DIVERSIFIED GATEWAY SOLUTIONS BERHAD - … · DIVERSIFIED GATEWAY SOLUTIONS BERHAD ... Formis Advanced Systems Sdn Bhd ... a 60% owned subsidiary of MYHB FCS : Formis Computer Services

DIVERSIFIED GATEWAY SOLUTIONS BERHAD (Company No. 675362-P)

(Incorporated in Malaysia under the Companies Act, 1965)

CIRCULAR TO SHAREHOLDERS

IN RELATION TO THE

PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE AND NEW SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY

TRANSACTIONS OF A REVENUE OR TRADING NATURE

The ordinary resolution in respect of the above proposal will be tabled at the Eighth Annual General Meeting of the Company. The Notice of the Eighth Annual General Meeting of the Company to be held at Banquet Hall, The Royal Selangor Golf Club, Jalan Kelab Golf, Off Jalan Tun Razak, 55000 Kuala Lumpur on Thursday, 12 September 2013 at 10.00 a.m. together with the Form of Proxy are set out in the Annual Report 2013 of the Company which is despatched together with this Circular.

The Form of Proxy must be lodged at the Registered Office of the Company at 16th Floor, KH Tower, 8 Lorong P. Ramlee, 50250 Kuala Lumpur not less than 48 hours before the time set for the Eighth Annual General Meeting or any adjournment thereof.

The lodging of the Form of Proxy will not preclude you from attending and voting in person at the Eighth Annual General Meeting should you subsequently wish to do so.

This Circular is dated 19 August 2013

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, bank manager, solicitor, accountant or other professional adviser immediately. Bursa Malaysia Securities Berhad has not perused through the contents of this Circular prior to its issuance and 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.




IN RELATION TO THE











IN RELATION TO THE











IN RELATION TO THE








DEFINITIONS

i

Except where the context otherwise requires, the following definitions shall apply throughout and for the purposes of this Circular only: ABS : Applied Business Systems Sdn Bhd (Company No. 188269-D), a wholly-

owned subsidiary of FRB Act : The Companies Act, 1965 and any statutory modification, amendment or

re-enactment thereof for the time being in force AGM : Annual General Meeting Board : Board of Directors of DGSB Bursa Securities : Bursa Malaysia Securities Berhad (Company No. 635998-W) CLS : Com-Line Systems Sdn Bhd (Company No. 192422-A), a 85% owned

subsidiary of FHB CUSCAPI : Cuscapi Berhad (Company No. 43190-H) CUSCAPI Group : Cuscapi Berhad and its subsidiary companies DGB : Diversified Gateway Berhad (Company No. 301306-T), a wholly-owned

subsidiary of DGSB Director(s) : Shall have the meaning given in Section 2(1) of the Capital Markets and

Services Act 2007, includes any person who is or was within the preceding 6 months of the date on which the terms of the transaction were agreed upon, a director of the Company, its subsidiary or holding company or a chief executive officer of DGSB, its subsidiary or holding company.

FAS : Formis Advanced Systems Sdn Bhd (Company No. 348596-K), a 60%

owned subsidiary of MYHB FCS : Formis Computer Services Sdn Bhd (Company No. 112344-P), a wholly-

owned subsidiary of FHB FES : Formis e Solutions Sdn Bhd (Company No. 15478-D), a wholly-owned

subsidiary of MYHB FHB : Formis Holdings Bhd (Company No. 281000-K), a wholly-owned

subsidiary of FRB FNS : Formis Network Services Sdn Bhd (Company No. 188270-U), a wholly-

owned subsidiary of FCS FRB Group : FRB and its subsidiary companies FRB : Formis Resources Berhad (Company No. 530701-T), the major shareholder

of DGSB through its wholly-owned subsidiary, FHB, which owns 60.03% equity interest in DGSB

FSSB : First Solution Sdn Bhd (Company No. 398017-P), a wholly-owned

subsidiary of FHB FST : Formis Systems & Technology Sdn Bhd (Company No. 312258-W), a

wholly-owned subsidiary of FRB FSTech : Formis Software & Technologies Sdn Bhd (Company No. 22962-U), a

wholly-owned subsidiary of MYHB

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DEFINITIONS (Cont’d)

ii

Dato’ Gan : Dato’ Gan Nyap Liou @ Gan Nyap Liow DGSB or the Company : Diversified Gateway Solutions Berhad (Company No. 675362-P) DGSB Group or the Group : DGSB and its subsidiary companies ISS (M) : ISS Consulting (Malaysia) Sdn Bhd (Company No. 446809-P), a wholly-

owned subsidiary of DGSB Ho Hup : Ho Hup Construction Company Berhad (Company No. 14034-W) Ho Hup Group : Ho Hup and its subsidiary companies ISS (S) : ISS Consulting (S) Pte Ltd (Company No. 199805226N), a wholly-owned

subsidiary of DGSB ISS (T) : ISS Consulting (Thailand) Ltd (Company No. (5) 1662/2542), a 49%

owned company of DGSB Latest Practicable Date : 31 July 2013, being the latest practicable date prior to the printing of this

circular Listing Requirements : ACE Market Listing Requirements of Bursa Securities and includes any

amendments thereto Major Shareholder : A person who has an interest or interests in one or more voting shares in the

corporation and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is :- (a) 10% or more of the aggregate of the nominal amounts of all the voting

shares in the corporation; or (b) 5% or more of the aggregate of the nominal amounts of all the voting

shares in the corporation where such person is the largest shareholder of the corporation.

For the purposes of the Proposed Mandate, “interest in shares” shall have the same meaning in Section 6A of the Act. It also includes any person who is or was within the preceding 6 months of the date on which the terms of the transaction were agreed upon, a Major Shareholder of the corporation or any other corporation which is its subsidiary and holding company.

MYHB : Man Yau Holdings Berhad (Company No. 254679-T), a wholly-owned

subsidiary of FRB NA : Net Assets NP : Nostalgic Properties Sdn Bhd (Company No. 330351-M), a wholly-owned

subsidiary of MYHB Person Connected : Such person, in relation to the Director or Major Shareholder, who falls

under any one of the following categories : (a) a family member of the Director or Major Shareholder; (b) a trustee of a trust (other than a trustee for a share scheme for

employees or pension scheme) under which the Director, Major Shareholder or family member of the Director or Major Shareholder is the sole beneficiary;

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DEFINITIONS (Cont’d)

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(c) a partner of the Director, Major Shareholder or a partner of a Person

Connected with that Director or Major Shareholder; (d) a person who is accustomed or under an obligation, whether formal or

informal, to act in accordance with the directions, instructions or wishes of the Director or Major Shareholder;

(e) a person in accordance with whose directions, instructions or wishes

the Director or Major Shareholder is accustomed or is under an obligation, whether formal or informal, to act;

(f) a body corporate or its directors which/who is/are accustomed or under

an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the Director or Major Shareholder;

(g) a body corporate or its Directors whose directions, instructions or

wishes the Director or Major Shareholder is accustomed or under an obligation, whether formal or informal, to act;

(h) a body corporate in which the Director, Major Shareholder and/or

Persons Connected with him are entitled to exercise, or control the exercise of, not less than 15% of the votes attached to voting shares in the body corporate; or

(i) a body corporate which is a related corporation.

Proposed Mandate : Proposed Renewal of Shareholders’ Mandate and Proposed New

Shareholders’ Mandate Proposed New Shareholders’ Mandate

: Proposed new shareholders’ mandate for new Recurrent Related Party Transactions

Proposed Renewal of Shareholders’ Mandate

: Proposed renewal of shareholders’ mandate for Recurrent Related Party Transactions approved at the Seventh AGM held on 13 September 2012

RRSB : Rangkaian Ringkas Sdn Bhd (Company No. 1013227-M), a wholly-owned

subsidiaries of DGSB Recurrent Related Party Transactions

: Related Party Transactions which are recurrent, of a revenue or trading nature and which are necessary for the day-to-day operations of the DGSB Group

Related Party(ies) : Director(s), Major Shareholder(s) or Person(s) Connected with such

Director(s) or Major Shareholder(s) Related Party Transaction

: A transaction entered into by the Company or its subsidiaries which involves the interest, direct or indirect, of a Related Party

RM and sen : Ringgit Malaysia and sen respectively Shares : Ordinary shares of the Company of RM0.10 each Tan Sri Megat : Tan Sri Dato’ Seri Megat Najmuddin Bin Datuk Seri Dr. Hj. Megat Khas

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CONTENTS

LETTER TO THE SHAREHOLDERS ON THE PROPOSED MANDATE:

PAGE 1. INTRODUCTION

1

2. DETAILS OF THE PROPOSED MANDATE

2.1 The Proposed Mandate 2 2.2 Principal Activities of the DGSB Group 3 2.3 Class, Nature and Estimated Aggregate Value of the Recurrent Related Party

Transactions 4

2.4 Previous mandate obtained but renewal will not be sought 10 2.5 Amounts due and owing to DGSB Group by related parties pursuant to Recurrent

Related Party Transactions 13

3. RATIONALE AND BENEFITS FOR THE PROPOSED MANDATE

13

4. REVIEW PROCEDURES

13

5. STATEMENT BY AUDIT COMMITTEE

14

6. CONDITION FOR THE PROPOSED MANDATE

15

7. FINANCIAL EFFECTS

15

8.

INTERESTS OF THE DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED WITH THEM

15

9. BOARD’S RECOMMENDATION

16

10. ANNUAL GENERAL MEETING

16

11. FURTHER INFORMATION

16

APPENDIX I : FURTHER INFORMATION

17

EXTRACT RESOLUTION TO BE TABLED AS SPECIAL BUSINESS AT THE FORTHCOMING EIGHTH ANNUAL GENERAL MEETING

ENCLOSED

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1

DIVERSIFIED GATEWAY SOLUTIONS BERHAD

(675362-P) (Incorporated in Malaysia under the Companies Act, 1965)

Registered Office: 16th Floor, KH Tower 8 Lorong P. Ramlee 50250 Kuala Lumpur

19 August 2013

Board of Directors Dato’ Mah Siew Kwok (Non-Independent Non-Executive Chairman) Mr Lau Chi Chiang (Executive Director and Chief Executive Officer) Mr Robin Lim Jin Hee (Executive Director and Chief Operating Officer) Ms Neo Poh Lian (Executive Director) Mr Hoe Kah Soon (Independent Non-Executive Director) Mr Chan Hiok Khiang (Independent Non-Executive Director) En Ahmad bin Khalid (Independent Non-Executive Director) To: The Shareholders of Diversified Gateway Solutions Berhad Dear Sir / Madam, PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE AND NEW SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE 1. INTRODUCTION 1.1 At the Seventh AGM held on 13 September 2012, the shareholders of the Company approved, inter alia, the

shareholders’ mandate for the Company and/or its subsidiaries to enter into Recurrent Related Party Transactions. The said mandates shall, in accordance with the Listing Requirements, expire at the conclusion of the forthcoming Eighth AGM of the Company, unless renewal is obtained.

1.2 In connection thereto, the Board of DGSB had on 29 July 2013 announced its intention to seek shareholders’

approval for the Proposed Mandate. 1.3 The purpose of this Circular is to provide you with the relevant information on the Proposed Mandate and to

seek your approval for the ordinary resolution to be tabled at the forthcoming Eighth AGM of the Company. The Notice of Eighth AGM is set out in the Annual Report 2013. The extract of ordinary resolution on the Proposed Mandate to be tabled at the DGSB’s Eighth AGM is enclosed together with this Circular.

YOU ARE ADVISED TO READ THE CONTENTS OF THIS CIRCULAR, TOGETHER WITH THE APPENDIX CONTAINED HEREIN CAREFULLY BEFORE VOTING ON THE RESOLUTION TO GIVE EFFECT TO THE PROPOSED MANDATE.

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2. DETAILS OF THE PROPOSED MANDATE 2.1 The Proposed Mandate

Rule 10.08 of the Listing Requirements stipulates the obligations of a listed corporation to comply with in relation to Related Party Transactions. However, pursuant to Rule 10.09(2) of the Listing Requirements, a listed corporation may seek a mandate from shareholders in respect of Recurrent Related Party Transactions, subject to the following :- (a) 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; (b) the shareholder mandate is subject to annual renewal and disclosure is made in the annual report of the

aggregate value of transactions conducted pursuant to the shareholder mandate during the financial year where the aggregate value is equal to or more than the threshold prescribed under Rule 10.09(1) of the Listing Requirements.

(c) a circular to shareholders which includes information as may be prescribed by Bursa Securities is

issued by the listed corporation for the shareholder mandate; (d) in a meeting to obtain shareholder mandate, the interested Director, interested Major Shareholder or

interested Person Connected with a Director or Major Shareholder; and where it involves the interest of an interested Person Connected with a Director or Major Shareholder, such Director or Major Shareholder, must not vote on the resolution to approve the transaction. An interested Director or interested Major Shareholder must ensure that Persons Connected with him abstain from voting on the resolution approving the transactions; and

(e) an immediate announcement is made to Bursa Securities when the actual value of a Recurrent Related

Party Transaction entered into by the listed corporation, exceeds the estimated value of the Recurrent Related Party Transaction disclosed in the circular by 10% or more and the announcement must include the information as may be prescribed by Bursa Securities.

Where a listed corporation has procured a shareholder mandate in respect of Recurrent Related Party Transactions, the provisions under Rule 10.08 of the Listing Requirements will not apply to the Recurrent Related Party Transactions which are comprised in the said mandate. The Proposed Mandate, if approved by the shareholders of the Company at the forthcoming Eighth AGM, is subject to annual renewal and will continue to be in force until :- (a) the conclusion of the next AGM of the Company following the forthcoming Eighth AGM at which the

Proposed Mandate is passed, at which time such mandate will lapse, unless by a resolution passed at the meeting, the authority for the Proposed Mandate is renewed;

(b) the expiration of the period, within which the next AGM of the Company is required to be held

pursuant to Section 143(1) of the Act (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

(c) revoke or varied by resolution passed by the shareholders in general meeting, whichever is the earlier.

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2.2 Principal Activities of the DGSB Group

DGSB is principally involved in the business of investment holding. The principal activities of those subsidiary companies within the DGSB Group which are transacting with the Related Parties are as follows :-

Name of Company

Effective equity interest %

Principal Activities

DGB 100.00 Provision of computer networking solutions and system integration

ISS (M) 100.00 Providing integrated technology software solutions

ISS (S) 100.00 Advisers and consultants for computer software solutions

ISS (T) 49.00* Advisers and consultants for computer software solutions

RRSB 100.00 Distribution and maintenance of computer networking, network security storage and network management

Note:- * In accordance with the Memorandum and Articles of Association of ISS (T), one voting right is attached to every

one ordinary share and one voting right is attached to every five preference shares. Based on the existing total issued and paid-up share capital of ISS (T) of 24,500 ordinary shares and 25,500 preference shares, the total voting rights are 29,600 comprising 24,500 voting rights for ordinary shares and 5,100 voting rights for preference shares. DGSB holds 24,500 ordinary shares which carry with them 24,500 voting rights or 82.77% of the total voting rights in ISS (T).

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2.3 Class, Nature and Estimated Aggregate Value of the Recurrent Related Party Transactions

(a) The Recurrent Related Party Transactions which will be covered in the Proposed Renewal of Shareholders’ Mandate are identified in the table below :-

Companies within the

DGSB Group transacting

with the Related Parties

Nature of transactions Related Party

Interested Directors / Major Shareholders / Persons

Connected

Estimated aggregate value

during the validity period of the

Proposed Renewal of Shareholders’

Mandate* (RM)

Estimated aggregated value as disclosed in the preceding year’s

circular to shareholders dated 17

August 2012 (“Estimated Value”)

(RM)

Actual value transacted from 13

September 2012 (date of Seventh AGM) to Latest Practicable

Date (“Actual Value”)

(RM) • DGB • ISS (M) • ISS (S) • ISS (T)

Supply of computer hardware and services by FNS to DGB, ISS (M), ISS (S) and ISS (T)

50,000,000

55,000,000 -

• DGB • ISS (M)

Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (M) to FNS

FNS (1)

50,000,000 50,000,000 18,490,160

• DGB • ISS (M) • ISS (S) • ISS (T)

Supply of computer hardware and services by FCS to DGB, ISS (M), ISS (S) and ISS (T)

5,000,000 5,500,000 -

• DGB • ISS (M)

Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (M) to FCS

FCS (2)

Interested Directors - Dato’ Gan (11) - Dato’ Mah Siew Kwok

(“Dato’ Mah) (18) Interested Major Shareholders - FHB (12) - FRB (13)

- Tan Sri Megat (14)

- Red Zone Development Sdn Bhd

(“RZD”) (15) - Monteiro Gerard Clair (16) - Wong Kit-Leong (16) - Raymond Tan (16)

Interested Person Connected with Directors - PlanetBiz Investments

Limited (“PIL”) (17) - Lim Nicholas Ping (22)

5,000,000 5,000,000 -

4

5






Connected




Mandate* (RM)




(RM)


September 2012 (date of Seventh AGM) to Latest Practicable

Date (“Actual Value”)

(RM) Supply of computer hardware and services by FSSB to DGB and ISS (M)

5,000,000 5,000,000 68,526 • DGB • ISS (M)

Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (M) to FSSB

FSSB (3)

5,000,000 5,000,000 -

Supply of computer hardware and services by ABS to DGB and ISS (M)

5,000,000 5,000,000 66,788 • DGB • ISS (M)

Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (M) to ABS

ABS (4)

Interested Directors - Dato’ Gan (11) - Dato’ Mah (18) Interested Major Shareholders - FHB (12) - FRB (13)


- RZD (15) - Monteiro Gerard Clair (16) - Wong Kit-Leong (16) - Raymond Tan (16)

Interested Person Connected with Directors - PIL (17) - Lim Nicholas Ping (22)

5,000,000 5,000,000 -

• DGB • ISS (M)

Supply of computer hardware and services by FST to DGB and ISS (M)

FST (5) 5,000,000 5,000,000 19,200

5

6






Connected




Mandate* (RM)




(RM)


September 2012 (date of Seventh AGM) to Latest Practicable Date (“Actual Value”)

(RM) • DGB • ISS (M)

Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (M) to FST

FST (5) 5,000,000 5,000,000 -


Supply of computer hardware, software and services by FSTech to DGB, ISS (M), ISS (S) and ISS (T)

FSTech (7) 5,000,000 7,500,000 -

• DGB • ISS (M)

Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (M) to FSTech

Interested Directors - Dato’ Gan (11) - Dato’ Mah (18)

Interested Major Shareholders - FHB (12) - FRB (13)




5,000,000 5,000,000 -

• DGB • ISS (M)

Supply of computer hardware and services by FAS to DGB and ISS (M)

FAS (9) 2,500,000 2,500,000 -

Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (M) to FAS

2,500,000 2,500,000 -

6

7






Connected




Mandate* (RM)




(RM)



(RM) DGSB Group Receiving of administrative

and management support, training and other related services from FRB to DGSB Group

FRB (12) Interested Directors - Dato’ Gan (11) - Dato’ Mah (18)





1,200,000 960,000 440,000

• DGB • ISS (M)

Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (M) to CUSCAPI Group

CUSCAPI Group

1,000,000 1,000,000 -

Supply of network infrastructure and security solutions and services by CUSCAPI Group to DGB and ISS (M)

Interested Directors Dato’ Gan (11)

Interested Person Connected with Director - PIL (17)

1,000,000 1,000,000 -

Note : None of the Actual Value of the Recurrent Related Party Transactions has exceeded the Estimated Value by 10% or more.

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(b) The Recurrent Related Party Transactions which will be covered in the Proposed New Shareholders’ Mandate are identified in the table below :-

Companies within the DGSB Group

transacting with the Related Parties

Nature of transactions Related Party Interested Directors / Major Shareholders / Persons Connected

Estimated aggregate value during the validity period of the Proposed New

Shareholders’ Mandate* (RM)

DGSB Group Provision of network connectivity and bandwidth services and project management services in relation to telecommunications by FRB Group to DGSB Group

FRB Group (19) 10,000,000

Supply of computer hardware, software and services by FRB Group to DGSB Group

10,000,000

Supply of network and software solutions, network security, storage and network management solutions inclusive of technical / maintenance services by DGSB Group to FRB Group





10,000,000

DGSB Group Supply of network and software solutions inclusive of technical / maintenance services by DGSB Group to Ho Hup Group

Ho Hup Group (20) 20,000,000

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9

Companies within the DGSB Group

transacting with the Related Parties

Nature of transactions Related Party Interested Directors / Major Shareholders / Persons Connected

Estimated aggregate value during the validity period of the Proposed New

Shareholders’ Mandate* (RM)

DGSB Group Provision of independent smart community network infrastructure, telecommunications and other related services by Fiber@Home to DGSB Group

Fiber At Home City Networks Sdn Bhd (“Fiber@Home”) (21)

1,000,000

Supply of network and software solutions, network security, storage and network management solutions inclusive of technical / maintenance services by DGSB Group to Fiber@Home



- Dato’ Mah (18) - RZD (15) - Monteiro Gerard Clair (16) - Wong Kit-Leong (16) - Raymond Tan (16)

Interested Person Connected with Directors - PIL (17)

- Lim Nicholas Ping (22)

10,000,000

* This comprises estimated value of transactions from the date of the forthcoming Eighth AGM to the date of the next AGM expected to be held in the

month of September 2014. The estimated value is based on information available at the point of estimation. Due to the nature of the transactions, the actual value of the transactions may vary from the estimated aggregate value disclosed above.

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2.4 Previous mandate obtained but renewal will not be sought

The following Recurrent Related Party Transactions are no longer required and shareholders mandate will not be sought for this Recurrent Related Party Transactions at the forthcoming Eighth AGM :





Interested Directors / Major Shareholders / Persons Connected

Estimated aggregated value as disclosed in the preceding

year’s circular to shareholders dated 17


(RM)



(RM) • DGB • ISS (M) • ISS (S) • ISS (T)

Supply of computer hardware, software solutions and services by FES to DGB, ISS (M), ISS (S) and ISS (T)

7,500,000 -

• DGB • ISS (M)

Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (M) to FES

FES (8)

5,000,000 -


Supply of computer hardware, software and services by CLS to DGB, ISS (M), ISS (S) and ISS (T)

CLS (6) 2,000,000 -

• DGB • ISS (M)

Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (M) to CLS

Interested Directors - Dato’ Gan (11) - Dato’ Mah (18)



- Dato’ Mah (18) - RZD (15) - Monteiro Gerard Clair (16) - Wong Kit-Leong (16) - Raymond Tan (16)


2,000,000 -

• DGB • ISS (M)

Supply of network and software solutions inclusive of technical / maintenance services by DGB and ISS (M) to Bukit Jalil Development Sdn Bhd (“BJD”)

BJD (10) 20,000,000 -

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11

Notes :- (1) FNS is a related party to DGB, ISS (M), ISS (S) and ISS (T) through a common ultimate Major

Shareholder, FRB. FNS is principally involved in the provision of information technology services in terms of hardware, software, consultancy and maintenance to telecommunications, oil and gas and government sectors.

(2) FCS is a related party to DGB, ISS (M), ISS (S) and ISS (T) through a common ultimate Major Shareholder, FRB. FCS is principally involved in the provision of computer technology and maintenance of computer hardware and software.

(3) FSSB is related party to DGB and ISS (M) through a common ultimate Major Shareholder, FRB. FSSB is principally engaged in the distribution and maintenance of computer hardware and software.

(4) ABS is a related party to DGB and ISS (M) through a common ultimate Major Shareholder, FRB. ABS is principally engaged in the distribution and maintenance of computer equipment and software.

(5) FST is a related party to DGB and ISS (M) through a common ultimate Major Shareholder, FRB. FST is principally engaged in the distribution and maintenance of computer hardware and software.

(6) CLS is a related party to DGB, ISS (M), ISS (S) and ISS (T) through a common ultimate Major Shareholder, FRB. CLS is principally engaged in the development of standard application packages and the provision of turnkey solution development services.

(7) FSTech is a related party to DGB, ISS (M), ISS (S) and ISS (T) through a common ultimate Major Shareholder, FRB. FSTech is principally involved in the development of application software, system integration services and the provision of hardware and software maintenance services.

(8) FES is a related party to DGB, ISS (M), ISS (S) and ISS (T) through a common ultimate Major Shareholder, FRB. FES is principally involved in the development of application software, system integration services and the provision of hardware and software maintenance services.

(9) FAS is a related party to DGB and ISS (M) through a common ultimate Major Shareholder, FRB. FAS is principally involved in the provision of computer technology and maintenance of computer hardware and software.

(10) BJD is a related party to DGB and ISS (M) through a common ultimate Major Shareholder, FRB. BJD is a 70% owned subsidiary of Ho Hup Construction Company Berhad which in turn is a 21.66% associated company of FHB. The principal activity of BJD is property development.

(11) Dato’ Gan is a common Director and shareholder of DGSB, FRB and CUSCAPI. He is also a director of BJD. Dato’ Gan was the Non-Independent Non-Executive Director of DGSB within the preceding six months from 12 September 2013. His direct and indirect interests in DGSB, FRB and CUSCAPI as at 31 July 2013 are set out below:-

Name of Company % of Interest Direct Indirect DGSB - - FRB 0.008 3.03 (a) CUSCAPI 6.02 -

(a) Deemed interest by virtue of his substantial interest in PlanetBiz Investments Limited pursuant to Section 6A of the Act.

(12) FHB is the holding company of FNS, FCS, FSSB and CLS and the major shareholder of DGSB. (13) FRB is the holding company of FHB. (14) Tan Sri Megat is the Non-Executive Chairman of FRB and also a Major Shareholder of FRB by virtue of

his direct interest in FRB. By virtue of his interests in FRB, Tan Sri Megat is deemed interested in the shares of FRB’s subsidiary companies to the extent these companies have an interest. Tan Sri Megat’s direct and indirect interests in FRB and DGSB as at 31 July 2013 are set out below:-

Name of Company % of Interest Direct Indirect FRB 18.56 - DGSB 1.36 60.03(a)

(a) Deemed interest by virtue of his interest in FRB pursuant to Section 6A of the Act.

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(15) RZD is a Major Shareholder of FRB. By virtue of its interests in FRB, RZD is deemed interested in the shares of FRB’s subsidiary companies to the extent these companies have an interest. RZD’s direct and indirect interests in FRB and DGSB as at 31 July 2013 are set out below:-

Name of Company % of Interest Direct Indirect FRB 22.04 - DGSB - 60.03(b)

(b) Deemed interest by virtue of its substantial interest in FRB, the holding company of FHB pursuant to Section 6A of the Act.

(16) Monteiro Gerard Clair, Wong Kit-Leong and Raymond Tan are Major Shareholders of FRB by virtue of their indirect interest through RZD. Monteiro Gerard Clair is also a director of FRB. By virtue of their deemed interests in FRB, they are deemed interested in the shares of FRB’s subsidiary companies to the extent these companies have an interest. Their direct and indirect interests in FRB and DGSB as at 31 July 2013 are set out below:-

Name of Company FRB DGSB % of Interest % of Interest Direct Indirect Direct Indirect Monteiro Gerard Clair - 22.04(c) - 60.03(d) Wong Kit-Leong - 22.04(c) - 60.03(d) Raymond Tan 0.04 22.04(c) 0.06 60.03(d)

(c) Deemed interest by virtue of their substantial interest in RZD pursuant to Section 6A of the Act. (d) Deemed interest by virtue of their substantial interest in RZD, which in turn owned 22.04% equity interest in

FRB, the holding company of FHB pursuant to Section 6A of the Act. (17) PIL is a Person Connected to Dato’ Gan and a Shareholder of FRB. PIL’s direct and indirect interests in

FRB and DGSB as at 31 July 2013 are set out below:-

Name of Company % of Interest Direct Indirect FRB 3.03 - DGSB - -

(18) Dato’ Mah is the Non-Executive Vice Chairman of FRB and also a Major Shareholder of FRB by virtue of his direct interest in FRB. By virtue of his interests in FRB, Dato’ Mah is deemed interested in the shares of FRB’s subsidiary companies to the extent these companies have an interest. Dato’ Mah direct and indirect interests in FRB and DGSB as at 31 July 2013 are set out below:-

Name of Company % of Interest Direct Indirect FRB 17.64 - DGSB 1.23 60.03(a)

(a) Deemed interest by virtue of his interest in FRB pursuant to Section 6A of the Act. (19) FRB Group is a related party to DGSB Group through a common ultimate Major Shareholder, FRB. (20) Ho Hup Group is a related party to DGSB Group through a common ultimate Major Shareholder, FRB.

Ho Hup is a 21.66% associated company of FHB. Ho Hup Group is principally involved in foundation engineering, civil engineering, building contracting works and hire of plant and machinery.

(21) Fiber@Home is a related party to DGSB Group through a common ultimate Major Shareholder, FRB. Fiber@Home is a 40% associated company of Continuous Network Advisers Sdn Bhd which in turn is a wholly-owned subsidiary of FRB. Fiber@Home is principally an independent Smart Community FTTH Network infrastructure provider and telecommunication company and a license holder with Suruhanjaya Komunikasi Multimedia Malaysia (SKMM) for Network Facilities Provider (NFP), Network Service Provider (NSP) and Application Service Provider (ASP).

(22) Lim Nicholas Ping is the brother-in-law to Dato’ Mah.

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The terms of transactions were based on an arm’s length basis and on normal commercial terms and on terms not more favourable to the Related Parties than those generally available to the public and not detrimental to the minority shareholders of the Company. Due consideration based on prevailing market rates under usual commercial terms, business practices and policies or otherwise in accordance with other applicable industry norms was given to price, payment, quality, delivery and service in order to maximise benefits for the transactions.

2.5 Amounts due and owing to DGSB Group by related parties pursuant to Recurrent Related Party

Transactions

The breakdown of the principal sum and interest for the total outstanding amount due under the Recurrent Related Party Transactions which exceeded the credit term as at 31 March 2013 are as follows :

No. Nature of transactions Amount of Outstanding Recurrent Related Party

Transactions Receivables (RM) ≤ 1 year > 1 to 3 years > 3 to 5 years > 5 years 1.

Supply of network and software solutions inclusive of technical / maintenance services by DGB to FNS

10,836,562 - - -

There were no late payment charges imposed to the above outstanding receivables as the Board was of the opinion that the above outstanding receivables were not substantial and are optimistic that the amounts were recoverable. As at the Latest Practicable Date, an amount totaling of RM8,542,164 out of the above amounts due to the DGSB Group by the related party has been recovered.

3. RATIONALE AND BENEFITS FOR THE PROPOSED MANDATE

The Recurrent Related Party Transactions entered into or to be entered into by the Group are in the ordinary course of business and are intended to meet the business needs of the Group at the best possible terms so as to achieve synergistic benefits within the Group. These transactions are likely to occur with some degree of frequency and may be constrained by the time-sensitive nature and confidentiality of such transactions, thus rendering it impractical to seek shareholders’ approval on a case by case basis before entering into such transactions. By obtaining the Proposed Mandate on an annual basis, the necessity to convene separate general meetings from time to time to seek shareholders’ approval as and when such Recurrent Related Party Transactions occur would not arise. This would substantially reduce the time, administrative requirements, and expenses associated with the convening of such meetings, without compromising the corporate objectives of the Group or adversely affecting the business opportunities available to the Group. The Related Parties which are involved in the Recurrent Related Party Transactions have proven their reliability and expertise in their respective fields. In certain instances, the Related Parties provide the Group the support for its operational needs, thereby enabling greater efficiency and effectiveness in the utilisation of the Group’s resources.

4. REVIEW PROCEDURES

To ensure that the Recurrent Related Party Transactions are undertaken on transaction prices and 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 and that they are conducted at arm’s length and on normal commercial terms consistent with the Group’s usual business practices and policies and will not be prejudicial to the shareholders, the Board will ensure that all transactions with Related Parties will only be entered into after

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taking into consideration the pricing, level and quality of products and support services, and the review procedures as stated below.

The Board has established the following review procedures which are to be carried out for each Recurrent Related Party Transactions :

(a) Records will be maintained by the Company to capture all Recurrent Related Party Transactions

entered into pursuant to the Proposed Mandate to ensure that relevant approvals have been obtained and review procedures in respect of such transactions are adhered to.

(b) On a periodic basis, the procedures and guidelines pertaining to Recurrent Related Party Transactions will be reviewed by the Senior Management of DGSB and the Audit Committee to ensure that the terms of the 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.

(c) The annual internal audit plan shall incorporate a review of all Recurrent Related Party Transactions to ensure that the relevant approvals have been obtained and the review procedures in respect of such transactions are adhered to. Should any discrepancies arise relating to the procedures and guidelines, proper steps would be taken to rectify them accordingly. The external auditors shall also review all Recurrent Related Party Transactions as part of their work scope.

(d) The Board and the Audit Committee shall review the internal audit reports to ascertain that the guidelines and procedures established to monitor Recurrent Related Party Transactions have been complied with. The review shall be done annually.

(e) Where any person(s) has an interest in the Recurrent Related Party Transactions to be reviewed, such person(s) shall abstain from deliberation and voting in respect of such transactions.

(f) Disclosure shall be made in the annual report of a breakdown of the aggregate value of all transactions conducted pursuant to the Proposed Mandate during the financial year and in the annual reports for the subsequent financial years during which the shareholders’ mandate remains 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 Mandate during the current financial year, amongst others, based on the following:-

(i) the type of the Recurrent Related Party Transactions made; and (ii) the names of the Related Parties involved in each type of Recurrent Related Party Transactions

and their relationship with the DGSB Group.

There are no thresholds for approval of Recurrent Related Party Transactions within the DGSB Group. However, all Recurrent Related Party Transactions are subject to the approval of any one of the directors of the respective companies. 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 type of products/services and/or quantities. Where quotation or comparative pricing from unrelated third parties cannot be obtained, the transaction price will be determined by the DGSB Group based on its usual business practices to ensure that the Recurrent Related Party Transaction is not detrimental to the DGSB Group.

5. STATEMENT BY AUDIT COMMITTEE

The Audit Committee of the Company has reviewed the procedures mentioned in section 4 above and is of the view that the said procedures are sufficient to ensure that the 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.

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The DGSB Group has in place adequate procedures and processes to monitor, track and identify Recurrent Related Party Transactions in a timely and orderly manner. These procedures and processes will be reviewed annually or as and when necessary.

6. CONDITION FOR THE PROPOSED MANDATE

The Proposed Mandate is conditional upon approval being obtained from the shareholders of DGSB at the forthcoming Eighth AGM.

7. FINANCIAL EFFECTS

The Proposed Mandate does not have any effect on the issued and paid-up share capital and Major Shareholders’ shareholdings of DGSB and is not expected to have any material effect on the consolidated earnings and NA of DGSB.

8. INTERESTS OF THE DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED

WITH THEM

The direct and indirect shareholdings of the interested Director, namely Dato’ Gan(4) and Dato’ Mah(5) (“Interested Directors”), interested Major Shareholders, namely FHB, FRB, Tan Sri Megat, RZD, Monteiro Gerard Clair, Wong Kit-Leong and Raymond Tan (“Interested Major Shareholders”) and interested Persons Connected with the Directors, namely PIL and Lim Nicholas Ping (“Interested Persons Connected”) in the Company as at Latest Practicable Date are set out below:-

Direct Indirect

No. of Shares % No. of Shares % Interested Directors Dato’ Gan (4)

-

-

-

-

Dato’ Mah (5) 16,670,092 1.23 813,923,401 (1) 60.03 Interested Major Shareholders

FHB 813,923,401 60.03 - - Tan Sri Megat 18,424,389 1.36 813,923,401 (1) 60.03 FRB - - 813,923,401 (2) 60.03 RZD - - 813,923,401 (1) 60.03 Monteiro Gerard Clair - - 813,923,401 (3) 60.03 Wong Kit-Leong - - 813,923,401 (3) 60.03 Raymond Tan 860,000 0.06 813,923,401 (3) 60.03 Interested Persons Connected

PIL - - - - Lim Nicholas Ping 686,911 0.05 - -

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Notes : (1) Deemed interest by virtue of their substantial interest in FRB, the holding company of FHB pursuant to

Section 6A of the Act. (2) Deemed interest by virtue of FHB being a wholly-owned subsidiary of FRB pursuant to Section 6A of the

Act. (3) Deemed interest by virtue of their substantial interest in RZD pursuant to Section 6A of the Act. (4) Dato’ Gan resigned as the Non-Independent Non-Executive Chairman of DGSB on 1 August 2013. (5) Dato’ Mah appointed the Non-Independent Non-Executive Chairman of DGSB on 1 August 2013. The Interested Directors has abstained and will continue to abstain from Board deliberations and voting pertaining to the Proposed Mandate. The Interested Directors, Interested Major Shareholders and Interested Persons Connected will abstain from voting in respect of their direct and indirect shareholdings on the Proposed Mandate at the forthcoming Eighth AGM. In addition, the Interested Directors and Interested Major Shareholders have undertaken that they will ensure that Persons Connected with them will abstain and continue to abstain from voting in respect of their direct and indirect shareholdings on the resolution, deliberating or approving the Proposed Mandate at the forthcoming Eighth AGM. Save as aforesaid, none of the other Directors or Major Shareholders or Persons Connected with them has any interest direct or indirect in the Proposed Mandate.

9. BOARD’S RECOMMENDATION

The Board (save for the Interested Directors) having considered all aspects of the Proposed Mandate, is of the opinion that the Proposed Mandate is in the best interest of the Company and its shareholders and accordingly, recommends that you vote in favour of the ordinary resolution pertaining to the Proposed Mandate to be tabled at the forthcoming Eighth AGM.

10. ANNUAL GENERAL MEETING

The Notice of Eighth AGM to consider and if thought fit, pass the ordinary resolution pertaining to the Proposed Mandate as set out herein is also enclosed in the Annual Report 2013. The Eighth AGM will be held on Thursday, 12 September 2013 at 10.00 a.m. at Banquet Hall, The Royal Selangor Golf Club, Jalan Kelab Golf, Off Jalan Tun Razak, 55000 Kuala Lumpur. If you are unable to attend and vote in person at the Eighth AGM and wish to appoint a proxy to attend and vote in your stead, you are requested to complete, sign and return the Form of Proxy in accordance with the instructions contained therein as soon as possible and in any event so as to arrive at the Company’s Registered Office at 16th Floor, KH Tower, 8 Lorong P. Ramlee, 50250 Kuala Lumpur not less than 48 hours before the time for the Eighth AGM. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the Eighth AGM should you subsequently wish to do so.

11. FURTHER INFORMATION

Shareholders of DGSB are advised to refer to the attached Appendix I for further information. Yours faithfully, For and on behalf of the Board of DIVERSIFIED GATEWAY SOLUTIONS BERHAD Lau Chi Chiang Executive Director and Chief Executive Officer

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APPENDIX I FURTHER INFORMATION 1. RESPONSIBILITY STATEMENT

This Circular has been seen and approved by the Board of DGSB who collectively and individually accept full responsibility for the accuracy and correctness of the information contained herein 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 in this Circular false or misleading.

2. MATERIAL LITIGATION

Save as disclosed below, as at the Latest Practicable Date, the DGSB Group is not involved in any material litigation, claims or arbitration, either as plaintiff or defendant, and the Board is not aware of any proceedings pending or threatened against the Group or of any facts likely to give rise to any proceedings which may materially and adversely affect the business or the financial position of the Group:

(i) Arbitration Proceedings by ISS (M) against TSH Resources Berhad (“TSH” or the “Respondent”)

ISS (M) has served a Notice of Arbitration (“Notice of Arbitration”) dated 2 June 2011 on TSH under the Arbitration Act 2005 in the Regional Centre for Arbitration at Kuala Lumpur (“Arbitration”). The amount claimed is as follows:

(a) the following special damages:

(i) outstanding sums of RM1,770,560.00 pursuant to invoices issued; (ii) outstanding costs on a time and material basis amounting to RM2,193,148.56; (iii) air travel, visa applications and accommodation amounting to RM87,403.00;

(b) further or alternatively general damages for ISS (M)’s losses and damages; (c) interest on the damages and/or sums awarded at such rate and for such period as deemed fit and

just by the arbitrators; and (d) legal costs and costs of the arbitration proceedings to be borne by the Respondent.

ISS (M)’s claim is based on the outstanding claims due and owing to ISS (M) by the Respondent, for works and/or services done and/or rendered, and expenses incurred by ISS (M) pursuant to the Master Consultancy Services Agreement dated 15 February 2008 and the Supplemental Agreement dated 2 October 2009 entered into between ISS (M) and the Respondent which have been terminated by the mutual consent of both parties. Following TSH’s service of notice of arbitration on 18 August 2011, a mutually agreed single arbitrator was appointed. At the preliminary meeting on 31 January 2012, the arbitrator directed for the submission of various cause papers. Pursuant to the arbitrator’s directions, ISS (M) filed its Statement of Claim on 6 April 2012 and TSH served its Defence and Counterclaim on 6 June 2012 claiming for the same items as set out in its Notice of Arbitration (as above) and including an alternative prayer of reimbursement of all monies paid to ISS (M) by TSH.

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Following the service of TSH’s Defence and Counterclaim, ISS (M) filed their Reply to Defence and the Defence to Counter Claim on 16 August 2012 (which was subsequently amended and served on 20 March 2013). The parties have requested for additional time to comply with the pre-hearing directions. The arbitration has been fixed for hearing on the 2 to 6 December 2013. In the meantime, the parties are also in the midst of trying to amicably settle this matter. As such, the Arbitrator has directed, vide letter dated 29 July 2013, that compliance with pre-hearing directions be held in abeyance pending settlement discussions. The legal counsels for the matter are of the opinion that ISS (M) has a fair chance of success based on the instructions obtained.

3. MATERIAL CONTRACTS

As at the Latest Practicable Date, neither DGSB nor its subsidiaries has entered into any contracts which are or may be material, not being contracts entered into in the ordinary course of business, during the past two (2) years preceding the date of this Circular.

4. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents may be inspected at the registered office of the Company at 16th Floor, KH Tower, 8 Lorong P. Ramlee, 50250 Kuala Lumpur, during office hours from Mondays to Fridays (except public holidays) from the date of this Circular until the date of the Eighth AGM:- (a) Memorandum and Articles of Association of DGSB; (b) The audited consolidated financial statements of DGSB for the past two (2) financial year ended 31

March 2012 and 2013; and (c) The relevant cause papers in respect of the material litigation referred to in Section 2 above.

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DIVERSIFIED GATEWAY SOLUTIONS BERHAD

(675362-P) (Incorporated in Malaysia under the Companies Act, 1965)

EXTRACT RESOLUTION TO BE TABLED AS SPECIAL BUSINESS AT THE FORTHCOMING EIGHTH ANNUAL GENERAL MEETING ORDINARY RESOLUTION PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE AND NEW SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE “THAT the Company and/or its subsidiaries be and is/are hereby authorised to enter into recurrent related party transactions from time to time with Related Parties who may be a Director, a Major Shareholder of the Company and/or its subsidiaries or a person connected with such a Director or Major shareholder, as specified in section 2.3 of the Circular to Shareholders dated 19 August 2013 subject to the following:- i) the transactions are of a revenue or trading in nature which are necessary for the day-to-day operations of the

Company and/or its subsidiaries and are transacted on terms consistent or comparable with market or normal trade practices and/or based on 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; and

ii) disclosure is made in the annual report of the aggregate value of transactions conducted during the financial

year pursuant to the shareholders’ mandate in accordance with the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad.

THAT the mandate given by the shareholders of the Company shall only continue to be in force until the conclusion of the next Annual General Meeting of the Company or the expiry of the period within which the next Annual General Meeting is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (the “Act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); unless revoked or varied by Ordinary Resolution of the shareholders of the Company in general meeting, whichever is the earlier; AND THAT the Directors of the Company be authorised to complete and do such acts and things as they may consider expedient or necessary to give effect to the shareholders’ mandate.”

Documents

DIVERSIFIED GATEWAY SOLUTIONS BERHAD - … · DIVERSIFIED GATEWAY SOLUTIONS BERHAD ... Formis Advanced Systems Sdn Bhd ... a 60% owned subsidiary of MYHB FCS : Formis Computer Services