TEO GUAN LEE CORPORATION BERHAD (Company No A) Incorporated in Malaysia

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 ( Bursa Securities ) 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 however arising from or in reliance upon the whole or any part of the contents of this Circular. TEO GUAN LEE CORPORATION BERHAD (Company No A) Incorporated in Malaysia CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE The Notice of Twenty Fourth Annual General Meeting of Teo Guan Lee Corporation Berhad which will be held at the Conference Room, Plot 28, Lorong Perusahaan Maju 4, Prai Industrial Estate, Prai, Penang on Monday, 27 November 2017 at noon or at any adjournment thereof is enclosed together with the Form of Proxy of Teo Guan Lee Corporation Berhad s Annual Report sent to you with this Circular The Form of Proxy should be lodged at the Registered Office at Plot 28, Lorong Perusahaan Maju 4, Prai Industrial Estate, Prai, Penang not less than forty-eight (48) hours before the time appointed for holding the meeting. The lodging of the Proxy Form will not preclude you from attending and voting in person at the meeting should you subsequently wish to do so. This Circular is dated 27 October 2017

2 DEFINITIONS Except where the context otherwise requires, the following definitions shall apply throughout this Circular: - Act AGM TGL or the Company TGL Group TGLKL TGLPG PPAC JC CN TGLP(KL) PWMSB TGLH TGLP TGLI SPB PSKB BC Bursa Securities Listing Requirements Proposed Shareholders Mandate or Proposal Companies Act 2016 as amended from time to time and any re-enactment thereof Annual General Meeting Teo Guan Lee Corporation Berhad Teo Guan Lee Corporation Berhad and its subsidiaries Teo Guan Lee (KL) Sdn. Bhd., a wholly-owned subsidiary company of TGL Teo Guan Lee (Penang) Sdn. Bhd., a wholly-owned subsidiary company of TGL P.P.A.C (M) Sdn. Bhd., a wholly-owned subsidiary company of TGL JC Garments (M) Sdn. Bhd., a wholly-owned subsidiary company of TGLKL Character Network Sdn. Bhd., a wholly-owned subsidiary company of TGLKL Teo Guan Lee Properties (KL) Sdn. Bhd., a wholly-owned subsidiary company of TGLKL Puppy Winks Marketing Sdn. Bhd., a wholly-owned subsidiary company of TGLKL Teo Guan Lee Holdings Sdn. Bhd., a substantial and single largest shareholder of TGL TGL Packaging Sdn. Bhd., a wholly-owned subsidiary company of TGLH TGL Industries Sdn. Bhd., a wholly-owned subsidiary company of TGLH Syarikat Perniagaan Bingel (M) Sdn. Bhd., a 53% owned subsidiary company of TGL Perniagaan Sulam Kim Bin (M) Sdn. Bhd. Bidang Cendana Sdn. Bhd., a director related company Bursa Malaysia Securities Berhad Main Market Listing Requirements of Bursa Malaysia Securities Berhad Proposed Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature 1

3 C O N T E N T S 1. INTRODUCTION 3 2. DETAILS OF THE PROPOSED SHAREHOLDERS MANDATE 4 3. DIRECTORS AND MAJOR SHAREHOLDERS INTEREST DIRECTORS RECOMMENDATION CONDITION ANNUAL GENERAL MEETING DIRECTORS RESPONSIBILITY STATEMENT MATERIAL CONTRACTS MATERIAL LITIGATION, CLAIMS OR ARBITRATION DOCUMENTS AVAILABLE FOR INSPECTION 12 APPENDIX I 13 2

4 TEO GUAN LEE CORPORATION BERHAD (Company No A) Incorporated in Malaysia REGISTERED OFFICE Plot 28, Lorong Perusahaan Maju 4, Prai Industrial Estate, Prai, Penang The Board of Directors Dato Mustapha Bin Abdul Hamid (Independent Non-Executive Chairman) Toh Kian Beng (Managing Director) Lee Kean Cheong (Independent Non-Executive Director) Toh Choon Keat (Executive Director) Toh Choon Guan (Executive Director) Chin Yoong Mun (Independent Non-Executive Director) 27 October 2017 To: The Shareholders of Teo Guan Lee Corporation Berhad ( A) Dear Sir/Madam TEO GUAN LEE CORPORATION BERHAD [ TGL / the Company ] PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (REFERRED AS THE PROPOSED SHAREHOLDERS MANDATE ) 1. INTRODUCTION Pursuant to Paragraph of the Bursa Malaysia Securities Berhad Listing Requirements ( Listing Requirements ), the Company has procured the shareholders mandate ( RRPT Mandate ) at its AGM held on 28 November 2016, for the Company and/or its subsidiaries, in their normal course of business, to enter into those transactions which are recurrent and of a revenue or trading nature which are necessary for day to day operations as set out in paragraph 2.2 below ( Recurrent Related Party Transactions ) with persons who are considered to be related parties as defined in Paragraphs and of the Listing Requirements. The aforesaid mandate took effect from 29 November 2016 and will expire upon the conclusion of the forthcoming AGM of the Company to be held on 27 November The Board proposes to seek its shareholders approval for the RRPT Mandate at the forthcoming AGM of the Company. The purpose of this Circular is to provide you with detailed information in respect of the Proposal and to seek your approval for the resolution thereto to be tabled at the forthcoming AGM of TGL scheduled to be held at Plot 28, Lorong Perusahaan Maju 4, Prai Industrial Estate, Prai, Penang, on Monday, 27 November 2017 at noon or any adjournment thereof. The Company had on 3 October 2017 made the announcement to the Bursa Securities pertaining to the Proposed Shareholders Mandate. SHAREHOLDERS OF TGL ARE ADVISED TO READ THE CONTENTS OF THIS CIRCULAR CAREFULLY BEFORE VOTING ON THE PROPOSED RESOLUTION PERTAINING TO THE PROPOSED SHAREHOLDERS MANDATE. 3

5 2. DETAILS OF THE PROPOSED SHAREHOLDERS MANDATE The principal activities of the Company at present are investment holding and the provision of management services. The principal activities of the subsidiaries are as follows: - i) Teo Guan Lee (KL) Sdn. Bhd. (TGLKL) (Wholly-owned by TGL) Investment Holding, Wholesaler and retailer of garments and related accessories; ii) Teo Guan Lee (Penang) Sdn. Bhd. (TGLPG) (Wholly-owned by TGL) Investment Holding, Wholesaler and retailer of garments and related accessories; iii) P.P.A.C. (M) Sdn. Bhd. (PPAC) (Wholly-owned by TGL) Wholesaler of garments and investment holding; iv) Galeri Megah Sdn. Bhd. (GM) (Wholly-owned by TGL) Property investment v) Affluent Lifestyle Sdn. Bhd. (AFL) (Wholly-owned by TGL) Wholesaler and retailer of baby and children apparels vi) Digitaland (M) Sdn. Bhd. (DL) (Wholly-owned by TGL) Investment Holding vii) Syarikat Perniagaan Bingel (M) Sdn. Bhd. (SPB) (53%-owned subsidiary company of TGL) Manufacturer of garments; viii) JC Garments (M) Sdn. Bhd. (JC) (Wholly-owned subsidiary company of TGLKL) Members Voluntary winding up; ix) Teo Guan Lee Properties (KL) Sdn. Bhd. (TGLP (KL)) (Wholly-owned subsidiary company of TGLKL) Property investment; x) Character Network Sdn. Bhd. (CN) (Wholly-owned subsidiary company of TGLKL) Wholesaler and retailer of apparel and accessories; xi) Puppy Winks Marketing Sdn. Bhd. (PWMSB) (Wholly owned subsidiary of TGLKL) Wholesaler and distributor of babywear and accessories xii) Contemporary Symphony Sdn. Bhd. (CS) (Wholly-owned by TGL) Retailer of baby & children apparels, footwear and accessories There are various transactions of trading or revenue nature which are necessary for the day-to-day operations of the companies in the TGL Group being transacted between the companies in the TGL Group and the classes of Related Party in the ordinary course of business. Paragraph of the Listing Requirements of the Bursa Securities, allows a listed issuer to seek a mandate from its shareholders for recurrent related party transactions of a revenue or trading nature which are necessary for its day-to-day operations and are in the ordinary course of business, subject to the following: - i) the transactions are in the ordinary course of business and are on terms no more favourable to the related party than those generally available to the public. ii) 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. iii) Interested Directors, Major Shareholders and 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 approving the transactions. An interested Director or interested Major Shareholder must also ensure that persons connected with him abstain from voting on the resolution approving the transactions. (iv) immediately announce to Bursa Securities when the actual value of the transaction entered into by the listed issuer, exceeds the estimated value of the transactions disclosed in the Circular by 10% or more and must include information as may be prescribed by Bursa Securities in the announcement. 4

6 2.1 Nature of the Transactions The nature of the transactions contemplated under the Shareholders Mandate shall include such transaction, but are not limited to those described below: - i) Renting of premises by TGLKL from a Related Party, namely, TGL Industries Sdn. Bhd.; ii) Renting of premises by TGLPG from a Related Party, namely, TGL Packaging Sdn. Bhd.; iii) Renting of premises by CS from a Related Party, namely, Bidang Cendana Sdn. Bhd.; iv) Purchase of goods from a Related Party, namely, Perniagaan Sulam Kim Bin (M) Sdn. Bhd.; v) Purchase of goods by TGLPG from a Related Party namely, TGL Packaging Sdn. Bhd.; vi) Purchase of goods by PPAC from a Related Party, namely, TGL Packaging Sdn. Bhd.; The above transactions are necessary for the TGL Group s day-to-day operations and are in the ordinary course of business of the TGL Group. 2.2 Classes of Related Parties (a) The Proposed Shareholders Mandate will cover the following classes of Related Parties:- Subsidiaries of TGL Related Party Types of transaction Interested director, major shareholder and person connected (1) Teo Guan Lee (KL) Sdn. Bhd. (TGLKL) (Whollyowned by TGL) [ Tenant ] (2)Teo Guan Lee (Penang) Sdn. Bhd. (TGLPG) (Whollyowned by TGL) [ Tenant ] TGL Industries Sdn. Bhd., ( 1 TGLI) (Wholly-owned by Teo Guan Lee Holdings Sdn. Bhd. ( 2 TGLH), a substantial and single largest shareholder of TGL) [ Landlord ] TGL Packaging Sdn. Bhd., ( 3 TGLP) (Wholly-owned by Teo Guan Lee Holdings Sdn. Bhd. (TGLH), a substantial and single largest shareholder of TGL) [ Landlord ] Renting of premises known as No , Jalan 6/91, Taman Shamelin Perkasa, Batu 3 ½, Jalan Cheras, Kuala Lumpur for office and warehouse purposes. Land area 30,360 sq ft Built up area 19, sq ft Tenure of Agreement: 1 July 2017 to 30 June 2019 Monthly rental: RM50,000 Renting of premises known as Plot 28, Lorong Perusahaan Maju 4, Prai Industrial Estate, Prai, Penang for office cum warehouse purposes Land area acres Built up area 79,462 sq ft Tenure of Agreement: 1 July 2016 to 30 June 2018 Monthly rental: RM50,000 Messrs. Dato Toh Peng Hoe, Toh Ping Hai, Toh Peng Hua and Toh Kian Beng are the directors and major shareholders of TGLH. Messrs. Dato Toh Peng Hoe, Toh Ping Hai, Toh Peng Hua and Toh Kian Beng are the directors and major shareholders of TGLH. Last Year Mandate (RM) Actual Value Transacted (RM) Proposed Mandate (RM) 600, , , , , ,000 5

7 (3)Teo Guan Lee (Penang) Sdn. Bhd. ( Tenant ) TGL Packaging Sdn. Bhd. ( Landlord ) Renting of staff quarters known as C3-09, Taman Pelangi, Prai Monthly Rental :RM Tenure : 1 July 2017 to 30 June 2019 Messrs. Dato Toh Peng Hoe, Toh Ping Hai, Toh Peng Hua and Toh Kian Beng are the directors and major shareholders of TGLH. 2,400 2,400 2,400 (4)Contemporary Symphony S/B(CS) (Wholly owned by TGL) ( Tenant ) Bidang Cendana S/B( 4 BC) a company wholly owned by Toh Peng Hoe Holdings S/B, Toh Ping Hai Holdings S/B and Toh Peng Hua Holdings S/B Renting of premises known as Lot no. 1F135 and 1F136 1 st Floor Queensbay Mall, Penang for operating of retail boutique Built up area sq ft Tenure of Agreement: 16 October 2016 to 15 October 2018 Monthly rental: RM10, Messrs Toh Peng Hoe Holdings S/B, Toh Ping Hai Holdings S/B, and Toh Peng Hua Holdings S/B are major shareholders of BC Dato Toh Peng Hoe, Toh Ping Hai, Toh Peng Hua and Toh Kian Beng are the directors of BC 130, , , (5) Syarikat Perniagaan Bingel (M) Sdn. Bhd. ( 4 SPB) (53% owned subsidiary company of TGL) [ Buyer ] Perniagaan Sulam Kim Bin (M) Sdn. Bhd. ( 5 PSKB) [ Seller ] Providing embroidery works Messrs. Kee Lik Kang and Kee Leck Seok are shareholders and directors of SPB. 200,000 58, ,000 6

8 (6)Teo Guan Lee (Penang) Sdn. Bhd. (Buyer) TGL Packaging Sdn. Bhd. Purchase of corrugated carton boxes Messrs. Dato Toh Peng Hoe, Toh Ping Hai, Toh Peng Hua and Toh Kian Beng are the directors and major shareholders of TGLH. 20,000 2,813 20,000 (7)P.P.A.C (M) Sdn. Bhd. (Buyer) TGL Packaging Sdn. Bhd. Purchase of corrugated carton boxes. Messrs. Dato Toh Peng Hoe, Toh Ping Hai, Toh Peng Hua and Toh Kian Beng are the directors and major shareholders of TGLH. 20, ,000 The estimated transaction values are based on the information available as at 2 October Due to the nature of the transactions, the actual value of transactions may vary from the estimated value disclosed above. Disclosures will be made in the 2017 Annual Report of the Company of the actual aggregate value of transactions contemplated pursuant to the Proposed Shareholders Mandate during the financial year. There is no deviation exceeding more than 10% between the proposed mandate value and actual value transacted The above transactions represent amount owing by the subsidiaries of TGL to the related parties, thus Paragraph 16A and 16B of Annexure PN12-A of Main Market Listing Requirements is not applicable 1 TGLI is a related party by virtue of its sole shareholder, TGLH, which is also a substantial and single largest shareholder of TGL. Messrs. Dato Toh Peng Hoe, Toh Ping Hai, Toh Peng Hua and Toh Kian Beng are the directors of TGLH. All of them are shareholders of TGLH [i.e. Shareholding in TGLH Toh Peng Hoe Holdings Sdn. Bhd. (33.33% or 1,666,667 Ordinary Shares of RM1.00 each of TGLH), Toh Ping Hai Holdings Sdn. Bhd. (33.33% or 1,666,667 Ordinary Shares of RM1.00 each of TGLH) and Toh Peng Hua Holdings Sdn. Bhd. (33.33% or 1,666,666 Ordinary Shares of RM1.00 each of TGLH)]. The current directors of TGLI are Toh Kian Beng, Toh Choon Guan and Toh Choon Meng whom are also the directors (except for Toh Choon Meng) and the substantial shareholders of TGL. 2 TGLH is a related party pursuant to its substantial and single largest shareholding interest in TGL of which, TGLH owns 15,102,723 Ordinary Shares of RM1.00 each (or 37.07%) of TGL s equity. Messrs. Dato Toh Peng Hoe, Toh Ping Hai, Toh Peng Hua and Toh Kian Beng are the directors of TGLH.All of them are shareholders of TGLH [i.e. Shareholding in TGLH Toh Peng Hoe Holdings Sdn. Bhd. (33.33% or 1,666,667 Ordinary Shares of RM1.00 each of TGLH), Toh Ping Hai Holdings Sdn. Bhd. (33.33% or 1,666,667 Ordinary Shares of RM1.00 each of TGLH) and Toh Peng Hua Holdings Sdn. Bhd. (33.33% or 1,666,666 Ordinary Shares of RM1.00 each of TGLH)]. 7

9 3 TGLP is a related party by virtue of its sole shareholder, TGLH, which is also a substantial and single largest shareholder of TGL. Messrs. Dato Toh Peng Hoe, Toh Ping Hai, Toh Peng Hua and Toh Kian Beng are the directors of TGLH. All of them are shareholders of TGLH [i.e. Shareholding in TGLH Toh Peng Hoe Holdings Sdn. Bhd. (33.33% or 1,666,667 Ordinary Shares of RM1.00 each of TGLH), Toh Ping Hai Holdings Sdn. Bhd. (33.33% or 1,666,667 Ordinary Shares of RM1.00 each of TGLH) and Toh Peng Hua Holdings Sdn. Bhd. (33.33% or 1,666,666 Ordinary Shares of RM1.00 each of TGLH)]. The current directors of TGLP are Toh Kian Beng, Toh Choon Guan and Toh Choon Meng whom are also the directors (except for Toh Choon Meng) and the substantial shareholders of TGL. 4 BC is a related party by virtue of its shareholders, Toh Peng Hoe Holdings S/B, Toh Ping Hai Holdings S/B and Toh Peng Hua Holdings S/B, which are substantial shareholders of TGLH. Messrs Dato Toh Peng Hoe, Toh Ping Hai, Toh Peng Hua and Toh Kian Beng are the directors of BC. 5 SPB is a 53% owned subsidiary company of TGL. Messrs. Kee Lik Kang and Kee Leck Seok are shareholders and directors of SPB. [i.e. Shareholding in SPB Mr. Kee Lik Kang (32.9% or 164,500 Ordinary Shares of RM1.00 each of SPB and Kee Leck Seok (14.1% or 70,500 Ordinary Shares of RM1.00 each of SPB)]. 6 PSKB s directors and shareholders are Messrs. Kee Lek Tong and Kee Lik Kang. PSKB is a related party because Messrs. Kee Lik Kang and Kee Leck Seok are the directors and shareholders of SPB. [i.e. Shareholding in PSKB Mr. Kee Lik Kang (162,500 Ordinary Shares of RM1.00 each of PSKB and Kee Lek Tong (87,500 Ordinary Shares of RM1.00 each of PSKB)]. The principal activity of PSKB is manufacturing and dealing in all kinds of embroidery works. Messrs Dato Toh Peng Hoe, Toh Ping Hai and Toh Peng Hua are brothers and directors of TGLH. Toh Kian Beng and Toh Choon Guan are directors of TGLH (except for Toh Choon Guan) TGL, TGLP and TGLI are the children of Dato Toh Peng Hoe and niece/nephew of Toh Ping Hai and Toh Peng Hua. They are substantial shareholders of TGL via TGLH, which is a substantial and single largest shareholder of TGL. Toh Choon Meng is the son of Dato Toh Peng Hoe. 2.3 RATIONALE FOR THE PROPOSED SHAREHOLDERS MANDATE The Proposed Shareholders Mandate will benefit the Company by facilitating entry by members of TGL Group into transactions with the classes of related parties specified in Clause 2.2 above in the ordinary course of the Group s business on commercial terms, in a timely fashion. The mandate will eliminate the need for the Company, to announce and to convene separate general meetings of the Company to seek the shareholders approval on each occasion pursuant to the requirements of Paragraph of the Listing Requirements of the Bursa Securities, as and when potential transactions with the specified classes of related parties arise. This will substantially reduce the administrative time, inconvenience and costs associated with the convening of such meetings without compromising the corporate objectives and adversely affecting the business opportunities available to TGL Group. Shareholders of the Company will appreciate that the related parties arrangements, as outlined in 2.2 above, are normal operations of a large Group undertaken for the benefit and interest of the Group. Pursuant to Paragraph of the Listing Requirements of the Bursa Securities, the approval of the shareholders of the Company are required for the above arrangements and transactions and this mandate is also subject to annual review. 2.4 EXCLUDED TRANSACTIONS Transactions with any related parties, which do not fall within the ambit of the Proposed Shareholders Mandate, will be subject to other applicable provisions of the Bursa Securities Requirements, the Act and/or any applicable law. 8

10 2.5 STATEMENT BY AUDIT COMMITTEE The Audit Committee is of the view that the Group has in place adequate procedure and processes to monitor, track and identify Recurrent Related Party Transactions in a timely and orderly manner.the review of these procedures and processes is done yearly. The Audit Committee is also of the view that the Guidelines and procedures for related parties transactions are sufficient to ensure that such transactions will be carried out at arm s length, on normal commercial terms which are not prejudicial to the interests of the shareholders of the Company, on terms not more favourable to the related party than those generally available to the public and on terms not to the detriment of minority shareholders. 2.6 DETERMINATION OF TRANSACTION PRICE Methods or procedures on which a transaction price is determined: - i) The Directors of the Company and its group of companies will ensure that the methods or procedures adopted for pricing a transaction with related parties are determined in accordance with the normal procedures and standards currently adopted by the Company and its group of companies in transactions with non-related parties conducted on an arms-length and on normal commercial terms taking into account prevailing market conditions and not detrimental to the minority shareholders. ii) iii) iv) All related party transactions will be subject to periodic reviews by the Audit Committee to ensure that they have been transacted on arms-length basis and on commercial terms not detrimental to the Company and its group of companies and that proper disclosures will be made in the annual report of the Company in respect of the aggregate value of transactions conducted pursuant to the Shareholders mandate during the financial year. Further, where there are any directors who have an interest (direct or indirect) in any related party transactions, such director shall abstain from voting on the matter. Where any member of the Audit Committee is interested in any transactions subject to the review of the Audit Committee, that member shall abstain from voting on any matter in respect of such transactions. The Audit Committee of the Company may, at its sole discretion, adopt new procedures and/or amend its current procedures to ensure that the current Related Party Transactions, are at all times, on terms and conditions not more favourable to the related party than those generally available to the public and are not to the detriment to the minority shareholders. v) Should the Audit Committee is of the view that the methods and procedures are not sufficient to ensure normal commercial terms has been adhered to and/or the transaction is detrimental to the minority shareholders, the Audit Committee shall vote against the transaction and propose the same to the Board of Directors to disallow the transaction. (vi) (vii) The threshold for approval of recurrent related party transactions are consistent with those transactions entered into with unrelated parties. All recurrent related party transactions are to be tabled and reviewed by the Audit Committee to ensure that they are on arm s length and on normal commercial terms, taking into account prevailing market conditions. The interested Directors will abstain from voting in the approval process. At least 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 the related parties are fair and reasonable and comparable to those offered to/by the related parties for the same or substantially similar type of products/services and/or quantities. Where quotation or comparative pricing from unrelated third parties cannot be obtained, the transaction price will be determined by the Group based on those offered by/to other unrelated parties for the same or substantially similar type of transaction to ensure that the Recurrent Related party transactions is not detrimental to the Group. 9

11 2.7 VALIDITY PERIOD FOR THE SHAREHOLDERS MANDATE The Proposed Shareholders Mandate is subject to annual renewal. In this respect, any authority conferred by the Proposed Shareholders Mandate shall only continue to be in force until:- (a) the conclusion of the next general meeting of the Company following the general meeting at which the Proposed Shareholders Mandate was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed; (b) the expiration of the period within which the next annual general meeting after that date is required to be held pursuant to Section 340(2) of the Companies Act 2016 ( CA )(but shall not extend to such extension as may be allowed pursuant to Section 340(4) of CA); or (c) revoked or varied by resolution passed by the shareholders in general meeting; whichever is earlier. The obtaining of the shareholders mandate on an annual basis would eliminate the need to convene separate general meeting from time to time to seek shareholders approval as and when potential recurrent related party transactions with as Mandated Related Party arise, thereby reducing substantially administrative time and expenses in convening such meeting, without compromising the corporate objectives and adversely affecting the business opportunities available to the Company and its subsidiary companies. 3. DIRECTORS AND MAJOR SHAREHOLDERS INTEREST Save as disclosed below, none of the other Director and/or Major Shareholder of TGL and persons connected with them are interested in the Proposed Shareholders Mandate. The direct and indirect shareholdings of the interested Directors, Major Shareholders and persons connected with them in the issued and paid up share capital of the Company as at the date of this Circular are as follows: Interested Directors Direct No. of units held % Indirect No. of units held % Toh Kian Beng ,123,259^ Toh Choon Keat ,100,659^^ Toh Choon Guan ,207,659^^^ Interested Major Shareholder Teo Guan Lee Holdings Sdn.Bhd. Interested Major Shareholders and Persons Connected Direct 15,102, Indirect No. of units held % No. of units held % Toh Peng Hoe Holdings S/B 5,719, ,488,159 (1) Toh Ping Hai Holdings S/B 8, ,190,641(2) Toh Peng Hua Holdings S/B ,190,641(2) Lau Soo Hiang 742, ,207,659(3) Estate of Lim Lee Chu 16, ,198,641(4) Toh Ping Hai 280, ,198,641(4) Dato Toh Peng Hoe ,207,659(3) Toh Peng Hua 51, ,190,641(5) Toh Choon Neng 80, ,207,659(3) Toh Choon Meng 159, ,207,659(3) Tea Mooi Kooi@TehYan Kwee 57, ,190,641(5) Ideal Structure Sdn. Bhd. (IS) 5,087,

12 ^ ^^ ^^^ Deemed interested through TGLH (15,102,723 ordinary shares of RM1.00 each), Toh Peng Hoe Holdings Sdn. Bhd. (5,719,500 ordinary shares of RM1.00 each), IS (5,087,918 ordinary shares of RM1.00 each) and MR (1,297,518 ordinary shares of RM1.00 each) Chew Jing Khai (915,600 ordinary share of RM1.00 each )by virtue of Section 59(11)(c) of the Act Deemed interested through TGLH (15,102,723 ordinary shares of RM1.00 each), Toh Peng Hoe Holdings Sdn. Bhd. (5,719,500 ordinary shares of RM1.00 each), IS (5,087,918 ordinary shares of RM1.00 each) and MR (1,297,518 ordinary shares of RM1.00 each) and Yeo Lay Peng (893,000 ordinary shares of RM1.00 each) by virtue of Section 59(11)(c) of the Act Deemed interested through TGLH (15,102,723 ordinary shares of RM1.00 each), Toh Peng Hoe Holdings Sdn. Bhd. (5,719,500 ordinary shares of RM1.00 each), IS (5,087,918 ordinary shares of RM1.00 each) and MR (1,297,518 ordinary shares of RM1.00 each) by virtue of Section 59(11)(c) of the Act 1. Deemed interested through TGLH, IS and MR 2. Deemed interested through TGLH and IS 3. Deemed interested through TGLH, Toh Peng Hoe Holdings S/B, IS and MR 4. Deemed interested through TGLH and Toh Ping Hai Holdings S/B and IS 5. Deemed interested through TGLH and Toh Peng Hua Holdings S/B and IS In view of the interests of Ms Toh Kian Beng, Mr Toh Choon Keat and Mr Toh Choon Guan in the proposal as disclosed in Clause 2.2 above, they have abstained and will continue to abstain from all deliberations and voting on the Shareholders Mandate at Board Meeting of TGL. They will also abstain from voting in respect of their direct and indirect shareholdings at the AGM of TGL on the resolution pertaining to the Shareholders Mandate. The interested Major Shareholder, TGLH (deemed related to the interested directors of TGL, that is Ms Toh Kian Beng, Mr Toh Choon Keat and Mr Toh Choon Guan) will abstain from voting on the resolution pertaining to the Shareholders Mandate at the AGM. The interested Directors and interested Major Shareholder have undertaken to ensure that persons connected with them will abstain from voting in respect of their direct and indirect shareholdings on the resolution pertaining to the Shareholders Mandate at the AGM. 4. DIRECTORS RECOMMENDATION Your Directors (except for Ms Toh Kian Beng, Mr Toh Choon Keat and Mr Toh Choon Guan) being interested parties to the Proposed Shareholders Mandate are of the opinion that the Proposed Shareholders Mandate is in the best interest of the Company and recommend that you vote in favour of the resolution pertaining to the Proposal to be tabled at the AGM. 5. CONDITION The Proposed Shareholders Mandate requires the approval of the shareholders of the Company at the forthcoming AGM and is subject to annual renewal. 6. ANNUAL GENERAL MEETING The ordinary resolution pertaining to the Proposed Renewal of Shareholders mandate has been incorporated in the Notice of AGM which is enclosed in TGL s Annual Report The AGM will be held at the Conference Room, Teo Guan Lee Corporation Berhad, Plot 28 Lorong Perusahaan Maju 4, Prai Industrial Estate, Prai, Penang on Monday 27 November 2017 at noon or any adjournment thereof. If you are unable to attend and vote in person at the AGM, you should complete and return the enclosed Proxy Form in accordance with the instructions contained therein as soon as possible and in any event so as to arrive at the Registered Office of TGL at Plot 28, Lorong Perusahaan Maju 4, Prai Industrial Estate, Prai, Penang not later than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof. The completion and return of the Form of Proxy will not preclude you from attending and voting at the AGM in person should you wish to do so. The Form of Proxy should be completed strictly in accordance with the instructions contained therein. 11

13 7. DIRECTORS RESPONSIBILITY STATEMENT This Circular has been seen and approved by the Directors of TGL who collectively and individually accept full responsibility for the accuracy of the information given 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 misleading in this Circular. 8. MATERIAL CONTRACTS TGL and its subsidiary companies have not entered into any other material contracts, not being contracts entered in the ordinary course of business during the two (2) years preceeding the date of this Circular. 9. MATERIAL LITIGATION, CLAIMS OR ARBITRATION Neither TGL nor any of its subsidiaries is engaged in any material litigation, claims or arbitration, either as plaintiff or defendant, and the Board is not aware of any proceedings pending or threatened against TGL or any of its subsidiaries or of any facts likely to give rise to any proceedings which might materially affect the financial position and business of TGL or any of its subsidiaries. 10. DOCUMENT AVAILABLE FOR INSPECTION The following documents are available for inspection at the Registered Office of TGL at Plot 28, Lorong Perusahaan Maju 4, Prai Industrial Estate, Prai, Penang during normal office hours from Mondays to Fridays (except public holidays) from the date of this Circular up to the date of the AGM: - i) Memorandum and Articles of Association of TGL ii) Audited Financial Statements of TGL for the past 2 financial years ended 30 June 2016 and 30 June 2017 Yours faithfully, For and on behalf of the Board TEO GUAN LEE CORPORATION BERHAD DATO MUSTAPHA BIN ABDUL HAMID 12

14 APPENDIX I Extract of Notice of Twenty Fourth Annual General Meeting As Special Business:- To consider and if thought fit, to pass with or without modifications the following Ordinary Resolution: Proposed Renewal of Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature That subject always to the provisions of the Companies Act, 2016 ( the Act ), the Memorandum and Articles of Association of the Company, the Bursa Malaysia Securities Berhad Main Market Listing Requirements or other regulatory authorities, approval be and is hereby given to the Company and/or its subsidiaries to enter into recurrent related party transactions with the corporations as set out in Clause 2.2 of the Circular to Shareholders dated 27 October 2017 (the Circular ), which are necessary for the day to day operations and are carried out in the ordinary course of business and are 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 as set out in the Circular ( Mandate ). That the Directors be empowered to do all such acts and things considered necessary or expedient to give full effect to the Mandate with full powers to assent to any conditions, modifications, revaluations, variations and/or amendments as may be imposed by the relevant authorities. That such Mandate shall commence upon passing this ordinary resolution and to be in force until:- (a) the conclusion of the next Annual General Meeting ( AGM ) of the Company at which time the authority shall lapse unless the authority is renewed by a resolution passed at the meeting; (b) the expiration of the period within which the next AGM after that date it is required to be held pursuant to Section 340(2) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or (c) revoked or varied by ordinary resolution of the shareholders of the Company at a general meeting; whichever is earlier. And that the Directors of the Company be and are hereby authorised to complete and to do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the transactions contemplated and/or authorised by this ordinary resolution. 13

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