UMW OIL & GAS CORPORATION BERHAD (Company No H) (Incorporated in Malaysia)

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in doubt as to the course of action to take, you should consult your stockbroker, solicitor, accountant, bank manager 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. Shareholders should rely on their own evaluation to assess the merits and risks of the Proposal as set out herein. UMW OIL & GAS CORPORATION BERHAD (Company No H) (Incorporated in Malaysia) CIRCULAR TO SHAREHOLDERS IN RELATION TO PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE AND EXTRACT OF NOTICE OF THE 7 TH ANNUAL GENERAL MEETING The above Proposal will be tabled as Special Business at UMW Oil & Gas Corporation Berhad s 7 th Annual General Meeting ( AGM ) to be held at Dewan Tun Abdul Razak, Menara Kembar Bank Rakyat, No. 33 Jalan Rakyat, Kuala Lumpur, Malaysia on Monday, 15 May 2017 at a.m. The Notice of the 7 th AGM is set out in the Annual Report of UMW Oil & Gas Corporation Berhad for the financial year ended 31 December If you are unable to attend and vote at the meeting, you may complete the Form of Proxy and deposit it at the registrar s office, Securities Services (Holdings) Sdn Bhd at Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur, Malaysia, not later than twenty-four (24) hours before the time appointed for the taking of the poll, or any adjournment thereof. The lodging of the Form of Proxy does not preclude you from attending and voting in person at the AGM should you subsequently decide to do so. Last date and time for lodging the Form of Proxy. Sunday, 14 May 2017 at a.m. Date and time of the AGM. Monday, 15 May 2017 at a.m. This Circular is dated 21 April 2017

2 DEFINITIONS In this Circular and the accompanying appendix, the following words and abbreviations shall have the following meanings unless otherwise stated:- Act : Companies Act 2016 as amended from time to time and any reenactment thereof AGM : Annual General Meeting Annual Report 2016 : Annual Report of the Company issued for the FYE 31 December 2016 ASB : Amanah Saham Bumiputera, a fund managed by Permodalan Nasional Berhad Board : The Board of Directors of the Company Bursa Securities or Exchange : Bursa Malaysia Securities Berhad Company Share or Shares : Ordinary Share(s) in the Company Director : Shall have the meaning given in Section 2(1) of the Capital Markets and Services Act, 2007 and for purposes of the Proposal, includes any person who is or was within the preceding six (6) months of the date on which the terms of the transaction were agreed upon, a Director of the Company or its subsidiary or holding company or a chief executive of the Company, its subsidiary or holding company FLAG or Financial Limit Authority Guidelines : A standardised authority limit approved by the Board which sets out the respective authority limits, including those reserved for the Board s approval and those which the Board may delegate to the Board committees, the President, the management committee and Management FYE : Financial Year Ended/Ending Group : UMW-OG and its subsidiaries Listing Requirements : Main Market Listing Requirements of Bursa Securities, including any amendment(s) thereto that may be made from time to time LPD : 31 March 2017, being the latest practicable date prior to the printing of this Circular Major Shareholder : Means 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:- (i) 10% or more of the aggregate of the nominal amounts of all the voting shares in the Company; or (ii) 5% or more 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. For the purpose of this definition, interest in shares shall have the meaning given in Section 8 of the Act. ii

3 DEFINITIONS Notice : Notice of the 7 th AGM OCTG : Oil country tubular goods For the purposes of the Proposal, Major Shareholder(s) includes any person who is or was within the preceding six (6) months of the date on which the terms of the transaction were agreed upon, a major shareholder of the Company or any other corporation which is its subsidiary or holding company. Person Connected : In relation to a Director or a Major Shareholder, means such person who falls under any one (1) of the following categories: (i) a family member of the Director or Major Shareholder; (ii) a trustee of a trust (other than a trustee for a share scheme for employees or pension scheme) under which the Director, Major Shareholder or a family member of the Director or Major Shareholder, is the sole beneficiary; (iii) a partner of the Director, Major Shareholder or a partner of a person connected with that Director or Major Shareholder; (iv) 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; (v) 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; (vi) 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; (vii) 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; (viii) a body corporate in which the Director, Major Shareholder 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 (ix) a body corporate which is a related corporation. Proposed Renewal of Shareholders Mandate or Proposal Related Party : Proposed renewal of Shareholders Mandate for RRPT to be entered into by the Group from the date of the forthcoming AGM until the next AGM : Director, Major Shareholder or Person Connected with such Director or Major Shareholder. For the purpose of the Proposal, the Related Parties are set out in Section 1.3 herein RM and sen : Ringgit Malaysia and sen, respectively iii

4 DEFINITIONS RRPT : Recurrent related party transaction(s) of a revenue or trading nature, which are necessary for the Group s day-to-day operations and are entered into by the Company and/or its subsidiaries in the ordinary course of business of the Group Shareholders Mandate : The shareholders mandate for the Group to enter into RRPT (as defined herein), for which approval from the shareholders was previously obtained during the 6 th AGM held on 17 May 2016 and such authority shall expire at the conclusion of the 7 th AGM UMWC : UMW Corporation Sdn Bhd UMW-OG or the Company : UMW Oil & Gas Corporation Berhad UMWH : UMW Holdings Berhad UMWH Group : UMWH and its subsidiaries USD : United States Dollar In this Circular, words incorporating the singular shall, where applicable, include the plural and vice versa and words incorporating the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. Reference to persons shall include a corporation, unless otherwise specified. Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or reenacted. Any reference to a time of day in this Circular shall be a reference to Malaysian time, unless otherwise stated. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK iv

5 CONTENTS LETTER TO OUR SHAREHOLDERS IN RELATION TO THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE: INTRODUCTION DETAILS OF THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE 1.1 Provisions of the Listing Requirements Principal Activities of the Group Classes and Nature of the RRPT Amount Due and Owing to the Group by Related Parties Review Procedures for the RRPT Statement by the Board Audit Committee Rationale INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH DIRECTORS/MAJOR SHAREHOLDERS APPROVALS REQUIRED DIRECTORS RECOMMENDATION TH AGM FURTHER INFORMATION APPENDIX EXTRACT OF NOTICE OF THE 7 TH ANNUAL GENERAL MEETING THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK v

6 UMW OIL & GAS CORPORATION BERHAD (Company No H) (Incorporated in Malaysia) Registered Office: Level 18, Block 3A, Plaza Sentral Jalan Stesen Sentral Kuala Lumpur Malaysia 21 April 2017 Board of Directors: Tan Sri Asmat bin Kamaludin Dato Abdul Rahman bin Ahmad Rohaizad bin Darus Badrul Feisal bin Abdul Rahim Razalee bin Amin Dato Afifuddin bin Abdul Kadir Cheah Tek Kuang Dato Ibrahim bin Marsidi (Chairman / Non-Independent Non-Executive Director) (Deputy Chairman / Non-Independent Non-Executive Director) (President / Non-Independent Executive Director) (Non-Independent Non-Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director) To: The Shareholders of UMW Oil & Gas Corporation Berhad Dear Sir/Madam, PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE INTRODUCTION At the 6 th Annual General Meeting of the Company held on 17 May 2016, the Company obtained shareholders approval for the Shareholders Mandate for the Group to enter into RRPT, the details of which were set out in the Circular to Shareholders dated 25 April The Shareholders Mandate will expire at the conclusion of the forthcoming 7 th AGM to be held on 15 May 2017, unless the mandate is renewed at the said 7 th AGM. On 15 March 2017, the Company announced to Bursa Securities, its intention to seek shareholders approval for the Proposed Renewal of Shareholders Mandate at the forthcoming 7 th AGM to be convened on Monday, 15 May The purpose of this Circular is to provide you with details of the Proposed Renewal of Shareholders Mandate and to seek your approval for the ordinary resolution pertaining to the Proposed Renewal of Shareholders Mandate to be tabled at the forthcoming 7 th AGM. The Notice together with the Form of Proxy are enclosed in the 2016 Annual Report. SHAREHOLDERS OF THE COMPANY ARE ADVISED TO READ AND CONSIDER THE CONTENTS OF THIS CIRCULAR CAREFULLY BEFORE VOTING ON THE RESOLUTION PERTAINING TO THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE AT THE FORTHCOMING 7 TH AGM. 1

7 1.0 DETAILS OF THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE 1.1 Provisions of the Listing Requirements Pursuant to Paragraph 10.09(2) of the Listing Requirements, a listed issuer may seek a mandate from its shareholders for RRPT subject 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; 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 where the aggregate value is equal to or more than the threshold below in relation to a listed issuer with an issued and paid-up capital of RM60 million and above: (a) the consideration, value of the assets, capital outlay or costs of the RRPT is RM1 million or more; or (b) the percentage ratio of such RRPT is 1% or more of the thresholds prescribed under Paragraph 10.02(g) of the Listing Requirements, whichever is the higher; (iii) the listed issuer s circular to shareholders for the shareholders mandate includes the information as may be prescribed by the Exchange. The draft circular must be submitted to the Exchange together with a checklist showing compliance with such information; (iv) in a meeting to obtain shareholders mandate, the interested Director, interested Major Shareholder or interested person connected with a Director or Major Shareholder, 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 ensure that persons connected with him abstain from voting on the resolution approving the transactions; and (v) the listed issuer immediately announces to the Exchange when the actual value of a RRPT entered into by the listed issuer, exceeds the estimated value of the RRPT disclosed in the circular by 10% or more and must include the information as may be prescribed by the Exchange in its announcement. The authority to be conferred pursuant to the Proposal, if approved by the shareholders, shall take effect from the passing of the ordinary resolution proposed at the forthcoming AGM and shall continue to be in force until: (i) the conclusion of the next AGM of the Company following the general meeting at which such mandate was passed, at which time it will lapse, unless by a resolution passed in a general meeting, the authority is renewed; or (ii) the expiration of the period within which the next AGM after that date is required to be held pursuant to Section 340(2) of the Act (but must not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or (iii) revoked or varied by a resolution passed by the shareholders of the Company in a general meeting, whichever is the earlier. Accordingly, your Board proposes to seek the shareholders approval for the Proposed Renewal of Shareholders Mandate. The Proposal will allow the Group, in the normal course of business, to enter into the RRPT referred to in Section 1.3 with the Related Parties, provided that such transactions are made at arm s length, on the Group s normal commercial terms and 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 of the Group. 2

8 1.2 Principal Activities of the Group The principal activities of the Company are to carry on the business of an investment holding company and to provide full corporate management, administrative and professional services as well as financial support to its subsidiaries. The principal activities of its subsidiaries and associate company as at LPD are as follows: Direct Name UMW Rig Asset (L) Ltd ( URA ) UMW Malaysian Ventures Sdn Bhd ( UMV ) UMW JDC Drilling Sdn Bhd ( UJD ) UMW Singapore Ventures Pte Ltd ( USV ) Subsidiary of USV UMW Oilfield Services (Tianjin) Co., Limited ( UOS-TJ ) Subsidiaries of UMV UMW Workover Sdn Bhd ( UWO ) Principal activities Effective equity interest Investment holding 100% Investment holding 100% Provision of drilling operations for the oil and gas industry 85% Investment holding 100% Provision of threading, inspection, repair and maintenance services for OCTG 100% Provision of workover operations for the oil and gas industry 100% UMW Offshore Drilling Sdn Bhd ( UOD ) UMW Oilpipe Services Sdn Bhd ( UOS ) Contract offshore drilling business and operations and other engineering services for oil and gas exploration, development and production in Malaysia and overseas Provision of threading, inspection, repair and maintenance services for OCTG 100% 100% UMW Oilpipe Services (Turkmenistan) Ltd ( UOS- TK ) Subsidiaries of URA Provision of threading, inspection, repair and maintenance services for OCTG UMW Drilling Co. Ltd ( UDC ) Ownership and leasing of rig 100% UMW Drilling 2 (L) Ltd ( UD2 ) Ownership and leasing of rig 100% UMW Drilling 3 (L) Ltd ( UD3 ) Ownership and leasing of rig 100% UMW Drilling 4 (L) Ltd ( UD4 ) Ownership and leasing of rig 100% UMW Drilling 5 (L) Ltd ( UD5 ) Ownership and leasing of rig 100% UMW Drilling 6 (L) Ltd ( UD6 ) Ownership and leasing of rig 100% UMW Drilling 7 (L) Ltd ( UD7 ) Ownership and leasing of rig 100% UMW Drilling 8 (L) Ltd ( UD8 ) Ownership and leasing of rig 100% Offshore Driller 4 Ltd ( OD4 ) Dormant 100% Subsidiaries of UOD UMW Drilling Academy Sdn Bhd ( UDA ) Provision of trainings and courses in relation to oil and gas drilling activities 51% 100% UMW Offshore Drilling Ltd ( UODL ) Contract drilling operations and other engineering services for oil and gas exploration, development and production 3 100%

9 Name Subsidiary of UD2 UMW Standard 1 Pte Ltd ( US1 ) Subsidiary of UD3 UMW Standard 3 Pte Ltd ( US3 ) Subsidiary of UD4 Offshore Driller B324 Ltd ( ODB ) Subsidiary of UOS UOT (Thailand) Limited ( UOT ) Associate Oil-Tex (Thailand) Company Limited ( OTT ) Principal activities Effective equity interest Ownership and leasing of rig 100% Dormant 100% Dormant 100% Provision of threading, inspection, repair and maintenance services for OCTG 58.8% Provision of logistic services for the oil and gas industry 20% It is envisaged that, in the normal course of the Group s businesses, transactions of a revenue or trading nature between companies in the Group and the Related Parties are likely to occur, which are necessary for its day-today operations. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 4

10 1.3 Classes and Nature of the RRPT The details of the existing RRPT that are subject to renewal for shareholders mandate at the forthcoming AGM are set out below: Name of Company involved Name of Related Party Nature of Transactions Interested Directors / Major Shareholders / Persons Connected ASB (2) UMWH (3) UMW-OG UMWC (3) (12) Management fee for internal audit and corporate communication services provided by UMWC to the Company Tan Sri Asmat bin Kamaludin (4) Badrul Feisal bin Abdul Rahim (5) Dr. Leong Chik Weng (6) ASB (2) UMW-OG UMWC (3) Tenancy of premises at Parcel Nos. 1, 2, 3 of Storey Nos. 16 th, 17 th & 18 th floors of Block 2B and Parcel No. CS/3A of 18 th floor, Block 3A Plaza Sentral, Kuala Lumpur granted by UMWC to the Company, the rental of which is payable on a monthly basis. UMWH (3) Tan Sri Asmat bin Kamaludin (4) Badrul Feisal bin Abdul Rahim (5) Dr. Leong Chik Weng (6) ASB (2) Group U-TravelWide Sdn Bhd (3) Purchase of air tickets UMWH (3) Tan Sri Asmat bin Kamaludin (4) Badrul Feisal bin Abdul Rahim (5) Dr. Leong Chik Weng (6) Actual Value Transacted from 17 May 2016 to the LPD RM Estimated Value disclosed in the Circular to Shareholders dated 25 April 2016 RM (1) Estimated Value of Transactions from 15 May 2017 (date of the forthcoming AGM to the next AGM) RM 797,000 2,200,000-2,333,000 2,700,000 2,700, ,000 2,000,000 5,000,000 5

11 Name of Company involved Name of Related Party Nature of Transactions Group UMWH Group Purchase of various goods and services by the Group from UMWH Group UJD JDC Panama, Inc. (7) (12) Payment of charter fee for NAGA 1 by UJD to JDC Panama, Inc. UJD Japan Drilling Co., Ltd ( JDC ) and its subsidiaries (12) Provision of services by JDC and its subsidiaries to UJD - Rig personnel (technical and skilled labour) - Technical services - Material management (12) Rental of warehouse and equipment by JDC and its subsidiaries to UJD Interested Directors / Major Shareholders / Persons Connected ASB (2) UMWH (3) Tan Sri Asmat bin Kamaludin (4) Badrul Feisal bin Abdul Rahim (5) Dr. Leong Chik Weng (6) JDC (9) Kenzo Yamada (8) Yoichi Onoe (8) Satoru Umezu (8) JDC (9) Kenzo Yamada (8) Yoichi Onoe (8) Satoru Umezu (8) Actual Value Transacted from 17 May 2016 to the LPD RM Estimated Value disclosed in the Circular to Shareholders dated 25 April 2016 RM (1) Estimated Value of Transactions from 15 May 2017 (date of the forthcoming AGM to the next AGM) RM 1,448,000 4,000,000 3,000,000 USD590,812 (RM2,615,229) (11) USD10,000,000 - (RM39,020,000) (10) USD3,243,779 (RM14,358,588) (11) USD5,000,000 (RM19,510,000) (10) - 6

12 Notes:- (1) The estimated values as set out above are based on Management s estimates of the value of transactions to be undertaken for the period from the forthcoming AGM to the next AGM. However, the value of transactions may be subject to changes. Disclosures will be made in the Annual Report of the Company for the FYE 31 December 2017 of the aggregate value of transactions contemplated as required under Paragraph of Practice Note 12 of the Listing Requirements. (2) ASB is a Major Shareholder of UMWH, having equity interest of 42.11% as at LPD. (3) UMWH is a Major Shareholder of the Company. UMWC is wholly-owned by UMWH. U-TravelWide Sdn Bhd is a wholly-owned subsidiary of UMWC. (4) Tan Sri Asmat bin Kamaludin ( Tan Sri Asmat ) is deemed interested by virtue of his directorship in the Company. Tan Sri Asmat was the Chairman/Director of UMWH until his retirement on 31 December He holds less than 0.1% indirect equity interest in UMWH. (5) Badrul Feisal bin Abdul Rahim is deemed interested by virtue of his directorships in the Company and UMWH. He is also a director of UMWC. He does not hold any equity interest in UMWH. (6) Dr. Leong Chik Weng was a director of the Company until his resignation on 24 February He is a director of UMWH and UMW Petropipe (L) Ltd. He does not hold any equity interest in UMWH. (7) JDC Panama, Inc. is a wholly-owned subsidiary of JDC, which in turn holds 15% equity interest in UJD. JDC is a common shareholder of both JDC Panama, Inc. and UJD. (8) Kenzo Yamada and Yoichi Onoe are directors of UJD and directors/shareholders of JDC. Satoru Umezu is a director of UJD and a shareholder of JDC. (9) JDC holds 15% equity interest in UJD. JDC is a common shareholder of both UJD and the subsidiaries of JDC. (10) Based on the rate of USD1 = RM3.902, being the middle rate published by Bank Negara Malaysia as at 31 March (11) Based on the rate of USD1 = RM4.4265, being the middle rate published by Bank Negara Malaysia as at the LPD. (12) The Company does not intend to seek renewal of the shareholder mandate for this transaction as no further transaction of this nature is expected. Save as disclosed above and in Section 2.0 of this Circular, there were no other persons deemed connected to the interested Directors and Major Shareholders. 7

13 1.4 Amount Due and Owing to the Group by Related Parties As at FYE 31 December 2016, there is no amount due and owing to the Group by its Related Parties pursuant to the RRPT which has exceeded the credit term. As such, the disclosures as required under Paragraphs 16A and 16B in Annexure PN12-A of the Listing Requirements are not applicable. 1.5 Review Procedures for the RRPT The Board has in place the following internal control procedures to ensure that transactions with Related Parties undertaken on transaction prices are not more favourable to the Related Party than those generally available to the public, are conducted at arm s length basis and are based on normal commercial terms consistent with the Group s usual business practices and are not prejudicial to the interests of the minority shareholders: (i) The pricing of transactions with a Related Party will take into account the pricing, prevailing market rates and conditions, quality, availability, timing of delivery and other related facts. The final pricing of transactions with a Related Party shall not be at terms more favourable than the prevailing market practices; (ii) All transactions entered/to be entered into pursuant to the Proposed Renewal of Shareholders Mandate have been/will be tabled to the Board Audit Committee on a quarterly basis for its review of compliance with the above. In its review of such transactions, the Board Audit Committee may, as it deems fit, request for additional information pertaining to the transactions from independent sources; (iii) Records will be maintained by the Company to capture all RRPT entered into pursuant to the Proposed Renewal of Shareholders Mandate to ensure that relevant approvals have been obtained and review procedures in respect of such transactions are adhered to; (iv) The Board Audit Committee shall continuously review the adequacy and appropriateness of the procedures, as and when required, with the authority to sub-delegate to individuals or committee(s) within the Company as they deem appropriate; (v) Where any of the Director(s) of the Company have an interest (whether direct or indirect) in a RRPT, such Director(s) shall abstain from all deliberations and voting on that matter in the Board s deliberations of such transaction. Where any member of the Board Audit Committee is interested in a RRPT, that member shall abstain from voting on any matter relating to any decisions to be taken by the Board Audit Committee with respect to such transaction; (vi) Immediate announcement will be made when the actual amount of a RRPT exceeds the estimated value of the RRPT disclosed in the Circular by 10% or more; (vii) Disclosure will be made in the Annual Report of the Company of the aggregate value of transactions conducted pursuant to the Proposed Renewal of Shareholders Mandate; and (viii) At least two (2) other contemporaneous transactions with unrelated third parties for similar products/services and/or quantities will be used as comparison, wherever possible, to determine whether the price and terms offered to/by 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. In the event that quotation or comparative pricing from unrelated third parties could not be obtained, the transaction prices will be based on the following, according to the level of significance: (a) Historical prices on past transactions that have occurred/been incurred with other comparable unrelated third party; and (b) Prevailing rates/prices of the goods or services (including where applicable, preferential rates/prices/discounts accorded to a class or classes of customers or for bulk purchases) according to normal commercial terms and usual business practice of the Group or otherwise in accordance with other applicable industry norms/considerations. The Company monitors all RRPT entered into by the Group and ensures that all RRPT are subject to the approvals of the appropriate levels of authority based on the FLAG. 8

14 1.6 Statement by the Board Audit Committee The Board Audit Committee has reviewed the procedures set out in Section 1.5 above and is of the view that the review procedures for RRPT are sufficient to ensure that the RRPT will be entered into at arm s length 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. Any member of the Board Audit Committee who is interested in any RRPT shall not be involved in the review of the RRPT. The Board Audit Committee is satisfied that the Group has in place adequate procedures and processes to monitor, track and identify RRPT in a timely and orderly manner, and the review of these procedures and processes will be conducted on an annual basis. 1.7 Rationale The RRPT entered into by the Group with the Related Parties are in the ordinary course of business and are necessary for its day-to-day operations. The RRPT are recurring transactions of a revenue or trading nature that contribute either directly or indirectly to the generation of the Group s revenue. By transacting with the Related Parties, the Group would have an advantage of familiarity with the background, financial well being and management of the Related Parties, thus enabling more informed commercial decisions. The close cooperation between the Group and the Related Parties has reaped mutual benefits and has been and is expected to continue to be beneficial to the businesses of the Group. These RRPT are expected to occur with some degree of frequency and may arise at any time and/or from time to time thus, the procurement of the Proposed Renewal of Shareholders Mandate on an annual basis would eliminate the need to convene separate general meetings from time to time to seek shareholders approval as and when potential RRPT arise, thereby substantially reducing administrative time and expenses in convening such meetings. The RRPT entered or to be entered into are undertaken at an arm s length basis on normal commercial terms and on terms not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company. 2.0 INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH DIRECTORS/MAJOR SHAREHOLDERS Based on the Record of Depositors and Register of Directors Shareholdings as at LPD, the direct and indirect interests of the interested Directors and Major Shareholders and/or person connected of the Company in respect of the Proposed Renewal of Shareholders Mandate are as follows: Interested Directors / Major Direct Indirect Shareholders / Persons Connected No. of Shares % No. of Shares % UMWH ASB 1,204,777, ,597, Tan Sri Asmat bin Kamaludin (a) Badrul Feisal bin Abdul Rahim Dr. Leong Chik Weng (b) Notes: (a) Deemed interested by virtue of Tan Sri Asmat s former directorship in UMWH. He has retired as a Director of UMWH on 31 December (b) Deemed interested by virtue of Dr. Leong s former directorship in UMW-OG. He has resigned as a Director of UMW-OG on 24 February Tan Sri Asmat bin Kamaludin and Badrul Feisal bin Abdul Rahim, being the interested Directors in the RRPT have abstained and will continue to abstain from Board deliberations and voting on the resolution pertaining to the Proposed Renewal of Shareholders Mandate. ASB and UMWH, being the interested Major Shareholders, the interested Directors and/or Persons Connected to them will abstain from voting in respect of his/her direct and/or indirect shareholdings in the Proposed Renewal of Shareholders Mandate at the forthcoming AGM. The interested Directors and interested Major Shareholders have undertaken to ensure that Persons Connected to them will abstain from voting in respect of their direct and indirect shareholdings on the resolution pertaining to the Proposed Renewal of Shareholders Mandate at the forthcoming AGM. 9

15 Save as disclosed above, none of the other Directors and/or Major Shareholders and/or Persons Connected to them, as defined in the Listing Requirements, has any interest, whether direct or indirect, in the Proposed Renewal of Shareholders Mandate. 3.0 APPROVALS REQUIRED The Proposed Renewal of Shareholders Mandate is subject to the approval of the shareholders of the Company at the forthcoming AGM to be convened or at any adjournment thereof. 4.0 DIRECTORS RECOMMENDATION The Board (save for Tan Sri Asmat bin Kamaludin and Badrul Feisal bin Abdul Rahim who have abstained from making any opinion and recommendation on the Proposed Renewal of Shareholders Mandate), having considered all aspects of the Proposed Renewal of Shareholders Mandate, is of the opinion that the above is in the best interest of the Company and therefore recommends that you vote in favour of the resolution pertaining to the Proposed Renewal of Shareholders Mandate to be tabled at the forthcoming AGM of the Company TH AGM The 7 th AGM, the Notice of which is enclosed in the Annual Report 2016 accompanying this Circular, will be held at Dewan Tun Abdul Razak, Menara Kembar Bank Rakyat, No. 33 Jalan Rakyat, Kuala Lumpur, Malaysia on Monday, 15 May 2017 at a.m. for the purpose of considering and, if thought fit, passing the ordinary resolution on the Proposed Renewal of Shareholders Mandate under the agenda of Special Business as set out in the Notice. If you are unable to attend and vote in person at the 7 th AGM, you are requested to complete, sign and return the Form of Proxy attached to the 2016 Annual Report, in accordance with the instructions printed thereon as soon as possible so as to arrive at the registrar s office, Securities Services (Holdings) Sdn Bhd at Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur, Malaysia, not later than twenty-four (24) hours before the time appointed for the taking of the poll or any adjournment thereof. The lodging of the Form of Proxy will not, however, preclude you from attending and voting in person at the forthcoming AGM should you subsequently wish to do so. 6.0 FURTHER INFORMATION Shareholders are requested to refer to the attached Appendix for further information. Yours faithfully For and on behalf of the Board of Directors of UMW OIL & GAS CORPORATION BERHAD RAZALEE BIN AMIN Chairman, Board Audit Committee Independent Non-Executive Director 10

16 FURTHER INFORMATION APPENDIX 1. RESPONSIBILITY STATEMENT This Circular has been seen and approved by the Board and they individually and collectively accept full responsibility for the accuracy of the information contained herein and confirm that, after having made all reasonable enquiries and to the best of their knowledge and belief, there are no other facts the omission of which would make any statement in this Circular misleading. 2. MATERIAL CONTRACTS Save as disclosed below, there are no material contracts (not being contracts entered in the ordinary course of business) which have been entered into by the Company and/or its subsidiaries during the two (2) years preceding the date of this Circular. (i) Share Purchase Agreement ( SPA ) dated 19 January 2017 between Tetap Kuasa Sdn Bhd ( Tetap Kuasa ) and UMW-OG whereby Tetap Kuasa agreed to sell to UMW-OG and UMW-OG agreed to purchase from Tetap Kuasa, 37,087,725 ordinary shares being Tetap Kuasa s shareholding in Orkim Sdn Bhd for a total cash consideration of RM472,725,000 subject to the terms and conditions of the SPA. (ii) SPA dated 19 January 2017 between Hallmark Odyssey Sdn Bhd ( Hallmark Odyssey ) and UMW- OG whereby Hallmark Odyssey agreed to sell to UMW-OG and UMW-OG agreed to purchase from Hallmark Odyssey, 497,768,820 ordinary shares being Hallmark Odyssey s shareholding in Icon Offshore Berhad for a total consideration of RM248,884,410 to be satisfied by the allotment and issuance of 311,105,513 shares by UMW-OG to Hallmark Odyssey subject to the terms and conditions of the SPA. (iii) SPA dated 13 February 2017 between Encik Wan Izani bin Wan Mahmood ( Wan Izani ) and UMW-OG whereby Wan Izani agreed to sell to UMW-OG and UMW-OG agreed to purchase from Wan Izani, 970,883 ordinary shares being Wan Izani s shareholding in Orkim Sdn Bhd for a total cash consideration of RM12,375,000 subject to the terms and conditions of the SPA. (iv) SPA dated 13 February 2017 between Mr. Khoo Chin Yew ( KCY ) and UMW-OG whereby KCY agreed to sell to UMW-OG and UMW-OG agreed to purchase from KCY, 776,706 ordinary shares being KCY s shareholding in Orkim Sdn Bhd for a total cash consideration of RM9,900,000 subject to the terms and conditions of the SPA. 3. MATERIAL LITIGATION, CLAIMS OR ARBITRATION Save as disclosed below, as at LPD the Group is not engaged in any material litigation, claims or arbitration, either as plaintiff or defendant, and the Directors have no knowledge of any proceedings pending or threatened or of any fact likely to give rise to any proceedings which might materially affect our financial or business position: (i) UMW Offshore Drilling Sdn Bhd ("UOD" or Claimant ) a wholly owned subsidiary within UMW-OG Group, had on 10 April 2015, served a Notice of Arbitration on Frontier Oil Corporation ( FOC or Respondent ), to seek, among others, an award for damages and/or compensation for all losses arising from the Respondent s breach of contract but not limited to the early termination fee amounting to USD19.2 million. On 14 August 2015, UOD served its Statement of Claim and the Respondent filed its Statement of Defence dated 18 September 2015 denying, among others, that Claimant is entitled to the early termination fee, damages, cost, interest or any other sums, without any counterclaim against UOD. The pleadings closed with the Statement of Reply submitted by the Claimant dated 23 October On 25 August 2016, FOC has served an Amended Statement of Defence and Counterclaim seeking, among others, for their alleged loss and damages on account of alleged non-performance and/or breach as follows: (a) USD20.0 million, being the loss of revenue; and/or 11

17 (b) Further or alternatively, damages reflecting loss of the extended well test value in the sum of USD9.70 million; and/or (c) Further or alternatively, cost of wasted expenditure of USD1.36 million; and/or (d) Further or alternatively, liquidated damages in the sum of USD3.84 million; and (e) Interest and Respondent's costs, fees and expenses associated with the arbitration. On 13 October 2016, UOD as the Claimant has served its Amended Reply and Defence to Counterclaim on the Respondent. UOD has been advised by its solicitors from the facts of its case that, UOD has a good claim and a good defence to the Respondent s counterclaim. 4. DOCUMENTS FOR INSPECTION Copies of the following documents are available for inspection at the Registered Office of the Company at Level 18, Block 3A, Plaza Sentral, Jalan Stesen Sentral 5, Kuala Lumpur, Malaysia during normal business hours on any working days from the date of this Circular up to and including the date of the forthcoming 7 th AGM: (i) Memorandum and Articles of Association of the Company; (ii) Audited financial statements of the Company for the two (2) FYE 31 December 2015 and 31 December 2016; (iii) (iv) Material contracts referred to in Section 2 above; and Material arbitration referred to in Section 3 above. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 12

18 ORDINARY RESOLUTION 8 UMW OIL & GAS CORPORATION BERHAD (Company No H) (Incorporated in Malaysia) EXTRACT OF NOTICE OF THE 7 TH ANNUAL GENERAL MEETING PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE ( PROPOSED RENEWAL OF SHAREHOLDERS MANDATE ) THAT the mandate granted by the shareholders of the Company on 17 May 2016 pursuant to Paragraph of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, authorising the Company, its subsidiaries or any of them (the Group ) to enter into the recurrent transactions of a revenue or trading nature as set out in Section 1.3 of the Circular to Shareholders dated 21 April 2017 ( Circular ), with the Related Parties as described in the Circular, which are necessary for the day-to-day operations of the Group, be and are hereby renewed, provided that such transactions are carried out in the ordinary course of business, made on arm s length basis and on normal commercial terms which are not more favourable to the Related Parties than those generally available to the public and not detrimental to the minority shareholders of the Company. AND THAT such authority conferred by such renewed mandate shall continue to be in force until: a. the conclusion of the 8 th Annual General Meeting ( AGM ) of the Company following this AGM, at which time it will lapse, unless the authority is renewed by a resolution passed at the general meeting; b. the expiration of the period within which the next AGM is required to be held pursuant to Section 340(2) of the Companies Act 2016, but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Companies Act 2016; or c. revoked or varied by resolution passed by the shareholders of the Company in a general meeting of the Company, whichever is the earlier. AND THAT authority be and is hereby given to the Directors of the Company to complete and do all such acts and things (including executing such documents as may be required) as they may consider expedient or necessary to give effect to the Proposed Renewal of Shareholders Mandate. AND FURTHER THAT the estimates given on the Recurrent Related Party Transactions specified in Section 1.3 of the Circular being provisional in nature, the Directors or any of them be and are hereby authorised to agree to the actual amount or amounts thereof, provided always that such amount or amounts comply with the review procedures set out in Section 1.5 of the Circular. 13