Y.S.P. SOUTHEAST ASIA HOLDING BERHAD (Company No X) (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 to be taken, you should consult your stockbroker, solicitor, accountant, bank manager or other professional advisers 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. Y.S.P. SOUTHEAST ASIA HOLDING BERHAD (Company No X) (Incorporated in Malaysia under the Companies Act, 1965) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED ESTABLISHMENT OF AN EMPLOYEES' SHARE OPTION SCHEME OF UP TO 10% OF THE ISSUED AND PAID-UP SHARE CAPITAL OF Y.S.P. SOUTHEAST ASIA HOLDING BERHAD AND NOTICE OF EXTRAORDINARY GENERAL MEETING Adviser RHB Investment Bank Berhad (Company No P) (A Participating Organisation of Bursa Malaysia Securities Berhad) The Notice of the Extraordinary General Meeting ("EGM") of Y.S.P. Southeast Asia Holding Berhad which is scheduled to be held at the Maple Junior Ball, Level C, One World Hotel, First Avenue, Bandar Utama City Centre, Petaling Jaya, Selangor Darul Ehsan on Monday, 17 June 2013 at a.m. or immediately following the conclusion or adjournment of the Twelfth Annual General Meeting ("AGM") of the Company scheduled to be held at the same venue and on the same date at 9.30 a.m., whichever is later, together with the Form of Proxy are enclosed herein. A member entitled to attend and vote at the EGM is entitled to appoint a proxy or proxies to attend, speak and vote on his/ her behalf. In such event, the Form of Proxy must be lodged at the Company Secretary's Office at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, Kuala Lumpur, not less than 48 hours before the time stipulated for holding the EGM or at any adjournment thereof, as indicated below. The lodging of the Form of Proxy shall not preclude you from attending and voting in person at the EGM should you subsequently wish to do so. Last date and time for lodging the Form of Proxy. : Saturday, 15 June 2013 at a.m. Date and time of the EGM... : Monday, 17 June 2013 at a.m. or immediately following the conclusion or adjournment of the Twelfth AGM, whichever is later This Circular is dated 27 May 2013

2 DEFINITIONS Except where the context otherwise requires, the following definitions shall apply throughout this Circular:- "Act" : The Companies Act, 1965 "AGM" : Annual General Meeting "Board" : The Board of Directors of YSPSAH "Bursa Depository" or "Depository" : Bursa Malaysia Depository Sdn Bhd "Bursa Securities" : Bursa Malaysia Securities Berhad "By-Laws" : The terms and conditions of the Proposed ESOS as amended, from time to time "Date of Acceptance" : The date where upon the ESOS Committee shall receive the written notice from an Eligible Employee accepting an offer "Date of Offer" : The date on which an Offer is made by the ESOS Committee to an Eligible Employee in the manner as indicated in the By-Laws "Director(s)" : A natural person who holds a directorship in the Company and shall have the meaning given in Section 4 of the Act "Effective Date" : The effective date for the implementation of the Proposed ESOS in the manner as indicated in the By-Laws "EGM" : Extraordinary General Meeting "Eligible Employee(s)" : Employees, executive and non-executive Directors of YSPSAH and its subsidiaries, which are not dormant, who meet the criteria of eligibility in the manner as indicated in the By-Laws "EPS" : Earnings per Share "ESOS" : Employees' share option scheme, being the scheme for the granting of ESOS Options to Eligible Employees to subscribe for new YSPSAH Shares upon the terms and conditions in the manner as indicated in the By-Laws "ESOS Committee" : The committee appointed and duly authorised by the Board to administer the Proposed ESOS in the manner as indicated in the By- Laws "ESOS Option(s)" or "Option(s)" : The right of a Grantee which may be conditional or unconditional to subscribe for new YSPSAH Shares pursuant to the contract constituted by the acceptance of an Offer by an Eligible Employee in the manner as indicated in the By-Laws "FYE" : Financial year ended/ ending "Grantee(s)" : An Eligible Employee who has accepted an Offer in the manner as indicated in the By-Laws i

3 DEFINITIONS (CONT'D) "Listing Requirements" : Main Market Listing Requirements of Bursa Securities "LPD" : 15 May 2013, being the latest practicable date prior to the printing and despatch of this Circular "Market Day(s)" : Any day between Mondays to Fridays (inclusive), excluding public holidays, and a day on which Bursa Securities is open for trading of securities "NA" : Net assets "Offer(s)" : A written offer made by the ESOS Committee to an Eligible Employee in the manner as indicated in the By-Laws "Option Period" : In respect of each ESOS Option, a period commencing on the Date of Offer relevant to such ESOS Option and expiring at the expiry of the Proposed ESOS as may be determined in the manner as indicated in the By-Laws, whichever is the earlier "OSK" : OSK Investment Bank Berhad. For avoidance of doubt, with effect from 13 April 2013, OSK Investment Bank Berhad has officially merged with RHBIB to become RHBIB. "Proposed ESOS" : The proposed establishment of an ESOS of up to 10% of the issued and paid-up share capital of the Company "Record of Depositors" : A record of depositors established by Bursa Depository under the Rules of Depository "RHBIB" : RHB Investment Bank Berhad "RM" and "sen" : Ringgit Malaysia and sen, respectively "Subscription Price" : The price at which the Grantee shall be entitled to subscribe for one (1) new YSPSAH Share pursuant to the exercise of an ESOS Option in the manner as indicated in the By-Laws "YSPSAH" or the "Company" "YSPSAH Group" or the "Group" "YSPSAH Share(s)" or "Share(s)" : Y.S.P. Southeast Asia Holding Berhad : YSPSAH and its subsidiaries, collectively : Ordinary share(s) of RM1.00 each in YSPSAH Words incorporating the singular shall, where applicable, include the plural and vice versa. Words denoting 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 re-enacted. Any reference to a time of day in this Circular shall be a reference to Malaysian time, unless otherwise specified. ii

4 TABLE OF CONTENTS LETTER TO THE SHAREHOLDERS OF YSPSAH CONTAINING:- PAGE 1. INTRODUCTION 1 2. DETAILS OF THE PROPOSED ESOS 2 3. RATIONALE AND JUSTIFICATION FOR THE PROPOSED ESOS 6 4. EFFECTS OF THE PROPOSED ESOS 7 5. HISTORICAL SHARE PRICES APPROVALS REQUIRED/ OBTAINED INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/ OR PERSONS CONNECTED TO THEM ESTIMATED TIMEFRAME FOR COMPLETION PROPOSALS ANNOUNCED BUT PENDING COMPLETION DIRECTORS' RECOMMENDATION EGM FURTHER INFORMATION 13 APPENDICES I. DRAFT BY-LAWS OF THE PROPOSED ESOS 14 II. FURTHER INFORMATION 36 NOTICE OF EGM FORM OF PROXY ENCLOSED ENCLOSED iii

5 Y.S.P. SOUTHEAST ASIA HOLDING BERHAD (Company No X) (Incorporated in Malaysia under the Companies Act, 1965) Registered Office 16th Floor, Plaza VADS No. 1, Jalan Tun Mohd Fuad Taman Tun Dr. Ismail Kuala Lumpur 27 May 2013 Board of Directors Datuk Dr. Anis Bin Ahmad (Chairman / Independent Non-Executive Director) Dato' Dr. Lee Fang Hsin (President / Group Managing Director) Dr. Lee Lee Fang-Chen (Non-Independent Non-Executive Director) Lee Ling Chin (Non-Independent Non-Executive Director) Tuan Haji Adi Azuan Bin Abdul Ghani (Non-Independent Non-Executive Director) Datuk Koay Soon Eng (Independent Non-Executive Director) Tu Shu Yao (Independent Non-Executive Director) To: The Shareholders of YSPSAH Dear Sir/ Madam, PROPOSED ESTABLISHMENT OF AN EMPLOYEES' SHARE OPTION SCHEME OF UP TO 10% OF THE ISSUED AND PAID-UP SHARE CAPITAL OF Y.S.P. SOUTHEAST ASIA HOLDING BERHAD 1. INTRODUCTION On 4 March 2013, OSK had, on behalf of the Board, announced that the Company proposes to implement an ESOS of up to 10% of the issued and paid-up share capital of the Company. On 13 May 2013, RHBIB had, on behalf of YSPSAH, announced that Bursa Securities had, vide its letter dated 13 May 2013, resolved to approve the listing of and quotation for the new YSPSAH Shares to be issued arising from the exercise of the ESOS Options on the Main Market of Bursa Securities. THE PURPOSE OF THIS CIRCULAR IS TO PROVIDE THE SHAREHOLDERS OF YSPSAH WITH THE RELEVANT INFORMATION ON THE PROPOSED ESOS AS WELL AS TO SEEK THE APPROVAL FROM THE SHAREHOLDERS OF YSPSAH FOR THE ORDINARY RESOLUTIONS PERTAINING TO THE PROPOSED ESOS TO BE TABLED AT THE FORTHCOMING EGM OF THE COMPANY. THE NOTICE OF THE FORTHCOMING EGM AND THE FORM OF PROXY ARE ENCLOSED TOGETHER WITH THIS CIRCULAR. SHAREHOLDERS OF YSPSAH ARE ADVISED TO READ AND CONSIDER CAREFULLY THE CONTENTS OF THIS CIRCULAR TOGETHER WITH THE APPENDICES CONTAINED HEREIN BEFORE VOTING ON THE ORDINARY RESOLUTIONS TO BE TABLED AT THE FORTHCOMING EGM OF THE COMPANY TO GIVE EFFECT TO THE PROPOSED ESOS. 1

6 2. DETAILS OF THE PROPOSED ESOS 2.1 Details of the Proposed ESOS The Proposed ESOS involves the granting of ESOS Options to the Eligible Employees as set out in Section of this Circular to subscribe for new YSPSAH Shares at specified prices to be determined in the manner set out in Section of this Circular. The Proposed ESOS will be administered by the ESOS Committee and governed by the By-Laws, a copy of which is attached as Appendix I of this Circular. 2.2 Salient features of the Proposed ESOS The salient features of the Proposed ESOS are set out below: Maximum number of YSPSAH Shares available under the Proposed ESOS The total number of new YSPSAH Shares, which may be allotted pursuant to the Proposed ESOS shall not exceed in aggregate 10% of the total issued and paid-up share capital of the Company (excluding treasury shares, if any) at any point in time during the existence of the Proposed ESOS Basis of allotment and maximum allowable allotment The maximum number of new YSPSAH Shares that may be offered to an Eligible Employee shall be determined at the discretion of the ESOS Committee after taking into consideration, where relevant, the performance, contribution, employment grade, seniority and length of service of the Eligible Employee, subject to the following:- i. The Directors and senior management do not participate in the deliberation or discussion of their own allocation; ii. iii. The allocation to an Eligible Employee, who either singly or collectively, through persons connected to the Eligible Employee, holds 20% or more of the issued and paid-up share capital of YSPSAH, must not exceed 10% of the total number of new YSPSAH Shares to be issued under the Proposed ESOS; and Not more than 50% of the new YSPSAH Shares available under the Proposed ESOS shall be allocated, in aggregate, to executive/ nonexecutive Directors and senior management of YSPSAH and its subsidiaries, which are not dormant. The allocation available under the Proposed ESOS will be staggered over the duration of the Proposed ESOS on an annual basis. The maximum allocation available to the Eligible Employees is fixed at 25% per annum. 2

7 2.2.3 Eligibility Only employees, executive Directors and non-executive Directors of YSPSAH and its subsidiaries, which are not dormant, who meet the following conditions as at the Date of Offer are eligible to participate in the Proposed ESOS:- i. Employees a) is at least 18 years of age; b) is employed full-time by and on the payroll of a company in YSPSAH and/ or its subsidiaries, which are not dormant; and c) is confirmed in writing as a full time employee and has been in the employment of YSPSAH and/ or its subsidiaries, which are not dormant, for a period of at least six (6) months of continuous service prior to and up to the Date of Offer, including service during the probation period and falls within any other criteria that the ESOS Committee may from time to time determine at its discretion. ii. Executive/ non-executive Director a) is at least 18 years of age; b) has been appointed as a executive/ non-executive Director in YSPSAH and/ or its subsidiaries, which are not dormant, for a period of at least three (3) months; and c) must have their entitlements under the Proposed ESOS approved by the shareholders of the Company in a general meeting. Pursuant to the Listing Requirements, an Eligible Employee who is a nonexecutive Director of YSPSAH and/ or any of its subsidiaries, which are not dormant, shall not sell, transfer and/ or assign the new YSPSAH Shares obtained through the exercise of the ESOS Options offered to him/ her within one (1) year from the Date of Offer. In the case of executive and non-executive Directors, their specific entitlements/ allotments under the Proposed ESOS must have been approved by the shareholders of YSPSAH in a general meeting. Eligibility, however, does not confer on an Eligible Employee a claim or right to participate in or any rights whatsoever under the Proposed ESOS and an Eligible Employee does not acquire or have any rights over or in connection with the Options or the new YSPSAH Shares comprised therein unless an Offer has been made in writing by the ESOS Committee to the Eligible Employee under the By-Laws and the Eligible Employee has accepted the Offer in accordance with the terms of the Offer and the Proposed ESOS. The selection of any Eligible Employee to participate and number of Options to be offered in the Proposed ESOS shall be at the sole and absolute discretion of the ESOS Committee and the decision of the ESOS Committee shall be binding and final. 3

8 2.2.4 Duration The Proposed ESOS, when implemented, shall be in force for a period of seven (7) years from the Effective Date. The Proposed ESOS may be extended for a further period of up to three (3) years at the discretion of the Board upon recommendation of the ESOS Committee, subject always that the duration or tenure of the Proposed ESOS shall be not more than 10 years from the Effective Date Basis of determining the Subscription Price Subject to any adjustments made under the By-Laws and pursuant to the Listing Requirements, the Subscription Price shall be the higher of:- i. The five (5)-day weighted average market price of YSPSAH Shares immediately preceding the Date of Offer, with a discount of not more than 10% at the ESOS Committee's discretion; or ii. The par value of YSPSAH Shares Acceptance An Offer made by the ESOS Committee to an Eligible Employee under the Proposed ESOS shall be in writing. An Offer made by the ESOS Committee to an Eligible Employee under the By-Laws shall be valid for a period of 30 calendar days from the Date of Offer or such longer period as may be determined by the ESOS Committee on a case-to-case basis at its discretion ("Prescribed Period"), and shall be accepted within this Prescribed Period by the Eligible Employee to whom the Offer is made by a written notice to the ESOS Committee in such form as prescribed by the ESOS Committee of such acceptance and accompanied by a payment to the Company of a nonrefundable cash consideration of RM1.00 only for the grant of the Option. The day of receipt of such written notice shall constitute the Date of Acceptance. If the Offer is not accepted in the aforesaid manner, the Offer shall automatically lapse upon the expiry of the Prescribed Period and shall be null and void and be of no effect, and the new YSPSAH Shares comprised in such Options may, at the discretion of the ESOS Committee, be re-offered to other Eligible Employees. Within 30 calendar days from the Date of Acceptance or such longer period as may be determined by the ESOS Committee on a case-to-case basis at its discretion, the ESOS Committee shall issue to the Grantee an option certificate in such form as may be determined by the ESOS Committee Amendments and/ or modifications Subject to the compliance with the Listing Requirements and any other relevant authorities, the ESOS Committee may, at any time and from time to time, recommends to the Board any additions and amendments to or deletions of the By-Laws as it shall in its discretion think fit and the Board shall have the power by resolution to add to, amend or delete all or any of the By-Laws upon such recommendation provided that no additions or amendments to or deletions of the By-Laws shall be made which will:- i. prejudice any rights of the shareholders of the Company which would have accrued to any Grantee without his prior consent; or ii. increase the number of YSPSAH Shares available under the Proposed ESOS beyond the maximum imposed by the By-Laws; or 4

9 iii. provide an advantage to any Grantee or group of Grantees or all Grantees, unless shareholders' approval is obtained at a general meeting. Where any amendments and/ or modifications are made to the By-Laws, the Company shall submit to Bursa Securities, the amendments and/ or modifications to the By-Laws and a confirmation letter that the amendments and/ or modifications complies with the provisions of the guidelines on the Proposed ESOS stipulated under the Listing Requirements no later than five (5) Market Days from the effective date of the said amendments and/ or modifications Alteration of share capital In the event of any alteration in the capital structure of the Company during the Option Period, whether by way of capitalisation of profit or reserves, rights issue, bonus issue, reduction of capital, subdivision or consolidation of capital or any other variations of capital, the Board shall have the discretion and accordingly assess the practicality of complying with the requirement to cause such corresponding adjustment, if any, to be made in:- i. the Subscription Price; and ii. the number of Shares comprised in the ESOS Option or any portion thereof that is unexercised; and shall be adjusted in accordance with the formulae as set out in the By- Laws. Any adjustments to the Subscription Price and/ or the number of new Shares comprise in the ESOS Option so far as unexercised arising from bonus issues, need not be confirmed in writing by the external auditors of the Company Ranking of the new YSPSAH Shares arising from the exercise of the ESOS Options The Grantees will not be entitled to any voting right or participation in any form of distribution and/ or offer of further securities in YSPSAH until and unless such Grantees exercise their ESOS Options into new YSPSAH Shares. The new YSPSAH Shares arising from the exercise of the ESOS Options shall, upon allotment and issuance, rank pari passu in all respects with the existing issued and paid-up YSPSAH Shares, except that the new YSPSAH Shares will not be entitled to rights arising on a liquidation of YSPSAH and any dividends, rights, allotment and/ or other forms of distribution ("Distribution") that may be declared, made or paid to shareholders, for which the entitlement date for the Distribution precedes the date of which the new YSPSAH Shares are credited into the Central Depository System account with Bursa Depository of the Grantees. The new YSPSAH Shares will be subject to all provisions of the Memorandum and Articles of Association of YSPSAH and such amendments thereafter, if any. 5

10 Holding of the ESOS Options and new YSPSAH Shares The ESOS Options granted to the Grantees shall be incapable of being disposed, transferred and/ or assigned in any manner whatsoever, and are exercisable at any time or times during the duration of the Option Period. Save for the non-executive Directors, the new YSPSAH Shares allotted and issued to the Grantees pursuant to the exercise of the ESOS Options will not be subject to any holding period or restriction on transfer, disposal and/ or assignment Listing of and quotation for the new YSPSAH Shares The approval has been obtained from Bursa Securities vide its letter dated 13 May 2013 for the listing of and quotation for the new YSPSAH Shares to be issued arising from the exercise of the ESOS Options on the Main Market of Bursa Securities. 2.3 Utilisation of proceeds The actual amount of proceeds to be raised from the Proposed ESOS will depend on the number of ESOS Options granted and exercised at the relevant point of time and the Subscription Price payable upon the exercise of the ESOS Options. The proceeds arising from the exercise of the ESOS Options will be utilised for the working capital requirements of YSPSAH Group, as and when received within the tenure of the Proposed ESOS. As such, the exact timeframe for utilisation of the proceeds are not determinable at this juncture. The proceeds for working capital will be utilised to finance the Group's day-to-day operations. These expenses include, amongst others, purchase of raw materials and packaging materials, staff costs and general expenses. The proceeds raised is expected to improve the Group's cash flow and to fund its operating expenses. The estimated expenses for the Proposed ESOS amounts to approximately RM100, RATIONALE AND JUSTIFICATION FOR THE PROPOSED ESOS The implementation of the Proposed ESOS primarily serves to align the interests of the Eligible Employees to the corporate goals of YSPSAH Group. The Proposed ESOS will provide the Eligible Employees with an opportunity to have equity participation in the Company and help achieve the positive objectives as set out below:- i. To recognise the contribution of the Eligible Employees whose services are valued and considered vital to the operations and continued growth of YSPSAH Group; ii. iii. iv. To motivate the Eligible Employees towards improved performance through greater productivity and loyalty; To inculcate a greater sense of belonging and dedication as the Eligible Employees are given the opportunity to participate directly in the equity of the Company; To retain the Eligible Employees, hence ensuring that the loss of key personnel is kept to a minimum level; and v. To reward the Eligible Employees by allowing them to participate in the Group's profitability and eventually realise any capital gains arising from appreciation in the value of the Company's shares. 6

11 The Proposed ESOS is also extended to the non-executive Directors of YSPSAH and its subsidiaries, which are not dormant, as they discharge important functions, and their services and contributions are valued by the Group. 4. EFFECTS OF THE PROPOSED ESOS The effects of the Proposed ESOS are set out below:- 4.1 Issued and paid-up share capital The Proposed ESOS will not have any immediate effect on the existing issued and paid-up share capital of the Company. The issued and paid-up share capital of the Company will increase progressively depending on the number of new YSPSAH Shares to be issued arising from the exercise of the ESOS Options that may be granted under the Proposed ESOS. For illustrative purpose, the proforma effects of the Proposed ESOS on the issued and paid-up share capital of YSPSAH are set out below:- No. of Shares RM Issued and paid-up share capital as at the LPD 133,042, ,042,985 Shares to be issued assuming full exercise of the ESOS 13,304,298 13,304,298 Options granted *1 Enlarged issued and paid-up share capital 146,347, ,347,283 Note:- *1 Assuming that the number of ESOS Options granted amounts to 10% of the issued and paid-up share capital of the Company 4.2 NA per Share and gearing The Proposed ESOS is not expected to have an immediate effect on the NA per Share and gearing of the Group until such time when the ESOS Options to be granted under the Proposed ESOS are exercised. The effects on the NA per Share and gearing of the Group will depend on the Subscription Price of the ESOS Options, the number of new YSPSAH Shares to be issued upon the exercise of the ESOS Options and the potential effect on the future earnings of the Group arising from the adoption of the Financial Reporting Standards 2 ("FRS 2"). Whilst the granting of the ESOS Options under the Proposed ESOS is expected to result in recognition of a charge in the statement of comprehensive income of the Group pursuant to the FRS 2, the recognition of such FRS 2 charge would not have any impact on the NA of the Group as the corresponding amount will be classified as an equity reserve which forms part of shareholders' equity. In the event none of the ESOS Options granted are exercised within the duration of the Proposed ESOS, the said amount would be transferred into the Company's retained earnings. On the other hand, the ESOS Options that are exercised may increase the share premium account, depending on the Subscription Price of the ESOS Options. Nevertheless, the Company has taken note of the potential impact of the FRS 2 on YSPSAH Group's future NA per Share and shall take into consideration such impact on the allocation and granting of ESOS Options to the Eligible Employees. 7

12 4.3 Earnings and EPS The Proposed ESOS is not expected to have any material effect on the earnings of YSPSAH Group for the FYE 31 December 2013, save for the possible impact of the FRS 2 on share-based payment. However, any potential effect on the EPS of YSPSAH Group in the future would depend on the number of ESOS Options granted and exercised, and the Subscription Price payable upon the exercise of the ESOS Options, as well as the impact of the FRS 2 on share-based payment. Under the FRS 2 on the share-based payment effective 1 January 2006, the cost arising from the issuance of the ESOS Options is measured by the fair value of the ESOS Options, which is expected to vest at each Date of Offer and is recognised in the statement of comprehensive income over the vesting period of the ESOS Options, thereby reducing the earnings of YSPSAH Group. The fair value of the ESOS Options is determined after taking into consideration, amongst others, the historical volatility of YSPSAH Shares, the risk-free rate, the subscription price of the ESOS Options and time to maturity of the ESOS Options from the vesting date of the ESOS Options. Hence, the potential effect on the EPS of YSPSAH Group, as a consequence of the recognition of the said cost, cannot be determined at this juncture. Nevertheless, the Company has taken note of the potential impact of the FRS 2 on YSPSAH Group's future earnings and shall take into consideration such impact on the allocation and granting of ESOS Options to the Eligible Employees. 4.4 Substantial shareholding structure The Proposed ESOS is not expected to have any immediate effect on the shareholdings of the substantial shareholders of YSPSAH. Any potential effect on the substantial shareholdings in YSPSAH will depend on the number of ESOS Options granted and new YSPSAH Shares to be issued arising from the exercise of the ESOS Options at any point in time. Based on the assumption that the number of ESOS Options granted amounts to 10% of the issued and paid-up share capital of YSPSAH, the proforma effects of the Proposed ESOS on the shareholdings of the substantial shareholders of the Company are set out in the ensuing page. THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 8

13 I After the Proposed ESOS and assuming full Shareholdings as at the LPD exercise of the ESOS Options granted *1 < Direct >< Indirect >< Direct >< Indirect > Substantial shareholders No. of Shares % No. of Shares % No. of Shares % No. of Shares % YSP International Company Limited 52,365, ,365, Lembaga Tabung Haji 15,523, ,523, Lee-Chang Yu-Ying ,833,772 * ,833,772 * Dato' Dr. Lee Fang Hsin 11,004, ,695,370 * ,004,209 * ,695,370 * Dr. Lee Fang-Yu 1,447, ,365,605 * ,447, ,365,605 * Dr. Lee Lee Fang-Chen 1,762, ,365,605 * ,762,097 * ,365,605 * Dr. Lee Fang-Jen 1,213, ,365,605 * ,213, ,365,605 * Lee Ling-Chin 1,520, ,365,605 * ,520,394 * ,365,605 * Lee Ling-Fen 519, ,365,605 * , ,365,605 * Yung Shin Pharmaceutical Industries Co. Ltd ,365,605 * ,365,605 * Yung Shin Global Holding Corporation ,365,605 * ,365,605 * Notes:- *1 *2 *3 *4 *5 *6 *7 Included for illustrative purposes only Dato' Dr. Lee Fang Hsin, Dr. Lee Lee Fang-Chen, Lee Ling Chin, being the Eligible Employees, were granted the maximum number of 1,000,000 ESOS Options each under the Proposed ESOS and assuming the ESOS Options were fully exercised into new YSPSAH Shares Deemed interested by virtue of her family members' direct shareholding in YSPSAH and by virtue of her family members' shareholding of more than 15% in Yung Shin Global Holding Corporation Deemed interested by virtue of his interest in Yung Shin Global Holding Corporation and his spouse's interest in the Company pursuant to Section 6A of the Act Deemed interested by virtue of his/ her interest in Yung Shin Global Holding Corporation Deemed interested by virtue of Section 6A of the Act, through its 100% interest in YSP International Company Limited Deemed interested by virtue of Section 6A of the Act, through its 100% interest in Yung Shin Pharmaceutical Industries Co., Ltd 9

14 4.5 Convertible securities As at the LPD, the Company does not have any existing convertible securities. 5. HISTORICAL SHARE PRICES The monthly highest and lowest market prices of YSPSAH Shares as traded on Bursa Securities for the past 12 months from May 2012 to April 2013 are set out below:- High Low RM RM 2012 May June July August September October November December January February March April Last transacted market price on 1 March 2013 (being the date prior to the Announcement) Last transacted market price on the LPD (being the LPD prior to the printing of this Circular) RM1.03 RM1.10 (Source: Bloomberg) 6. APPROVALS REQUIRED/ OBTAINED The Proposed ESOS are subject to the following approvals:- i. Bursa Securities, for the listing of and quotation for the new YSPSAH Shares to be issued arising from the exercise of the ESOS Options on the Main Market of Bursa Securities, which was obtained vide its letter dated 13 May 2013, subject to the following conditions:- Conditions 1. RHBIB is required to submit a confirmation to Bursa Securities of full compliance of the Proposed ESOS pursuant to Paragraph 6.43(1) of the Listing Requirements and stating the effective date of implementation together with a certified true copy of the resolution passed by the shareholders in general meeting approving the Proposed ESOS; and 2. YSPSAH is required to furnish Bursa Securities on a quarterly basis a summary of the total number of shares listed pursuant to the exercise of options under the Proposed ESOS as at the end of each quarter together with a detailed computation of listing fees payable. Status of compliance To be complied To be complied ii. iii. The shareholders of YSPSAH, at the forthcoming EGM of the Company; and Any other relevant authority, if required. 10

15 The Proposed ESOS is not conditional upon any other proposals undertaken or to be undertaken by the Company. 7. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/ OR PERSONS CONNECTED TO THEM All the Directors of YSPSAH are eligible to participate in the Proposed ESOS, and are therefore deemed interested to the extent of their respective allocations under the Proposed ESOS. Notwithstanding this, all Directors have deliberated on the Proposed ESOS, and have agreed to present the Proposed ESOS to the shareholders of the Company for their consideration and approval. The Directors of YSPSAH shall abstain from voting in respect of their direct and/ or indirect shareholdings, if any, at the forthcoming EGM of the Company in respect of the ordinary resolutions to be tabled for their respective proposed allocation as well as the proposed allocations to the persons connected to them, if any. The Directors of YSPSAH will undertake to ensure that persons connected to them, if any, will abstain from voting in respect of their direct and/ or indirect shareholdings, if any, in the Company on the ordinary resolutions pertaining to their respective proposed allocation and the proposed allocations to the persons connected to them to be tabled at the forthcoming EGM. The shareholdings of the Directors of YSPSAH and interested major shareholders as at the LPD are set out below:- Directors of YSPSAH Shareholdings as at the LPD < Direct > < Indirect > No. of Shares % No. of Shares % Datuk Dr. Anis Bin Ahmad 1,187, Dato' Dr. Lee Fang Hsin 11,004, ,695,370 * Dr. Lee Lee Fang-Chen 1,762, ,365,605 * Lee Ling Chin 1,520, ,365,605 * Tuan Haji Adi Azuan Bin Abdul Ghani Datuk Koay Soon Eng 657, Tu Shu Yao 282, ,000 * Interested major shareholders YSP International Company Limited 52,365, Lee-Chang Yu-Ying ,833,772 * Dato' Dr. Lee Fang Hsin 11,004, ,695,370 * Dr. Lee Fang-Yu 1,447, ,365,605 * Dr. Lee Lee Fang-Chen 1,762, ,365,605 * Dr. Lee Fang-Jen 1,213, ,365,605 * Lee Ling-Chin 1,520, ,365,605 * Lee Ling-Fen 519, ,365,605 * Yung Shin Pharmaceutical Industries Co. Ltd ,365,605 *

16 Shareholdings as at the LPD < Direct > < Indirect > No. of Shares % No. of Shares % Yung Shin Global Holding Corporation ,365,605 * Notes:- *1 *2 *3 *4 *5 *6 Deemed interested by virtue of his interest in Yung Shin Global Holding Corporation and his spouse's interest in the Company pursuant to Section 6A of the Act Deemed interested by virtue of his/ her interest in Yung Shin Global Holding Corporation Deemed interested by virtue of his spouse's interest in the Company pursuant to Section 6A of the Act Deemed interested by virtue of her family members' direct shareholding in YSPSAH and by virtue of her family members' shareholding of more than 15% in Yung Shin Global Holding Corporation Deemed interested by virtue of Section 6A of the Act, through its 100% interest in YSP International Company Limited Deemed interested by virtue of Section 6A of the Act, through its 100% interest in Yung Shin Pharmaceutical Industries Co., Ltd Save as disclosed above, none of the Directors and interested major shareholders of the Company and/ or persons connected to the Directors has any other interest, either direct or indirect, in the Proposed ESOS and proposed allocation under the Proposed ESOS to the respective Directors of YSPSAH. 8. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances and subject to all required approvals being obtained, the Board expects the Proposed ESOS to be completed by the third quarter of PROPOSALS ANNOUNCED BUT PENDING COMPLETION Save for the Proposed ESOS, the Board is not aware of any other corporate exercise that has been announced but not yet completed as at the date of this Circular. 10. DIRECTORS' RECOMMENDATION The Board, having considered all aspects of the Proposed ESOS, is of the opinion that the Proposed ESOS is in the best interest of the Group after taking into consideration the rationale and justification for the Proposed ESOS, and the effects of the Proposed ESOS as set out in Sections 3 and 4 of this Circular, respectively. Accordingly, the Board recommends that you vote in favour of the resolutions pertaining to the Proposed ESOS at the forthcoming EGM. However, the Board has abstained from giving any opinion on the respective proposed allocation under the Proposed ESOS to each of them and/ or persons connected to them. In addition, the Board has also abstained from making any recommendation for voting in respect of the resolutions pertaining to the proposed allocation to each of them and/ or persons connected to them, given that they are interested in the respective proposed allocation to them and/ or persons connected to them under the Proposed ESOS. 12

17 11. EGM The EGM, the notice of which is enclosed in this Circular, is scheduled to be held at the Maple Junior Ball, Level C, One World Hotel, First Avenue, Bandar Utama City Centre, Petaling Jaya, Selangor Darul Ehsan on Monday, 17 June 2013 at a.m. or immediately following the conclusion or adjournment of the Twelfth AGM of the Company scheduled to be held at the same venue and on the same date at 9.30 a.m., whichever is later, for the purpose of considering and if thought fit, passing with or without modification, the resolutions to give effect to the Proposed ESOS. If you are unable to attend and vote in person at the EGM, you are requested to complete, sign and return the enclosed Form of Proxy in accordance with the instructions contained therein, to be deposited at the Company Secretary's Office at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, Kuala Lumpur, not less than 48 hours before the time stipulated for holding the EGM or at any adjournment thereof. The lodging of the Form of Proxy shall not preclude you from attending and voting in person at the EGM should you subsequently wish to do so. 12. FURTHER INFORMATION Shareholders are advised to refer to the attached appendices for further information. Yours faithfully, For and on behalf of the Board of Y.S.P. SOUTHEAST ASIA HOLDING BERHAD DATUK DR. ANIS BIN AHMAD Chairman / Independent Non-Executive Director 13

18 APPENDIX I DRAFT BY-LAWS OF THE PROPOSED ESOS 1. DEFINITIONS In these By-Laws, the following terms shall, unless the context otherwise requires, have the following meanings: Act : The Companies Act, 1965, as amended from time to time and any re-enactment thereof. Articles : Articles of Association of the Company, as amended from time to time. Board : The Board of Directors of YSPSAH for the time being. Bursa Securities : Bursa Malaysia Securities Bhd (Company No W). Bursa Securities LR : Main Market Listing Requirements of Bursa Securities including any amendments thereto that may be made from time to time. CDS : Central Depository System. CDS Account : The account established by the Depository for the recording of deposit and withdrawal of securities and for dealing in such securities by the depositor. Central Depositories Act : The Securities Industry (Central Depositories) Act, 1991, as amended from time to time. Date of Acceptance : The date whereupon the ESOS Committee shall receive the written notice from an Eligible Employee accepting an Offer. Date of Offer : The date on which an Offer (including any subsequent Offers) is made to the Eligible Employee by the ESOS Committee to participate in the Scheme. Depository : Bursa Malaysia Depository Sdn Bhd (Company No W). Depository Rules : Rules of Depository, as amended from time to time. Director(s) : Either an executive director or a non-executive director of the Group within the meaning of Section 4 of the Act. Effective Date : The date on which the Scheme comes into force as provided in By-Law 19. Eligible Employee : An employee or Director of the YSPSAH Group who meets the criteria of eligibility for participation in the Scheme as stipulated under By-Law 3. ESOS : The employees share option scheme. 14

19 ESOS Committee : The committee appointed and duly authorized by the Board to administer the Scheme comprising a Director or Directors of the Company and other persons appointed from time to time by the Board. Grantee : An Eligible Employee who has accepted the Offer or any part thereof of an Option in accordance with the provisions of By- Law 6. Market Day Maximum Allowable Allotment Offer(s) : Any day between Monday to Friday (inclusive), excluding public holidays, and a day on which Bursa Securities is open for trading of securities. : The maximum number of new YSPSAH Shares that may be offered and allotted to an Eligible Employee in accordance with the provisions of By-Law 4. : Written offer(s) by the ESOS Committee to an Eligible Employee to participate in the Scheme in the manner indicated under By-Law 5. Option(s) : The right of a Grantee to subscribe for new YSPSAH Shares pursuant to the contract constituted by the acceptance of an Offer by an Eligible Employee in the manner indicated under By-Law 6. Option Certificate : The certificate issued by the ESOS Committee confirming the grant of the Option to an Eligible Employee and the Option Price together with the number of YSPSAH Shares comprised in the Option. Option Period : The period commencing from the Date of Offer and expiring at the end of seven (7) calendar years from the Effective Date or such other period as may be specifically stated in the Offer provided that no option period shall extend beyond the duration referred to under By-Law 19 hereof or in the event of a termination of the Scheme, the date of termination of the Scheme. Option Price : The price at which the Grantee shall be entitled to subscribe for new YSPSAH Shares in the manner indicated under By- Law 7. Person Connected with him : Person connected as defined in paragraph 1.01 of the Bursa Securities LR. Scheme : The scheme for the grant of Options to Eligible Employees to subscribe for new YSPSAH Shares upon the terms as set out herein, such scheme to be known as the YSPSAH Employees Share Option Scheme. RM : Ringgit Malaysia. YSPSAH or Company : Y.S.P. Southeast Asia Holding Bhd (Company No X). 15

20 YSPSAH Group or Group YSPSAH Share(s) or Share(s) : YSPSAH and its subsidiaries as defined in Section 5 of the Act which are not dormant. Subsidiaries include subsidiaries existing as at the Effective Date and subsidiaries incorporated or acquired at any time during the tenure of the Scheme. : Ordinary share(s) of RM1.00 each in YSPSAH. In these By-Laws: (a) (b) (c) (d) (e) (f) (g) any reference to a statutory provision shall include any subordinate legislation made from time to time under that provision and any Bursa Securities LR, policies and/or guidelines of the relevant authorities (in each case, whether or not having the force of law but, if not having the force of law, the compliance with which is in accordance with the reasonable commercial practice of persons to whom such requirements, policies and/or guidelines are addressed to by Bursa Securities and/or the relevant authorities); any reference to a statutory provision shall include that provision as from time to time modified or re-enacted whether before or after the date of these By-Laws so far as such modification or re-enactment applies or is capable of applying to any Options offered and accepted within the duration of the Scheme and shall also include any past statutory provision (as from time to time modified or re-enacted) which such provision has directly or indirectly replaced; words importing the singular meaning, where the context so admits, include the plural meaning and vice versa; words of the masculine gender include the feminine genders and all such words shall be construed interchangeably in that manner; any liberty or power which may be exercised or any determination which may be made hereunder by the ESOS Committee may be exercised in the ESOS Committee s discretion; the headings in these By-Laws are for convenience only and shall not be taken into account in the interpretation of these By-Laws; and if an event is to occur on a stipulated day which is not a Market Day, then the stipulated day will be taken to be the first Market Day after that day. 2. MAXIMUM NUMBER OF YSPSAH SHARES AVAILABLE UNDER THE SCHEME 2.1 The maximum number of new YSPSAH Shares to be issued pursuant to the exercise of the Options which may be granted under the Scheme shall not exceed ten percent (10%) of the total issued and paid-up share capital of the Company at any point of time throughout the duration of the Scheme as provided in By-Law

21 2.2 Notwithstanding By-Law 2.1 or any other provision herein contained, in the event the maximum number of new YSPSAH Shares comprised in the Options granted under the Scheme exceeds the aggregate of ten percent (10%) of the issued and paid-up share capital of the Company as a result of the Company purchasing its own shares in accordance with Section 67A of the Act or undertaking any other corporate proposal and thereby diminishing its issued and paid-up share capital, then such Options granted prior to the adjustment of the issued and paid-up share capital of the Company shall remain valid and exercisable in accordance with the provisions of the By- Laws. No further Options shall be offered until the total number of new YSPSAH Shares comprised in the Options to be granted under the Scheme falls below ten percent (10%) of its issued and paid-up share capital. 3. ELIGIBILITY 3.1 Any employee of the Group shall be eligible to participate in the Scheme if, as at the Date of Offer, the employee: (a) (b) (c) is at least 18 years of age; is employed full-time by and on the payroll of a company in the Group; and is confirmed in writing as a full time employee and has been in the employment of the Group for a period of at least six (6) months of continuous service prior to and up to the Date of Offer, including service during the probation period and falls within any other criteria that the ESOS Committee may from time to time determine at its discretion. The eligibility and number of Options to be offered to an Eligible Employee under the Scheme shall be at the sole and absolute discretion of the ESOS Committee and the decision of the ESOS Committee shall be final and binding. 3.2 Any Director of the Group shall be eligible to participate in the Scheme if, as at the Date of Offer, such Director: (a) (b) (c) is at least 18 years of age; has been appointed as a Director of a company within the YSPSAH Group for a period of at least three (3) months; and should have their entitlements under the Scheme approved by the shareholders of the Company in a general meeting. 3.3 Eligibility under the Scheme does not confer on an Eligible Employee a claim or right to participate in or any rights whatsoever under the Scheme and an Eligible Employee does not acquire or have any rights over or in connection with the Options or the new YSPSAH Shares comprised therein unless an Offer has been made in writing by the ESOS Committee to the Eligible Employee under By-Law 5 and the Eligible Employee has accepted the Offer in accordance with the terms of the Offer and the Scheme. 3.4 A set of criteria on staff eligibility and allocation as determined by the Board from time to time shall be made available to all Eligible Employees of the YSPSAH Group. The allocation of the Options pursuant to the Scheme shall be verified by the audit committee at the end of each financial year and an statement made by audit committee on the verification of the such allocation shall be included in the annual report of YSPSAH. 17

22 4. BASIS OF ALLOCATION AND MAXIMUM ALLOWABLE ALLOTMENT 4.1 Subject to any adjustment which may be made under By-Law 15, the aggregate number of new YSPSAH Shares that may be offered under the Scheme and allotted to an Eligible Employee shall be at the sole and absolute discretion of the ESOS Committee after taking into consideration, amongst others and where relevant, the performance, contribution, employment grade, seniority and length of service of the Eligible Employee, subject to the following: (a) (b) (c) not more than 50% of the new YSPSAH Shares available under the Scheme shall be allocated, in aggregate, to Directors and senior management of the Group; and not more than 10% of the new YSPSAH Shares available under the Scheme shall be allocated to any individual Eligible Employee who, either singly or collectively through Persons Connected with the Eligible Employee, holds 20% or more in the issued and paid-up share capital of the Company; and the Directors and senior management do not participate in the deliberation or discussion of their own allocation, provided always that it is in accordance with any prevailing guidelines issued by Bursa Securities, the Bursa Securities LR or any other relevant authorities as amended from time to time. 4.2 At the time the Offer is made in accordance with By-Law 5, the ESOS Committee shall set out the basis of allotment, identifying the category or grade of the Eligible Employee and the Maximum Allowable Allotment for the Eligible Employee. 4.3 Any Eligible Employee who holds more than one position within the YSPSAH Group and by holding such positions, the Eligible Employee is in more than one category, shall only be entitled to the Maximum Allowable Allotment of any one of those categories. The ESOS Committee shall be entitled at its discretion to determine the applicable category. 4.4 In the event that an Eligible Employee is promoted, the Maximum Allowable Allotment applicable to such Eligible Employee shall be the Maximum Allowable Allotment corresponding to the category of employee of which he then is a party, subject always to the maximum number of YSPSAH Shares available under the Scheme as stipulated under By-Law The allocation available under the Proposed ESOS will be staggered over the duration of the Proposed ESOS on an annual basis. The maximum allocation available to the Eligible Employees is fixed as 25% per annum. 5. OFFER OF OPTIONS 5.1 (a) The ESOS Committee shall, within the duration of the Scheme as specified in By-Law 19 hereof, make Offers to any Eligible Employee (based on the criteria of allocation as set out in By-Law 3 herein) whom the ESOS Committee may in its sole and absolute discretion select to subscribe for new YSPSAH Shares. Further offers of Options may be made to those who become eligible for offer under the Scheme. (b) Notwithstanding subsection (a) above, where it involves a grant of Option to Eligible Employees who are members of the ESOS Committee, such grant of Options shall be decided by the Board. 18