Velesto Energy : Circular Proposed Granting of ESOS Options

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, banker, solicitor, accountant or other professional advisers immediately.

Bursa Malaysia Securities Berhad ("Bursa Securities") has not perused this Circular prior to its issuance as Velesto Energy Berhad ("VEB" or the "Company") has been selected by Bursa Securities as one of the eligible listed issuers under the Green Lane Policy. 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.

VELESTO ENERGY BERHAD

Registration No. 200901035667 (878786-H)

(Incorporated in Malaysia)

CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED OFFER AND GRANTING OF UP TO A MAXIMUM NUMBER OF 11,400,000 ESOS OPTIONS (AS DEFINED HEREIN) TO MEGAT ZARIMAN ABDUL RAHIM, THE PRESIDENT AND NON-INDEPENDENT EXECUTIVE DIRECTOR OF THE COMPANY, UNDER VEB'S ESOS (AS DEFINED HEREIN)

Principal Adviser

AFFIN HWANG INVESTMENT BANK BERHAD

(Registration No. 197301000792 (14389-U))

(A Participating Organisation of Bursa Malaysia Securities Berhad)

The Proposed Granting of ESOS Options (as defined herein) will be tabled as Special Business at the 13th Annual General Meeting ("AGM") of the Company which will be held as a virtual meeting conducted entirely through live streaming and remote voting using the remote participation and voting facilities hosted on the Securities Services ePortal at https://sshsb.net.my/provided by SS E Solutions Sdn. Bhd. from the broadcast venue at Ballroom, Level 2, Aloft KL Sentral, 5, Jalan Stesen Sentral, Kuala Lumpur Sentral, 50470 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur, Malaysia on Monday, 29 May 2023 at 2:00 p.m.

The Notice of the 13th AGM, Proxy Form, 13th AGM Administrative Guide, Annual Report 2022 and this Circular can be downloaded at the website of the Company at https://www.velesto.com.

A member is entitled to attend and vote at the virtual meeting and is also entitled to appoint a proxy to attend and vote on his/her behalf. The Proxy Form must be either:

1. deposited at the Share Registrar's office of Securities Services (Holdings) Sdn Bhd, at Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur; or
2. lodged via electronic means through the Securities Services e-Portal platform ("SS ePortal") at https://sshsb.net.my/or by fax to [phone] or by email to [e-mail] later than 27 May 2023 at 2:00 pm or at any adjournment thereof.

The lodging of the Proxy Form will not preclude you from participating and voting at the meeting should you subsequently wish to do so. Kindly refer to the Administrative Guide for the 13th AGM in order to register, participate and vote remotely via the remote participation and voting facilities.

Last date and time for lodging the Proxy Form Date and time of the 13th AGM

• Saturday, 27 May 2023, 2:00 p.m.
• Monday, 29 May 2023, 2:00 p.m.

Should you wish to participate at the 13th AGM, please register for remote participation electronically via the SS ePortal at https://sshsb.net.my/by 29 May 2023 at 2:00 p.m.

This Circular is dated 28 April 2023

DEFINITIONS

Except where the context otherwise requires, the following terms and abbreviations shall apply throughout this Circular:

2019 ESOS Circular	: Circular to the shareholders of VEB dated 2 October 2019 on the
		establishment of the ESOS, which was approved by the shareholders of
		VEB on 31 October 2019
ABB	: Affin Bank Berhad (Registration No. 197501003274 (25046-T))
Act	:	Companies Act 2016
Affin Hwang IB or	: Affin Hwang Investment Bank Berhad (Registration No. 197301000792
Principal Adviser		(14389-U)), a wholly-owned subsidiary of ABB
AGM	:	Annual General Meeting
Announcement	: Announcement dated 14 April 2023 in relation to the Proposed Granting
		of ESOS Options
BNRC	: Board Nomination and Remuneration Committee of VEB
Board	: The board of Directors of VEB
Bursa Securities	:	Bursa Malaysia Securities Berhad (Registration No. 200301033577
		(635998-W))
By-Laws	: The rules, terms and conditions governing the ESOS as may be modified,
		varied and/or amended from time to time
CDS Account	: An account established by Bursa Depository for a depositor for the
		recording of deposit and withdrawal of securities and for dealing in such
		securities by a depositor
Circular	: This circular to the shareholders of VEB dated 28 April 2023
Constitution	: The constitution of VEB
Deed Poll	: Deed poll constituting the Warrants dated 8 September 2017
Director	: A natural person who holds a directorship in VEB or any company within
		VEB Group, whether in an executive or non-executive capacity, and shall
		have the meaning given in Section 2(1) of the Capital Markets and
		Services Act 2007 as amended from time to time including any re-
		enactment thereof
Eligible Person(s)	:	An Employee or Executive Director of the VEB Group (excluding
		subsidiary companies which are dormant) who meets the criteria of
		eligibility for participation in the ESOS in accordance with the By-Laws
Employee	: A natural person who is employed by and on the payroll of any company
		within the Group
EPS	:	Earnings per Share
ESOS	: VEB's employees' share option scheme, which was established on 1
		November 2019 and shall expire on 31 October 2024

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DEFINITIONS (CONT'D)

ESOS Option(s)		: The right of a Grantee to subscribe for VEB Shares at the Option Exercise
				Price pursuant to the acceptance of an Offer by an Eligible Person in
				accordance with the By-Laws
ESOS Committee		: The BNRC or a committee comprising such persons appointed from time
				to time by the Board, which is authorised by the Board with the
				responsibility of, among others, implementing, allocating and
				administering the ESOS
Executive Director		: A Director who is on the payroll of the Group and is involved in the day-
				to-day management of the Group
FYE			: Financial year ended/ending, as the case may be
Grantee			: An Eligible Person who has accepted the Offer in accordance with the By-
				Laws
Listing Requirements		: Main Market Listing Requirements of Bursa Securities
LPD			: 31 March 2023, being the latest practicable date prior to the printing of
				this Circular
MFRS 2			: Malaysian Financial Reporting Standards 2, on "Share-Based Payment"
				issued by the Malaysian Accounting Standards Board
NA			:	Net assets
Offer			: A written offer made by the ESOS Committee to an Eligible Person to
				participate in the ESOS in accordance with the By-Laws
Option Exercise Price		: The price at which a Grantee shall be entitled to subscribe for each VEB
				Share upon exercise of the ESOS Options in accordance with the By-
				Laws
Proposed Granting	of	: Proposed offer and granting of up to a maximum number of 11,400,000
ESOS Options			ESOS Options to Megat Zariman Abdul Rahim, under the ESOS
RM and sen		: Ringgit Malaysia and sen respectively
VEB or the Company		: Velesto Energy Berhad (Registration No. 200901035667 (878786-H))
VEB Group or Group		: VEB and its subsidiaries, collectively, and in the context of the ESOS,
				shall exclude subsidiaries which are dormant
VEB	Share(s)	or	:	Ordinary share(s) in VEB
Share(s)
VWAP			: Volume weighted average price
Warrant(s)		: Existing warrant(s) 2017/2024 of the Company. Each warrant holder is
				entitled to the right to subscribe for 1 Share at an exercise price of
				RM0.395 per warrant

References to "we", "us", "our" and "ourselves" are to the Company, and where the context otherwise requires, the subsidiaries of the Company. All references to "you" are to the shareholders of the Company.

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DEFINITIONS (CONT'D)

Words incorporating the singular shall, where applicable, include the plural and vice versa. Words incorporating the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. Any reference to persons shall include a corporation, unless otherwise specified.

Any reference in this Circular to any statutes, rules, regulations or rules of the stock exchange is a reference to such statutes, rules, regulations or rules of the stock exchange currently in force and as may be amended from time to time and any re-enactment thereof.

Any reference to a time or date in this Circular shall be a reference to Malaysian time, unless otherwise stated.

Any discrepancy in the tables included in this Circular between the amounts listed, actual figures and the totals thereof are due to rounding.

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TABLE OF CONTENTS

PAGE

EXECUTIVE SUMMARY

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LETTER TO THE SHAREHOLDERS OF VEB IN RELATION TO THE PROPOSED GRANTING OF ESOS OPTIONS

1.	INTRODUCTION	1
2.	DETAILS OF THE PROPOSED GRANTING OF ESOS OPTIONS	2
3.	RATIONALE FOR THE PROPOSED GRANTING OF ESOS OPTIONS	6
4.	UTILISATION OF PROCEEDS	6
5.	EFFECTS OF THE PROPOSED GRANTING OF ESOS OPTIONS	6
6.	HISTORICAL SHARE PRICES	8
7.	APPROVALS REQUIRED	8
8.	INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS, PRESIDENT AND/OR	8
	PERSONS CONNECTED WITH THEM
9.	DIRECTORS' STATEMENT AND RECOMMENDATION	9
10.	ESTIMATED TIMEFRAME FOR COMPLETION	9
11.	CORPORATE EXERCISE ANNOUNCED BUT PENDING COMPLETION	9
12.	AGM	9
13.	FURTHER INFORMATION	10

APPENDICES

1. BY-LAWSIN RELATION TO THE ESOS
   II FURTHER INFORMATION
   III EXTRACT OF NOTICE OF THE 13TH AGM OF THE COMPANY

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