CIRCULAR TO SHAREHOLDERS

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the course of action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. The 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. FAR EAST HOLDINGS BERHAD (14809-W) (Incorporated in Malaysia) CIRCULAR TO SHAREHOLDERS in relation to the PART A PROPOSED RENEWAL OF SHAREHOLDERS MANDATE IN RESPECT OF RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE PART B PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY The above proposal will be tabled as Special Business at the Company s 39th Annual General Meeting. Notice of the 39th Annual General Meeting of Far East Holdings Berhad to be held at The Zenith Hotel, Jalan Putra Square 6, Putra Square, Kuantan, Pahang Darul Makmur on 19 June 2013 at a.m. together with the Form of Proxy are set out in the Annual Report of the Company for the financial year ended 31 December A Proxy Form is enclosed which you are urged to complete and return in accordance with the instructions thereon as soon as possible so as to arrive at Far East Holdings Berhad, Suite 5 & 6, Tingkat 8, Kompleks Teruntum, Jalan Mahkota, Kuantan, Pahang Darul Makmur not later than forty eight (48) hours before the time set for holding the meeting. The lodging of the Proxy Form will not preclude you from attending and voting in person at the meeting should you subsequently wish to do so. Date and time of the 39th Annual General Meeting : 19 June 2013 at a.m. This Circular is dated 24 May 2013

2 DEFINITIONS In this Circular and the accompanying appendices, the following abbreviations shall have the following meanings unless otherwise stated: Act : The Malaysian Companies Act, 1965 as amended from time to time and any re-enactment thereof AGM Board : : Annual General Meeting The Board of Directors of FEHB BSOP : B.S. Oil Palm Plantations Sdn Bhd (11201-W), a whollyowned subsidiary of FEHB Bursa Securities : Bursa Malaysia Securities Berhad ( W) CPO : Crude Palm Oil DOPP : Dawn Oil Palm Plantations Sdn Bhd (11200-X), a whollyowned subsidiary of FEHB Directors : The Directors for the time being of FEHB, and shall have the same meaning as in Section 4 of the Companies Act Includes any person who is or was within the preceding six (6) months of the date on which the terms of the transactions were agreed upon, a Director of FEHB or any other company which is its subsidiary or holding company or a chief executive officer of the listed issuer, its subsidiary or holding company EGM : Extraordinary General Meeting EPOM : Endau Palm Oil Mill Sdn Bhd ( P) FEHB or the Company : Far East Holdings Berhad (14809-W) FEHB Group or the Group : FEHB and its subsidiary companies FFB FPSB : : Fresh fruit bunches Future Prelude Sdn Bhd ( K) KAOP : Kampong Aur Oil Palm Company (Sdn.) Berhad (7017-X), a 82.83% owned subsidiary of FEHB Kilang Sawira Makmur : Kilang Sawira Makmur Sdn Bhd ( P) KKSB : Kilang Kosfarm Sdn subsidiary of FEHB Bhd ( K), a 51% owned Kosma : Koperasi Serbausaha Makmur Berhad, a co-operative society established under the Co-operative Society Act 1993 i

3 LKPP : Lembaga Kemajuan Perusahaan Pertanian Negeri Pahang LKPP Corp. : LKPP Corporation Sdn Bhd ( V) LPD : Latest Practicable Date which is 30 April 2013 (being a date which is not more than 30 days prior to the date of the Circular) PGC : PGC Management Services Sdn Bhd ( P) Major Shareholder : A person who has an interest or interests in one or more voting shares in a company and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is:- (a) equal to or more than 10% of the aggregate of the nominal amounts of all the voting shares in the company; or (b) equal to or more than 5% of the aggregate of the nominal amounts of all the voting shares in the company where such person is the largest shareholder of the company. For the purpose of this definition, interest in shares shall have the same meaning given in Section 6A of the Companies Act Includes any person who is or was within the preceding six (6) months of the date on which the terms of the transactions were agreed upon, a major shareholder of FEHB or any other company which is its subsidiary or holding company Shareholders Mandate : Proposals by the Company to renew the shareholders mandate for the Company to enter into recurrent related party transactions of a revenue or trading nature Mandated Related Parties : KKSB, WWSB, PTSB, PPOM, RPOM, EPOM, PGC, PPOPM, KOSMA, LKPP Corp., Kilang Sawira Makmur and FPSB MPOB : Malaysian Palm Oil Board Persons Connected : This shall have the same meaning as in Chapter 1 of the Listing Requirements PPOM : Prosper Palm Oil Mill Sdn Berhad (37206-D) PPOPM : Prosper Palm Oil Product Marketing Sdn Bhd ( M) PTSB : Prosper Trading Sdn Bhd ( U) Related party(ies) : A Director, Major Shareholder or a Person Connected with such Director or Major Shareholder who is interested in a RRPTs. For the purpose of this definition, Director and Major Shareholders shall have the same meanings as above ii

4 Related party transaction : A transaction entered into by the listed issuer or its subsidiaries, which involves the interest, direct or indirect, of a related party RM and sen : Ringgit Malaysia and sen respectively RPOM SC WWSB : : : Rompin Palm Oil Mill Sdn Bhd ( T) Securities Commission Wujud Wawasan Sdn Bhd ( P) 2012 Mandate : The shareholders mandate obtained on 20 June 2012 for the FEHB Group to enter into Recurrent Related Party Transactions 2013 Mandate : The shareholders mandate to be obtained at the Company s forthcoming 39th AGM for the FEHB Group to enter into Recurrent Related Party Transactions and the shareholders mandate for the RRPT is from the forthcoming AGM until the next AGM iii

5 TABLE OF CONTENTS PART A PROPOSED RENEWAL OF SHAREHOLDERS MANDATE IN RESPECT OF RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE PAGE 1 INTRODUCTION 1 2 DETAILS OF THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE VALIDITY PERIOD OF THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE 10 4 FINANCIAL EFFECT OF THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE 11 5 CONDITIONS 11 6 DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS AND PERSON CONNECTED 11 7 STATUTORY AND OTHER GENERAL INFORMATION 12 8 ANNUAL GENERAL MEETING 12 9 DIRECTORS RECOMMENDATION 13 PART B PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY 1 INTRODUCTION 14 2 DETAILS AND RATIONALE 14 3 EFFECT OF THE PROPOSED AMENDMENTS 15 4 APPROVAL OF THE PROPOSED AMENDMENS 15 5 INTEREST OF DIRECTORS AND MAJOR SHAREHOLDERS 15 6 STATUTORY AND OTHER GENERAL INFORMATION 15 7 ANNUAL GENERAL MEETING 15 8 DIRECTORS RECOMMENDATION 16 FURTHER INFORMATION APPENDIX I - ADDITIONAL INFORMATION APPENDIX II - PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

6 PART A PROPOSED RENEWAL OF SHAREHOLDERS MANDATE IN RESPECT OF RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

7 FAR EAST HOLDINGS BERHAD (14809-W) (Incorporated in Malaysia) Registered Office Suite 5 & 6, Tingkat 8, Kompleks Teruntum, Jalan Mahkota, Kuantan, Pahang Darul Makmur. 24 May 2013 Board of Directors YH Dato Kamaruddin bin Mohammed (Chairman, Non Independent Non Executive Director) YH Dato Md. Adnan bin Sulaiman (Non Independent Non Executive Director) YH Dato Tan Bing Hua (Independent Non Executive Director) Mr Tee Kim Tee Ching Tee (Non Independent Non Executive Director) Mr Tee Cheng Hua (Non Independent Executive Director) En Khairul Azahar bin Ariffin (Independent Non Executive Director) En Hashim Naina Merican bin Yahaya Merican (Independent Non Executive Director) Mr Tee Lip Teng (Non Independent Non Executive Director) To the Shareholders of Far East Holdings Berhad Dear Shareholders FAR EAST HOLDINGS BERHAD PROPOSED RENEWAL OF SHAREHOLDERS MANDATE FOR THE FEHB GROUP TO ENTER INTO RRPTs 1. INTRODUCTION 1.1 On 20 June 2012, the Company had at the Annual General Meeting, obtained a Shareholders Mandate from its shareholders for the Company and/or its subsidiaries to enter into RRPTs of a revenue or trading nature, which are necessary for FEHB Group s day to day operations and are in the ordinary course of business and on terms that are no more favourable to the Related Party than those generally available to the public. 1.2 FEHB had on 9 April 2013 announced that it proposed to seek the shareholders approval at the forthcoming AGM to be convened in relation to: proposed renewal of the Shareholders Mandate to allow FEHB Group to enter into RRPTs provided that such transactions are made at arm s length, in the ordinary course of business and on normal commercial terms which are not more favourable to the Related Party than those generally available to the public and are not to the detriment of the minority shareholders. 1

8 THE PURPOSE OF THIS CIRCULAR IS TO PROVIDE YOU WITH THE RELEVANT INFORMATION RELATING TO THE RENEWAL OF SHAREHOLDERS MANDATE TO BE OBTAINED, AND TO SET OUT THE VIEW OF YOUR BOARD AS WELL AS TO SEEK YOUR APPROVAL FOR THE RESOLUTION WHICH WILL BE TABLED AT THE FORTHCOMING 39TH AGM TO BE CONVENED. A NOTICE OF THE 39TH AGM TOGETHER WITH THE PROXY FORM ARE ENCLOSED HEREWITH IN THE ANNUAL REPORT OF THE COMPANY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER Shareholders are advised to read the contents of this Circular carefully before voting on the relevant resolution to approve the renewal of Shareholders Mandate. 2. DETAILS OF THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE 2.1 Introduction At the last AGM held on 20 June 2012, the shareholders of the Company had approved the Shareholders Mandate to allow the Company and/or its subsidiary companies, in their normal course of business, to enter into Recurrent Related Party Transactions of a revenue or trading nature with related parties which are necessary for its day-to-day operations on terms not more favourable to the related party than those generally available to the public and are not to the detriment of the minority shareholders of the Company. Pursuant to Paragraph of the Listing Requirements, a listed issuer may seek a Shareholders Mandate in respect of RRPTs of a revenue nature, which are necessary for its day-to-day operations, subject to the following: (a) (b) (c) the transactions are in the ordinary course of business and are on terms not more favourable to the related party than those generally available to the public; the Shareholders Mandate is subject to annual renewal and disclosure is to be made in the annual report of the Company of the aggregate value of transactions conducted pursuant to the RRPTs during the financial year; and in a meeting to obtain Shareholders Mandate, the interested directors, interested major shareholders and interested persons connected with a director or major shareholder and where it involves the interest of an interested person connected with a director or a major shareholder, such director or major shareholder, must not vote on the resolution approving the transactions. An interested director or interested major shareholder must also ensure that persons connected with him abstain from voting on the resolution approving the transaction. In complying with this requirement, the Board is now seeking a renewal of Shareholders Mandate to authorise such transactions which are necessary for its dayto-day operation and are in the ordinary course of business. Details of these RRPTs, which are in accordance with subparagraph 10.09(1) of the Listing Requirements, are set out in the ensuing sections. 2

9 2.2 Class of Related Parties The principal activities of the Company are cultivation of oil palms, productions and sales of fresh fruit bunches, crude palm oil and palm kernel and investment holdings. The principal activities of the Company s subsidiaries and its related companies are disclosed below: Name Nature of Relationship Date and Place of Incorporation KKSB FEHB directly holds 51% * equity interest in KKSB Malaysia WWSB KKSB directly holds 51% equity interest in WWSB * Malaysia Principal Activities Operating of palm oil mill Operating of palm oil mill PTSB PTSB is a major shareholder of FEHB that holds 23.73% * equity interest in FEHB Malaysia Operating of palm kernel mill PPOM FEHB directly holds 40% equity interest in PPOM RPOM PPOM directly holds 30% equity interest in RPOM EPOM PTSB directly holds 32% equity interest in EPOM PGC KKSB directly holds 30% equity interest in PGC PPOPM PPOM directly holds 30% equity interest in PPOPM * * * * * Malaysia Malaysia Malaysia Malaysia Malaysia Operating of palm oil mill and cultivation of oil palm Operating of palm oil mill Operating of palm oil mill and palm kernel mill Management Services in palm oil plantations and marketing of sales and purchases of CPO Trading and Marketing agent KOSMA KOSMA is a shareholder of WWSB that holds 49% * equity interest in WWSB (Incorporated under Cooperative Act 1993) Malaysia Operating of palm oil mill and cultivation of oil palm LKPP Corp. LKPP Corp. holds 5.96% * equity interest in FEHB. LKPP Corp. is a wholly owned subsidiary of LKPP. LKPP is a major shareholder of FEHB that holds 25.18% * equity interest in FEHB Malaysia Operating of palm oil mill and cultivation of oil palm Kilang Sawira Makmur * KKSB indirectly holds 31.50% stake in Kilang Sawira Makmur via its associated company i.e. Jaspurna Holdings Sdn Bhd Malaysia Operating of palm oil mill FPSB FEHB and PPOM directly hold * * 47.17% and 35.17% equity interest in FPSB respectively Malaysia Manufacturing and exporting palm oil, fatty acids and chemicals compounds or derivatives * As at 30 April

10 2.2.2 Pursuant to paragraph of the Listing Requirements, the parties related to FEHB Group, which have recurrent transactions of a revenue or trading nature with the Group are as follows: (i) Sales of fresh fruit bunches Related Party Nature of Transaction Method of Pricing KKSB Sales of FFB by FEHB to KKSB Based on forward sales and and WWSB MPOB pricing WWSB Sales of FFB between KKSB and Based on forward sales and WWSB MPOB pricing PPOM Sales of FFB by KKSB to PPOM Based on forward sales and MPOB pricing RPOM Sales of FFB by FEHB Based on forward sales and to RPOM MPOB pricing EPOM Sales of FFB by FEHB to EPOM Based on forward sales and MPOB pricing Kilang Sawira Makmur Sales of FFB by FEHB to Kilang Based on forward sales and Sawira Makmur MPOB pricing LKPP Corp. Sales of FFB by FEHB to LKPP Corp. Based on MPOB pricing (ii) Purchases of fresh fruit bunches Related Party Nature of Transaction Method of Pricing FEHB Purchases of FFB by KKSB from Based on forward sales and FEHB MPOB pricing KKSB Purchases of FFB between KKSB Based on forward sales and and WWSB MPOB pricing PPOM Purchases of FFB by KKSB from Based on forward sales and PPOM MPOB pricing RPOM Purchases of FFB by KKSB from Based on forward sales and RPOM MPOB pricing KOSMA Purchases of FFB by WWSB from KOSMA Based on MPOB pricing (iii) Sales of CPO Related Party Nature of Transaction Method of Pricing KKSB Sales of CPO by KKSB to WWSB Based on the contract price WWSB Sales of CPO by WWSB to KKSB Based on the contract price PPOM Sales of CPO by KKSB and WWSB Based on the contract price to PPOM RPOM Sales of CPO by KKSB and WWSB Based on the contract price to RPOM EPOM Sales of CPO by KKSB and WWSB Based on the contract price to EPOM PGC Sales of CPO by KKSB to PGC Based on the forward sales and sales contract price Kilang Sawira Makmur Sales of CPO by KKSB to Kilang Based on the contract price Sawira Makmur FPSB Sales of CPO by KKSB and WWSB to FPSB Based on the contract price 4

11 (iv) Purchases of CPO Related Party Nature of Transaction Method of Pricing KKSB Purchases of CPO by WWSB from Based on the contract price KKSB WWSB Purchases of CPO by KKSB from Based on the contract price WWSB PPOM Purchases of CPO by KKSB and Based on the contract price WWSB from PPOM RPOM Purchases of CPO by KKSB and Based on the contract price WWSB from RPOM EPOM Purchases of CPO by KKSB and Based on the contract price WWSB from EPOM PPOPM Purchases of CPO by KKSB and Based on the contract price WWSB from PPOPM Kilang Sawira Makmur Purchases of CPO by KKSB and Based on the contract price WWSB from Kilang Sawira Makmur (v) Sales of Kernel Related Party Nature of Transaction Method of Pricing PTSB Sales of kernel by KKSB and Based on the contract price WWSB to PTSB EPOM Sales of kernel by WWSB to EPOM Based on the contract price RPOM Sales of kernel by KKSB and Based on the contract price WWSB to RPOM (vi) Purchases of Kernel Related Party Nature of Transaction Method of Pricing EPOM Purchases of kernel by WWSB from Based on the contract price EPOM (vii) Management fee The management fee charged includes the management services for technical services, marketing services, administration and accounting services. Related Party Nature of Transaction Method of Pricing PGC Management fee charged by PGC to Based on agreed contract KKSB, WWSB and Kilang Sawira Makmur agreement for the management services. (viii) Purchases of Fertilizers Related Party Nature of Transaction Method of Pricing PTSB Purchases of fertilizers by FEHB Based on the agreed fertilizer from PTSB prices negotiated 5

12 2.2.3 The RRPTs for which approval is now being sought for the Proposed Renewal of Shareholders Mandate at the forthcoming 39 th AGM are as follows: Related Party FEHB KKSB WWSB PPOM RPOM EPOM 2013 Mandate 2012 Mandate (A) (B) (C) (D) Estimated value of transaction pursuant to 2013 Mandate ** RM' , ,422 58, , , ,440 Estimated value of transaction disclosed in 2012 Mandate RM' , ,696 45, , , ,254 Actual value of transaction conducted pursuant to 2012 Mandate (as at LPD) RM'000 58,819 74,786 15,914 28,061 54,990 55,255 Deviation between values in (C) and (B) Kilang Sawira Makmur 297, ,073 72, LKPP Corp. KOSMA PGC PPOPM PTSB FPSB Total 5, , ,050 6,677 70,128 19,640 2,145,377 3, , ,844 2,073 82,475-1,835,993 1,316 75,124 64,465 1,485 16, ,135 ** The estimated value of transaction pursuant to 2013 is based on the estimated value of 2012 which was based on accounting records. The estimated figures will vary with the fluctuation of oil palm prices and production during the year. The transaction for FPSB with FEHB Group only transacted in January 2013 onwards. The validity period of the Proposed Shareholders Mandate is disclosed in Section 3 of this Circular There is no threshold for the approval of Recurrent Related Party Transactions within the listed issuer s group of companies. % Amount Due and Owing Under Recurrent Related Party Transactions The breakdown of the principal sum (without interest) for the total outstanding amount due and owing to the Group under the RRPT as per Section of this Circular which exceeded the credit terms as at 31 December 2012 are as follows:- Company RPOM LKPP Corp. PGC PTSB Total Outstanding Amount (RM 000) 1 year or less 2, ,133 2,811 23,277 6

13 There were no late payment charges imposed by the Group on the above outstanding amounts as they were trade in nature. The management from time to time will discuss with the debtors for early settlement of the outstanding amounts. The Board of Directors is of the opinion that there will be no recoverability issues as the debtors are related parties with a long-standing business relationship with the Group and has proven to be creditworthy debtors with good payment records. 2.4 Directors and Major Shareholders Interests and Person Connected The interested major shareholders and interested directors for all the transactions above are as follows: Interested Major Shareholders: PTSB a1 LKPP a2 Interested Directors: YH Dato Kamaruddin bin Mohammed a3 YH Dato Md. Adnan bin Sulaiman a4 Mr Tee Kim Tee Ching Tee a5 Mr Tee Cheng Hua a6 Mr Tee Lip Teng a7 Person Connected: Pn Asmin binti Yahya a8 Note: a1 a2 a3 a4 a5 a6 a7 PTSB is a major shareholder of FEHB with equity interest of 23.73% b and is deemed interested party in the Proposed Renewal Shareholders Mandate. PTSB holds 32% equity stake in EPOM. PTSB is 44.67% b directly holds by PPOM. PPOM directly holds 49% b equity stake in KKSB, 40% b equity stake in PGC, 30% equity stake in RPOM and 30% equity stake in PPOPM. LKPP is a major shareholder of FEHB with equity interest of 25.18% b and is deemed interested party in the Proposed Renewal Of Shareholders Mandate. LKPP holds 100% equity stake in LKPP Corporation Sdn Bhd. YH Dato Kamaruddin bin Mohammed is deemed interested party in the Proposed Renewal of Shareholders Mandate, by virtue of his directorship and shareholding in FEHB, indirect interest in PGC and directorship in LKPP, PPOM, KKSB, WWSB and Kilang Sawira Makmur. YH Dato Md. Adnan bin Sulaiman who is deemed interested party in the Proposed Renewal of Shareholders Mandate, by virtue of his directorship in FEHB and PPOM which directly holds 44.67% b interest in PTSB, which in turn holds 23.73% b interest in FEHB. He is a General Manager of LKPP and a Director in LKPP Corporation Sdn Bhd. Mr Tee Kim Tee Ching Tee is deemed interested party in the Proposed Renewal of Shareholders Mandate, by virtue of his directorship and shareholding in FEHB and his directorship in KKSB, PTSB, PPOM, WWSB, RPOM, Kilang Sawira Makmur, EPOM and FPSB. Mr Tee Cheng Hua is deemed interested party in the Proposed Renewal of Shareholders Mandate, by virtue of his directorship and shareholding in FEHB and his directorship in KKSB, PTSB, PPOM, WWSB, PGC, RPOM, Kilang Sawira Makmur, EPOM and FPSB. Mr Tee Lip Teng is deemed interested party in the Proposed Renewal of Shareholders Mandate, by virtue of his directorship and shareholding in FEHB and his directorship in FPSB. 7

14 a8 b Pn Asmin binti Yahya is General Manager of the Company is deemed interested party in the Proposed Renewal of Shareholders Mandate, by virtue of her directorship in KKSB and FPSB. As at 30 April Terms and Nature of the Recurrent Related Party Transactions The Recurrent Related Party Transactions that will be covered by the Shareholders Mandate relate to the sales of FFB, processing and sale of crude palm oil and palm kernel, management services and purchases of fertilizers by FEHB Group from the Mandated Related Parties. The Recurrent Related Party Transactions will be made at arm s length on normal commercial terms which are not more prejudicial to the interests of the shareholders of the Company, on terms no more favourable to the related party than those generally available to the public and on terms not to the detriment of the minority shareholders. 2.6 Disclosure and Review Procedures for the RRPTs The review procedures for the RRPTs are as follows: (i) (ii) (iii) (iv) (v) A list of Mandated Related Parties will be prepared and the relevant companies will be notified that all RRPTs are required to be undertaken on an arm s length basis, on normal commercial terms which are not more prejudicial to the interests of the shareholders of the Company, on terms no more favourable to the related party than those generally available to the public and on terms not to the detriment of the minority shareholders; All RRPTs will be reviewed by the internal auditor and the management; A register will be maintained by the Company to record all RRPTs which are entered into pursuant to the Proposed Renewal of Shareholders Mandate; The annual internal audit plan shall incorporate a review of all RRPTs entered into pursuant to the Proposed Renewal of Shareholders Mandate to ensure that the relevant approvals have been obtained and the review procedures in respect of such transactions are adhered to; At least 2 other contemporaneous transactions with unrelated third parties for similar products/services and/or quantities will be used as comparison, wherever possible, to determine whether the price and terms offered to/by the related parties are fair and reasonable and comparable to those offered to/by other unrelated third parties for the same or substantially similar types of products/services and/or quantities. In the event the 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 will be determined by those offered by/to other unrelated parties for substantially similar type of transactions and approved by the Board to ensure that the Recurrent Related Party Transactions are not detrimental to the Group. 8

15 (vi) (vii) (viii) (ix) (x) The Group has in place adequate procedures and processes to monitor, to track and to identify the RRPT in a timely and orderly manner; The Board and the Audit Committee shall review the internal audit reports to ascertain that the guidelines and procedures established to monitor RRPTs have been complied with and the review shall be done on yearly basis at the end of the year; The Board and the Audit Committee have reviewed the procedures and shall continue to review the procedures as and when required. If a member of the Board or Audit Committee has an interest in the transaction to be reviewed by the Board or the Audit Committee as the case may be, he will abstain from any decision-making by the Board or the Audit Committee in respect of that transaction; The transaction prices will be based on the arm s length transaction which are agreeable to all parties; A disclosure of the aggregate value of Recurrent Transactions conducted pursuant to the Shareholders Mandate is made in the Annual Report of the Company; showing a breakdown of the aggregate value of the Recurrent Transactions made during the financial year, amongst others, based on the following information: (a) (b) the type of the Recurrent Transactions made; and the names of the related parties involved in each type of the Recurrent Transactions made and their relationship with the Company. 2.7 Rationale for the Proposed Renewal of Shareholders Mandate The RRPTs are necessary for the FEHB Group s day-to-day operation. The RRPTs are with Related Parties, are mainly involved in activities related to sales of FFB, processing and sale of crude palm oil and palm kernel, management services and purchases of fertilizers. It is envisaged that in the normal course of business of the FEHB Group, transactions in respect of goods or services with the Related Parties will occur with some degree of frequency from time to time and may arise at any time. The Proposed Renewal of Shareholders Mandate will also accord the FEHB Group with the following benefits: (i) (ii) (iii) flexibility and choice of parties to enter into such transactions, whether with Related Parties or non-related Parties; facilitate transactions with Related Parties which are in the ordinary course of business of the FEHB Group undertaken at arm s length, based on normal commercial terms and on terms which are not more favourable to the Related Parties than those generally available to the public and are not detrimental to the interests of minority shareholders; facilitate transactions with Related Parties where in an expeditious manner to meet business needs which are necessary for its day-to-day operations particularly business needs which are time sensitive in nature; 9

16 (iv) eliminate the need to announce and convene separate general meetings to seek shareholders mandate for each transaction and as such, substantially reduce expenses, time and other resources associated with the making of announcements and convening of general meetings on an ad-hoc basis, improve administrative efficiency considerably and allow financial and manpower resources to be channelled to attain more productive objectives. In addition to the above benefits, the Related Parties had also proven to be reliable in its delivery of services and products as well as fulfilling the quality expectations of the FEHB Group. Due to previous business dealings with the Related Parties, the Related Parties are familiar with Group s operations and are able to meet the Group s business requirements even when short notice is given. This has allowed the Group to benefit from sudden business opportunities that had arisen. 2.8 Statement by the Audit Committee The Audit Committee comprises the following Directors: Name of Members Designation En Khairul Azahar bin Ariffin YH Dato Kamaruddin bin Mohammed YH Dato Tan Bing Hua En Hashim Naina Merican bin Yahaya Merican Chairman Member Member Member The Audit Committee of FEHB (with the exception of interested Directors in the RRPTs and/or persons connected therewith) is of the view that the existing guidelines and review procedures for related parties transactions are sufficient to ensure that such transactions will be carried out at arm s length, on normal commercial terms which are not prejudicial to the interests of the shareholders of the Company, on terms no more favourable to the related party than those generally available to the public and on terms not to the detriment of minority shareholders. 3. VALIDITY PERIOD OF THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE The Board will seek shareholders approval for the renewal of the Proposed Shareholders Mandate annually subject to satisfactory review by the Audit Committee of its continued application to the interested parties transactions. In this respect, if approved at the forthcoming 39th AGM, such approval shall continue to be in force until: (i) (ii) (iii) the conclusion of the next AGM of the Company following the forthcoming 39th AGM at which such Proposed Renewal of Shareholders Mandate is passed, at which time it will lapse, unless by a resolution passed at an AGM, the authority is renewed; the expiration of the period within which the next AGM after that date 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 an AGM or EGM, whichever is the earlier. 10

17 4. FINANCIAL EFFECTS OF THE PROPOSED RENEWAL OF SHAREHOLDERS MANDATE The Proposed Renewal of Shareholders Mandate will not have any financial effect on the Company. 5. CONDITIONS The Proposed Renewal of Shareholders Mandate is conditional upon the approval of the shareholders of FEHB at the 39th AGM to be convened. 6. DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS AND PERSON CONNECTED 6.1 Major Shareholders of FEHB and persons connected to them Save as disclosed below, as at 30 April 2013 none of the other major shareholders of FEHB and/or persons connected with them, has any direct or indirect interest in the Proposed Renewal of Shareholders Mandate. PTSB and LKPP are major shareholders by virtue of their 23.73% and 25.18% shareholdings in FEHB respectively. PTSB and LKPP being major shareholders have undertaken that they shall ensure that the persons connected with PTSB and LKPP will abstain from voting at the forthcoming 39th AGM on the Proposed Renewal of Shareholders Mandate. Accordingly, PTSB and LKPP will abstain from voting at the forthcoming 39th AGM in respect of their direct and indirect shareholdings on the Proposed Renewal Of Shareholders Mandate. The shareholding of PTSB and LKPP in FEHB as at 30 April 2013 is as follow: Major Shareholder LKPP PTSB <-- Total No. Of Ordinary Shares Held of RM > Direct % Indirect % 35,600, ,552, Directors of FEHB and persons connected to them Save as disclosed below, none of the other Directors of FEHB or persons connected to them have any interest, direct or indirect in the Proposed Renewal of Shareholders Mandate. YH Dato Kamaruddin bin Mohammed, YH Dato Md. Adnan bin Sulaiman, Mr Tee Kim Tee Ching Tee and Mr Tee Lip Teng are Directors of FEHB, whereas Mr Tee Cheng Hua is Executive Director of FEHB. YH Dato Kamaruddin bin Mohammed is a Director in LKPP, PPOM, KKSB, WWSB and Kilang Sawira Makmur and also has indirect interest in PGC whereas YH Dato Md. Adnan bin Sulaiman is a General Manager of LKPP, a Director in LKPP Corp. and PPOM. 11

18 Mr Tee Kim Tee Ching Tee is a Director in KKSB, PTSB, PPOM, WWSB, RPOM, Kilang Sawira Makmur, EPOM and FPSB. Mr Tee Cheng Hua is a Director in KKSB, PTSB, PPOM, WWSB, PGC, RPOM, Kilang Sawira Makmur, EPOM and FPSB. Mr Tee Lip Teng is a Director in FPSB. Hence, YH Dato Kamaruddin bin Mohammed, YH Dato Md. Adnan bin Sulaiman, Mr Tee Kim Tee Ching Tee, Mr Tee Cheng Hua and Mr Tee Lip Teng being interested directors will abstain from voting in respect of his/their direct and/or indirect shareholdings at the forthcoming 39th AGM on the Proposed Renewal of Shareholders Mandate. Accordingly, YH Dato Kamaruddin bin Mohammed, YH Dato Md. Adnan bin Sulaiman, Mr Tee Kim Tee Ching Tee, Mr Tee Cheng Hua and Mr Tee Lip Teng being interested directors have abstained and will continue to abstain from board deliberation and voting in respect of the Proposed Renewal of Shareholders Mandate. The Directors of FEHB who are interested in the Proposed Renewal of Shareholders Mandate and their respective shareholdings in FEHB as at 30 April 2013 are as follows:- <-- Total No. Of Ordinary Shares Held of RM > Directors Direct % Indirect % YH Dato Kamaruddin bin Mohammed 2,700, , YH Dato Md. Adnan bin Sulaiman Mr Tee Kim Tee Ching Tee 5,199, Mr Tee Cheng Hua 2,124, Mr Tee Lip Teng 300, Person Connected Pn Asmin binti Yahya is General Manager of the Company. As at 30 April 2013, she holds 75,000 unit shares in FEHB. She is also a Director in KKSB and FPSB; and being interested person in the Proposed Renewal of Shareholders Mandate, will abstain from voting in respect of her direct and/or indirect shareholdings at the forthcoming 39th AGM on the Proposed Renewal of Shareholders Mandate. 7. STATUTORY AND OTHER GENERAL INFORMATION Shareholders are requested to refer to the Appendix I of this Circular for further information. 8. ANNUAL GENERAL MEETING The 39th AGM of the Company, the notice of which is set out in the Annual Report of Far East Holdings Berhad for the financial year ended 31 December 2012 accompanying this Circular, will be held at The Zenith Hotel, Jalan Putra Square 6, Putra Square, Kuantan, Pahang Darul Makmur on 19 June 2013 at a.m. for the purpose of considering and, if thought fit, passing the ordinary resolution pertaining to the Proposed Renewal of Shareholders Mandate under the agenda of Special Business as set out in the Annual Report. 12

19 If you are unable to attend and vote at the 39th AGM in person, you will find enclosed with this Circular a Form of Proxy which you are requested to complete, sign and return in accordance with the instructions contained therein as soon as possible and, in any event, so as to arrive at Far East Holdings Berhad, Suite 5 & 6, Tingkat 8, Kompleks Teruntum, Jalan Mahkota, Kuantan, Pahang not later than forty-eight (48) hours before the time fixed for convening the 39th AGM. The completion and return of the Form of Proxy will not preclude you from attending and voting at the 39th AGM if you subsequently wish to do so. 9. DIRECTORS RECOMMENDATION The Board save and except for YH Dato Kamaruddin bin Mohammed, YH Dato Md. Adnan bin Sulaiman, Mr Tee Kim Tee Ching Tee, Mr Tee Cheng Hua and Mr Tee Lip Teng having considered all aspects of the Proposed Renewal of Shareholders Mandate, is of the opinion that the Proposed Renewal of Shareholders Mandate is in the best interest of the Company and its shareholders. Accordingly, they (save and except for YH Dato Kamaruddin bin Mohammed, YH Dato Md. Adnan bin Sulaiman, Mr Tee Kim Tee Ching Tee, Mr Tee Cheng Hua and Mr Tee Lip Teng, who have abstained from deliberation and voting at the Board meetings of FEHB and are deemed interested in the Proposed Renewal of Shareholders Mandate) recommend that you vote in favour of the ordinary resolution to be tabled at the forthcoming 39th AGM pertaining to the Proposed Renewal of Shareholders Mandate under the agenda of Special Business as set out in the Notice of AGM in the Annual Report of Far East Holdings Berhad for the financial year ended 31 December Yours faithfully For and on behalf of the Board FAR EAST HOLDINGS BERHAD.... Khairul Azahar bin Ariffin Independent Non Executive Director 13

20 PART B PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

21 FAR EAST HOLDINGS BERHAD (14809-W) (Incorporated in Malaysia) Registered Office : Suite 5 & 6, Tingkat 8, Kompleks Teruntum, Jalan Mahkota, Kuantan, Pahang Darul Makmur. 24 May 2013 Board of Directors YH Dato Kamaruddin bin Mohammed (Chairman, Non Independent Non Executive Director) YH Dato Md. Adnan bin Sulaiman (Non Independent Non Executive Director) YH Dato Tan Bing Hua (Independent Non Executive Director) Mr Tee Kim Tee Ching Tee (Non Independent Non Executive Director) Mr Tee Cheng Hua (Non Independent Executive Director) En Khairul Azahar bin Ariffin (Independent Non Executive Director) En Hashim Naina Merican bin Yahaya Merican (Independent Non Executive Director) Mr Tee Lip Teng (Non Independent Non Executive Director) To the Shareholders of Far East Holdings Berhad Dear Shareholders FAR EAST HOLDINGS BERHAD PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION OF THE COMPANY ( PROPOSED AMENDMENTS ) 1. INTRODUCTION On 9 April 2013, the Company announced that it will seek shareholders approval in relation to the Proposed Amendments to the Company s Articles of Association. As provided under the Practice Note 18 of Listing Requirements Bursa Malaysia has not perused this Circular prior to its issuance as the Proposed Amendments fall under the category of the Exempt Circular as outlined in the aforesaid Practice Note. The purpose of this Circular is to provide the shareholders with the details of the Proposed Amendments together with the Board s recommendations thereto and to seek your approval for the Special Resolution to be tabled at the AGM of the Company. 2. DETAILS AND RATIONALE OF THE PROPOSED AMENDMENTS The Proposed Amendments are made to amend the Company s Articles of Association so as to be consistent with the amended Listing Requirements of Bursa Malaysia and to provide 14

22 flexibility and efficiency in procedures for the Company. The Proposed Amendments are also primarily to ensure that shareholders have access to Articles of Association which are updated and comprehensive. Detail of the Proposed Amendments are set out in Appendix II of this Circular for shareholders information and approval. 3. EFFECT OF THE PROPOSED AMENDMENTS The Proposed Amendments will not have any effect on the share capital or the shareholdings of the substantial shareholders of the Company. 4. APPROVAL OF THE PROPOSED AMENDMENTS The approval of the shareholders at the forthcoming AGM will be sought for the Proposed Amendments in which it is required to be passed by way of a Special Resolution of the Company in a general meeting. 5. INTEREST OF DIRECTORS AND MAJOR SHAREHOLDERS None of the Directors and/or Major Shareholders of the Company of any persons connected to them (as defined in the Listing Requirements) has any interest, direct or indirect in the Proposed Amendments. 6. STATUTORY AND OTHER GENERAL INFORMATION Shareholders are requested to refer to the Appendix I of this Circular for further information. 7. ANNUAL GENERAL MEETING The 39th AGM of the Company, the notice of which is set out in the Annual Report of Far East Holdings Berhad for the financial year ended 31 December 2012 accompanying this Circular, will be held at The Zenith Hotel, Jalan Putra Square 6, Putra Square, Kuantan, Pahang Darul Makmur on 19 June 2013 at a.m. for the purpose of considering and, if thought fit, passing the special resolution pertaining to the Proposed Amendments under the agenda of Special Business as set out in the Annual Report. 15

23 If you are unable to attend and vote at the 39th AGM in person, you will find enclosed with this Circular a Form of Proxy which you are requested to complete, sign and return in accordance with the instructions contained therein as soon as possible and, in any event, so as to arrive at Far East Holdings Berhad, Suite 5 & 6, Tingkat 8, Kompleks Teruntum, Jalan Mahkota, Kuantan, Pahang Darul Makmur not later than forty-eight (48) hours before the time fixed for convening the 39th AGM. The completion and return of the Form of Proxy will not preclude you from attending and voting at the 39th AGM if you subsequently wish to do so. 8. DIRECTORS RECOMMENDATION The Board having considered all aspects of the Proposed Amendments is of the opinion that the Proposed Amendments are in the best of the Company and its shareholders and recommends that you vote in favour of the Special Resolution in relation to the Proposed Amendments to be tabled at the forthcoming AGM. Yours faithfully For and on behalf of the Board FAR EAST HOLDINGS BERHAD.... Khairul Azahar bin Ariffin Independent Non Executive Director 16

24 ADDITIONAL INFORMATION APPENDIX I 1. Directors Responsibility This Circular has been seen and approved by the Directors and they individually and collectively 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 facts and omission of which would make any statement herein misleading. 2. Material Contracts Neither FEHB nor its subsidiary companies have entered into any contract which are and may be material within the two (2) years preceding the date of this Circular, other than contracts entered into in the ordinary course of business. 3. Material Litigation Save as disclosed below, the Board has confirmed that the FEHB Group is not engaged in any material litigation, either as plaintiff or defendant, claims or arbitration and the Directors are not aware of any proceedings pending or threatened or of any fact likely to give rise to any proceedings which might materially and adversely affect the position or business of the FEHB Group :- IN THE HIGH COURT AT KUALA LUMPUR ORIGINATING SUMMONS NO. 24NCC(ARB)-46-11/ Far East Holdings Berhad (FEHB) 2. Kampong Aur Oil Palm Company (Sdn.) Berhad (KAOP) - Plaintiffs And Majlis Ugama Islam dan Adat Resam Melayu Pahang (MUIP) - Defendant IN THE HIGH COURT AT KUALA LUMPUR ORIGINATING SUMMONS NO. 24NCC(ARB)-54-11/2012 (formerly 47-11/2012) Majlis Ugama Islam dan Adat Resam Melayu Pahang - Plaintiff And 1. Far East Holdings Berhad - 1 st Defendant 2. Kampong Aur Oil Palm Company (Sdn.) Berhad - 2 nd Defendant FEHB had on 6 November 2012 filed Originating Summons No. 24NCC (ARB)-46-11/2012 in the High Court of Malaya at Kuala Lumpur to challenge the Final Award dated 19 September 2012 from the Arbitrator. The financial impact on the Final Award could not be finalised as the Board is disputing the decision and the amount awarded by the Arbitrator. FEHB had on 16 November 2012 received a sealed copy of an Originating Summons and Affidavit in Support from MUIP. The Originating Summons No. 24NCC(ARB)-54-11/2012 (formerly 47-11/2012) is dated 12 November 2012 and the Affidavit in Support was affirmed on 9 November On the application of FEHB/KAOP and MUIP, the hearing dates for the above cases which were scheduled on the and was adjourned to The Solicitor of FEHB is of the view that the Company has a reasonable chance of succesfully challenging the award.

25 4. Documents For Inspection Copies of the following documents will be available for inspection at the Registered Office of FEHB at Suite 5 & 6, Tingkat 8, Kompleks Teruntum, Jalan Mahkota, Kuantan, Pahang Darul Makmur during normal business hours from Mondays to Fridays (except for public holiday) for a period from the date of this Circular to the date of the AGM: (a) Memorandum and Articles of Association of FEHB; (b) Audited accounts of the FEHB Group for the past two (2) financial years ended 31 December 2011 and 31 December 2012 and also the unaudited quarterly results as at 31 March 2013; and (c) The relevant documents pertaining to the material litigation referred in Section 3 above.

26 APPENDIX II Article No Existing Articles Amended Articles 2 Interpretation WORD - MEANING No Provision WORD Omnibus account Exempt Authorised Nominees MEANING An account in which securities are held for two or more beneficial owners An authorised nominee defined under the Central Depositories Act which is exempted from compliance with the provisions of subsection 25A(1) of Central Depositories Act 73B Number of Proxy No Provision Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) 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. Exempt authorised nominee refers to an authorised nominee defined under the Central Depositories Act which is exempted from compliance with the provisions of subsection 25A(1) of Central Depositories Act. Where an exempt authorised nominee appoints two (2) or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies.

27 Article No Existing Articles Amended Articles 71 Qualification of Proxy (NIL) No Provision A member of a Company entitled to attend and vote at a meeting of a Company, or at a meeting of any class of members of the Company, shall be entitled to appoint any person as his proxy to attend and vote instead of the member at the meeting. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at a meeting of a Company shall have the same rights as the member to speak at the meeting.