ahmad zaki resources berhad -...

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 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 content of this Circular.

Ahmad Zaki Resources Berhad

(Company No. 432768-X) (Incorporated in Malaysia)

CIRCULAR TO SHAREHOLDERS

IN RELATION TO

PART A PROPOSED RENEWAL OF THE SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

PART B

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

The last date and time for lodging the Form of Proxy : 25 June 2012 at 10.00 a.m. The date and time of the Annual General Meeting : 27 June 2012 at 10.00 a.m.

This Circular is dated 4 June 2013





IN RELATION TO


PART B








IN RELATION TO


PART B








IN RELATION TO


PART B








IN RELATION TO


PART B


The last date and time for lodging the Form of Proxy : 25 June 2012 at 10:00 a.m. The date and time of the Annual General Meeting : 27 June 2012 at 10:00 a.m.






IN RELATION TO


PART B








IN RELATION TO


PART B








IN RELATION TO


PART B




AHMAD ZAKI RESOURCES BERHAD Page | 1

DEFINITIONS Unless 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

AGM : Annual General Meeting

Audit Committee : Audit Committee of AZRB, comprising of Raja Dato’ Seri Aman bin Raja Haji Ahmad (Chairman), Datuk (Prof.) A Rahman @ Omar bin Abdullah, Tan Sri Dato’ Lau Yin Pin @ Lau Yen Beng and Dato’ Haji Ismail @ Mansor bin Said

AZRB or Company : Ahmad Zaki Resources Berhad

AZRB Group or Group : AZRB and its subsidiaries

AZSB : Ahmad Zaki Sdn Bhd, a wholly owned subsidiary of AZRB

Board : Board of Directors of AZRB

Bursa Securities : Bursa Malaysia Securities Berhad (635998-W)

Director : This shall have the meaning given in Section 2 (1) of the Capital Markets and Services Act, 2007 and/or Section 4 of the Companies Act, 1965 and for the purpose of the Proposals, includes any person who is or was within the preceding six (6) months of the date on which the terms of the transaction were agreed upon, a Director of AZRB or any other company which is its subsidiary or holding company or a Chief Executive Officer of AZRB, its subsidiary or holding company

DSHWZ : Dato’ Sri Haji Wan Zaki bin Haji Wan Muda

Listing Requirements : Main Market Listing Requirements of Bursa Securities, as amended from time to time

Major Shareholder : Any person who is or was within the preceding six (6) months of the date on which the terms of the transaction were agreed upon, who has an interest or interests in one or more voting shares in AZRB or its subsidiaries or holding company 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 AZRB or any other company which is its subsidiary or holding company; or

b) 5% or more of the aggregate of the nominal amounts of all the voting shares in AZRB or its subsidiary or holding company where such person is the largest shareholder in AZRB or its subsidiary or holding company.

For the purpose of this definition, “interest in shares” has the meaning given in section 6A of the Companies Act 1965.

Proposed Amendments : Proposed Amendments to the Articles of Association of the Company as set out in this Circular

Proposed Shareholders’ Mandate

: Proposed renewal of the Shareholders’ Mandate for RRPT of the AZRB Group as set out in this Circular

Related Party(ies) : Director(s), Major Shareholder(s) or person connected with such Director(s) or Major Shareholder(s)

Related Party Transaction(s) : Transaction entered into by the listed issuer or its subsidiaries which involves the interest, direct or indirect, of a Related Party(ies)

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

Shareholders’ Mandate : Shareholders’ general mandate pursuant to Paragraph 10.09 of the Main Market Listing Requirements in respect of RRPT



thereof








Director : This shall have the meaning given in Section 2 (1) of the Capital Markets and Services Act, 2007 and/or Section 4 of the Companies Act, 1965 and for the purpose of the Proposals, includes any person who is or was within the preceeding six (6) months of the date on which the terms of the transaction were agreed upon, a Director of AZRB or any other company which is its subsidiary or holding company or a Chief Executive Officer of AZRB, its subsidiary or holding company
















thereof








Director : This shall have the meaning given in Section 2 (1) of the Capital Markets and Services Act, 2007 and/or Section 4 of the Companies Act, 1965 and for the purpose of the Proposals, includes any person who is or was within the preceding six (6) months of the date on which the terms of the transaction were agreed upon, a Director of AZRB or any other company which is its subsidiary or holding company or a Chief Executive Officer of AZRB, its subsidiary or holding company














1


DEFINITIONS Substantial Shareholder : A person who has interest or interests in one or more voting shares in a company

and the nominal amount of those shares, is less than 5% of the aggregate of the nominal amounts of all the voting shares in the company as defined under Section 69D (1) of the Act. For the purpose of this definition, “interest in shares” shall have the meaning given in Section 6A of the Act.

ZHSB : Zaki Holdings (M) Sdn Bhd

RM and sen : Ringgit Malaysia and sen respectively

Person(s) Connected : Such person, in relation to the Director or Major Shareholder, who falls under any one of the following categories:

(a) member of the Director’s or Major Shareholder’s family;

(b) a trustee of a trust (other than a trustee for an employee share scheme or pension scheme) under which the Director, Major Shareholder or a member of the Director’s or Major Shareholder’s family is the sole beneficiary;

(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.

2


CONTENTS

PAGE

1. INTRODUCTION 4

2. AGM 5

3. FURTHER INFORMATION 5 PART A : PROPOSED RENEWAL OF THE SHAREHOLDERS’ MANDATE 1. Details of the Proposed Shareholders’ Mandate 6

2. Principal business activities of AZRB and its subsidiaries 7

3. Nature of RRPT and estimated values 8

4. Disclosure and review procedures for the RRPT 13

5. Audit Committee’s statement 14

6. Rationale for the Proposed Shareholders’ Mandate 14

7. Effects of the Proposed Shareholders’ Mandate 15

8. Outstanding Recurrent Related Party Transactions Receivables 15

9. Approval required 15

10. Directors’ and Major Shareholders’ interests 15

11. Directors’ recommendation 16 PART B : PROPOSED AMENDMENTS 1. Details of the Proposed Amendments 16

2. Rationale of the Proposed Amendments 16

3. Conditions of the Proposed Amendments 16

4. Directors’ and Major Shareholders’ Interest 16

5. Directors’ recommendation 16 APPENDIX I Details of the Proposed Amendments 17

APPENDIX II Further Information 19

3




Registered Office: Level 2, Tower 1, Avenue 5, Bangsar South City, 59200 Kuala Lumpur 4 June 2013

Board of Directors: Raja Dato’ Seri Aman bin Raja Haji Ahmad (Independent Non-Executive Chairman) Dato’ Sri Haji Wan Zaki bin Haji Wan Muda (Executive Vice Chairman) Dato’ Wan Zakariah bin Haji Wan Muda (Managing Director) Dato’ Haji Mustaffa bin Mohamad (Executive Director) Dato’ W Zulkifli bin Haji W Muda (Executive Director) Tan Sri Dato’ Lau Yin Pin @ Lau Yen Beng ((Independent Non-Executive Director) Datuk (Prof.) A Rahman @ Omar bin Abdullah (Independent Non-Executive Director) Dato’ Haji Ismail @ Mansor bin Said (Independent Non-Executive Director) To: The Shareholders of Ahmad Zaki Resources Berhad Dear Sir/Madam, PART A : PROPOSED RENEWAL OF THE SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE PART B : PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE

COMPANY (collectively referred as the “Proposals”). 1. INTRODUCTION On 10 May 2013, the Company announced to the Bursa Malaysia that the Board intends to seek shareholders’

approval of the following Proposals at the forthcoming AGM:-

(i) Proposed renewal of Shareholders’ Mandate for AZRB Group pursuant to Paragraph 10.09 of the Listing Requirements in respect of RRPT

(ii) Proposed Amendments to the Articles of Association of the Company

(collectively referred as the “Proposals”).

4


The purpose of this Circular is to provide you with the details of the Proposals and to seek your approval for the ordinary and special resolutions pertaining to the Proposals to be tabled at the forthcoming AGM.

2. AGM

Our AGM will be held on Thursday, 27 June 2013 at 10:00 am at Tun Sri Lanang 1 & 2, Ground Floor, The Royale Chulan Kuala Lumpur, 5, Jalan Conlay, 50450 Kuala Lumpur on Thursday, 27 June 2013 for the purpose of considering and, if thought fit, passing the ordinary and special resolutions as set out in the notice of AGM. The notice of AGM that contains the resolutions pertaining to the Proposals has been incorporated into the Annual Report 2012 which is being circulated to you together with this Circular. If you are unable to attend and vote in person at the AGM, you may complete and return the Form of Proxy enclosed in the Annual Report 2012 in accordance with the instructions printed therein as soon as possible and in any event so as to arrive at the Registrar Office of the Company not less than 48 hours before the time fixed for the AGM or at any adjournment thereof. The lodging of the Form of Proxy does not preclude you from attending and voting in person should you subsequently decide to do so.

3. FURTHER INFORMATION Shareholders are requested to refer to the attached Appendix II for additional information. Yours faithfully For and on behalf of the Board of Ahmad Zaki Resources Berhad Raja Dato’ Seri Aman bin Raja Haji Ahmad Independent Non-Executive Chairman 5


PART A : PROPOSED RENEWAL OF THE SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE 1. DETAILS OF THE PROPOSED SHAREHOLDERS’ MANDATE

The Board wishes to seek the approval of the shareholders of AZRB for the renewal of the Shareholders’ Mandate which was obtained on 19 June 2012, which would enable the AZRB Group to continue to enter into the RRPT, provided that such transactions are entered within the ordinary course of business and undertaken at arms’ length, on normal commercial terms of the AZRB Group which 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.

Pursuant to Paragraph 10.09 of the Main Market Listing Requirements, a listed issuer may seek a Shareholders’ Mandate that is necessary for its day to day operations 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 Shareholders’ Mandate is subject to annual renewal and the disclosure is made in the annual report of

the aggregate value of transactions conducted pursuant to the Shareholders’ Mandate during the financial year where:-

(i) the consideration, value of assets, capital outlay or costs of the aggregated transactions is

RM1 million or more; or (ii) the percentage ratio of such aggregated transaction is 1% or more,

whichever is the higher,

(c) the listed issuer to issue circular to shareholders for the Shareholder’s Mandate; (d) in the meeting to obtain Shareholder’s 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 approving the transactions. 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 Malaysia when the actual value of a recurrent related party transaction entered into by the listed issuer, 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 prescribed by Bursa Securities.

The Proposed Shareholders’ Mandate is subject to an annual renewal. In this respect, any authority conferred by the Proposed Shareholders’ Mandate shall only continue to be in force until:

(a) the conclusion of the next AGM of AZRB (being the 17th AGM of the Company) following the

forthcoming AGM (being the 16th AGM of the Company) at which such Proposed Shareholders’ Mandate is passed, at which time the said authority will lapse, unless by a resolution passed at a general meeting whereby the authority of the Proposed Shareholders’ Mandate is renewed; or

(b) the expiration of the period within which the next AGM of AZRB (being the 17th AGM of the Company)

is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Companies Act, 1965); or

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

whichever is the earlier. Approval from shareholders will be sought for the renewal of the Shareholders’ Mandate at the next AGM and at each subsequent AGM of the Company, subject to satisfactory review by the Audit Committee.

6


The estimated transaction values are based on the information available and management estimates at the point of estimation. Due to the nature of the transactions, the actual value of transactions may vary from the estimated value disclosed below.

2. PRINCIPAL BUSINESS ACTIVITIES OF AZRB AND ITS SUBSIDIARIES

AZRB’s principal activities are investment holding, management services and contractors of civil and structural construction works while the principal activities of its subsidiaries are as follows:-

Subsidiaries Principal Activities Equity Interest

Ahmad Zaki Sdn. Bhd. Contractors of civil and structural contract work

100

Inter-Century Sdn. Bhd. Dealer of marine fuels and lubricants

100

Tadok Granite Manufacturing Sdn. Bhd.

Dormant 100

AZRB International Ventures Sdn. Bhd.

Investment holding 100

Trend Vista Development Sdn. Bhd.

Dormant 100

Peninsular Medical Sdn. Bhd. Undertake design, development and the construction of a teaching hospital as well as to carry out the related maintenance services subsequent to the completion of teaching hospital

100

AZRB Properties Sdn. Bhd. Dormant

100

EKVE Sdn. Bhd. Engaged in the business of construction, establishment, operation, maintenance and management of highway

100

Unggul Energy & Construction Sdn. Bhd.

Dormant 100

P.T. Ichtiar Gusti Pudi

Oil palm cultivation 95

Ahmad Zaki Saudi Arabia Co. Ltd. Contractors of civil and structural contract works

95

Temala Development Sdn. Bhd. Dormant

70

Betanaz Properties Sdn. Bhd. Property development

51

Peninsular Prokonsult Sdn. Bhd. Dormant

100

Held through Ahmad Zaki Sdn. Bhd.


Kemaman Technology & Industrial Park Sdn. Bhd.

Property development 60

AZSB Machineries Sdn. Bhd. Rental of machineries

100

Held through Inter-Century Sdn. Bhd.

Subsidiaries Principal Activities Equity

Interest Astral Far East Sdn. Bhd. Dealer of lubricants and petroleum-based products

100

7


Held through AZRB International Ventures Sdn. Bhd.


AZRB Construction (India) Pvt. Ltd Dormant 100

Ahmad Zaki Saudi Arabia Co. Ltd. Contractors of civil and structural contract works

5

3. NATURE OF RRPT AND ESTIMATED VALUES

The terms of the pricing of the following RRPT are consistent with the AZRB Group’s usual business pricing practices and policies. Hence, the pricing is not more favourable to the Related Parties than to the public and not to the detriment of the minority shareholders:-

THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK

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4. DISCLOSURE AND REVIEW PROCEDURES FOR THE RRPT

4.1 Disclosure for the RRPT

Disclosure will be made in the annual report of the Company on the breakdown of the aggregate value of RRPT conducted pursuant to the Proposed Shareholders’ Mandate during the current financial year, and in the annual reports for the subsequent financial years during which a Shareholders’ Mandate is in force.

The disclosure will include, amongst others, the following information:

(i) the type of RRPT; and

(ii) the names of the Related Parties involved in each type of the RRPT entered into and the

relationship with the AZRB Group. 4.2 Review procedures for the RRPT

As part of the existing internal procedures in relation to RRPT, the AZRB Group will continue to implement the following procedures for general transactions to ensure that the RRPT of the AZRB Group are undertaken at arms’ length and on normal commercial terms of the AZRB Group which are not more favourable to the Related Parties than those generally available to the public and are not to the detriment of minority shareholders: (i) A list of Related Parties has been circulated to the subsidiaries of AZRB to notify them that any

RRPT are required to be undertaken at arms’ length, on normal commercial terms of the AZRB Group which 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;

(ii) AZRB and each of its subsidiaries will record all RRPT which are entered into pursuant to the

Shareholders’ Mandate; (iii) Each of the subsidiaries of AZRB will submit a RRPT report to the management team of the

Company on a quarterly basis; (iv) The management team of the Company will review and summarise the RRPT reports for the

consideration of the Audit Committee on a quarterly basis; (v) 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 produces/services and/or quantities. In the event that quotation or comparative pricing from unrelated third parties cannot be obtained, the transaction price will be based on prevailing market rates/prices that are agreed upon under similar commercial terms for transactions with unrelated third parties, business practices and policies and terms which are generally in line with industrial norms and is not detrimental to the Group and the minority shareholders. Other factors taken into considerations for evaluation purposes will be reliability to supply, delivery, quality materials or goods and services;

(vi) AZRB Group will obtain quotations from third parties in order to compare quotations from related

parties and will make purchases from the parties (whether they are third parties or related parties) which offer the lowest quotations. Although the Group also sources similar products and services from third parties, the Board of Directors is of the view that these close business relationships with the related parties allow the Group to be more competitive in terms of product pricing and response time in the steel related sector and creates an extensive network of marketing, distribution and manufacturing operations for the Group. These upstream and downstream linkages will help to reduce inventory costs, increase availability and fulfill customer demands, improve asset allocation, reduce inventory lead time and better utilization of resources;

(vii) The Audit Committee will reviews the management reports on the RRPT to ascertain that the

guidelines and procedures established to monitor RRPT have been complied with and the review shall be carried out at the quarterly meetings of the Audit Committee;

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(viii) There was no specific threshold for approval of RRPTs within the AZRB Group. However, all RRPTs are subject to the approval of the appropriate levels of authority as determined by the senior management and/or the Tender Board (i.e. chaired by independent non-executive director) from time to time, subject to the provisions in the Listing Requirements and/or the Companies Act, where necessary. Where any Director has an interest (direct or indirect) in any RRPT, such Director will abstain from deliberation and decision making;

(ix) The Board and Audit Committee shall have the overall responsibility for the determination of the

review procedures and processes with authority to sub-delegate to officers within the AZRB Group as they deem appropriate; and

(x) The Board and the Audit Committee have reviewed the procedures and will continue to review the

procedures on a quarterly basis or as and when required, with the authority to sub-delegate the review process to individuals or committees within the AZRB Group 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 Audit Committee in respect of that transaction.

5. AUDIT COMMITTEE’S STATEMENT

The Audit Committee of the Company has reviewed the procedures mentioned in Paragraph 3.2 above and is satisfied that:-

(a) the Group has in place adequate procedures and processes to monitor, track and identify recurrent related party transactions in a timely and orderly manner and these procedures and processes are reviewed on a quarterly basis or as and when required; and

(b) the procedures above are sufficient to ensure that the terms of the RRPT are fair, reasonable, on normal commercial terms and are not more favourable to the related party than those generally available to the public and the RRPTs are not detrimental of the minority shareholders and are in the best interest of the Group.

6. RATIONALE FOR THE PROPOSED SHAREHOLDERS’ MANDATE

The Proposed Shareholders’ Mandate will allow the AZRB Group to continue to transact the RRPT with the transacting parties as listed in the first column of the table in Pages 9 to 11 above (“Transacting Parties”) which involve the interest of the Related Parties, as approved by the shareholders on 19 June 2012, from time to time, provided that such transactions are in the ordinary course of business and undertaken at arms’ length, on normal commercial terms of the AZRB Group which 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 AZRB Group’s rationales for entering into the RRPT with the Transacting Parties are, inter alia, as follows:

(a) Administrative and insurance agent provided to the AZRB Group

The AZRB Group has been transacting with ZHSB to obtain administrative and insurance agent services since prior to 1999. Due to their past working relationship, ZHSB have a good understanding of the businesses and structure of the AZRB Group, allowing for a more effective provision of such services. The rates for such services provided by ZHSB for the AZRB Group are also competitive and comparable with rates generally available to the public.

(b) Provision of accommodation to the AZRB Group for its staff The Residence Inn Cherating is situated in the East Coast of Peninsular Malaysia, near the regional office

of the AZRB Group. The location of the hotel makes it a convenient place to accommodate the staff of the AZRB Group during their visits to the regional office. The rates for such accommodation are competitive and are comparable with those generally available to the public.

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(c) Purchase of building materials by AZSB

The purchase of building materials from QMC and Kemaman Quarry are mainly for the projects of the AZRB Group located in the East Coast of Peninsular Malaysia. QMC and Kemaman Quarry are also based in the East Coast of Peninsular Malaysia and have in the past proved themselves to be reliable suppliers of quality building materials in relation to quarry operation or road construction. Its location reduces the logistic problems in relation to the transport of such building materials to the relevant project sites. Chuan Huat Industrial Marketing Sdn Bhd and Chuan Huat Hardware Sdn Bhd are among AZSB’s numerous suppliers of building materials. They have been reliable suppliers to AZSB and the materials supplied are priced competitively.

The approval of shareholders for the Proposed Shareholders’ Mandate would eliminate the need to convene separate general meetings from time to time to seek shareholders’ approval as and when potential RRPT with the Transacting Parties arise, thereby reducing substantially administrative time and expenses in convening such meetings, without compromising the corporate objectives and adversely affecting the business opportunities available to the AZRB Group.

7. EFFECTS OF THE PROPOSED SHAREHOLDERS’ MANDATE

The Proposed Shareholders’ Mandate has no foreseeable adverse effect on the share capital and substantial shareholding of AZRB and the NA, gearing and earnings of the AZRB Group.

8. OUTSTANDING RECURRENT RELATED PARTY TRANSACTIONS RECEIVABLES

There is no amount due and owing to the Group by its Related Parties pursuant to the Recurrent Related Party Transactions.

9. APPROVALS REQUIRED

The Proposed Shareholders’ Mandate is subject to approval being obtained from the shareholders of the Company at the forthcoming AGM.

10. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS

Save as disclosed below, none of the other Directors, Major Shareholders of the Company or Persons Connected with the Directors and/or Major Shareholders of the Company have any interest, direct or indirect, in the Proposed Shareholders’ Mandate. In addition to being Directors and/or having equity interest in AZRB, DSHWZ, Dato’ Wan Zakariah bin Haji Wan Muda, and Dato’ W Zulkifli bin Haji W Muda (collectively, “Interested Directors”) are Directors and/or have equity interest in the relevant companies involved in the RRPT and hence are interested in the Proposed Shareholders’ Mandate. ZHSB is a Major Shareholder of AZRB and is also a transacting party with the AZRB Group and hence is deemed to be interested in the Proposed Shareholders’ Mandate (“Interested Major Shareholder”). The Interested Directors have abstained and will continue to abstain from deliberating and voting on the resolutions in respect of the relevant RRPT in which they are interested at the relevant meetings of the Board.

The Interested Directors and Interested Major Shareholder will abstain and have also undertaken to ensure that the Persons Connected with them will abstain from voting in respect of their direct and indirect shareholdings in the Company on the relevant ordinary resolution pertaining to the Proposed Shareholders’ Mandate to be tabled at the forthcoming AGM.

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11. DIRECTORS’ RECOMMENDATION

The Board (other than the Interested Directors), having considered all aspects of the Proposed Shareholders’ Mandate, is of the opinion that it is in the best interest of the AZRB Group and accordingly, recommends that you vote in favour of the resolution pertaining to the Proposed Shareholders’ Mandate to be tabled at the forthcoming AGM.

PART B : PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION 1. DETAILS OF THE PROPOSED AMENDMENTS The details of the Proposed Amendments are set out in Appendix I of this Circular. 2. RATIONALE OF THE PROPOSED AMENDMENTS

Bursa Securities has amended the Listing Requirements to enhance the Corporate Governance requirements pursuant to the issuance of the Corporate Governance Blueprint 2011 and the Malaysian Code on Corporate Governance 2012 which came into effect on 31 December 2012. This new code sets out broad principles and specific recommendations on structures and processes which companies should adopt in making good corporate governance an integral part of business dealing and culture. Therefore, the Proposed Amendments, where relevant to render consistency throughout the Articles of Association of the Company with the Listing Requirements and to enhance the administrative efficiency of the Company.

3. CONDITIONS OF THE PROPOSED AMENDMENTS

The Proposed Amendments are conditional upon the approval obtained from the Shareholders of the Company at the forthcoming AGM.

4. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS None of the Directors and Major Shareholders of the Company and/or any Person Connected to the Directors and/or Major Shareholders have any interest, direct or indirect, the Proposed Amendments.

5. DIRECTORS’ RECOMMENDATION The Directors, having considered all aspects of the Proposed Amendments, are of the opinion that the Proposed Amendments is in the best interest of the Company. Accordingly, the Directors recommend that the shareholders of the Company vote in favour of the resolution pertaining to the Proposed Amendments to be tabled at the forthcoming AGM.


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APPENDIX I

Details of the Proposed Amendments of Articles are as follows:-

Article No. Existing Articles Amended Articles

- Exempt Authorised Nominee – an authorised nominees, as defined under Securities Industry (Central depository) Act, 1991”

To insert new definition under Article 2

- Share Issuance Scheme – a scheme involving a new issuance of shares to the employees

To amend Article 5 (e)

Allotment of Shares Every issue of shares or options to employees and/or Directors of the Company shall be approved by the members in general meeting and no Director shall participate in such issues of shares or options unless:- (i) the members in the general meeting have

approved of the specific allotments to be made to such Director.

Allotment of Shares Every issue of shares or options to employees and/or Directors of the Company shall be approved by the members in general meeting and no Director shall participate in a Share Issuance Scheme unless the members in the general meeting have approved of the specific allotments to be made to such Director.

To amend Article 68

Voting Subject to any rights or restrictions for the time being attached to any classes of shares, at meetings of members or classes of members, each member entitled to vote may vote in person or by proxy who may but need not be a member of the Company or by attorney upon which all calls due to the Company have been paid and on a show of hands, a member of ordinary shares or preference share who is personally present and entitled to vote shall be entitled to one (1) vote, and on a poll every member present in person or by proxy or by attorney or other duly authorised representative shall have one (1) vote for each share he holds. A proxy or attorney shall be entitled to vote both on a show of hands and on a poll.

Voting Subject to any rights or restrictions for the time being attached to any classes of shares, at meetings of members or classes of members, each member entitled to vote may vote in person or by proxy who may but need not be a member of the Company or by attorney upon which all calls due to the Company have been paid and on a show of hands, a member of ordinary shares or preference share who is personally present and entitled to vote shall be entitled to one (1) vote, and on a poll every member present in person or by proxy or by attorney or other duly authorised representative shall have one (1) vote for each share he holds. A proxy or attorney shall be entitled to vote both on a show of hands and on a poll. A proxy appointed to attend and vote at a meeting of a Company shall have the same rights as the member to speak at the meeting.

17


Article No. Existing Articles Amended Articles

To amend Articles 74

Instrument appointing proxy to be in writing and number of proxy The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if the appointer is a corporation, either under seal or under the hand of an officer or attorney duly authorised. A proxy may but need not be a member of the Company and the provisions of Section 149(1) (b) of the Act shall not apply to the Company. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting and where the member appoints two (2) proxies to attend and vote at the same meeting, such appointment shall be invalid unless the member specifies the proportion of his holdings to be represented by each proxy.

Instrument appointing proxy to be in writing and number of proxy The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if the appointer is a corporation, either under seal or under the hand of an officer or attorney duly authorised. A proxy may but need not be a member of the Company and the provisions of Section 149(1) (b) of the Act shall not apply to the Company and there shall be no restriction as to the qualification of the proxy. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting and where the member appoints two (2) proxies to attend and vote at the same meeting, such appointment shall be invalid unless the member specifies the proportion of his holdings to be represented by each proxy.

To amend Article 74A

Notwithstanding Article 74 above, where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

Notwithstanding Article 74 above, where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“Omnibus Account”), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each Omnibus Account it holds. The appointment of two (2) or more proxies in respect of any particular Omnibus Account shall be invalid unless the Exempt Authorised Nominee specifies the proportion of its shareholding to be represented by each proxy.”


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APPENDIX II – FURTHER INFORMATION

1. RESPONSIBILITY STATEMENT

This Circular has been seen and approved by the Board and they collectively and individually accept full responsibility for the accuracy of the information given 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 LITIGATION

Save as disclosed below, neither AZRB nor any of its subsidiaries, is engaged in any material litigation, claims or arbitration, either as plaintiff or defendant, which has a material effect on the financial position or the business of AZRB or its subsidiaries and the Board of Directors of AZRB has no knowledge of any proceedings pending or threatened against AZRB and/ or its subsidiaries or of any other facts likely to give rise to any proceedings which might materially affect the financial position or business of AZRB and / or its subsidiaries:-

a) Claim or litigation brought against the Company:

(i) Sime Engineering Sdn Bhd (“SESB”) vs Ahmad Zaki Resources Berhad

On 13 October 2010 SESB served a Writ and Statement of Claim dated 12 October 2010 on AZRB, claiming a sum of RM15,246,000 for alleged breaches by AZRB of the Malaysia-China Hydro Joint Venture Agreement dated 12 June 2002 relating to the Bakun Hydroelectric Project Package CW2 - Main Civil Works.

AZRB had filed its Defence at the Kuala Lumpur High Court on 2 December 2010 and also instituted a Counterclaim against Sime Engineering and members of the Malaysia-China Hydro Joint Venture (“MCH JV”) Executive Committee (“Exco”) namely Sinohydro Corporation (formerly known as China Water Resources and Hydropower Engineering Company) (“Sinohydro”) and WCT Berhad (“WCT”) for the sum of RM58,000,600 as special damages (“AZRB Counterclaim”).

On 19 January 2011, AZRB filed an application to strike out SESB’s Writ and Statement of Claim which was dismissed by the High Court on 17 August 2011. On 5 January 2012, the Court of Appeal has allowed AZRB’s appeal against the decision of the High Court on 17 August 2011 in dismissing AZRB’s striking out application of SESB’s Writ and Statement of Claim. SESB have filed their Notice of Motion for leave to appeal in the Federal Court against the decision of the Court of Appeal on 3 February 2012. The Federal Court has on 29 April 2013 dismissed SESB’s leave to appeal accordingly. In light of the dismissal, SESB’s claim against AZRB in the High Court for the sum of RM15,246,000.00, interests and costs has now come to an end and stand dismissed.

With regards to AZRB’s Counterclaim, parties are undergoing the process of discovery. The Court has fixed 28 June 2013 as the case management date. AZRB, in consultation with its solicitors, is of the view that AZRB has a valid case against SESB and the MCH JV Exco in its counterclaim.

b) Arbitration on Alfaisal University project

On 3 March 2011, the Company filed its arbitration notice with the ICC International Court of Arbitration seeking various reliefs and claims including the bonds liquidated by King Faisal Foundation in respect of the contract entered into by Alfaisal University and the Company pertaining to Alfaisal University Campus Development Project Phase 1 & 2 in Riyadh, Saudi Arabia. AZRB has filed its statement of claim in respect of the final relief on 18 January 2012. The hearing was held on 27 May 2012. The Arbitrator is expected to issue an award tentatively on 28 June 2013.

19


3. MATERIAL CONTRACTS

Save as disclosed below, AZRB and/or its subsidiaries, have not entered into any material contracts (not being contracts entered into in the ordinary course of business) during the two (2) years preceeding the date of this Circular:- (i) On 13 February 2013, the Company signed a Concession Agreement with the Government of Malaysia for

the design, construction, completion, operation, management and maintenance of the East Klang Valley Expressway for a concession period of fifty (50) years.

4. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at our registered office at Level 2, Tower 1, Avenue 5, Bangsar South City, 59200 Kuala Lumpur during normal office hours on Monday to Friday (except public holidays) from the date of this Circular up to and including the date of the forthcoming AGM: - (a) The Memorandum and Articles of Association of the Company;

(b) The Audited Consolidated Financial Statements for the past two (2) financial years ended 31 December

2011 and 31 December 2012 of the Company and the Group; (c) The first quarterly unaudited consolidated results of the Company for the period ended 31 March 2013; (d) The material litigations as referred to in Section 2 above; and

(e) The material contracts as referred to in Section 3 above.


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