Hap Seng Consolidated Berhad : AGM Reporting Document

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the 46th annual general meeting of Hap Seng Consolidated Berhad will be conducted by way of a fully virtual meeting with its broadcast venue at the Kinabalu Room, Ground Floor, Menara Hap Seng, Jalan P. Ramlee, 50250 Kuala Lumpur on Thursday, 26 May 2022 at 10am to transact the following:-

AGENDA

ORDINARY BUSINESS

1. To table the audited financial statements for the financial year ended 31 December 2021 together with the reports of directors and auditors. Note 1

To consider and if thought fit, to pass the following ordinary resolutions:-

• 2. To re-elect the following directors who shall retire by rotation in accordance with clause 116 of the Company's constitution and being eligible, have offered themselves for re-election: - Notes 2 & 3

  • (a) Mr. Lee Wee Yong

    Ordinary Resolution 1

  • (b) Datuk Simon Shim Kong Yip, JP

  Ordinary Resolution 2

  Lt Gen (R) Datuk Abdul Aziz Bin Hasan who retires in accordance with clause 116 of the Company's constitution, will not be seeking re-election and accordingly will retire at the conclusion of this 46th annual general meeting. Note 4

• 3. To approve payment of directors' fees of the Company and its subsidiaries amounting to RM1,080,000.00 for the financial year ended 31 December 2021. Note 5

  Ordinary Resolution 3

• 4. To reappoint Messrs Ernst & Young PLT as auditors of the Company to hold office until the conclusion of the next annual general meeting at a remuneration to be determined by the directors of the Company. Note 6

Ordinary Resolution 4

SPECIAL BUSINESS

To consider and if thought fit, to pass the following resolutions:-

5.

Authority to allot shares pursuant to section 75 of the Companies Act 2016

"That subject always to the approvals of the relevant authorities, the directors of the Company be and are hereby empowered pursuant to section 75 of the Companies Act 2016 to allot shares in the Company at any time upon such terms and conditions, and for such purposes as the directors of the Company may in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the total number of issued shares of the Company for the time being and that the directors of the Company be and are hereby empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad and such authority shall continue to be in force until the conclusion of the next annual general meeting of the Company." Note 7

Ordinary Resolution 5

• 6. Proposed renewal of and new shareholders' mandate for recurrent related party transactions of a revenue or trading nature

  "That subject to the provisions of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company and its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature with the related parties as set out in Part A, section 2.3 of the Circular/Statement to shareholders dated 28 April 2022, which are necessary for the day-to-day operations of the Company and/or its subsidiaries and are carried out in the ordinary course of business, at arm's length and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company.

  That such approval shall continue to be in force until:-

  (a) the conclusion of the next annual general meeting of the Company, at which time the said authority shall lapse, unless renewed by a resolution passed at the annual general meeting; or

  • (b) the expiration of the period within which the next annual general meeting of the Company is required to be held pursuant to section 340(2) of the Companies Act 2016 (but must not extend to such extension as may be allowed pursuant to section 340(4) of the Companies Act 2016); or

  • (c) revoked or varied by a resolution passed by the shareholders in a general meeting of the Company,

  whichever is the earlier;

  and that the directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the proposed renewal of and new shareholders' mandate." Note 8

  Ordinary Resolution 6

• 7. Proposed renewal of share buy-back authority

  "That subject always to section 127 of the Companies Act 2016, the Company's constitution, Main Market Listing Requirements of Bursa Malaysia Securities Berhad, and the approvals of all relevant governmental and/or regulatory authorities, the directors of the Company be and are hereby authorised to purchase ordinary shares in the Company through Bursa Malaysia Securities Berhad, provided that:-

  • (a) the aggregate number of ordinary shares purchased and/or held by the Company as treasury shares shall not exceed 10% of the total number of issued shares of the Company;

  • (b) the maximum funds allocated by the Company for the purpose of purchasing its own shares shall not exceed the total retained profits of the Company, based on the Company's audited financial statements for the financial year ended 31 December 2021; and

(c)the authority conferred by this resolution shall continue to be in force until:-

• (1) the conclusion of the next annual general meeting of the Company, at which time the said authority shall lapse, unless renewed by the passing of a resolution at that meeting, either unconditionally or subject to conditions; or

• (2) the expiration of the period within which the next annual general meeting of the Company is required to be held pursuant to section 340(2) of the Companies Act 2016 (but shall not extend to such extension as may be allowed pursuant to section 340(4) of the Companies Act 2016); or

• (3) revoked or varied by a resolution passed by the shareholders in a general meeting of the Company,

whichever occurs first;

and that the directors of the Company be and are hereby authorised to deal with the shares purchased in their absolute discretion in the following manner:-

(i) cancel all the shares so purchased; and/or

• (ii) retain part thereof as treasury shares and cancel the remainder; and/or

• (iii) retain the shares so purchased in treasury for distribution as dividend to the shareholders and/or resell on the market of Bursa Malaysia Securities Berhad; and/or

• (iv) transfer the treasury shares or any of the said shares as purchase consideration; and/or

• (v) in any other manner as prescribed by section 127(7) of the Companies Act 2016,

and further that the directors of the Company be and are hereby authorised to take all such steps as are necessary and/or enter into any and all agreements, arrangements and guarantees with any party or parties to implement, finalise and give full effect to the aforesaid purchase with full powers to assent to any conditions, modifications, revaluations, variations and/or amendments (if any) as may be imposed by the relevant authorities from time to time to implement or to effect the purchase of its own shares." Note 9

Ordinary Resolution 7

8.

Proposed amendment to the constitution of the Company

"That the proposed amendment to the constitution of the Company as set out in Appendix A be and is hereby approved." Note 10

Special Resolution

By order of the Board

Lim Guan Nee (MAICSA 7009321)

SSM Practising Certificate No. 202008003410 Company Secretary

Kuala Lumpur

28 April 2022

Explanatory notes to the Agenda:-

• 1. Pursuant to section 340(1) and (2) of the Companies Act 2016 ("Act"), the directors shall lay before the Company at its annual general meeting ("AGM") its audited financial statements made up to a date not more than 6 months before the date of the AGM. This agenda 1 is meant for discussion only and will not be put forward for voting.

• 2. Pursuant to clause 116 of the Company's constitution, at least one-third of the directors of the Company for the time being shall retire from office at every AGM and be eligible for re-election.

• 3. The nominating committee conducted directors' self and peer assessment to evaluate and determine the respective performance and eligibility of each of the directors who are to retire in accordance with clause 116 of the Company's constitution to stand for re-election. In their evaluation, the nominating committee took into account the skills, experience, integrity, tenure, competency, commitment and contribution of the respective director. Upon due deliberation, the nominating committee concluded that each such retiring director has performed to the expectation of the committee. Accordingly, the board approved of the recommendations of the nominating committee, namely such retiring directors are eligible to stand for re-election during the AGM.

• 4. Lt Gen (R) Datuk Abdul Aziz Bin Hasan, having served as an independent non-executive director of the Company for more than 9 years will retire by rotation as a director in accordance with clause 116 of the Company's constitution. As he will not be seeking re-election, Lt Gen (R) Datuk Abdul Aziz Bin Hasan will retire at the conclusion of this AGM.

• 5. Pursuant to section 230(1) of the Act, the Company shall at every AGM approve of the fees payable to the directors of the Company and its subsidiaries. The remuneration committee is responsible for conducting a regular review of the fees payable to non-executive directors and members of the board committees. This is to ensure that the chair and non-executive members of the board and the chair and members of the respective board committee are appropriately remunerated in line with the market benchmarking.

  The last increase in fees payable to the chair and non-executive members of the board and the chair and members of the respective board committee was approved by shareholders of Company during the 42th AGM held on 30 May 2018. Based on the recommendations of the remuneration committee, the board had approved of the following proposed revised fees with effect from 1 January 2021 subject to shareholders' approval to be obtained during the forthcoming AGM:-

  Non-	Audit	Audit	Remuneration	Remuneration	Nominating	Nominating
  executive	committee	committee	committee	committee	committee	committee
  Chairman	director	chairman	member	chairman	member	chairman	member
  Approved current fees
  (per annum)	RM180,000	RM100,000	RM15,000	RM15,000	RM2,500	RM2,500	RM2,500	RM2,500
  Proposed fees to be
  approved
  (per annum)	RM210,000	RM115,000	RM20,000	RM17,500	RM10,000	RM8,750	RM10,000	RM8,750

  The above total directors' fees of RM1,080,000.00 exclude directors' fees payable by the Company's listed subsidiaries, namely Hap Seng Plantations Holdings Berhad and Hafary Holdings Limited, which are subject to their own shareholders' approval being obtained.

• 6. Pursuant to section 271(4) and section 273(b) of the Act, the Company shall at every AGM appoint its auditors who shall hold office until the conclusion of the next AGM. The audit committee had assessed the suitability and independence of Messrs Ernst & Young PLT ("EY"), the auditors of the Company based on the following criteria:-

  • (a) their performance and quality of work;

  • (b) experience and competency of professional staff assigned to the audit;

  • (c) adequacy of resources;

  • (d) independence throughout the conduct of the audit engagement; and

  • (e) level of non-audit services and fees rendered to the Group.

  The audit committee was satisfied with the suitability of EY in terms of their audit quality, performance, competency and sufficiency of resources as well as provisions of non-audit services, which did not impair their objectivity and independence as auditors of the Company. The board approved of the audit committee's recommendation for shareholders' approval to be sought at this AGM on the proposed reappointment of EY as auditors of the Company.

• 7. The proposed resolution 5 is to authorise the Company to allot shares pursuant to section 75 of the Act. This proposed resolution 5, if passed, will empower the directors of the Company to allot ordinary shares in the Company up to 10% of the total number of issued shares of the Company for the time being, subject to compliance with all other regulatory requirement and this authority will enable the Company to finance investment projects, working capital and/or acquisitions by issuing new shares as and when the need arises without delay or incurring costs in convening a separate general meeting. This authority, unless revoked or varied at an earlier general meeting, will expire at the conclusion of the next AGM of the Company.

  As at the date of this notice of AGM, the Company has not issued any new shares pursuant to the authority granted by the shareholders at the last AGM held on 25 May 2021, which authority shall lapse at the conclusion of this AGM.

• 8. The proposed resolution 6 is to authorise the Company and its subsidiaries to enter into recurrent related party transactions ("RRPT") which are necessary for day-to-day operations, subject to the transactions being carried out in the ordinary course of business and on terms not detrimental to the minority shareholders of the Company. This would eliminate the need to make regular announcements to Bursa Malaysia Securities Berhad or convene separate general meetings from time to time to seek shareholders' approval as and when RRPT arise, thereby reducing substantial administrative time and expenses in convening such meetings.

  Further information on the said RRPT is set out in Part A of the Circular/Statement to shareholders dated 28

• April 2022 which is issued together with the Company's Annual Report 2021.

• 9. The proposed resolution 7 is to authorise the Company to purchase its own shares of up to 10% of the total number of issued shares of the Company. This authority, unless revoked or varied by the Company at a general meeting, will expire at the conclusion of next AGM of the Company. Further information on the proposed renewal of share buy-back authority is set out in Part B of the Circular/Statement to shareholders dated 28 April 2022 which is issued together with the Company's Annual Report 2021.

• 10. The proposed special resolution, if passed, shall cohere the constitution of the Company with the latest amendments made to Malaysian Code on Corporate Governance (as at 28 April 2021) in relation to seek shareholders' approval through a two-tier voting process to retain an independent director beyond the nine-year tenure.