pusat Dagangan Dana 1, Jalan PJU 1A/46, Petaling Jaya, Selangor Darul Ehsan, not less than forty-eight (48) hours before the time appointed for holding the meeting. 7. Only depositors whose names appear in the Record of Depositors as at 20 May 2015 be regarded as members and entitled to attend and vote at the meeting. EXPLANATORY NOTES ON SPECIAL BUSINESS: (i) Ordinary Resolution 7 - Proposed Renewal of Existing Shareholders Mandate and Proposed New Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature The explanatory notes on Ordinary Resolution 7 are set out in the Circular to Shareholders dated 30 April