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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. If you have sold or transferred all your shares in AKTIF LIFESTYLE CORPORATION BERHAD, you should at once send this Circular together with the copy of the Annual Report 2003 to the agent through whom the sale was contracted for onward transmission to the purchaser or transferee. Kuala Lumpur Stock Exchange 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.

AKTIF LIFESTYLE CORPORATION BERHAD

(Company No. : 289534-K) (Incorporated in Malaysia)

CIRCULAR TO SHAREHOLDERS in relation to the

·

PROPOSED RENEWAL OF SHAREHOLDERS' MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

·

The Notice convening the Ninth Annual General Meeting of Aktif Lifestyle Corporation Berhad to be held at Level 2, Grand Seasons Hotel, No. 72 Jalan Pahang, 53000 Kuala Lumpur on Thursday, 28 August 2003 at 2:30 p.m. which set out the resolutions to consider the abovementioned proposals together with the Form of Proxy relating thereto are incorporated in the Annual Report 2003 of Aktif Lifestyle Corporation Berhad. The Form of Proxy, completed in accordance with the instructions thereon, must be lodged at the registered office of the Company at Level 10, Grand Seasons Avenue, No. 72 Jalan Pahang, 53000 Kuala Lumpur not less than fortyeight (48) hours before the time set for the Annual General Meeting. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the meeting should you subsequently wish to do so. Last day and time for lodging Form of Proxy Date and time of the Annual General Meeting : : Tuesday, 26 August 2003 at 2:30 p.m. Thursday, 28 August 2003 at 2:30 p.m.

This Circular is dated 6 August 2003

DEFINITIONS

Except where the context otherwise requires, the following definitions shall apply throughout this Circular: "ACT" : Companies Act, 1965 as amended from time to time and any re-enactment thereof. Annual General Meeting Aktif Lifestyle Corporation Berhad (289534-K) ALCB and its subsidiaries companies and associated companies Aktif Lifestyle Stores Sdn Bhd (19583-M), a wholly-owned subsidiary of ALCB The Board of Directors of ALCB Binalita Sdn Bhd (170650-P), a wholly-owned subsidiary of MB Ms Chew Siok Cheng Mr Chan Teik Huat Ms Chan T'shiao Li Focus Park Sdn Bhd (398214-M), a wholly-owned subsidiary of MB Kuala Lumpur Stock Exchange The Listing Requirements of KLSE including any amendments, modifications and additions thereto and any Practice Notes issued in relation thereto. Mdm Lim Siew Kim Any person who is or was within the preceding twelve (12) months of the date on which the terms of the transaction were agreed upon, as defined under Paragraph 1.01 of the Listing Requirements as 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 not less than 5% of the aggregate of the nominal amounts of all the voting shares in the Company. For the purpose of this definition, "interest in shares" shall have the meaning given in Section 6A of the Companies Act, 1965. Metroplex Berhad (5304-K) Metroplex Equity Holdings Sdn Bhd (107937-M) Metroplex Group Sdn Bhd (104868-V) Metroplex Holdings Sdn Bhd (69491-V), a wholly-owned subsidiary of MB Octon Electronics Sdn Bhd (158584-X), a subsidiary of ALCB Any prevailing laws, rules, regulations, orders, guidelines and requirements issued by the relevant authorities including but not limited to the Listing Requirements of KLSE Proposed Amendments to the Company's Articles of Association, details of which are set out in Appendix I of this Circular Proposed Renewal of the existing Shareholders' Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

"AGM" "ALCB" or "Company" "ALCB Group" or "Group" "ALS"

: : : :

"Board" or "Board of Directors" "BSB" "CSC" "CTH" "CTL" "FPSB" "KLSE" "Listing Requirements"

: : : : : : : :

"LSK" "Major Shareholder"

: :

"MB" "MEHSB" "MGSB" "MHSB" "OESB" "Prevailing Law"

: : : : : :

"Proposed Amendments"

:

"Proposed Renewal of Shareholders' Mandate or Proposed Renewal"

:

"PSB" "PSC" "Recurrent Related Party Transactions" or "Recurrent Transactions"

: : :

Prominview Sdn Bhd (90615-U), a subsidiary of Dikim Holdings Sdn Bhd Ms Paw Swee Choo Recurrent Related Party Transactions of a revenue or trading nature, which are necessary for the day-to-day operations and in the ordinary course of business of ALCB Group A Director, Major Shareholder or person connected with such Director or Major Shareholder of ALCB Group Ringgit Malaysia and sen respectively

"Related Party"

:

"RM" and "sen"

:

Unless specifically referred to, words denoting the singular only shall include the plural and vice versa and words denoting the masculine gender shall also include the feminine gender and vice versa.

CONTENTS Page A. LETTER TO SHAREHOLDERS

1. INTRODUCTION

1

1.1 1.2

Proposed Renewal of Shareholders' Mandate Proposed Amendments to the Articles of Association of the Company

1 2

2.

DETAILS OF THE PROPOSED RENEWAL OF SHAREHOLDERS' MANDATE

2

2.1 2.2 2.3 2.4 2.5 2.6

Proposed Renewal of Shareholders' Mandate Class and Nature of Recurrent Related Party Transactions ("the Proposed Renewal") Rationale for the Proposed Renewal of the Shareholders' Mandate Rationale for the Proposed Amendments to the Articles of Association Disclosure and Review Procedures for the Recurrent Related Party Transactions Audit Committee's Statement

2 3 5 6 6 6

3. FINANCIAL EFFECTS OF THE PROPOSED RENEWAL OF SHAREHOLDERS' MANDATE AND PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

7

4. DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS

7

4.1

Interested Directors' and Major Shareholders' Interests

7

5. STATUTORY AND OTHER GENERAL INFORMATION

8

6. CONDITION OF THE PROPOSED RENEWAL OF SHAREHOLDERS' MANDATE AND THE PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

8

7. DIRECTORS' RECOMMENDATION

8

8. ANNUAL GENERAL MEETING

8

B.

APPENDICES I. Details of the Proposed Amendments to the Articles of Association of the Company 9 10

II. Further Information

AKTIF LIFESTYLE CORPORATION BERHAD

(Company No. : 289534-K) (Incorporated in Malaysia)

Registered Office:Level 10, Grand Seasons Avenue No. 72 Jalan Pahang 53000 Kuala Lumpur

Date : 6 August 2003

Board of Directors: Puan Sharifah Noor Binti Syed Abdul Rahman Al-Attas (Chairman) Mr Chan Teik Huat YBhg Dato' Haji Man Bin Haji Mat Encik Faris Bin Abdullah @ Patrick Chen Yee Ching

To:

The Shareholders of Aktif Lifestyle Corporation Berhad

Dear Sir/Madam, · · 1. Proposed Renewal of Shareholders' Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature Proposed Amendments to the Articles of Association of the Company INTRODUCTION The Board of Directors of the Company had on 23 June 2003 announced the Company's intention to seek shareholders' approval on the following proposals: · · 1.1 Proposed Renewal of Shareholders' Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature; Proposed Amendments to the Articles of Association of the Company

Proposed Renewal of Shareholders' Mandate At the Annual General Meeting of the Company held on 28 August, 2002 the shareholders gave their approval for the shareholders' mandate in respect of Recurrent Related Party Transactions of a revenue or trading nature which are in the ordinary course of business and necessary for its day-to-day operations of the Company and its subsidiaries pursuant to Paragraph 10.09 of the Listing Requirements of the KLSE. The authority conferred by the shareholders' mandate in accordance with the Listing Requirements will lapse at the conclusion of the coming AGM which will be held on 28 August 2003. In order for ALCB Group to enter into Recurrent Related Party Transactions, the Company announced on 23 June 2003 that it will seek shareholders' approval to renew the existing Shareholders' Mandate on terms not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders pursuant to Paragraph 10.09 of the Listing Requirements of the KLSE at the forthcoming AGM.

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1.2

Proposed Amendments to the Articles of Association of the Company On 23 June 2003 the Company had announced that it proposes to amend its Articles of Association in order to enhance the Company's flexibility in the way the directors conduct their meetings. The Company proposes to introduce a new provision to the Articles of Association of the Company to provide for the conduct of Board meetings via electronic means. The details of the Proposed Amendments are set out in Appendix I herein. The Proposed Amendments are conditional upon the approval of the shareholders, by way of a Special Resolution at the forthcoming AGM. The purpose of this Circular is to provide shareholders with details of the Proposed Renewal of the Shareholders' Mandate for Recurrent Related Party Transactions and the Proposed Amendments to the Articles of Association of the Company and to seek shareholders' approval for the ordinary resolution relating to the Proposed Renewal and special resolution relating to the Proposed Amendments, to be tabled at the forthcoming AGM of the Company to be convened at Level 2, Grand Seasons Hotel, No. 72 Jalan Pahang, 53000 Kuala Lumpur on Thursday, 28 August 2003 at 2:30 p.m.

2. 2.1

DETAILS OF THE PROPOSED RENEWAL OF THE SHAREHOLDERS' MANDATE Proposed Renewal of the Shareholders' Mandate The Board wishes to seek shareholders' approval for the renewal of the existing shareholders' mandate as set out and described in Section 2.2 below for Recurrent Related Party Transactions, which are on terms not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders. The Recurrent Related Party Transactions will also be subject to the review procedures as set out in Section 2.5 below. The Proposed Renewal, if approved by shareholders at the forthcoming AGM will take effect from the date the ordinary resolution is passed by the shareholders at the forthcoming AGM and shall continue to be in force until: a) the conclusion of the next AGM of the Company at which time it will lapse, unless by a resolution passed at the meeting; the authority is renewed; or the expiration of the period within which the next AGM that is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or revoked or varied by resolution passed by the shareholders in general meeting;

b)

c)

whichever is earlier. Thereafter, approval from shareholders for a renewal of the Shareholders' Mandate will be sought at each subsequent AGM of the Company.

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The principal business activity of the Company is investment holding and as follows:

Direct Subsidiary Company ALS *Indirect Subsidiary Company Aktif Lifestyle Duty Free Sdn Bhd Aktif-Sunway Sdn Bhd Dolce Carlotta (M) Sdn Bhd OESB Retail Commercio (M) Sdn Bhd Sunbeam Bakeries Sdn Bhd Tioman Duty Free Sdn Bhd * Subsidiary companies held through ALS. 2.2 Equity Interest Held (%) 100

that of its subsidiaries are

Principal Activities Operation of supermarkets and departmental stores

100 80 80 64.5 100 100 100

Dormant Operation of departmental store Dormant Retailing of electrical and electronic household appliances Operations of specialty retail store Operation of bakeries and food courts Dormant

Class and Nature of Recurrent Related Party Transactions (" the Proposed Renewal") 2.2.1 The Proposed Renewal of the Shareholders' Mandate are in respect of Recurrent Transactions entered into by ALCB Group with the related parties as follows:Companies in ALCB Group involved in the Related Parties Recurrent Transactions ALS BSB

No.

Interested Related Parties LSK CTH

Nature of Relationship ALS is a wholly-owned subsidiary of ALCB. BSB is a wholly-owned subsidiary of MB LSK is a director of MB and a major shareholder of ALCB and MB. CTH is a director and shareholder of ALCB and MB. major

a.

b.

ALS

MHSB

LSK CTH PSC

ALS is a wholly-owned subsidiary of ALCB. MHSB is a wholly-owned subsidiary of MB. LSK is a director of MB and a major shareholder of ALCB and MB. She is also a director of MHSB. CTH is a director and major shareholder of ALCB and MB. He is also a director in ALS and MHSB. PSC is a director in ALS and MHSB. She is also a director in the subsidiaries of ALCB.

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No.

c.

Companies in ALCB Related Parties Group involved in the Recurrent Transactions ALS PSB

Interested Related Parties LSK CTH CTL

Nature of Relationship

ALS is a wholly-owned subsidiary of ALCB. LSK is a major shareholder of ALCB and a director and indirect major shareholder of PSB CTH is a person connected to LSK and is also a director in ALS and a director and major shareholder of ALCB. CTL is a person connected to LSK and CTH and a director of PSB.

d.

OESB

BSB

LSK CTH CSC

OESB is a 64.5%-owned subsidiary of ALS which in turn is a wholly-owned subsidiary of ALCB. BSB is a wholly-owned subsidiary of MB. LSK is a director of MB and a major shareholder of ALCB and MB. CTH is a director and shareholder of ALCB and MB. major

CSC is a director of OESB and BSB.

2.2.2 The Proposed Renewal of the Shareholders' Mandate will enable ALCB Group to undertake transactions involving the following:

Estimated Value of Transaction No. Related Parties Nature of Recurrent Transactions

Receivable by ALCB Group (RM)

(1)(a) (b) (2)

BSB BSB MHSB

Secretarial services provided to ALS. Secretarial services provided to OESB. Rental of retail and office space at the Mall shopping complex by MHSB to ALS (ii). Rental of premises by ALS from PSB (iii).

Payable by ALCB Group (RM) 60,000

12,000 12,888,114

(3)

PSB

141,067

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Notes: (i) The estimated transaction values are for the period from the date of 28 August 2003 until the next following AGM based on the information available at the point of estimation derived from the forecast for 12 months. Due to the nature of the transactions, the actual value of transactions may vary from the estimated value disclosed above. These figures may vary according to the level of operations. The premises rented from MHSB are for head office use and for operating a supermarket/departmental store at the Mall shopping complex, details as follows: Floor Area (sq. ft.) 274,085.75 6,712.24 843.44 2,850.76 Rental Rate (p.s.f.) RM3.00 RM2.66 RM2.35 RM2.66 Service Charge (p.s.f.) RM0.79 RM0.75 RM0.75 RM0.75 Total payable per month (RM) 1,038,784.99 22,888.74 2,614.66 9,721.09 Tenancy Period

(ii)

Location

Lower Ground, Ground, 1st, 2nd & 3rd Floors Lot 18.02 Lot 18.03 Lot 18.04

Renewed for 3 years w.e.f. 16/5/2002. Renewed for 3 years w.e.f. 15/6/2000. Renewed for 3 years w.e.f. 15/8/2001. Renewed for 3 years w.e.f. 15/6/2000.

(iii)

The premises rented from PSB are for operating 2 outlets for retailing apparels and gifts at the Grand Seasons Hotel, details as follows: Floor Area (sq. ft.) 1,127.53 1,811.36 Rental Rate (p.s.f.) RM3.00 RM3.00 Service Charge (p.s.f.) RM1.00 RM1.00 Total payable per month (RM) 4,510.12 7,245.44 Tenancy Period

Location

Lot G.04 & G.05, Grand Seasons Avenue Lot G.04 & G.05, Grand Seasons Avenue 2.3

Renewed for 3 years w.e.f. 1/8/2001. Renewed for 3 years w.e.f. 1/8/2001.

Rationale for the Proposed Renewal of the Shareholders' Mandate The Recurrent Related Party Transactions to be entered into by ALCB are all in the ordinary course of business. They are recurring transactions of a revenue or trading nature which are necessary for its day-to-day operations and are in the ordinary course of business of the Group which are likely to occur with some degree of frequency and arise at any time and from time to time and are made on an arm's length basis and on normal commercial terms which are not more favourable to the Related Parties than those generally available to the public and not to the detriment of the minority shareholders. It may be impractical to seek shareholders' approval on a case to case basis before entering into such Recurrent Related Party Transactions. As such, the Board is seeking a shareholders' mandate pursuant to Paragraph 10.09 of the Listing Requirements for the Recurrent Related Party Transactions as set out in Section 2.2 above, to allow the Group to enter into such Recurrent Related Party Transactions made on an arm's length basis and on normal commercial terms and which are not more favourable to the Related Party than those generally available to the public and not to the detriment of the minority shareholders. The obtaining of the Proposed Renewal of the Shareholders' Mandate on an annual basis would eliminate the need to convene separate general meetings from time to time to seek shareholders' approval as and when potential Recurrent Related Party Transactions with a Related Party arise, thereby reducing substantially administrative time and expenses in convening such meetings, without compromising the corporate objectives or adversely affecting the business opportunities available to the Group. The Proposed Renewal of the Shareholders' Mandate is intended to facilitate transactions in the ordinary course of business of the Group which are transacted from time to time with the Related Parties which are carried out on an arm's length and on the Group's normal commercial terms and on terms not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders. ALCB Group has a long standing business relationships with the Related Parties. In the case of secretarial services provided by the Related Party, the Group is able to obtain more personal, quality and reliable services on short notices thus facilitating the smooth workflow of the Group. The premises rented from Related Parties are situated at choice locations and conducive for the operation of the Group's retail businesses. The close working relationship with the Related Parties has and is expected to continue to reap mutual benefits.

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2.4

Rationale for the Proposed Amendments to the Articles of Association The rationale for the Proposed Amendments to the Articles of Association of the Company is to enhance the Company's flexibility in the way the directors conduct their meetings via electronic means which allow simultaneous or instantaneous transmission.

2.5

Disclosure and Review Procedures for the Recurrent Related Party Transactions Disclosure will be made in the annual report of the Company of the aggregate value of the Recurrent Related Party Transactions conducted pursuant to the proposed renewal of the shareholders' mandate during the current financial year, and in the annual report for the subsequent financial year during which a shareholders' mandate is in force. In making such disclosure, a breakdown will be provided of the aggregate value of the Recurrent Related Party Transactions conducted pursuant to the proposed renewal of shareholders' mandate during the current financial year, among others, based on the following:(a) (b) the type of the Recurrent Related Party Transactions made; and the names of the Related Parties involved in each type of Recurrent Related Party Transactions and their relationship with the Company.

The Company has established procedures and guidelines to ensure that Recurrent Related Party Transactions are undertaken on an arm's length basis and on the Company's normal commercial terms and on terms not more favourable to the Mandated Related Parties than those generally available to the public. The terms are consistent with the Company's usual business practices and policies, which are generally no more favourable to the Related Parties than those extended to unrelated third parties and are not to the detriment of the minority shareholders. The Company will implement the following measures and procedures to supplement existing internal procedures: (i) A list of Related Parties will be circulated to the Directors and Senior Management of the Company and its subsidiaries to notify them that all Recurrent Related Party Transactions are required to be undertaken on an arm's length basis and on normal commercial terms and on terms not more favourable to the Mandated Related Party than those generally available to the public or those extended to unrelated third parties and are not to the detriment of the minority shareholders. Records will be maintained by the Company to capture all Recurrent Related Party Transactions. All Recurrent Related Party Transactions will be reviewed by a management committee comprising at least one (1) executive director and two (2) senior management staff. The annual internal audit plan shall incorporate a review on a test basis of all Recurrent Related Party Transactions described in the Proposed Shareholders' Mandate to ensure that the review procedures in respect of such transactions are adhered to. In a review, comparison will be made with price quote from third parties and/or other factors such as reliability of supply, delivery, services and quality of materials or goods. The Board and the Audit Committee shall review the internal audit reports to ascertain that the procedures and guidelines established to monitor Recurrent Related Party Transactions have been complied with and the review shall be done together with the review of the quarterly results. The Board and the Audit Committee shall review the procedures and shall continue to review the procedures as and when required, with the authority to sub-delegate to individuals or committees within the Company as they deem appropriate. If a member of the Board or the 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 the said transaction.

(ii) (iii)

(iv)

(v)

(vi)

(vii)

2.6

Audit Committee's Statement The Audit Committee has seen and reviewed the procedures and guidelines for Recurrent Related Party Transactions and are of the view that the said procedures and guidelines are sufficient to ensure that Recurrent Related Party Transactions are not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders. The transactions are undertaken on an arm's length basis on the Company's normal commercial terms and on terms not more favourable to the Related Parties than those generally extended to unrelated third parties. -6-

3.

FINANCIAL EFFECTS OF THE PROPOSED RENEWAL OF SHAREHOLDERS' MANDATE AND PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION The Proposed Renewal and Proposed Amendments will not have any effect on the issued and paid-up share capital of ALCB and is not expected to have any material effect on the net tangible assets and earnings per share of ALCB Group.

4.

DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS The direct and indirect interests of the Directors, Major Shareholders and/or Persons Connected with such Directors or Major Shareholders of ALCB Group in the Recurrent Transactions are set out and described in Section 4.1 below. CTH, CTL and CSC being the interested directors as set out and described in Section 2.2.1 above, in relation to the Proposed Renewal of the Shareholders' Mandate, have abstained and will continue to abstain from all Board deliberations and voting on resolutions which involve their respective direct or indirect interests. The interested Major Shareholders namely, LSK, CTH and MGSB as set out and described in Section 2.2.1 above, will abstain from voting on the resolutions involving their respective direct and indirect interests in ALCB, at the forthcoming AGM on the Proposed Renewal. In addition, they undertake to ensure that the Persons Connected to them, namely CTL, CSC, FPSB, MB and MGSB as set out and described in Section 4.1 below, will also abstain from voting on the resolutions involving their respective direct and indirect interests in ALCB, at the forthcoming AGM on the Proposed Renewal. Save as disclosed above and in Section 4.1 below of this Circular, none of the other Directors or Major Shareholders of ALCB or Persons Connected to them has any interest, direct or indirectly, in the Recurrent Transactions.

4.1

Interested Directors' and Major Shareholders' Interests According to the Register of Directors' Shareholdings and Register of Substantial Shareholders as at 7 July 2003 the direct and indirect interests of the Directors and Major Shareholders of ALCB are as follows: No. of ordinary shares of RM1.00 each held in ALCB Direct % Indirect % Interested Director CTH(2) Interested Major Shareholders MGSB LSK(2) CTH(2) Persons Connected CTL(3) CSC (4) FPSB (5) MB MGSB 664,000 316,000 5,265,464 4.69 1.54 25.71 664,000 3.24 5,265,464 1,518,784 4,000 25.71 7.42 0.02 6,245,464(1) 6,245,464(1) 30.50 30.50 4,000 0.02 6,245,464(1) 30.50

Note:(1) (2) (3) (4) ( 5)

Deemed interested by virtue of their interest in FPSB, MB and MGSB. LSK is the wife of CTH. CTL is a daughter of LSK and CTH and also a person connected by virtue of her directorship in PSB. CSC is a person connected by virtue of her directorship in OESB and BSB. FPSB is a subsidiary of MB. -7-

5.

STATUTORY AND OTHER GENERAL INFORMATION Shareholders are requested to refer to Appendix II of this Circular for further information.

6.

CONDITION OF THE PROPOSED RENEWAL OF THE SHAREHOLDERS' MANDATE AND THE PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION The Proposed Renewal and the Proposed Amendments are subject to and conditional upon approval being obtained from shareholders of the Company at the forthcoming AGM to be held on 28 August 2003.

7.

DIRECTORS' RECOMMENDATION The Board (with the exception of CTH), having considered all aspects of the above Proposed Renewal of Shareholders' Mandate for Recurrent Transactions and the Proposed Amendments to the Articles of Association, is of the opinion that the Proposed Renewal and the Proposed Amendments are fair, reasonable and in the best interest of the Group and has therefore (with the exception of CTH) recommend that you vote in favour of the Ordinary Resolution in relation to the Proposed Renewal and Special Resolution in relation to the Proposed Amendments to be tabled at the forthcoming AGM.

8.

ANNUAL GENERAL MEETING An AGM, notice of which is set out in the Annual Report 2003 containing the audited financial statements for the financial year ended 28 February 2003 sent together with this Circular, will be held at Level 2, Grand Seasons Avenue, No. 72 Jalan Pahang, 53000 Kuala Lumpur on Thursday, 28 August 2003 at 2:30 p.m. for the purpose of considering and if thought fit, passing the Ordinary Resolution to give effect to the Proposed Renewal and the Special Resolution to give effect to the Proposed Amendments. If you are unable to attend and vote in person at the forthcoming AGM, you are requested to complete and return the Form of Proxy in accordance with the instructions therein as soon as possible so as to arrive at the Registered Office of the Company at Level 10, Grand Seasons Avenue, No. 72 Jalan Pahang, 53000 Kuala Lumpur not less than forty-eight (48) hours before the time set for the AGM. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the meeting should you subsequently wish to do so.

Yours faithfully, For and on behalf of the Board AKTIF LIFESTYLE CORPORATION BERHAD

_____________________________________ Dato' Haji Man Bin Haji Mat Independent Non-Executive Director

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APPENDIX I

DETAILS OF THE PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

To enhance the Company's flexibility in the way the directors conduct their meetings, it is the intention of the Company to introduce a new provision to the Articles of Association of the Company to provide for the conduct of Board Meetings via electronic means. The Articles of Association of the Company is proposed to be amended in the following manner:1. The following new article to be inserted as new Article 94A:"New Article 94A shall read as: Without limiting the discretion of the directors to regulate their meeting under Article 94, the directors may, if they think fit, confer by radio, telephone, closed circuit television or other electronic means of audio or audio-visual communication. A resolution passed by such a conference shall, despite the fact that the directors are not present together in one place at the time of the conference, be deemed to have been passed at the meeting of the directors held on the day on which and at the time at which (using Malaysian time) the conference was held. The provisions of these Articles relating to proceedings of directors apply to such conferences so far as they are capable of application and with any necessary changes."

-9-

FURTHER INFORMATION 1. RESPONSIBILITY STATEMENT

APPENDIX II

This Circular has been seen and approved by the Directors of ALCB who collectively and individually accept full responsibility for the accuracy of the information given in this Circular and confirm that after making all reasonable enquiries and to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading.

2.

MATERIAL CONTRACTS

Neither ALCB nor its subsidiaries have entered into any contracts which are or may be material (not being contracts entered into in the ordinary course of business of the Company or its subsidiaries) during the two (2) years immediately preceding the date of this Circular.

3.

MATERIAL LITIGATIONS

Save as disclosed below, ALCB and its subsidiaries are not involved in any material litigation, which had or may have a material effect on the financial position of the Group and the Directors are not aware of any proceedings, pending or threatened against the Group or of any facts likely to give rise to any proceedings which might materially and adversely affect the position or business of ALCB and its subsidiaries. (i) Merit Properties Sdn Bhd ("Plaintiff") vs Aktif Lifestyle Stores Sdn Bhd ("Defendant") The Defendant entered into a lease agreement with the Plaintiff on 24 February 1997 in respect of premises in a complex known as Johor Bahru City Square. The Plaintiff had, inter alia, represented to the Defendant that the complex would have an international standard hotel and have no more than two anchor tenants. The representations did not materialise and the Defendant did not take up the lease. The Plaintiff filed in a suit on 8 March 2000 for the sum of RM19,500,000 for damages as a result of the termination. The Defendant had filed in a counter claim for damages by reason of frustration and/or misrepresentation by the Plaintiff. In view of the fact that the Plaintiff had managed to lease the premises to other tenants and the fact that the Defendant had filed in a counter claim, the exposure is unlikely to be substantial. The Plaintiff had indicated an intention to settle the claim out of court with the Defendant. The Defendant's solicitors/Directors are of the opinion that there is a good prospect of success in defending the suit and also in the counterclaim against the Plaintiff. (ii) OCBC Bank (Malaysia) Berhad ("OCBC") and RHB Bank Berhad ("RHB") ("the Plaintiffs) vs Aktif Lifetyle Stores Sdn Bhd ("ALS") and Aktif Lifestyle Corporation Berhad ("the Company) (`the Defendants") ALS, a wholly-owned subsidiary of the Company, had a RM20 million loan extended to it by ING Insurance Berhad ("Lender"). This loan which expired on 16 November 2002 was secured by way of two bank guarantees of RM10 million each from OCBC and RHB ("the Plaintiffs") respectively. These bank guarantees carry the corporate guarantees of the Company. Upon expiry of the loan, the Plaintiffs settled this sum with the Lender under the bank guarantees. Subsequently, OCBC has demanded full repayment of the RM10 million paid to the Lender. Simultaneously, OCBC has also called on the corporate guarantee of the Company. RHB also has demanded full repayment of RM10 million paid under their bank guarantee. On 22 January 2003, the Defendants have been served a Writ of Summons dated 31 December 2002 by OCBC for the repayment of the said RM10 million. The Defendants will be defending the claim under this suit whilst continuing to seek a settlement with OCBC in conjuction with its proposed restructuring scheme. A Statement of Defence was filed by the Defendant on 25 February 2003. The defendant's solicitors are of the opinion that there is a reasonable prospect of success in defending the suit.

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4.

DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at the Registered Office of the Company, at Level 10, Grand Seasons Avenue, No. 72 Jalan Pahang, 53000 Kuala Lumpur from the date of this Circular up to and including the date of the forthcoming AGM:(a) (b) (c) (d) Memorandum and Articles of Association of the Company The audited consolidated accounts of ALCB for the two(2) financial years ended 28 February 2003. The unaudited consolidated financial results of ALCB for the first quarter ended 31 May 2003 The relevant cause papers in respect of material litigation referred to in paragraph 3 above

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