KWANTAS CORPORATION BERHAD

 Company No. 356602-W

(Incorporated in Malaysia)

MINUTES OF THE TWENTY-SECOND ANNUAL GENERAL MEETING HELD AT K-63A-3^RD FLOOR, SIGNATURE OFFICE, KK TIMES SQUARE, OFF COASTAL HIGHWAY, 88100 KOTA KINABALU, SABAH, MALAYSIA ON THURSDAY, 30^TH NOVEMBER 2017 AT 10:10 A.M

PRESENT:         DIRECTORS                        

                                    Datuk Ismail Abdullah

                                    Mr Kwan Ngen Chung

                                    Mr Kwan Ngen Wah                                                                                 

                                    Dato’ Chong Kan Hiung

                                    Mdm Kwan Min Nyet

                                    Mr Petrus Gimbad

                                    Mr Ooi Jit Huat                                                                                         

                                    ABSENT WITH APOLOGIES

                                    Mdm Kwan Jin Nget

                                    MEMBERS

                                    5 members present in person (including Directors)

                                    PROXY

                                    7 members appointed the Chairman of the meeting as proxy

                                    7 proxies present in person

                                    BY INVITATION

                                    Mr Chau Man Kit                   -       PKF Partner

                                    Ms Terrie Wong                     -       PKF Senior Audit In-Charge

                                    Ms Hoo Ley Beng                  -       Authorised Representative, MSWG

                                    Ms Wong Lee Fun                  -       Independent Scrutineer 

                                    IN ATTENDANCE

                                    Mdm Kwan Fei Fen               -        Company Secretary

Before commencing the 22^nd Annual General Meeting of the Company, Chairman of the meeting Datuk Ismail Abdullah welcomed all the Directors, members, proxies and invitees who took their time-off to attend this 22^nd Annual General Meeting of the Company.

1.            QUORUM

Upon confirmation by the Company Secretary that a quorum was present, the Chairman called the meeting to order at 10:10 a.m.

2.            NOTICE

               The notice convening the meeting was taken as read.

3.            TO LAY BEFORE THE MEETING THE AUDITED STATEMENTS OF ACCOUNTS TOGETHER WITH THE DIRECTORS’ AND AUDITORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2017 FOR DISCUSSION PURPOSE

               The audited accounts for the year ended 30 June 2017 together with the Report of

               Directors and Auditors were tabled for discussion.

Chairman informed that the Board had received a letter dated 22^nd November 2017 from Minority Shareholder Watchdog Group (“MSWG”) on matters to be addressed during the Annual General Meeting for the attention of all members of the Company. Chairman acknowledged the presence of the authorised representative of MSWG, Mdm Hoo Ley Beng, and suggested that the issues be responded to first by the Board. The issues raised in the letter and the Board responses were as follows :-

Q1.        The Group has a total land bank of 58,450 hectares, of which 36.25% or 21,187 hectares have been planted with oil palms. From the total planted area, approximately 80% or 16,978 hectares are matured, 20% or 4,209 hectares are immatured.

(a)    Could the Board provide the following details in respect of Sabah, Sarawak and Kalimantan Region :- 

(i)           Total land bank;

(ii)         Total planted hectarage;

(iii)       Age profile of the palm in the categories of “less than 4”, “8 to 15”, “16 to 20”,

         “21 to 25” and “above 25”. 

Reply :

Group Managing Director Mr Kwan Ngen Chung informed that the details are as follows :-

(b)   Out of the total unplanted hectarage of 37,263 hectares, what is the plantable hectarage in

      each region? Please share the planting schedule in the next three years.

Reply :

   Group Managing Director Mr Kwan Ngen Chung reported the details of the plantable hectarage as follows :

  - Sabah Region: 372 Hectare (CL title)

  - Sarawak Region: 11,526 Hectare (NCR title), 6,499 Hectare (CL title)

- Kalimantan Region: 13,555 Hectare (Leasehold land)

Planting schedule in the next three years:

Q2.      On 7 April 2017, the Group had divested 100% equity interest in Dongma (Guangzhou Free Trade Zone) Oleochemicals Co. Ltd. (“DMO”) in China. Also, subsequent to the financial year ended 30 June 2017, the Company has located a potential buyer for two subsidiary companies in China which are engaged in the business of soap noodle, oleochemicals and glycerine and bulking installation, trading of palm oils and fat products respectively.

(a)    Could the Board share the plan with regards to its oleochemical business moving forward given that the Oleochemical Products Division has been in a loss position in the last five years?

Reply :

Group Managing Director Mr Kwan Ngen Chung reported that the Board is carrying out a divestment exercise of certain assets in China. The Group is actively reviewing its business model to mitigate price and currency risks through tolling and cost control strategies.                                                                  

(b)   With the disposal and the proposed disposal of the abovementioned subsidiaries in China, would the Company withdraw its presence in China, going forward?

Reply :

Group Managing Director Mr Kwan Ngen Chung informed that the Company will withdraw its manufacturing presence in China when the divestment exercise is materialised. The Company may maintain a marketing office in China thereafter.

Q3.     One of the challenges in the palm oil industry is shortage of workers. The Group has implemented Buffalo Assisted Collection (BAC) measures to reduce its dependency on labour.

Besides BAC, what are the other automation or mechanization to be implemented to enhance operations efficiency and to reduce dependency on labour?

          Reply :

Group Managing Director Mr Kwan Ngen Chung reported that the entire palm oil industry

in Malaysia is facing severe labour shortage problem and the Company can no longer stick to the conventional way of managing its operations. BAC is one way of reducing the Company’s dependency on labour. Another innovative idea that the Company has in mind is the use of cable way system to transport its fresh fruit bunches directly to the oil mill once the fruits are harvested in order to reduce the transportation costs.

Q4.     In FY2016, revenue derived from Singapore accounted for approximately 37% of the Group revenue. However, in FY2017, there was no revenue derived from Singapore.

           What was the reason for zero revenue generated from Singapore in FY2017 and moving forward, would there be revenue expected from Singapore?

Reply :

Executive Director Dato’ Chong Kan Hiung reported that most of the international palm oil trading houses were based in Singapore. In FY2017, the Company was still having sales to Singapore but the goods were shipped directly from the Company to the end customers in other countries without going through Singapore.

            Other Issue  - Corporate Governance

Q1.         Under Resolution 2, the Company is seeking shareholders’ approval for the payment of Directors’ fees to the Non-Executive Directors for an amount up to RM200,000 from 01 July 2017 until the conclusion of the next Annual General Meeting (AGM) of the Company. 

               As explained in the Notes to the Resolution, the quantum of the Directors’ fees for each Non-Executive Directors from 01 July 2017 until the next AGM (18 months) is derived based on the estimated adjustments to increase the Directors’ fees after the FY2017.

               Could the Board provide the percentage of the increase in the Directors’ fees for each Non-Executive Directors?

Reply :

Executive Director Dato’ Chong Kan Hiung briefed that the Directors’ fees for the Non-Executive Directors of the Company have not been revised and adjusted for many years. In view of the time commitment and the increasing responsibilities of the Non-Executive Directors who are also the Independent Directors of the Company, the Directors’ fees are likely to be adjusted upwards after FY2017. The quantum of increase is subject to approval of the Board and RM200,000 is the maximum provisional figures for 18 months period. The actual amount paid may be less.

At this juncture, the Board has not deliberated on the actual adjustment and the percentage of the increase in the Directors’ fees for each Non-Executive Directors is likely to be between 20% to 40%.

Q2.         We noted that the Extract of Minutes of the 21^st AGM of the Company published in the website pursuant to Paragraph 9.21(2) of the Main Market Listing Requirements was simplified with questions raised by MSWG. In the spirit of transparency and effective communication with stakeholders, we hope that the Board would consider to include the following information in the future Minutes of AGM published in the website of the Company :-

(i)     Attendance of the Board members;

(ii)   No. of shareholders/proxies attended the AGM; and

(iii) Questions and Company’s reply to the questions raised by other shareholders, if

      any.

Reply :

Company Secretary Mdm Kwan Fei Fen replied that pursuant to Paragraph 9.21(2) of the Main Market Listing Requirements, a listed issuer must publish all announcements made to the Exchange and a summary of key matters discussed at the AGM on its website. The Board has endeavoured to publish all questions raised by MSWG as well as questions raised by other shareholders during the AGM in the Company’s websites and moving forward, the Board will inculcate the best practices to also include the attendance of the Board members and the number of shareholders/proxies attended the AGM in the Minutes available at the Company’s website.

Additional Query

Apart from the above questionnaires raised by MSWG, authorized representative from MSWG Mdm Hoo Ley Beng further enquired on the roles and responsibilities of each Executive Directors and how would the Board maintain a balance mix of the composition of its members ?

Reply :

Executive Director Dato’ Chong Kan Hiung briefed that there are currently 5 Executive Directors who are responsible for managing and implementing the Group’s daily executive functions and the roles and responsibilities of each of the Executive Directors are as follows :-

(i)           Group Managing Director Mr Kwan Ngen Chung : Overseeing full executive

responsibilities for the day-to-day management of the Group’s operations and 

implementation of the Board’s policies and decisions.

(ii)         Executive Director Mr Kwan Ngen Wah : Overseeing land matters and plantation

         matters in Sarawak region.

(iii)       Executive Director Dato’ Chong Kan Hiung : Overseeing accounts, corporate finance

         and corporate matters.

(iv)       Executive Director Mdm Kwan Jin Nget : Overseeing human resources management

         and general administration of the oil palm plantation business in Lahad Datu region.

(v)         Executive Director Mdm Kwan Min Nyet : Overseeing overall finance and

         Administrative matters.

Executive  Director Dato’ Chong Kan Hiung  further explained  that  subsequent to  the    

revision of Malaysian Code on Corporate Governance which came into force in April 2017, the Board has numerous discussions to consider reducing the number of Executive Director and at the same time increasing the number of Independent Non-Executive Director in order to match the new requirement of maintaining half of the Board members as Independent Non-Executive Directors. Moving forward, the Board is likely to make these changes to be in line with the new Malaysian Code on Corporate Governance.

There being no further questions, the Chairman then proceeded with the rest of the agenda items. At this juncture, the Chairman announced that, pursuant to the amendments to the Main Market Listing Requirements of Bursa Securities announced on 24^th March 2016, all resolutions to be considered at the meeting will be put to vote by poll and notified the members and proxies that a copy of the ballot paper will be distributed to each of them for the said purpose. He further reminded that interested parties must abstain from voting on resolutions approving the shareholders’ mandate on recurrent related party transactions.

He added that poll voting on the resolutions will be scrutinized by Ms Wong Lee Fun of Duomatic Corporate Services Sdn Bhd, the Independent Scrutineer appointed by the Company.

4.            DIRECTORS’ FEES

Chairman proceeded to item 2 of the Agenda : Resolution 1 : To approve the payment of Directors’ fees of RM66,000 to the Non-Executive Directors of the Company for the financial year ended 30 June 2017.

The matter was put to the floor for voting and it was unanimously RESOLVED :-

THAT the payment of Directors’ fees of RM66,000 to the Non-Executive Directors of the Company for the financial year ended 30 June 2017 is hereby approved.

               The poll result was noted as follows :-

5.            DIRECTORS’ FEES FOR THE PERIOD 01 JULY 2017 UNTIL THE

               CONCLUSION OF THE NEXT ANNUAL GENERAL MEETING

Item 3 of the Agenda : Resolution 2 : To approve the payment of Directors’ fees to the Non-Executive Directors for an amount up to RM200,000 from 01 July 2017 until the conclusion of the next Annual General Meeting of the Company.

The matter was put to the floor for voting and it was unanimously RESOLVED :-

THAT the payment of Directors’ fees to the Non-Executive Directors for an amount up to RM200,000 from 01 July 2017 until the conclusion of the next Annual General Meeting of the Company is hereby approved.

               The poll result was noted as follows :-

6.            DIRECTORATE

   Item 4(a) of the Agenda : Resolution 3 : To re-elect Mr Ooi Jit Huat, who retired by

   rotation pursuant to Article 73 of the Company’s Constitution (Articles of Association)

   and being eligible, offered himself for re-election.

(a)      In accordance with Article 73 of the Company’s Constitution (Articles of Association), Mr Ooi Jit Huat who retired by rotation and being eligible, offered himself for re-election.

The matter was put the floor for voting.

Majority of the members voted for the resolution with 0.35% voted against it.

The Chairman declared the resolution as carried with majority voted for it and it was RESOLVED :-

       THAT Mr Ooi Jit Huat be and is hereby re-elected as a Director of the Company.  

                      The poll result was noted as follows :

          Item 4(b) of the Agenda : Resolution 4 : To re-elect Dato’ Chong Kan Hiung, who

          retired by rotation pursuant to Article 73 of the Company’s Constitution (Articles

          of Association) and being eligible, offered himself for re-election.

(b)     In accordance with Article 73 of the Company’s Constitution (Articles of Association), Dato’ Chong Kan Hiung who retired by rotation and being eligible, offered himself for re-election.

The  matter  was  put  to  the  floor  for  voting  and  it  was unanimously RESOLVED :-

      THAT Dato’ Chong Kan Hiung be and is hereby re-elected as a Director of the

      Company.

                     The poll result was noted as follows :-

        Item 4(c) of the Agenda : Resolution 5 : To re-elect Mr Kwan Ngen Wah, who

        retired by rotation pursuant to Article 73 of the Company’s Constitution (Articles of

       Association) and being eligible, offered himself for re-election.

(c)      In accordance with Article 73 of the Company’s Constitution (Articles of Association), Mr Kwan Ngen Wah who retired by rotation and being eligible, offered himself for re-election.

The matter was put the floor for voting.

Majority of the members voted for the resolution with 0.03% voted against it.

The Chairman declared the resolution as carried with majority voted for it and it was RESOLVED :-

       THAT Mr Kwan Ngen Wah be and is hereby re-elected as a Director of the   

       Company.

                      The poll result was noted as follows :-

7.            AUDITORS

   Item5 of the Agenda : Resolution 6 : To re-appoint Messrs PKF as Auditors of the

   Company and authorize the Directors to fix their remuneration.

               The matter was put to the floor for voting and it was unanimously RESOLVED :-      

THAT Messrs PKF be and is hereby re-appointed as Auditors of the Company and authorize the Directors to fix their remuneration.

               The poll result was noted as follows :-

8.            SPECIAL BUSINESS

               Item 6 of the Agenda : Ordinary Resolution 1 : Authority to allot and issue shares

               pursuant to Section 75 of the Companies Act 2016.

            I.  ORDINARY RESOLUTION NO.1

·      Authority to Allot and Issue Shares Pursuant to Section 75 of the Companies Act 2016

The meeting was requested to consider the Ordinary Resolution as set out in the Notice of meeting on the authority to allot and issue shares pursuant to Section 75 of the Companies Act 2016.

The matter was put to  the  floor  for voting and it was unanimously RESOLVED :-

THAT pursuant to Section 75 of the Companies Act 2016 and subject always to the approval of the relevant authorities, the Directors be and are hereby empowered to issue shares in the capital of the Company from time to time upon such terms and conditions and for such purposes as the Directors may in their discretion deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten percent (10%) of the issued share of the Company for the time being and that the Directors be and are also empowered to obtain the approval for listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.

            The poll result was noted as follows :-

Item 6 of the Agenda : Ordinary Resolution 2 : Proposed renewal of the existing shareholders’ mandate for recurrent related party transactions of a revenue or trading nature.

II.                ORDINARY RESOLUTION NO.2

·               Proposed Renewal of the Existing Shareholders’ Mandate for Recurrent Related Party Transactions of A Revenue or Trading Nature

The meeting was requested to consider the Ordinary Resolution as set out in the Notice of meeting on the proposed renewal of the existing shareholders’ mandate for recurrent related party transactions of a revenue or trading nature involving Section 2.1.2 and 2.1.3 of the Circular to Shareholders dated 31^st October 2017.

The matter was put to the floor for voting and it was unanimously RESOLVED :-

THAT subject always to the compliance with the Companies Act 2016, the Company’s Constitution (Memorandum and Articles of Association), the Listing Requirements of

Bursa Malaysia Securities Berhad and all other applicable laws, regulation and guidelines, 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 which are necessary for

the day-to-day operations of the Company and its subsidiary from time to time, the nature and the contracting party of which referred to under Section 2.1.2 and 2.1.3 of the Circular to Shareholders dated 31^st October 2017 PROVIDED THAT

(i)                 the transactions are in the ordinary course of business on an arm’s length basis, on normal commercial terms and on terms 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; and

(ii)               disclosure is made in the annual report of the breakdown of the aggregate value of the transactions conducted pursuant to this shareholders’ mandate during the financial year of the Company.

AND THAT such authority shall commence upon the passing of this resolution and shall continue to be in force until

(a)                the conclusion of the next Annual General Meeting of the Company following the general meeting at which such mandate was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed; or

(b)               the expiration of the period within which the next Annual General Meeting after the date it 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

(c)                revoked or varied by resolution passed by the shareholders in general meeting,

whichever is earlier.

AND FURTHER THAT authority be and is hereby given to the Directors of the Company to complete and do all such acts and things (including executing such documents as may be required) to give effect to the transactions contemplated and/or authorised by this Ordinary Resolution.

            The poll result was noted as follows :

Item 6 of the Agenda : ordinary Resolution 3 : Proposed renewal of authority for the Company to purchase up to ten percent (10%) of the issued share of the Company.

III.             ORDINARY RESOLUTION NO. 3

·            Proposed Renewal of Authority For The Company To Purchase Up To Ten Percent (10%) of The Issued Share of The Company

The meeting was requested to consider the Ordinary Resolution as set out in the Notice of meeting on the proposed renewal of authority for the Company to purchase up to ten percent (10%) of the issued share of the Company.

The matter was put to the floor for voting and it was unanimously RESOLVED :-

THAT subject always to the Companies Act 2016 (“Act”), provisions of the Company’s Constitution (Memorandum and Articles of Association) and the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other relevant authorities, and other relevant approvals, the Directors of the Company be and are hereby authorized to renew the authority to purchase the Company’s ordinary shares (“Shares”) through Bursa Securities, subject to the following :-

(a)    the maximum number of Shares that may be purchased by the Company shall not exceed ten percent (10%) of the issued share of the Company at any point of time;

(b)   the maximum fund to be allocated by the Company for purpose of purchasing its Shares shall not exceed the aggregate of the retained profits of the Company;

(c)    the Shares purchased are to be treated in either of the following manner:-

(i)                 cancel the Shares so purchased; or

(ii)               retain the Shares so purchased as treasury shares; or

(iii)             retain part of the Shares purchased as treasury shares and cancel the remainder

The treasury shares may be distributed as dividends to the shareholders and/or resold through Bursa Securities and/or subsequently cancelled.

AND THAT the authority conferred by this resolution shall commence upon the passing of this resolution until :-

(i)                 the conclusion of the next Annual General Meeting, at which time it will lapse, unless the authority is renewed by a resolution passed at the meeting, either unconditionally or subject to conditions; or

(ii)               the expiration of the period within which the next Annual General Meeting of the Company after that date is required to be held pursuant to Section 340(2) of the Act (but shall not extend to such extensions as may be allowed pursuant to Section 340(4) of the Act); or

(iii)             revoked or varied by ordinary resolution of the shareholders of the Company in a general meeting of the Company,

whichever occurs first.

AND FURTHER THAT the Directors of the Company be and are hereby authorized to take such steps to give full effect to the aforesaid purchase with full power to assent to any conditions, modifications, variations and/or amendments as may be imposed by the relevant authorities and/or to do all acts and things as the Directors may deem fit and expedient in the best interest of the Company.”

            The poll result was noted as follows :-

Item 6 of the Agenda : Ordinary Resolution 4 : Continuing in office as Independent Non-Executive Director.

IV.    ORDINARY RESOLUTION NO.4

·                  Continuing In Office As Independent Non-Executive Director

The meeting was requested to consider the Ordinary Resolution as set out in the Notice of meeting on the proposed continuing in office for Mr Ooi Jit Huat as Independent Non-Executive Director.

Mr Ooi Jit Huat, aged 66, was appointed on 09 March 2000 as Independent Non-Executive Director of the Company. Pursuant to Recommendations 3.2 and 3.3 of the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”), the tenure of an Independent Director should not exceed a cumulative term of 9 years. However, MCCG 2012 recommended that approval of shareholders be sought in the event that the Company intends to retain a person who has served in that capacity for more than 9 years.

The Nomination Committee and Board of Directors of the Company have assessed and reviewed the independence of Mr Ooi Jit Huat, who has served as Independent Non-Executive Director for more than 9 years, remains objective and independent in expressing his view and in deliberation and decision making. During his tenure in office, he has not developed, established or maintained any significant relationship which would impair his independence as an Independent Director.

The matter was put to the floor for voting.

             Majority of the members voted for the resolution with 0.35% voted against it.

The  Chairman  declared  the  resolution  as  carried  with  majority voted for it and it was

RESOLVED :-

THAT the approval be and is hereby given to Mr Ooi Jit Huat who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than 9 years, to continue to act as Independent Non-Executive Director of the Company until the conclusion of the next Annual General Meeting of the Company.

            The poll result was noted as follows :-

9.            OTHER ORDINARY BUSINESS

Item 7 of the Agenda : To transact any other business of the Company for which due notice shall have been given in accordance with the Companies Act 2016 and the Company’s Constitution (Articles of Association) of the Company.

               The Secretary confirmed that there was no other ordinary business for which due notice

                had been given.

10.  TERMINATION

There being no further business, the meeting was terminated at 11.30a.m with a vote of thanks to the Chair. Chairman recorded his sincere gratitude to the Board of Directors for the advice, counsel and support given to him as the Chairman of the Company. Chairman further extended his gratitude to the Management for their loyalty, commitment, guidance and support to the Company.

CONFIRMED AS A CORRECT RECORD

DATUK ISMAIL ABDULLAH

CHAIRMAN OF THE

22^ND ANNUAL GENERAL MEETING