JT INTERNATIONAL BERHAD (Company No D) (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 to be taken, 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 howsoever arising from or in reliance upon the whole or any part of the contents of this Circular. In line with Practice Note 18 of Bursa Securities, Bursa Securities has not perused Part B of this Circular prior to its issuance as the Proposed Amendments to the Articles of Association of the Company fall under the category of exempt Circulars as outlined in the aforesaid practice note. JT INTERNATIONAL BERHAD (Company No D) (Incorporated in Malaysia) CIRCULAR TO SHAREHOLDERS IN RELATION TO PART A: PART B: PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR JT INTERNATIONAL BERHAD AND ITS SUBSIDIARIES TO ENTER INTO RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE WITH RELATED PARTIES PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION The above proposals will be tabled at the Fortieth Annual General Meeting of the Company. Notice of the Fortieth Annual General Meeting of the Company, which will be held at Ballroom 1, 1 st Floor, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, Kuala Lumpur on Thursday, April 25, 2013 at a.m. together with the Form of Proxy are enclosed in the 2012 Annual Report of the Company dispatched together with this Circular. The Form of Proxy must be lodged at the Registered Office of the Company at 6 th Floor, Menara Manulife, No. 6, Jalan Gelenggang, Damansara Heights, Kuala Lumpur not later than forty-eight (48) hours before the time set for holding the meeting or at any adjournment thereof. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the meeting should you subsequently wish to do so. Last date and time for lodging the Form of Proxy : Tuesday, 23 April 2013 at a.m. Date and time of the Fortieth Annual General Meeting : Thursday, 25 April 2013 at a.m. This Circular is dated 3 April 2013

2 DEFINITIONS Except where the context otherwise requires, the following definitions shall apply throughout this Circular: Act AGM Board Bursa Securities Companies Act, 1965, as amended from time to time and any re-enactment thereof Annual General Meeting Board of Directors of JTI Malaysia Bursa Malaysia Securities Berhad CMSA Capital Markets and Services Act 2007 Director Japan Tobacco Inc. Group JTI Malaysia or Company JTI Malaysia Group or Group Listing Requirements Major Shareholder has the meaning given in Section 2(1) of the CMSA and includes any person who is or was within the preceding 6 months of the date on which the terms of the transaction were agreed upon, a Director of JTI Malaysia, its subsidiary or holding company or a chief executive of JTI Malaysia, its subsidiary or holding company Japan Tobacco Inc. and its subsidiaries and associated companies Berhad Berhad and its subsidiaries Main Market Listing Requirements of Bursa Securities, as amended from time to time means a person who has an interest or interests in one or more voting shares in the Company and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is (a) (b) 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. This includes any person who is or was within the preceding 6 months of the date on which the terms of the transaction were agreed upon, a Major Shareholder of JTI Malaysia or any other corporation which is its subsidiary or holding company. For the purpose herein, interest in shares has the meaning given in Section 6A of the Act Person Connected in relation to a Director or Major Shareholder, means such person who falls under any one of the following categories: (a) (b) (c) a family member of the Director or Major Shareholder; a trustee of a trust (other than a trustee for an employee share scheme 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; -i-

3 DEFINITIONS (Cont d) (d) (e) (f) (g) (h) (i) 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, Major Shareholder or Persons Connected with him are entitled to exercise, or control the exercise of, not less than 15% of the votes attached to voting shares in the body corporate; or a body corporate which is a related corporation. Proposed Amendments of Articles Proposed Mandate Related Party Related Party Transaction Recurrent Related Party Transactions RM Shareholder Mandate Proposed amendments to the Articles of Association of JTI Malaysia as in the Annexure to Part B of this Circular Proposed renewal of the existing shareholders mandate for JTI Malaysia Group to enter into Recurrent Related Party Transactions the details of which are set out in Section 2.5 of Part A of this Circular means a Director, Major Shareholder or Person Connected with such Director or Major Shareholder means a transaction entered into by the JTI Malaysia Group which involves the interest, direct or indirect, of a Related Party means Related Party Transactions which are recurrent, of a revenue or trading nature and which are necessary for day-to-day operations of the Group Ringgit Malaysia Shareholders approval for a general mandate for the JTI Malaysia Group to enter into Recurrent Related Party Transactions For practical reasons, information disclosed in this Circular, unless otherwise indicated, has been based on a cutoff date of 7 March 2013, being the latest practicable date ( LPD ) before the printing of this Circular. -ii-

4 CONTENTS PART A LETTER TO SHAREHOLDERS IN RELATION TO THE PROPOSED MANDATE CONTAINING Page 1.0 INTRODUCTION DETAILS OF THE PROPOSED MANDATE RATIONALE FOR AND BENEFITS OF THE PROPOSED MANDATE DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS EXISTING MANDATE ON RECURRENT RELATED PARTY TRANSACTIONS DETAILS OF OVERDUE TRADE RECEIVABLES APPROVAL REQUIRED DIRECTORS RECOMMENDATION AGM FURTHER INFORMATION 13 PART B LETTER TO SHAREHOLDERS IN RELATION TO THE PROPOSED AMENDMENTS OF ARTICLES CONTAINING Page 1.0 INTRODUCTION DETAILS OF THE PROPOSED AMENDMENTS OF ARTICLES RATIONALE FOR THE PROPOSED AMENDMENTS OF ARTICLES EFFECTS OF THE PROPOSED AMENDMENTS OF ARTICLES APPROVAL REQUIRED DIRECTORS RECOMMENDATION AGM FURTHER INFORMATION 15 ANNEXURE DETAILS OF THE PROPOSED AMENDMENTS OF ARTICLES APPENDIX FURTHER INFORMATION 18 -iii-

5 PART A LETTER TO SHAREHOLDERS IN RELATION TO THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE

6 JT INTERNATIONAL BERHAD (9244-D) (Incorporated in Malaysia) Registered Office: - 6 th Floor, Menara Manulife No. 6, Jalan Gelenggang Damansara Heights Kuala Lumpur Board of Directors: - 3 April 2013 Dato Sri Mohd. Nadzmi bin Mohd. Salleh (Independent Non-Executive Chairman) Robert John Stanworth (Managing Director) Thean Nam Hooi (Executive Director) Hirakazu Otomo (Executive Director) Nobuaki Hayashi (Non-Executive Director) Pierre Henri Emeric Binetter (Non-Executive Director) Datuk Henry Chin Poy-Wu (Independent Non-Executive Director) Keong Choon Keat (Independent Non-Executive Director) Leong Wai Hoong (Independent Non-Executive Director) To: The Shareholders of Berhad Dear Sir/Madam, PROPOSED RENEWAL OF EXISTING SHAREHOLDERS MANDATE FOR JTI MALAYSIA GROUP TO ENTER INTO RECURRENT RELATED PARTY TRANSACTIONS 1.0 INTRODUCTION The Company had at its Thirty-Ninth AGM held on 26 April 2012 obtained a Shareholder Mandate for the Company and its subsidiaries to enter into Recurrent Related Party Transactions in the ordinary course of business based on commercial terms which are not more favourable to the Related Party than those generally available to the public. The authority conferred by the Shareholder Mandate shall in accordance with the Listing Requirements lapse at the conclusion of the forthcoming AGM unless authority for its renewal is obtained from the shareholders of the Company at the AGM. On 26 February 2013 the Company announced that it proposes to seek a renewal of the existing Shareholder Mandate for the Recurrent Related Party Transactions. The purpose of this Circular is to provide you with details on the Proposed Mandate, to set out the views of your Board, and to seek your approval for the Ordinary Resolution pertaining to the Proposed Mandate to be tabled at the forthcoming AGM as Special Business. 2.0 DETAILS OF THE PROPOSED MANDATE 2.1 Provisions under the Listing Requirements Paragraph 10.09(2) of the Listing Requirements provides that a listed issuer may seek a mandate from its shareholders for Recurrent Related Party Transactions subject to the following:- -1-

7 (a) the transactions are in the ordinary course of business and are on terms not more favourable to the related party than those generally available to the public; (b) (c) (d) (e) the shareholder mandate is subject to annual renewal and disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the shareholder mandate during the financial year where the aggregate value is equal to or more than the threshold prescribed under paragraph 10.09(1) of the Listing Requirements; the issuing of circular to shareholders for the shareholder mandate, the contents of which include information as may be prescribed by Bursa Securities; in a meeting to obtain shareholders mandate, the interested director, interested major shareholder or interested person connected with a director or major shareholder; and where it involves the interest of an interested person connected with a director or major shareholder, such director or major shareholder, must not vote on the resolution 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 listed issuer immediately announces to Bursa Securities when the actual value of a Recurrent Related Party Transaction entered into by the listed issuer, 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 Pursuant thereto, the Company is seeking a renewal of the Shareholder Mandate for the transactions mentioned in Section 2.5, Part A of this Circular. The Proposed Mandate will allow the JTI Malaysia Group in the normal course of business to enter into Recurrent Related Party Transactions provided such transactions are on terms not more favourable to the Related Parties than those generally available to the public. The authority to be conferred by the Proposed Mandate will take effect from the passing of the ordinary resolution proposed at the forthcoming AGM and shall continue to be in force until:- (a) (b) (c) the conclusion of the next AGM of JTI Malaysia following the forthcoming AGM at which the proposal is approved, at which time it will lapse, unless by a resolution passed at the general meeting, the authority is renewed; the expiration of the period within which the next AGM after the forthcoming AGM is required 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 revoked or varied by resolution passed by the shareholders in general meeting; whichever is the earlier. Disclosure will be made in the Company s Annual Report in accordance with Section of Bursa Securities Practice Note 12, which requires a breakdown of the aggregate value of the Recurrent Related Party Transactions made during the financial year pursuant to the Proposed Mandate based on the following information:- (i) (ii) 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. -2-

8 2.2 Principal Activities of the JTI Malaysia Group The principal activity of JTI Malaysia is investment holding. The principal activities of its subsidiaries are the manufacturing, marketing and sale of tobacco products under the brand names of Salem, Winston, Mild Seven, Camel and More. 2.3 Japan Tobacco Inc. Group The Japan Tobacco Inc. Group is an international tobacco group involved in the business of manufacturing, marketing and sale of internationally recognised cigarette brands including Camel, Winston, Mild Seven and Salem throughout the world. Japan Tobacco Inc. has offices in more than 40 countries outside of Japan. JTI Malaysia is a member of the Japan Tobacco Inc. Group, being 60.37% directly held by Holding B.V., a corporation which is indirectly a subsidiary of Japan Tobacco Inc. 2.4 Class of Related Parties And Nature of Recurrent Related Party Transactions Contemplated Under the Proposed Mandate The Proposed Mandate will apply to transactions between the JTI Malaysia Group and the Japan Tobacco Inc. Group. The Related Parties and their relationships and the type of the Recurrent Related Party Transactions, which are intended to be entered into by the JTI Malaysia Group with the Japan Tobacco Inc. Group pursuant to the Proposed Mandate, are as detailed in Section 2.5 of Part A of this Circular. The estimated values of the Recurrent Related Party Transactions set out in this Circular are for the period from the conclusion of the forthcoming AGM of the Company until the conclusion of the next AGM of the Company based on the JTI Malaysia Group s budget for financial year ending 31 December 2013 and may be subject to changes. The aggregate or actual values of these transactions may exceed the estimated amounts over the said period. 2.5 Proposed Mandate The Company is seeking a renewal of the Shareholder Mandate for the JTI Malaysia Group to enter into the transactions as detailed in the table below with the Japan Tobacco Inc. Group which had been approved by the shareholders on 26 April In addition to the Related Transacting Parties detailed in the table below, the JTI Malaysia Group may also need to enter into the type of transactions detailed in the table below with other Related Parties of the Japan Tobacco Inc. Group in the ordinary course of business. Item Related Transacting Parties Nature of transaction undertaken by the JTI Malaysia Group Estimated Value of transaction from 25 April 2013 to the date of next AGM RM 000 Nature of interest S.A. Use of licensed trademarks (which includes Salem, Winston, Mild Seven, Camel and More ) and procurement of technical know-how for the aforesaid brands 29,367 Through Major Shareholder JTI Malaysia Group is related to S.A. through a common Major Shareholder, namely Holding B.V. and common ultimate holding company, namely Japan Tobacco Inc. -3-

9 Item Related Transacting Parties Nature of transaction undertaken by the JTI Malaysia Group Estimated Value of transaction from 25 April 2013 to the date of next AGM RM 000 Nature of interest Purchases Sales (A) (B) Japan Tobacco Inc. Germany GmbH Limited Liability Company Petro S.A. Japan Tobacco International (Singapore) Pte. Ltd. JTI Business Services (Asia) Sdn. Bhd. JTI (Vietnam) Pte Ltd. (Thailand) Limited Gallaher Singapore Pte Limited Gallaher Limited JTI Kazakhstan Limited Liability Company Austria Tabak GmbH Korea Inc AG Dagmersellen Purchase and sale of tobacco leaf, cigarette packaging and wrapping materials, equipments and spare parts for tobacco processing, cigarette making and packing machines 1,463 (28,678) Through Major Shareholder JTI Malaysia is a member of the Japan Tobacco Inc. Group, being 60.37% directly held by JT International Holding B.V., a corporation which is indirectly a subsidiary of Japan Tobacco Inc. Japan Tobacco Inc. is the ultimate holding company of JTI Malaysia. JTI Malaysia Group is related to the Related Transacting Parties referred to in item (B) herein through a common Major Shareholder, namely Holding B.V. -4-

10 Item Related Transacting Parties Nature of transaction undertaken by the JTI Malaysia Group Estimated Value of transaction from 25 April 2013 to the date of next AGM RM 000 Nature of interest Services Switzerland SA Gallaher Limited Payment for management costs relating to expatriates working in Malaysia 15,142 Through Major Shareholder JTI Malaysia Group is related to the Related Transacting Parties herein through a common Major Shareholder, namely Holding B.V. and common ultimate holding company, namely Japan Tobacco Inc. (A) (B) Japan Tobacco Inc. JTI Business Services (Asia) Sdn. Bhd. Gallaher Limited S.A. Procurement of transactional, administrative, technical and operational services including areas of accounting, planning, purchasing and business support 5,335 Through Major Shareholder Japan Tobacco Inc. is the ultimate holding company of JTI Malaysia. JTI Malaysia Group is related to the Related Transacting Parties referred to item (B) herein through a common Major Shareholder, namely JT International Holding B.V. S.A. Procurement for various information technology and consulting services, software purchase and installation, training and sharing of cost in relation to system implementation 10,925 Through Major Shareholder JTI Malaysia Group is related to S.A. through a common Major Shareholder, namely Holding B.V. and common ultimate holding company, namely Japan Tobacco Inc. S.A. Undertaking consignment manufacturing activities of tobacco products under the various brand names which includes Salem, Winston, Mild Seven, Camel and More (33,857) Through Major Shareholder JTI Malaysia Group is related to S.A. through a common Major Shareholder, namely Holding B.V. and common ultimate holding company, namely Japan Tobacco Inc. -5-

11 Item Related Transacting Parties Nature of transaction undertaken by the JTI Malaysia Group Estimated Value of transaction from 25 April 2013 to the date of next AGM RM 000 Nature of interest (A) (B) Japan Tobacco Inc. Services Switzerland SA S.A. JTI Business Services (Asia) Sdn. Bhd. Luxembourg S.A. Provision of transactional, administrative and operational services including areas of accounting, planning, purchasing and business support (25,695) Through Major Shareholder Japan Tobacco Inc. is the ultimate holding company of JTI Malaysia. JTI Malaysia Group is related to the Related Transacting Parties referred to in item (B) herein through a common Major Shareholder, namely Holding B.V. and common ultimate holding company, namely Japan Tobacco Inc. Holding B.V. Payment for centrally rendered services benefiting JTI Malaysia Group as an entity of the Japan Tobacco Inc. Group of entities, including but not limited to:- - Consulting on business management and marketing - HR consulting and training - Quality Assurance (QA) and Global Production - Legal, Scientific and Regulatory Assurance (SRA), Corporate Security, Product Liability, Regional Law, Corporate Governance - Accounting, financial and management services (Corporate, Finance, Tax, Strategic Planning & Insurance) (See Note below) 15,586 Through Major Shareholder Holding B.V. is the holding company and Major Shareholder of JTI Malaysia with 60.37% equity interest. Note: The Japan Tobacco Inc. Group carries out a wide variety of services that benefit its member companies. The relevant companies within the Japan Tobacco Inc. Group have the relevant expertise, technical competencies as well as facilities and infrastructure to carry out the service. These centralized services rendered by the Japan Tobacco Inc. Group helps to generate saving from economies of scale for all the recipient companies. It further ensures the consistency and quality of the services received. It would not be practicable nor cost efficient for the JTI Malaysia Group to perform such services for itself. The service provider will generally charge the allocation of the cost based on the actual cost incurred. -6-

12 2.6 Guidelines and Review Procedures The JTI Malaysia Group has established procedures to ensure that the Recurrent Related Party Transactions contemplated under the Proposed Mandate are undertaken on transaction prices and terms which are generally not more favourable to the Related Party than those generally available to the public and are not to the detriment of the minority shareholders. The Recurrent Related Party Transactions which are in the ordinary course of business will be transacted at arm s length, on normal commercial terms consistent with the Group s usual business practices and policies, on terms not more favourable to the Related Party than those generally available to the public and on terms not to the detriment of the minority shareholders. These include transacting at the prevailing market rates/prices of the service or product provider s usual commercial terms, business practices and policies (including where applicable, preferential rates and discounts accorded to a class or classes of customers or for bulk purchases) or otherwise in accordance with applicable industry norms. The cost plus method will be used where appropriate in the determination of fair price or contract rates. This method determines the arm s length price or rate by adding an appropriate mark-up to the cost. Wherever practical and/or feasible, at least 2 other contemporaneous transactions with unrelated third parties for similar products/services and/or quantities will be used as comparison, to determine whether the price and terms offered to/by the related parties are fair and reasonable and comparable to those offered to/by other unrelated third parties for the same or substantially similar type of products/services and/or quantities. In the event that quotation or comparative pricing from unrelated third parties cannot be obtained (for instance, if there are no unrelated third party vendors/customers of similar products or services, or if the product/service is a proprietary item), the transaction price are set at arm s length similar to the price that a third party would charge for similar services in similar circumstances and is not detrimental to the JTI Malaysia Group. Separate transfer pricing analysis and benchmarking studies are done to ensure that such Recurrent Related Party Transactions are made at arm s length. To monitor the Recurrent Related Party Transactions, the procedures established by the JTI Malaysia Group are as follows:- (i) Records shall be maintained to capture all Recurrent Related Party Transactions which are entered into pursuant to the shareholders mandate; (ii) (iii) (iv) (v) The internal audit plan shall incorporate a review of the Recurrent Related Party Transactions entered into. The Audit Committee shall review the internal audit reports to ascertain if the established guidelines and procedures have been complied with; The Audit Committee shall review at each quarterly meeting and report to the Board on any Recurrent Related Party Transactions; Should the Audit Committee during its review form an opinion that the Recurrent Related Party Transactions are not being conducted in accordance with established terms and procedures and/or not being conducted on an arm s length basis and on normal commercial terms, or are detrimental to the interests of shareholders, it will advise the Board to convene a general meeting to seek a fresh shareholders mandate; and The Board will consider the Audit Committee s report on the Recurrent Related Party Transactions. There are no thresholds for approval of the Recurrent Related Party Transactions as all the business transactions including Recurrent Related Party Transactions are conducted in the ordinary course of business and guided by the JTI Malaysia Group s pre-determined internal operating guidelines. 2.7 Statement by Audit Committee The Audit Committee has considered the guidelines and review procedures mentioned in Section 2.6 above and is of the view that the said procedures are sufficient to ensure that the Recurrent Related Party Transactions are on terms not more favourable to the Related Party than those generally available to the public and are not to the detriment of the minority shareholders. -7-

13 In addition, the Audit Committee is of the view that the JTI Malaysia Group has in place adequate procedures and processes to monitor, track and identify Recurrent Related Party Transactions in a timely and orderly manner and of which the procedures and processes would be reviewed annually or whenever the need arises. 3.0 RATIONALE FOR AND BENEFITS OF THE PROPOSED MANDATE The Recurrent Related Party Transactions that are set out in this Circular are intended to meet the business needs of the Group on the best possible terms as well as to explore beneficial business opportunities. It is in the interest of the JTI Malaysia Group to transact with these Related Parties in order to enjoy synergistic benefits. The Proposed Mandate, if approved by the shareholders, will eliminate the need to make announcements to Bursa Securities and/or to convene separate general meetings from time to time to seek shareholders approval as and when potential Recurrent Related Party Transactions arise. This will reduce substantially the expenses associated with the convening of general meetings on an ad hoc basis, improve administrative efficiency considerably and allow manpower resources and time to be focused on attaining the Group s corporate objectives and business opportunities. The Proposed Mandate is intended to facilitate transactions entered into in the ordinary course of business of the JTI Malaysia Group which are transacted from time to time with the Related Parties at arm s length, on the Group s 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 of JTI Malaysia. 4.0 DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS Save as disclosed below, none of the other Directors, other Major Shareholders and/or Persons Connected to them has any interest, direct or indirect, in the Proposed Mandate. 4.1 Interested Directors Shigeyuki Nakano was (within the preceding 6 months of the LPD) an Executive Director of the Company. He resigned as Director of JTI Malaysia on 28 February As at LPD, Shigeyuki Nakano has 14, shares representing negligible equity interest in Japan Tobacco Inc., the ultimate holding company of JTI Malaysia. Though Robert John Stanworth (an Executive Director), Nobuaki Hayashi and Pierre Henri Emeric Binetter (both Non-Independent Non-Executive Directors) do not hold shares in the Company, they being persons nominated to the Board of the Company by Holding B.V. are deemed interested in the Proposed Mandate. Both Pierre Henri Emeric Binetter and Nobuaki Hayashi are also Directors of (Wholesale) India Private Limited, Mauritius Private Limited, Korea Inc., (Philippines) Inc., JTI Company (Philippines) Inc., Tobacco Services (Singapore) Pte. Ltd., JTI (Vietnam) Pte. Ltd., Gallaher Singapore Pte. Limited, (Thailand) Limited, Japan Tobacco International (HK) Ltd., JT International (Asia Pacific) Limited, JTI Asia (Exports) Limited, JTI Holdings (Hong Kong) Limited and JTI Services (Hong Kong) Limited, all of which are direct or indirect subsidiary companies or associated companies of Holding B.V., the Major Shareholder of JTI Malaysia. Pierre Henri Emeric Binetter is also a Director of Gallaher Asia Limited, PT Japan Tobacco International Indonesia and JT Tobacco International Taiwan Corp, all of which are direct or indirect subsidiary companies or associated companies of Holding B.V., the Major Shareholder of JTI Malaysia. Nobuaki Hayashi is also a Director of Myanmar Japan Tobacco Company Limited, a subsidiary company of Japan Tobacco Inc. Pierre Henri Emeric Binetter is a registered shareholder with 1 share each representing negligible equity interest in (Philippines) Inc and JTI Company (Philippines) Inc., both of which are subsidiary companies of Holding B.V., the Major Shareholder of JTI Malaysia. -8-

14 As at LPD, Nobuaki Hayashi has 1, shares representing negligible equity interest in Japan Tobacco Inc., the ultimate holding company of JTI Malaysia. Nobuaki Hayashi is also a registered shareholder with 1 share each representing negligible equity interest in Japan Tobacco International (HK) Ltd, (Philippines) Inc. and JTI Company (Philippines) Inc., all of which are subsidiary companies of Holding B.V., the Major Shareholder of JTI Malaysia. As at LPD, Hirakazu Otomo (an Executive Director) has 6, shares representing negligible equity interest in Japan Tobacco Inc., the ultimate holding company of JTI Malaysia. None of the Interested Directors has equity interest in JTI Malaysia as at LPD. Accordingly, Shigeyuki Nakano, Robert John Stanworth, Pierre Henri Emeric Binetter, Nobuaki Hayashi and Hirakazu Otomo ( Interested Directors ) have abstained and will continue to abstain from board deliberation and voting on the resolution relating to the Proposed Mandate. The Interested Directors and Persons Connected to them will also abstain from voting in respect of their direct and indirect shareholdings (if any) in the Company on the ordinary resolution pertaining to the Proposed Mandate at the forthcoming AGM. The Interested Directors have undertaken that they will ensure that the Persons Connected to them will abstain from voting in respect of their direct and indirect shareholdings in the Company on the resolution, deliberating or approving the Proposed Mandate at the forthcoming AGM. 4.2 Interested Major Shareholders Japan Tobacco Inc. indirectly through Holding B.V. owns a 60.37% equity interest in JTI Malaysia. It is also indirectly a Major Shareholder of the equity interest of the Related Transacting Parties as set out in Section 2.5, Part A of this Circular. Holding B.V. is a wholly owned subsidiary of JT Europe Holding B.V. which in turn is a wholly owned subsidiary of Japan Tobacco Inc. Japan Tobacco Inc. is therefore the ultimate holding company of JTI Malaysia. Holding B.V., JT Europe Holding B.V., and Japan Tobacco Inc. being the interested Major Shareholders will abstain from voting in respect of their direct and/or indirect shareholdings in JTI Malaysia on the resolution relating to the Proposed Mandate. The interested Major Shareholders have undertaken that they will ensure that the Persons Connected to them will abstain from voting in respect of their direct and/or indirect shareholding in the Company on the resolution, deliberating or approving the Proposed Mandate at the forthcoming AGM. The direct and indirect shareholdings of the interested Major Shareholders in JTI Malaysia as at LPD are as follows: Direct Indirect Name No. of shares % No. of shares % Holding B.V. 157,885, JT Europe Holding B.V ,885,275 * * Japan Tobacco Inc ,885,275 * * * Deemed interest through Holding B.V. pursuant to Section 6A(4) of the Act. -9-

15 5.0 EXISTING MANDATE ON RECURRENT RELATED PARTY TRANSACTIONS Set out below is the actual value transacted of each Recurrent Related Party Transaction, from the date on which the existing mandate was obtained on 26 April 2012 up to 7 March 2013 being the latest practicable date before the printing of this Circular, together with its estimated value as disclosed in the Circular to Shareholders dated 4 April 2012: Related Transacting Parties Nature of transaction undertaken by the JTI Malaysia Group Actual Value Transacted from 26 April 2012 to 7 March 2013 RM 000 Estimated Value as disclosed in the Circular to Shareholders dated 4 April 2012 RM 000 S.A. Use of licensed trademarks (which includes Salem, Winston, Mild Seven, Camel and More ) and procurement of technical know-how for the aforesaid brands 25,092 28,431 Purchases Sales Purchases Sales Japan Tobacco Inc. Germany GmbH Limited Liability Company Petro S.A. Japan Tobacco International (Singapore) Pte. Ltd. JTI Business Services (Asia) Sdn. Bhd. JTI (Vietnam) Pte Ltd. (Thailand) Limited Gallaher Singapore Pte Limited Gallaher Limited JTI Kazakhstan Limited Liability Company Austria Tabak GmbH Korea Inc AG Dagmersellen Ukraine JTI Polska Sp.z o.o. Purchase and sale of tobacco leaf, cigarette packaging and wrapping materials, equipments and spare parts for tobacco processing, cigarette making and packing machines 9,401 Refer to Note 1 below (23,262) Refer to Note 2 below 7,863 Refer to Note 1 below (17,086) Refer to Note 2 below Note 1: The Actual Value of the transaction exceeded the Estimated Value by RM1,538,000 [20%] was due to an acquisition of tobacco packing machine for new product line. Note 2: The Actual Value of the transaction exceeded the Estimated Value by RM6,176,000 [36%] was due to higher than expected increase in orders. -10-

16 Related Transacting Parties Nature of transaction undertaken by the JTI Malaysia Group Actual Value transacted from 26 April 2012 to 7 March 2013 RM 000 Estimated Value as disclosed in the Circular to Shareholders dated 4 April 2012 RM 000 Services Switzerland SA Gallaher Limited Payment for management costs relating to expatriates working in Malaysia Refer to Note 3 below 7,051 6,067 Japan Tobacco Inc. JTI Business Services (Asia) Sdn. Bhd. Gallaher Limited S.A. Procurement of transactional, administrative, technical and operational services including areas of accounting, planning, purchasing and business support 4,966 5,808 S.A. Procurement for various information technology and consulting services, software purchase and installation, training and sharing of cost in relation to system implementation 7,178 8,408 S.A. Undertaking consignment manufacturing activities of tobacco products under the various brand names which includes Salem, Winston, Mild Seven, Camel and More Refer to Note 4 below (34,812) (30,259) Japan Tobacco Inc. Services Switzerland SA S.A. JTI Business Services (Asia) Sdn. Bhd. Luxembourg S.A. Provision of transactional, administrative and operational services including areas of accounting, planning, purchasing and business support (19,405) (18,474) Note 3: The Actual Value of the transaction exceeded the Estimated Value by RM984,000 [16%] was due to increase in number of expatriates working at the manufacturing plant. Note 4: The Actual Value of the transaction exceeded the Estimated Value by RM4,553,000 [15%] was due to higher than expected production volume. -11-

17 Related Transacting Parties Nature of transaction undertaken by the JTI Malaysia Group Actual Value transacted from 26 April 2012 to 7 March 2013 RM 000 Estimated Value as disclosed in the Circular to Shareholders dated 4 April 2012 RM 000 Holding B.V. Payment for centrally rendered services benefiting JTI Malaysia Group as an entity of the Japan Tobacco Inc. Group of entities, including but not limited to:- - Consulting on business management and marketing - HR consulting and training - Quality Assurance (QA) and Global Production - Legal, Scientific and Regulatory Assurance (SRA), Corporate Security, Product Liability, Regional Law, Corporate Governance - Accounting, financial and management services (Corporate, Finance, Tax, Strategic Planning & Insurance) 11,651 15, DETAILS OF OVERDUE TRADE RECEIVABLES Details of the Group s trade receivables from the Related Transacting Parties pursuant to Recurrent Related Party Transactions which exceeded the credit terms for the following periods as at the end of the financial year ended 31 December 2012 are as follows:- Overdue Trade Receivables from Related Transacting Parties as at Exceeded Credit Term For Principal sum (RM) a period of 1 year or less 50,426 a period of more than 1 to 3 years - a period of more than 3 to 5 years - a period of more than 5 years - The above trade receivables owing by the Related Transacting Party S.A. were in respect of sale of cigarette packaging and wrapping materials. There is no late payment charges imposed on the above outstanding receivables as the balances would be included in the January 2013 payment schedule. As at 17 January 2013, the outstanding receivables of RM50,426 have been fully recovered. -12-

18 7.0 APPROVAL REQUIRED The Proposed Mandate is subject to approval being obtained from the shareholders of the Company at the forthcoming AGM. 8.0 DIRECTORS RECOMMENDATION 9.0 AGM Your Board (save for the Interested Directors who have abstained from giving any opinion), having considered all aspects of the Proposed Mandate, is of the opinion that the Proposed Mandate is in the best interest of the Company. Accordingly, your Board (save for the Interested Directors who abstained from giving any recommendation) recommends that you vote in favour of the ordinary resolution pertaining to the Proposed Mandate to be tabled at the forthcoming AGM of the Company. The Ordinary Resolution on the Proposed Mandate is incorporated in the Notice of AGM in the Company s Annual Report and Financial Statements for the financial year ended 31 December 2012 which is being sent to you together with this Circular. The AGM will be held at the Ballroom 1, 1 st Floor, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, Kuala Lumpur on Thursday, 25 April 2013 at a.m. If you are unable to attend and vote in person at the AGM, you are requested to complete and return the Form of Proxy enclosed in the Annual Report of JTI Malaysia for the financial year ended 31 December 2012 in accordance with the instructions printed therein as soon as possible and, in any event, so as to arrive at the Registered Office of the Company not later than forty-eight (48) hours before the appointed time for the AGM. 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 FURTHER INFORMATION Shareholders are requested to refer to the appendix for additional information. Yours faithfully On behalf of the Board of Directors of JT INTERNATIONAL BERHAD DATO SRI MOHD. NADZMI BIN MOHD. SALLEH Independent Non-Executive Chairman -13-

19 PART B LETTER TO SHAREHOLDERS IN RELATION TO THE PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

20 JT INTERNATIONAL BERHAD (Company No D) (Incorporated in Malaysia) Registered Office: - 6 th Floor, Menara Manulife No. 6, Jalan Gelenggang Damansara Heights Kuala Lumpur 3 April 2013 Board of Directors: - Dato Sri Mohd. Nadzmi bin Mohd. Salleh (Independent Non-Executive Chairman) Robert John Stanworth (Managing Director) Thean Nam Hooi (Executive Director) Hirakazu Otomo (Executive Director) Nobuaki Hayashi (Non-Executive Director) Pierre Henri Emeric Binetter (Non-Executive Director) Datuk Henry Chin Poy-Wu (Independent Non-Executive Director) Keong Choon Keat (Independent Non-Executive Director) Leong Wai Hoong (Independent Non-Executive Director) To: The Shareholders of Berhad Dear Sir/Madam, PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION 1.0 INTRODUCTION On 26 February 2013, the Company announced that it proposes to seek shareholders approval at the forthcoming AGM to amend certain Articles of its existing Articles of Association. The purpose of Part B of this Circular is to provide you with details on the aforesaid proposal, to set out the views of your Board, and to seek your approval for the Special Resolution relating to the Proposed Amendments of Articles, to be tabled at the forthcoming AGM. 2.0 DETAILS OF THE PROPOSED AMENDMENTS OF ARTICLES Details of the proposed amendments are set out in the Annexure to this Part B of this Circular. 3.0 RATIONALE FOR THE PROPOSED AMENDMENTS OF ARTICLES The Proposed Amendments of Articles is to streamline the Company s Articles of Association to be aligned with the recent amendments to the Listing Requirements and add clarity to the existing Articles of Association as well as to reflect the current market practice. 4.0 EFFECTS OF THE PROPOSED AMENDMENTS OF ARTICLES The Proposed Amendments of Articles will not have any effect on the issued and paid-up share capital, shareholdings of the Directors and Major Shareholders, net assets and earnings of the JTI Malaysia Group. -14-

21 5.0 APPROVAL REQUIRED The Proposed Amendments of Articles is subject to approval being obtained from the shareholders of the Company at the forthcoming AGM. 6.0 DIRECTORS RECOMMENDATION Your Directors, having considered all aspects of the Proposed Amendments of Articles are of the opinion that the said proposal is in the best interests of the Company and therefore, your Directors recommend that you vote in favour of the Special Resolution relating to the Proposed Amendments of Articles to be tabled at the forthcoming AGM. 7.0 AGM The Special Resolution regarding the Proposed Amendments of Articles is incorporated in the Notice of AGM in the Company s Annual Report and Financial Statements for the financial year ended 31 December 2012 which is being sent to you together with this Circular. The AGM will be held at Ballroom 1, 1 st Floor, Sime Darby Convention Centre, 1A, Jalan Bukit Kiara 1, Kuala Lumpur on Thursday, 25 April 2013 at a.m. If you are unable to attend and vote in person at the AGM, you are requested to complete and return the Form of Proxy enclosed in the Annual Report of JTI Malaysia for the financial year ended 31 December 2012 in accordance with the instructions printed therein as soon as possible and, in any event, so as to arrive at the Registered Office of the Company not later than forty-eight (48) hours before the appointed time for the AGM. 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. 8.0 FURTHER INFORMATION Shareholders are requested to refer to the Appendix for further information. Yours faithfully On behalf of the Board of Directors of JT INTERNATIONAL BERHAD DATO SRI MOHD. NADZMI BIN MOHD. SALLEH Independent Non-Executive Chairman -15-

22 ANNEXURE DETAILS OF THE PROPOSED AMENDMENTS OF ARTICLES The Articles of Association are proposed to be amended in the following manner:- i) To insert the following word and meaning of Exempt Authorised Nominee in Article 2:- WORD Exempt Authorised Nominee MEANING an authorised nominee defined under the Central Depositories Act which is exempted from compliance with the provisions of subsection 25A(1) of the Central Depositories Act ii) To delete and substitute the existing Article 66 with a new Article 66 as follows:- Existing Article 66 "In every notice calling a meeting of the Company there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint one or more proxies to attend and vote instead of him, and that a proxy need not also be a member. New Article 66 "In every notice calling a meeting of the Company there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him, and that a proxy need not also be a member. iii) To delete and substitute the existing Article 89 with a new Article 89 as follows:- Existing Article 89 "Where a member appoints more than one (1) proxy, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. Where a member of the Company is an authorised nominee as defined under the Central Depositories Act, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. New Article 89 (1) A member entitled to attend and vote at a meeting of the Company, or at a meeting of any class of members of the Company, shall be entitled to appoint more than one (1) proxy (subject always to a maximum of two (2) proxies at each meeting) to attend and vote instead of the member at the meeting. (2) Where a member of the Company is an authorised nominee as defined under the Central Depositories Act, it may appoint at least one (1) but not more than two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. (3) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account ("omnibus account"), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. (4) Where a member or the authorised nominee appoints more than one (1) proxy (subject always to a maximum of two (2) proxies at each meeting), or where an exempt authorised nominee appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. " -16-

23 iv) To delete and substitute the existing Article 93 with a new Article 93 as follows:- Existing Article 93 The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under the corporation's seal or under the hand of an officer or attorney duly authorised. The directors may, but shall not be bound to require evidence of the authority of any such attorney or officer. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(l)(b) of the Act shall not apply to the Company. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll. New Article 93 The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under the corporation's seal or under the hand of an officer or attorney duly authorised. The directors may, but shall not be bound to require evidence of the authority of any such attorney or officer. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(l)(b) of the Act shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at a meeting of the Company shall have the same rights as the member to speak at the general meeting. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll. -17-

24 APPENDIX FURTHER INFORMATION 1. DIRECTORS RESPONSIBILITY STATEMENT This Circular has been seen and approved by the Board of JTI Malaysia and they collectively and individually accept full responsibility for the accuracy of the information given in this Circular and confirm that, after making all reasonable enquiries to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement herein misleading. 2. MATERIAL CONTRACTS There are no material contracts (not being contracts entered into in the ordinary course of business) which have been entered into by JTI Malaysia and/or its subsidiaries during the two (2) years immediately preceding the date of this Circular. 3. MATERIAL LITIGATION Neither JTI Malaysia nor any of its subsidiaries is engaged in any material litigation, claims or arbitration, either as plaintiff or defendant, and the Board of JTI Malaysia has no knowledge of any proceedings pending or threatened against JTI Malaysia Group or of any facts likely to give rise to any proceedings which may materially and adversely affect the financial position or business of the JTI Malaysia Group. 4. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents are available for inspection at the Registered Office of JTI Malaysia at 6 th Floor, Menara Manulife, No. 6, Jalan Gelenggang, Damansara Heights, Kuala Lumpur during normal business hours between Mondays and Fridays (except public holidays) from the date of this Circular up to and including the date of the Fortieth AGM:- i) the Memorandum and Articles of Association of JTI Malaysia; and ii) the audited financial statements of JTI Malaysia for the past two (2) financial years ended 31 December 2011 and 31 December