CSC Steel Holdings Berhad Seeks Shareholder Approval for Renewal of Recurrent Related Party Transactions Mandate

Key Highlights from the Latest Circular to Shareholders

• Meeting Date: The 22nd Annual General Meeting (AGM) of CSC Steel Holdings Berhad (“CHB”) will be held on Thursday, 21 May 2026, at 10:30 a.m. at the Company’s Office Block in Melaka, Malaysia.
• Proposal: Renewal of the shareholders’ mandate for recurrent related party transactions (RRPT) of a revenue or trading nature, crucial for the Group’s ongoing business operations.
• Key Related Parties: Transactions are primarily with China Steel Corporation (CSC) and its group companies, including China Steel Global Trading Corporation (CSGT), Chung Hung Steel Corporation (CHSC), and Himag Magnetic Corporation (HMC). CSC, through its wholly-owned subsidiary China Steel Asia Pacific Holdings Pte. Ltd. (CSAP), is a major shareholder of CHB.
• Estimated Transaction Value: The Group seeks approval for RRPTs with an estimated aggregate value of up to RM956.4 million for the period between the 22nd AGM and the next AGM, with transactions spanning purchase of raw materials, spare parts, machinery, rollers, and chemicals.
• Actual Value Transacted (last mandate period): For the period from 29 May 2025 to 31 March 2026, the actual value of RRPTs was RM498.85 million, well within the prior approved limit.

Detailed Summary of the Proposal

The renewal of the RRPT mandate is a routine yet critical corporate action for CHB, as it allows the Group to continue transacting with its related parties in the ordinary course of business. The transactions are necessary for CHB’s operational continuity, given the integral relationship with CSC and its affiliates for the supply and procurement of key materials and services.

Principal Activities of CHB Group and Related Parties

• CHB: Investment holding.
• CSCM (a 100%-owned subsidiary): Manufacturing and marketing of pickled and oiled steel, cold rolled steel, hot-dipped galvanised steel (GI), and pre-painted galvanised steel (PPGI).
• CMSB (subsidiary of CSCM): Investment holding.
• Related Parties:
  • CSC: Steel manufacturing.
  • CSGT: Trading of steel and industrial materials.
  • CHSC: Manufacture of hot and cold rolled steel.
  • HMC: Magnetic powder manufacturing and trading.

Breakdown of RRPTs (For Mandate Renewal Period)

Total Estimated Value for Proposed Mandate Renewal: RM956.4 million

Important Information for Shareholders

• Voting Restrictions: All interested Directors, major shareholders, and persons connected to them are required to abstain from voting on the proposed mandate. This ensures independent minority shareholder approval.
• Review and Safeguards: The Audit Committee and internal audit function review all RRPTs to ensure transactions are executed at arm’s length and on terms not more favourable to the related parties than those available to the public. Any transaction above RM5 million requires Board ratification.
• Audit Committee Statement: The Audit Committee has reviewed and is satisfied with the adequacy of procedures for RRPTs, confirming that these transactions are not prejudicial to minority shareholders.
• No Outstanding RRPT Receivables: As at 31 December 2025, there were no overdue receivables from related parties, indicating good credit and counterparty management.
• Financial Impact: While the proposed mandate does not affect the issued share capital or major shareholdings, it is expected to continue to contribute positively to CHB’s earnings and net assets.

Rationale and Potential Price Sensitivity

The RRPTs with CSC and its group are central to CHB’s supply chain, ensuring security of supply for critical raw materials and services at competitive prices. Disruption or inability to renew this mandate could materially impact production, revenues, and ultimately share price due to operational risk. Conversely, the ability to secure large-scale, continuing transactions with its strategic parent and affiliates may be seen as a stabilizing factor for CHB’s earnings visibility and business continuity.

Shareholders should also note: The actual value of RRPTs for the prior period (RM498.85 million) was significantly under the approved ceiling, suggesting prudent transaction management and potential for additional capacity should market demand increase. Any sharp increase in RRPT volumes or changes in pricing terms in future years could be price sensitive and warrant close monitoring.

Approval and Next Steps

• Shareholder Approval Required: The renewal of the RRPT mandate is subject to shareholder approval at the 22nd AGM. The Board (excluding the interested Directors) unanimously recommends voting in favour of the proposal.
• Proxy Voting: Shareholders unable to attend may submit proxy forms by 10:30 a.m. on 19 May 2026, including electronic submissions.

Conclusion

The proposed renewal of the RRPT mandate is a vital measure for CHB’s operational continuity and revenue generation. Given the scale of transactions and the close relationship with its controlling shareholder group, this mandate is a significant factor for investors to assess the company’s risk profile, governance standards, and future earnings potential. Shareholders are strongly encouraged to review the detailed circular and participate in the upcoming AGM to exercise their voting rights on this important resolution.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell any securities. Investors should perform their own due diligence and consult their financial advisors before making any investment decisions. The author and publisher accept no liability for any direct or indirect loss arising from reliance on the information provided.

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