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Thereafter, approval from the shareholders for subsequent renewals of the mandate will
be sought at each subsequent AGM of the Company subject to a satisfactory review by
the ARMC of its continued application to Recurrent Related Party Transactions.
3. DETAILS OF THE PROPOSED ADOPTION OF NEW CONSTITUTION
The CA 2016 which was gazetted on 15 September 2016, has come into force effective
31 January 2017. It introduced wide-ranging changes to the Companies Act, 1965 which
aimed to reduce regulatory burden on companies, provide for greater business flexibility,
strengthen the corporate governance and reinforcement of director’s accountability. The
key changes include, among others, the following:
abolition of the concept of shares with nominal value to simplify the accounting
treatment of share capital.
provisions to facilitate electronic transmission of notices and document.
merging of the memorandum and articles of association of a company into one
document called the “Constitution”.
Removal of maximum age limit for directors.
Requirement of solvency test and solvency statements by directors for certain
exercises which include capital reduction, share buyback and payment of dividend as
a means to protect stakeholders and creditors.
The Company proposes to update its Constitution by incorporating relevant changes or
provisions introduced under the CA 2016. At the same time, the Constitution will also be
amended for consistency with the prevailing Listing Requirements.
Given the amendments required to be made are numerous and would entail substantial
amendment to the existing Constitution of the Company, the Board proposes that a new
Constitution to be adopted to replace the existing Constitution. The proposed new
Constitution to be adopted is set out in Appendix I of this Circular.
4. RATIONALE AND BENEFITS OF THE PROPOSALS
4.1 Proposed Shareholders’ Mandate
The Recurrent Related Party Transactions entered or to be entered into by the Group are
all in the ordinary course of business. They are recurring transactions of a revenue or
trading nature which are likely to occur with some degree of frequency and may arise at
any point in time. These transactions may be constrained by the time-sensitive nature
and confidentiality of such transactions, and it may be impractical to seek shareholders’
approval on a case-by-case basis before entering into such Recurrent Related Party
Transactions. As such, the Board is seeking a shareholders’ mandate pursuant to Chapter
10, Paragraph 10.09 of the Listing Requirements to allow the Group to enter into
Recurrent Related Party Transactions described in Section 2.3 above.
The Recurrent Related Party Transaction, as outlined in Section 2.3 above, are made on
arm’s length basis and on normal commercial terms not more favourable to the Related
Parties than those generally available to the public and are not detrimental to the minority
shareholders of the Company and which are not prejudicial to the interest of the
shareholders.
By obtaining the Proposed Shareholders’ Mandate, the necessity to convene separate
general meetings from time to time to seek shareholders’ approval as and when such
Recurrent Related Party Transactions occur would be eliminated. This would substantially
reduce administrative time, inconvenience and expenses associated with the convening
of such meetings, without compromising the corporate objectives of the Group or
adversely affecting the business opportunities available to the Group.