SIME DARBY BERHAD (Company No U) (Incorporated in Malaysia under the Companies Act, 1965)

Transcription

1 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 has not perused the Circular in respect of the Proposed Amendments as it is prescribed as an exempt circular. 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. SIME DARBY BERHAD (Company No U) (Incorporated in Malaysia under the Companies Act, 1965) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PART A PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR EXISTING RECURRENT RELATED PARTY TRANSACTIONS AND PROPOSED NEW SHAREHOLDERS MANDATE FOR ADDITIONAL RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE PART B PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE COMPANY The resolutions in respect of the above proposals will be tabled as Special Business at the Sixth Annual General Meeting of the Company. The notice of the Sixth Annual General Meeting of the Company together with the Form of Proxy are set out in the 2012 Annual Report of the Company dispatched together with this Circular. In the event you wish to appoint a proxy, please complete and return the Form of Proxy in accordance with the instructions printed thereon. The completed Form of Proxy must be deposited at the office of the Share Registrar of the Company, Tricor Investor Services Sdn Bhd, at Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, Kuala Lumpur, Malaysia not less than forty-eight (48) hours before the time stipulated for the holding of the Annual General Meeting. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the meeting should you subsequently decide to do so. Last date and time for lodging of Form of Proxy : Tuesday, 6 November 2012 at a.m. Date and time of Annual General Meeting : Thursday, 8 November 2012 at a.m. Venue of Annual General Meeting : Grand Ballroom, First Floor, Sime Darby Convention Centre 1A, Jalan Bukit Kiara 1, Kuala Lumpur, Malaysia This Circular is dated 16 October 2012

2 DEFINITIONS Except where the context otherwise requires, the following definitions (in alphabetical order) shall apply throughout this Circular (definition denoting singular number shall also include the plural and vice-versa, where applicable): Act : Malaysian Companies Act, 1965, as amended from time to time AGM : Annual General Meeting of the Company 2012 Annual Report : Annual Report of the Company for the financial year ended 30 June 2012 Board : Board of Directors of Sime Darby Bursa Securities : Bursa Malaysia Securities Berhad (Company No W) Circular : This Circular dated 16 October 2012 Director(s) : Shall have the meaning given in Section 4 of the Act and Section 2(1) of the Malaysian Capital Markets and Services Act, 2007 and for the purpose of the Proposed Shareholders Mandate 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 or the Chief Executive Officer of a company in the Sime Darby Group and/or its subsidiaries EPF : Employees Provident Fund Board (EPF Act 1991) Major Shareholder(s) : A person who has an interest or interests in one (1) or more voting shares in a company and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is: (i) (ii) 10% or more of the aggregate of the nominal amounts of all the voting shares in the company; or 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; and for the purposes of the Proposed Shareholders Mandate, and in respect of any particular transaction, 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. For the purposes of this definition, interest in shares shall have the meaning given in Section 6A of the Act MMLR : The Main Market Listing Requirements of Bursa Securities and any amendments made thereto from time to time and any Practice Notes issued in relation thereto i

3 DEFINITIONS (Continued) Person(s) Connected : In relation to a Director or Major Shareholder who falls under any one of the following categories: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) a family member of the Director or Major Shareholder. Family in relation to a person means such person who falls within any one of the following categories: (a) spouse; (b) parent; (c) child including an adopted child and step-child; (d) brother or sister; and (e) spouse of the person referred to in subparagraphs (c) and (d) above. a trustee of a trust (other than a trustee for a share scheme for employee or pension scheme) under which the Director, Major Shareholder or a family member of the Director or Major Shareholder, is the sole beneficiary; a partner of the Director, Major Shareholder or a partner of a person connected with that Director or Major Shareholder; 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; 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; 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 a body corporate which is a related corporation PNB : Permodalan Nasional Berhad (Company No X) Proposal(s) : Proposed Shareholders Mandate and/or Proposed Amendments, collectively Proposed Amendments : Proposed Amendments to the Memorandum and Articles of Association of the Company Proposed Shareholders Mandate : Proposed renewal of existing shareholders mandate and Proposed new shareholders mandate for the Sime Darby Group to enter into existing and additional Recurrent Related Party Transactions of a revenue or trading nature, collectively which are necessary for the Sime Darby Group s day-to-day operations and are in the ordinary course of business of the Sime Darby Group ii

4 DEFINITIONS (Continued) Recurrent Related Party Transaction(s) : Related Party Transaction(s) which is recurrent, of a revenue or trading nature, and which is necessary for the day-to-day operations of the Sime Darby Group Related Party(ies) : Director(s), Chief Executive Officer, Major Shareholder(s) or Person(s) Connected with such Director(s), Chief Executive Officer or Major Shareholder(s) Related Party Transaction A transaction entered into by the Sime Darby Group which involves the interests, direct or indirect, of a Related Party RM and sen : Ringgit Malaysia and sen, respectively Sime Darby Group or the Group : Sime Darby and its subsidiary companies, collectively Sime Darby or Company : Sime Darby Berhad (Company No U) YPB : Yayasan Pelaburan Bumiputra (Registration No P) All references to our Company or Sime Darby in this Circular are to Sime Darby Berhad and references to our Group are to our Company and our subsidiaries. References to we, us, our and ourselves are to our Company and, where the context otherwise requires, our subsidiaries. All references to you in this Circular are to the shareholders of our Company. 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/or neuter genders, and vice versa. References to persons shall include corporations. Any discrepancies in the tables included in this Circular between the amounts listed, actual figures and the totals thereof are due to rounding. Any reference to a time of day and date in this Circular is a reference to Malaysian time and date, respectively. The rest of this page has been intentionally left blank iii

5 CONTENTS Page PART A PROPOSED SHAREHOLDERS MANDATE 1. INTRODUCTION 2 2. DETAILS OF THE PROPOSED SHAREHOLDERS MANDATE Provisions of the MMLR Principal activities of the Sime Darby Group Classes of Related Party Details of Recurrent Related Party Transactions Review of procedures on Recurrent Related Party Transactions Statement by the Governance & Audit Committee RATIONALE AND BENEFITS OF THE PROPOSED SHAREHOLDERS MANDATE EFFECTS OF THE PROPOSED SHAREHOLDERS MANDATE INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED TO THEM APPROVAL REQUIRED DIRECTORS RECOMMENDATION AGM FURTHER INFORMATION 15 iv

6 CONTENTS (Continued) Page PART B PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION 1. INTRODUCTION DETAILS OF THE PROPOSED AMENDMENTS Memorandum of Association Articles of Association RATIONALE AND BENEFIT OF THE PROPOSED AMENDMENTS EFFECTS OF THE PROPOSED AMENDMENTS INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED TO THEM APPROVAL REQUIRED DIRECTORS RECOMMENDATION AGM FURTHER INFORMATION 27 APPENDICES APPENDIX I FURTHER INFORMATION 28 APPENDIX II EXTRACT OF THE NOTICE OF THE SIXTH ANNUAL GENERAL MEETING 36 v

7 PART A PROPOSED SHAREHOLDERS MANDATE 1

8 SIME DARBY BERHAD (Company No U) (Incorporated in Malaysia under the Act) Registered Office 19 th Floor, Wisma Sime Darby Jalan Raja Laut Kuala Lumpur Malaysia 16 October 2012 Directors Tun Musa Hitam (Independent Non-Executive Chairman) Tan Sri Dato Sri Hamad Kama Piah Che Othman (Non-Independent Non-Executive Deputy Chairman) Tan Sri Samsudin Osman (Non-Independent Non-Executive Director) Tan Sri Dato Dr Wan Mohd Zahid Mohd Noordin (Non-Independent Non-Executive Director) Tan Sri Datuk Amar (Dr) Tommy Hamid Bugo (Independent Non-Executive Director) Tan Sri Datuk Dr Yusof Basiran (Non-Independent Non-Executive Director) Dato Sri Lim Haw Kuang (Independent Non-Executive Director) Dato Henry Sackville Barlow (Senior Independent Non-Executive Director) Dato Azmi Mohd Ali (Non-Independent Non-Executive Director) Dato Sreesanthan Eliathamby (Independent Non-Executive Director) Puan Zaiton Mohd Hassan (Non-Independent Non-Executive Director) Dato Mohd Bakke Salleh (President & Group Chief Executive) To: The Shareholders of Sime Darby Dear Sir/Madam PROPOSED SHAREHOLDERS MANDATE 1. INTRODUCTION At the Fifth AGM held on 10 November 2011, the Company had obtained a mandate from its shareholders to allow the Company and/or its subsidiaries to enter into Recurrent Related Party Transactions of a revenue or trading nature which are necessary for the Group s day-to-day operations and are carried out in the ordinary course of business on normal commercial terms which are not more favourable to the Related Party than those generally available to the public (2011 Shareholders Mandate). The 2011 Shareholders Mandate shall, in accordance with the MMLR, expire at the conclusion of the forthcoming Sixth AGM which will be held on 8 November 2012 unless renewal of the 2011 Shareholders Mandate is obtained from the shareholders at the said AGM. In addition to the renewal of the 2011 Shareholders Mandate, the Company will also be seeking a shareholders mandate for the Sime Darby Group to enter into new Recurrent Related Party Transactions of a revenue or trading nature with its Related Parties. 2

9 In respect of the above, the Company had on 20 September 2012, announced through Bursa Securities that the Board had resolved to seek shareholders approval for the Proposed Shareholders Mandate in accordance with Paragraph of the MMLR at the forthcoming Sixth AGM. The purpose of this Circular is to provide you with details of the Proposed Shareholders Mandate and to seek your approval of the ordinary resolution pertaining to the Proposed Shareholders Mandate to be tabled at the forthcoming Sixth AGM. An extract of the Notice of the Sixth AGM is enclosed in this Circular for your ease of reference. YOU ARE ADVISED TO READ AND CONSIDER CAREFULLY THE CONTENTS OF THIS CIRCULAR BEFORE VOTING ON THE ORDINARY RESOLUTION PERTAINING TO THE PROPOSED SHAREHOLDERS MANDATE AT THE FORTHCOMING SIXTH AGM. 2. DETAILS OF THE PROPOSED SHAREHOLDERS MANDATE 2.1 Provisions of the MMLR (i) Pursuant to paragraph of the MMLR, the Company may seek from its shareholders the Proposed Shareholders Mandate in respect of Recurrent Related Party Transactions of a revenue or trading nature which are necessary for the day-to-day operations of the Group, subject to the following: (a) (b) the transactions are in the ordinary course of business and are on terms that are 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: i. the consideration, value of the assets, capital outlay or costs of the Recurrent Related Party Transactions is RM1 million or more; or ii. the percentage ratio of such Recurrent Related Party Transaction is 1% or more, whichever is the higher. (c) (d) (e) the circular to shareholders for the shareholders mandate includes the information as may be prescribed by Bursa Securities; in a meeting to obtain the shareholders mandate, the interested Director(s), interested Major Shareholder(s) or interested persons 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 to approve 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 the Company immediately announces to Bursa Securities when the actual value of a Recurrent Related Party Transaction entered into by Sime Darby 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 Securities in its announcement. 3

10 (ii) The Proposed Shareholders Mandate, if approved, will take effect from the date of the forthcoming Sixth AGM and shall continue to be in force until: (a) (b) (c) the conclusion of the next AGM of the Company following the forthcoming Sixth AGM at which such mandate was passed, at which time the said authority shall lapse, unless by an Ordinary Resolution passed at that meeting, the authority is renewed; or the expiration of the period within which the next AGM is 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 the authority is revoked or varied by Ordinary Resolution passed by the shareholders of the Company in a general meeting, whichever is the earliest. Thereafter, approval from shareholders will be sought for the renewal of the Proposed Shareholders Mandate for the Recurrent Related Party Transactions at each subsequent AGM. (iii) Disclosure will be made in the Company s Annual Report in accordance with Section of Practice Note 12 of the MMLR, which requires a breakdown of the aggregate value of the Recurrent Related Party Transaction conducted pursuant to the Proposed Shareholders Mandate for the financial year under review, amongst others, based on the following information: (a) (b) the type of the Recurrent Related Party Transactions made; and the names of the Related Parties involved in each type of the Recurrent Related Party Transactions made, and their relationship with the Company. Notwithstanding the above, the Proposed Shareholders Mandate sought does not cover any recurrent transaction of a revenue or trading nature involving companies in which EPF is interested, as the conditions set out in paragraph (11)(m) of the MMLR are expected to be fulfilled, and therefore, transactions involving companies in which EPF is interested would not be regarded as related party transactions. The Sime Darby Group in the ordinary course of business, enters into Recurrent Related Party Transactions of a revenue or trading nature, which are necessary for the Group s day-to-day operations with certain Related Parties of the Company. Such Recurrent Related Party Transactions will be carried out 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 are not to the detriment of the minority shareholders. Details of the Recurrent Related Party Transactions under the Proposed Shareholders Mandate are set out in Section 2.4 of this Circular. 2.2 Principal activities of the Sime Darby Group The Company is a limited liability company, incorporated and domiciled in Malaysia. The Company is principally an investment holding company. The principal activities of the Group are divided into six businesses namely, Plantation, Property, Industrial, Motors, Energy & Utilities and Healthcare. 4

11 The companies in the Sime Darby Group to which the Proposed Shareholders Mandate applies are as follows: Subsidiaries of Sime Darby Plantation Division Sime Darby s Effective Equity Interest Principal Activities Sime Darby Plantation Sdn Bhd (Sime Darby Plantation) 100% Production, processing and sale of palm oil, palm kernel and other palm oil related products and investment company Subsidiary of Sime Darby Plantation PT Minamas Gemilang 100% Investment Property Division Sime Darby Brunsfield Holding Sdn Bhd (SDBH) 60% Property development and investment holding Subsidiaries of SDBH Sime Darby Brunsfield Damansara Sdn Bhd Sime Darby Brunsfield Resort Sdn Bhd 60% 60% Property development Property development 2.3 Classes of Related Party The Proposed Shareholders Mandate will apply to the following classes of Related Parties: (i) (ii) Directors or Major Shareholders; and Persons connected with the Directors or Major Shareholders. The rest of this page has been intentionally left blank 5

12 2.4 Details of Recurrent Related Party Transactions The class and nature of the Recurrent Related Party Transactions which have been entered into and are to be entered into by the Sime Darby Group are detailed as follows: (i) Existing Shareholders Mandate Company Transacting Party Nature of Transaction Related Party Estimated Aggregate Value from 10 November 2011 to 8 November Actual Value transacted from 10 November 2011 (i.e. date of the last AGM) to 20 September (being the last practicable date) Estimated Aggregate Value from the forthcoming AGM on 8 November 2012 to the next AGM 3 Sime Darby Plantation Chemical Company of Malaysia Berhad and its following subsidiaries: CCM Agri-Max Sdn Bhd CCM Fertilizers Sdn Bhd CCM Chemicals Sdn Bhd P.T. CCM Agripharma (CCM and Group) Purchase of chemicals and fertilisers by Sime Darby Plantation from CCM and Group Interested Directors Tan Sri Dato Sri Hamad Kama Piah Che Othman 4 Dato Azmi Mohd Ali 4 Interested Major Shareholder PNB 5 RM million RM million RM million SDBH Brunsfield Engineering Sdn Bhd (BESB) Building Contract for the design and build as well as certain service provider components of SDBH s property development projects Interested Directors and Major Shareholders Dato Dr Ir Gan Thian Leong 6 Encik Mohamad Hassan Zakaria 7 1, TOTAL 1,

13 (ii) New Shareholders Mandate Company Transacting Party Nature of Transaction Related Party Subsidiary of Sime Darby Plantation, PT Minamas Gemilang Chemical Company of Malaysia Berhad and its following subsidiaries: CCM Fertilizers Sdn Bhd CCM Chemicals Sdn Bhd P.T. CCM Agripharma (CCM and Group) Purchase of chemicals and fertilisers by the subsidiary of Sime Darby Plantation from CCM and Group Interested Directors Tan Sri Dato Sri Hamad Kama Piah Che Othman 4 Dato Azmi Mohd Ali 4 Interested Major Shareholder PNB 5 Estimated Aggregate Value from the forthcoming AGM on 8 November 2012 to the next AGM 3 RM million 120 Subsidiaries of SDBH, namely Sime Darby Brunsfield Damansara Sdn Bhd and Sime Darby Brunsfield Resort Sdn Bhd BESB Building Contract for the design and build as well as certain service provider components of property development projects Interested Directors and Major Shareholders Dato Dr Ir Gan Thian Leong 6 Encik Mohamad Hassan Zakaria 7 1,788 TOTAL 1,908 Notes: ¹ The Estimated Aggregate Value as disclosed in the preceding year s circular to shareholders dated 18 October The Actual Value transacted has not exceeded the Estimated Aggregate Value of the Existing Shareholders Mandate by 10% or more. 3 Due to the nature of the transactions, the actual value of the transactions may vary and be subject to change from the Estimated Aggregate Values disclosed above. 4 Tan Sri Dato Sri Hamad Kama Piah Che Othman and Dato Azmi Mohd Ali are Directors of Chemical Company of Malaysia Berhad (CCM) and Sime Darby. 5 PNB, a Major Shareholder of Sime Darby, is also a Major Shareholder of CCM by holding 70.4% direct interest in CCM as at 20 September Dato Dr Ir Gan Thian Leong is a Director and deemed Major Shareholder of SDBH, holding an effective interest of 19.2% in SDBH by virtue of his effective interest of 48% shareholding in Brunsfield Metropolitan Sdn Bhd, a Major Shareholder of SDBH pursuant to Section 6A of the Act. He also holds an effective interest of 43.2% in BESB. 7 Encik Mohamad Hassan Zakaria is a Director and deemed Major Shareholder of SDBH, holding an effective interest of 20.8% in SDBH by virtue of his effective interest of 52% shareholding in Brunsfield Metropolitan Sdn Bhd, a Major Shareholder of SDBH pursuant to Section 6A of the Act. He also holds an effective interest of 41.6% in BESB. 7

14 2.4.2 Sime Darby Plantation also acquired fertilisers from the following unrelated third parties: Agrifert Malaysia Sdn Bhd; and PK Fertilizers Sdn Bhd. The prices and terms offered by the related parties are fair and reasonable and comparable with those offered by the unrelated third parties. Sime Darby Plantation will continue to obtain quotations or comparative pricing from at least 2 unrelated third parties for similar products/services and/or quantities as comparisons to determine whether the prices and terms offered by the related parties are fair and reasonable and comparable to those offered by other unrelated third parties for the same or substantially similar types of products and/or quantities and to ensure that the recurrent Related Party Transaction is not detrimental to the Sime Darby Group. All construction and service provider contracts to be awarded by SDBH shall be based on the method which is most beneficial to SDBH and its subsidiaries and in compliance with SDBH s tender policies and procedures. For all contracts, tenders submitted are assessed and evaluated by an independent check consultant. The tendered rates are evaluated against current market rates to ensure that the rates are reasonable and comparable. SDBH will continue to assess and evaluate the tender rates to determine whether the prices and terms offered by the related parties are fair and reasonable and comparable to the market rates for the same or substantially similar types of products and/or quantities and to ensure that the recurrent Related Party Transaction is not detrimental to the Sime Darby Group For the financial year ended 30 June 2012, there were no amounts due and owing to the Sime Darby Group by its Related Parties pursuant to the Recurrent Related Party Transactions which has exceeded the credit terms. Hence, there were no late payment charges imposed on the Related Parties. 2.5 Review of procedures on Recurrent Related Party Transactions The Sime Darby Group has established guidelines and procedures to ensure that Recurrent Related Party Transactions are conducted on transaction prices and on normal commercial terms consistent with the Group s normal business practices and policies which are not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders, as follows: (i) (ii) A list of Related Parties shall be circulated to the operating divisions and subsidiaries, updated on a quarterly basis, for their reference in ensuring that all transactions with such Related Parties are undertaken 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. These include transacting at the prevailing market rates/prices of the service or product provider s usual commercial terms (including, where appropriate, preferential rates and discounts accorded for bulk purchases which are the same as those accorded for third-party bulk purchases), or otherwise in accordance with applicable industry norms. There are no specific thresholds for approval of Recurrent Related Party Transactions within the Group. However, all Recurrent Related Party Transactions are subject to the approval of the appropriate levels of authority set by the operating divisions. Plantation Division The following guidelines set by the Plantation Division will apply for the purchase of goods and services in the Plantation Division, including the purchase of chemicals and fertilisers by Sime Darby Plantation and its subsidiaries: (a) For purchases of goods or services for value up to RM50,000, a quotation process is adopted. Such purchases shall be approved by the General Manager of the Operating Unit/Head of Zone/Head of Operating Unit or managers that are assigned with such authority to approve. 8

15 A tendering process shall be adopted for purchases of goods or services exceeding RM50,000 in value. For closed tenders, invitations to bid shall be extended to selected approved vendors, which list could include companies related to the Group. All transactions are conducted on arm s length basis and based on best pricing. Tenders valued at more than RM50,000 to RM500,000 are deliberated by the Tender Committee from the respective operating units/estates/mills/business units and approved by the General Manager of the Operating Unit/Senior Head or Head of Zone/Head of Operating Unit/Head of Head Office Department. Tenders valued at more than RM500,000 to RM50 million will be recommended by the Divisional Head Office Tender Evaluation Committee (HOTEC) and the approvals will be as follows: i. Tenders valued above RM500,000 to RM3 million shall be approved by either the Chief Financial Officer (CFO) or the Head of Business Unit. ii. iii. Tenders valued above RM3 million to RM5 million shall be approved by the CFO and the Head of Business Unit/Head of Head Office Department. Tenders valued above RM5 million to RM50 million shall be deliberated and approved by the Plantation Division Tender Committee I (PDTC I). The members shall include Group Procurement. Tenders valued above RM50 million to RM100 million will be recommended by the Plantation Division Tender Review Committee (PDTRC), whose members shall include Group Procurement, and approved by the Plantation Division Tender Committee II (PDTC II). Tenders valued above RM100 million to RM500 million will be recommended by the Executive Vice President (EVP) and supported by the PDTRC and approved by the Sime Darby Plantation Board Tender Committee. Tenders valued above RM500 million to RM750 million will be recommended by the EVP and supported by the PDTRC and Group Tender Committee and approved by the Sime Darby Plantation Board Tender Committee (secondary approver) and by the Sime Darby Board Tender Committee. Tenders valued above RM750 million will be recommended by the EVP and supported by the PDTRC and Group Tender Committee and approved by the Sime Darby Plantation Board Tender Committee (secondary approver) and by the Board of Sime Darby. (b) The Limits of Authority (LOA) which shall be observed are as follows: Tenders valued above RM50,000 to RM500,000 shall be approved by the General Manager of the Operating Unit/Senior Head or Head of Zone/Head of Operating Unit/Head of Head Office Department. Tenders valued above RM500,000 to RM3 million shall be approved by either the CFO or the Head of Business Unit. Tenders valued above RM3 million to RM5 million shall be approved by the CFO and the Head of Business Unit/Head of Head Office Department. Tenders valued above RM5 million to RM50 million shall be deliberated and approved by the PDTC I. The members shall include Group Procurement. Tenders valued above RM50 million to RM100 million are deliberated and approved by the PDTC II. The members of the PDTC II shall include Group Procurement. 9

16 Tenders valued above RM100 million to RM500 million are deliberated and approved by the Sime Darby Plantation Board Tender Committee. Tenders valued above RM500 million to RM750 million are deliberated and approved by the Sime Darby Plantation Board Tender Committee (secondary approver) and by the Sime Darby Board Tender Committee. Tenders valued above RM750 million are deliberated and approved by the Sime Darby Plantation Board Tender Committee (secondary approver) and by the Board of Sime Darby. Property Division The following guidelines set by the Property Division will apply for the tender policies and procedures in the Property Division: (a) Scope of Procurement All tenders for construction and project related works in Sime Darby Property Berhad (SD Property) shall be executed by the Contract Management Department except for tenders for the following departments: i. Marketing & Sales ii. Human Resource & Administration iii. Property Investment & Hospitality iv. Property China Operations v. Sime Darby Brunsfield Holding Sdn Bhd. The above will be executed by the respective department/company. (b) Tendering Strategy All tenders shall be through: i. Pre-qualified tenders Standard model for all contracts in the annual budget with the normal process of design development, plan approval and tender. ii. Direct negotiated tenders For selected products or work that meet or exceed the desired quality and cost eg. Supplier management products. iii. Design & build tenders For urgent or specialised projects. Capable Contractors take the lead in design management and construction. Cost is capped within the approved budget. Contractors are to reduce cost and add value. Selection of Contractors will be approved by the Pre-qualification & Tender Committee (PQTC). iv. Open tenders Special work that requires Contractors beyond the current Master list of Contractors. (c) List of Tenders (LOT) The tenderers shall be selected based on their grading, listing status, specialisation and limit of work in hand as indicated below: Super A A B C Grade Limit of Work in Hand RM150 Million RM100 Million RM5 Million RM0.5 Million Should a proposed tenderer be selected despite exceeding the above limit, justification shall be made to the respective approval authority for such a selection. 10

17 (d) Authority Limits for Award of Contract Approving Authority Value of Contract (RM) Sime Darby Board > 750 million Sime Darby Board Tender Committee > 500 million 750 million Board of SD Property > 100 million 500 million Division Tender Committee 2 > 50 million 100 million Division Tender Committee 1 > 5 million - 50 million Managing Director of SD Property Up to 5 million Head of Property Development Up to 1 million Head of Township Operations Up to 500,000 Heads of Department & Head of Township Up to 100,000 Heads of Unit Up to 10,000 Maintenance Manager ( for urgent cases ) Up to 10,000 A newly prequalified contractor (first timer) shall not be awarded a second contract until 30% satisfactory completion of the first contract or at the discretion of Management. (iii) (iv) (v) (vi) (vii) (viii) The operating divisions and subsidiaries will inform the Divisional CFO and Company Secretary, by completing the Related Party Transaction Disclosure Form, as and when Recurrent Related Party Transactions that exceed the Group s threshold of RM260 million (i.e. 1% of the Net Assets of Sime Darby as at 30 June 2012) and which has not obtained the shareholders mandate or has exceeded the shareholders mandate by 10% or more occurs. Thereafter, an announcement shall be made to Bursa Securities. All operating divisions and subsidiaries shall regularly review their existing information systems to ensure that features are incorporated into the systems for capturing information on Recurrent Related Party Transactions at source, for instance, when purchase requisitions are raised. A register shall be maintained to capture all Recurrent Related Party Transactions entered into pursuant to the Proposed Shareholders Mandate. The internal auditors shall periodically review Management s system and procedures for Recurrent Related Parties Transactions and ascertain that the guidelines have been complied with. Details of Recurrent Related Party Transactions made during each quarter and the cumulative amount shall be tabled to the Governance & Audit Committee of the Board of Sime Darby every quarter for its consideration and information. Details of the Recurrent Related Party Transactions made during the financial year shall be submitted to the Group Finance Department annually for disclosure in the Company s Annual Report. Where necessary, monthly reports shall be generated. All divisions and subsidiaries are required to comply with the Sime Darby Group Policies and Authorities (GPAs). The GPAs establish the minimum standards of corporate governance practices expected of the companies within the Sime Darby Group in pursuit of Sime Darby s corporate objectives. The GPAs covering the following areas have relevance in respect of Related Party Transactions: (a) (b) (c) defined authority limits for approval of proposed capital expenditure which include the leasing or renting of premises/assets for a period exceeding one (1) year. Details of the transacting parties, particularly if it is a Related Party, and the terms of the transaction must be furnished in the proposal. policies on conflicts of interest which require Directors and employees to act in good faith at all times in the best interest of the companies within the Group. the requirement for the corporate assurance team to review the internal control systems of the Group so as to reasonably provide assurance to the Board, the Governance & Audit Committee and Management of the proper conduct and adherence to controls and procedures. 11

18 (d) (e) policies on Directors and persons connected to Directors purchases of the Group s products which should not be on terms that are more favourable than those offered to employees and the public. Directors are required to notify the relevant Company Secretary of any direct sales to them and/or persons connected to them. tendering procedures to ensure that competitive bidding principles are observed in the procurement of goods and services. These include the setting up of tender committees, and having a sufficient number of vendors (normally not less than three (3)) to bid where all priced bids received are on a sealed basis and are appropriately documented as well as witnessed upon opening. (ix) (x) (xi) Any Director who has an interest in any transaction shall abstain from Board deliberations and voting on the relevant resolution(s) and ensure that persons connected to him also abstain from voting in respect of the Recurrent Related Party Transactions. The corporate assurance plan shall incorporate a review of the Recurrent Related Party Transactions entered into as well as Management s systems and procedures to capture and compile information on such transactions. The Governance & Audit Committee shall review the corporate assurance reports to ascertain whether the established guidelines and procedures for Recurrent Related Party Transactions have been complied with. Any member of the Governance & Audit Committee may, as he deems fit, request for additional information pertaining to Recurrent Related Party Transactions from independent sources or advisers. 2.6 Statement by the Governance & Audit Committee The Governance & Audit Committee has seen and reviewed the guidelines and procedures in Section 2.5 above and is satisfied that the guidelines and procedures established for Recurrent Related Party Transactions are sufficient to ensure that such transactions will be carried out on normal commercial terms which are not prejudicial to the interests of shareholders, and the terms of the Recurrent Related Party Transactions are 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 Sime Darby. The Governance & Audit Committee is of the view that the Group has put in place adequate procedures and processes to identify, monitor and track Recurrent Related Party Transactions in a timely and orderly manner, and will, at its discretion, amend the guidelines and procedures which are no longer appropriate or adequate, to ensure that the Recurrent Related Party Transactions are, at all times, carried out on terms consistent with the Group s practices and are not to the detriment of the minority shareholders. These procedures and processes are reviewed on an annual basis. As at 20 September 2012 (being the latest practicable date prior to the printing of this Circular), the Governance & Audit Committee comprised the following members: Dato Henry Sackville Barlow (Chairman/Senior Independent Non-Executive Director) Tan Sri Datuk Amar (Dr) Tommy Hamid Bugo (Independent Non-Executive Director) Dato Sreesanthan Eliathamby (Independent Non-Executive Director) Puan Zaiton Mohd Hassan (Non-Independent Non-Executive Director). 12

19 3. RATIONALE AND BENEFITS OF THE PROPOSED SHAREHOLDERS MANDATE The rationale and benefits of the Proposed Shareholders Mandate are as follows: (i) (ii) (iii) To facilitate transactions with Related Parties which are in the ordinary course of business of the Group undertaken on arms length basis, on normal commercial terms and on terms which are not more favourable to the Related Parties than those generally available to the public and are not detrimental to the interests of the minority shareholders. To meet the business needs of the Group on the best possible terms as well as to explore beneficial business opportunities within the Group and with its joint-venture partners. The Group has had long-standing business relationships with the Related Parties and the close co-operation has reaped mutual benefits which are expected to continue to be beneficial to the business of the Group. The necessity to make frequent announcements to Bursa Securities and to convene separate general meetings from time to time to seek shareholders approval as and when such Recurrent Related Party Transactions occur as required under the MMLR would not arise. This will substantially reduce administrative time and expenses associated with the making of announcements or the convening of such meetings on an ad-hoc basis, without compromising the corporate objectives of the Group or adversely affecting the business opportunities available to the Group. 4. EFFECTS OF THE PROPOSED SHAREHOLDERS MANDATE The Proposed Shareholders Mandate will not have any effect on the share capital, substantial shareholders shareholdings, net assets per share, gearing, or earnings per share of Sime Darby for the financial year ending 30 June INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED TO THEM The interested Directors and interested Major Shareholders direct and indirect shareholdings in Sime Darby as at 20 September 2012 are as follows: Direct Indirect Interested related parties No. of shares held % No. of shares held % PNB 606,098, YPB* ,098, * YPB is deemed interested pursuant to Section 6A of the Act Save as disclosed in Section 2.4, none of the other Directors, or Major Shareholders and/or Persons Connected to them has any interest, direct or indirect, in the Proposed Shareholders Mandate. The interested Directors and Shareholder (Dato Dr Ir Gan Thian Leong, Encik Mohamad Hassan Zakaria and PNB) as disclosed in Section 2.4 have undertaken that they will abstain from voting on the resolution pertaining to the Proposed Shareholders Mandate in respect of their interest, being direct or indirect shareholdings, if any, in Sime Darby at the Sixth AGM. They have also undertaken to ensure that Persons Connected to them will abstain from voting in respect of their interest, being direct and indirect shareholdings, in Sime Darby on the Ordinary Resolution pertaining to the Proposed Shareholders Mandate at the Sixth AGM. Tan Sri Dato Dr Wan Mohd Zahid Mohd Noordin resigned as Director of PNB with effect from 9 April However, he is deemed a Director of PNB under the MMLR. Tan Sri Dato Sri Hamad Kama Piah Che Othman, Tan Sri Dato Dr Wan Mohd Zahid Mohd Noordin, Tan Sri Datuk Dr Yusof Basiran, Dato Azmi Mohd Ali and Puan Zaiton Mohd Hassan, being nominee Directors of PNB, and who do not have any interest, being direct or indirect shareholdings, in Sime Darby, have abstained and will continue to abstain from deliberating and voting on the resolution at our relevant Board meetings and at the Sixth AGM in respect of the Proposed Shareholders Mandate. 13

20 These Directors have also undertaken to ensure that Persons Connected to them will abstain from voting in respect of their interest, being direct and indirect shareholdings, in Sime Darby on the Ordinary Resolution pertaining to the Proposed Shareholders Mandate at the Sixth AGM. Tan Sri Dato Sri Hamad Kama Piah Che Othman and Dato Azmi Mohd Ali are deemed interested in the Proposed Shareholders Mandate by virtue of their directorships in Sime Darby and Chemical Company of Malaysia Berhad. They do not have any interest, being direct or indirect shareholding, in Sime Darby and have abstained and will continue to abstain from deliberating and voting on the resolution at our relevant Board meetings and at the Sixth AGM on the Proposed Shareholders Mandate. Tan Sri Dato Sri Hamad Kama Piah Che Othman and Dato Azmi Mohd Ali have also undertaken to ensure that Persons Connected to them (if any) will abstain from voting in respect of their interest, being direct and indirect shareholdings, in the Company on the Ordinary Resolution pertaining to the Proposed Shareholders Mandate at the Sixth AGM. 6. APPROVAL REQUIRED The Proposed Shareholders Mandate is subject to the approval of the shareholders of Sime Darby at the forthcoming Sixth AGM. 7. DIRECTORS RECOMMENDATION Having considered all aspects of the Proposed Shareholders Mandate, the Directors of Sime Darby (save for Tan Sri Dato Sri Hamad Kama Piah Che Othman, Tan Sri Dato Dr Wan Mohd Zahid Mohd Noordin, Tan Sri Datuk Dr Yusof Basiran, Dato Azmi Mohd Ali and Puan Zaiton Mohd Hassan who abstained from expressing an opinion and making recommendations) are of the opinion that the Proposed Shareholders Mandate is in the best interest of the Company. Accordingly, they recommend that you vote in favour of the Ordinary Resolution pertaining to the Proposed Shareholders Mandate to be tabled at the forthcoming Sixth AGM. 8. AGM The Sixth AGM of the Company, the Notice of which is enclosed in the 2012 Annual Report of the Company, will be held at the Grand Ballroom, First Floor, Sime Darby Convention Centre, 1A, Jalan Bukit Kiara 1, Kuala Lumpur, Malaysia, on Thursday, 8 November 2012 at a.m., for the purpose of considering and, if thought fit, approving, inter alia, the Ordinary Resolution on the Proposed Shareholders Mandate, as Special Business. If you are unable to attend and vote in person at the AGM, you are requested to complete, sign and return the Form of Proxy (available in the 2012 Annual Report of the Company) in accordance with the instructions printed thereon as soon as possible, in any event, so as to arrive at the office of the Share Registrar of the Company, Tricor Investor Services Sdn Bhd, at Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, Kuala Lumpur, Malaysia not less than forty-eight (48) hours before the time fixed for holding the AGM or any adjournment thereof. The completion and lodgement of the Form of Proxy will not preclude you from attending and voting in person at the AGM should you subsequently decide to do so. 14

21 9. FURTHER INFORMATION Shareholders are advised to refer to the attached Appendices for further information. Yours faithfully for and on behalf of the Board of Directors of SIME DARBY BERHAD TUN MUSA HITAM Chairman 15

22 PART B PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION 16

23 SIME DARBY BERHAD (Company No U) (Incorporated in Malaysia under the Act) Registered Office 19 th Floor, Wisma Sime Darby Jalan Raja Laut Kuala Lumpur Malaysia 16 October 2012 Directors Tun Musa Hitam (Independent Non-Executive Chairman) Tan Sri Dato Sri Hamad Kama Piah Che Othman (Non-Independent Non-Executive Deputy Chairman) Tan Sri Samsudin Osman (Non-Independent Non-Executive Director) Tan Sri Dato Dr Wan Mohd Zahid Mohd Noordin (Non-Independent Non-Executive Director) Tan Sri Datuk Amar (Dr) Tommy Hamid Bugo (Independent Non-Executive Director) Tan Sri Datuk Dr Yusof Basiran (Non-Independent Non-Executive Director) Dato Sri Lim Haw Kuang (Independent Non-Executive Director) Dato Henry Sackville Barlow (Senior Independent Non-Executive Director) Dato Azmi Mohd Ali (Non-Independent Non-Executive Director) Dato Sreesanthan Eliathamby (Independent Non-Executive Director) Puan Zaiton Mohd Hassan (Non-Independent Non-Executive Director) Dato Mohd Bakke Salleh (President & Group Chief Executive) To: The Shareholders of Sime Darby Dear Sir/Madam PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION 1. INTRODUCTION The Board had on 20 September 2012 among others, resolved to seek shareholders approval at the forthcoming Sixth AGM of the Company on the Proposed Amendments. An announcement was made to Bursa Securities on the Proposal on 20 September The purpose of Part B of this Circular is to provide you with details of the Proposed Amendments and to seek your approval of the Special Resolutions pertaining to the Proposed Amendments of the Memorandum and Articles of Association, to be tabled at the forthcoming Sixth AGM. An extract of the Notice of the Sixth AGM is enclosed in this Circular for your ease of reference. YOU ARE ADVISED TO READ AND CONSIDER CAREFULLY THE CONTENTS OF THIS CIRCULAR BEFORE VOTING ON THE SPECIAL RESOLUTIONS PERTAINING TO THE PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION AT THE FORTHCOMING SIXTH AGM. 17

24 2. DETAILS OF THE PROPOSED AMENDMENTS 2.1 Memorandum of Association The Company proposes to amend its Memorandum of Association to facilitate the establishment of a Performance-Based Employee Share Scheme for its eligible employees (including the Executive Directors) of Sime Darby and its subsidiaries (excluding subsidiaries which are dormant) which amendments are as follows: Clause Existing Clause Proposed Amendments to the Memorandum of Association 4 (xxii) To establish and maintain or procure the establishment and maintenance of any noncontributory or contributory pension, provident or superannuation funds for the benefit of and to give or procure the giving of donations, gratuities, pensions, allowances or emoluments to any persons who are or were at any time in the employment or service of the Company or its predecessors in business or of any company which is a subsidiary of the Company or is allied to or associated with the Company or with any such subsidiary company, or who are or were at any time Directors or officers of the Company or of any such predecessors or other company as aforesaid, and the wives, widows, families and dependants of any such persons, and also to establish and subsidise or subscribe to any institutions, clubs or funds calculated to be for the benefit of or to advance the interests and well-being of the Company or of any such other company as aforesaid or of any such persons as aforesaid, and to make any payments for or towards the insurance of any such persons as aforesaid, and to subscribe or guarantee money for charitable or benevolent objects or for any exhibition or for any public, general or useful object and to do any of the matters aforesaid either alone or in conjunction with any such other company as aforesaid. To establish and maintain or provide or procure the establishment and maintenance of any noncontributory or contributory pension, provident or superannuation funds or other pension funds or such other funds as the Board of Directors may deem fit and to make or establish such arrangements or schemes for the benefit of and to give or procure the giving of donations, gratuities, pensions, allowances, or emoluments or other moneys to or for the benefit of to any persons who are or were at any time in the employment or service of the Company or its predecessors in business or of any company which is a subsidiary of the Company or is allied to or associated with the Company or with any such subsidiary other company, as the Company deems fit, or who are or were at any time Directors or officers of the Company or of any such predecessors or other company as aforesaid, and the wives, widows, families and dependants of any such persons, and also to establish and subsidise or subscribe to any institutions, clubs or funds calculated to be for the benefit of or to advance the interests and well-being of the Company or of any such other company as aforesaid or of any such persons as aforesaid, and to make any payments for or towards the insurance of any such persons as aforesaid, and to subscribe or guarantee money for charitable or benevolent objects or for any exhibition or for any public, general or useful object and to do any of the matters aforesaid either alone or in conjunction with any such other company as aforesaid. 18