Parkson Holdings Berhad: Detailed Analysis of 2026 Proposed Shareholders’ Mandate for Recurrent Related Party Transactions

Key Highlights

• Proposed Renewal of Shareholders’ Mandate: Parkson Holdings Berhad (“Parkson”) is seeking shareholder approval at its 42nd Annual General Meeting (AGM) on 21 May 2026 for the renewal of its mandate to enter into recurrent related party transactions (RRPTs) of a revenue or trading nature.
• Coverage Period: The mandate will be effective from the approval date until the next AGM, unless earlier revoked or varied.
• Compliance: All RRPTs must be conducted on an arm’s length basis, on normal commercial terms not more favourable to related parties than those available to the public, and not detrimental to minority shareholders.
• Transparency and Oversight: The mandate includes robust review and approval procedures involving multiple tiers of management and the Audit Committee.
• No Material Financial Impact: The mandate is not expected to materially affect Parkson’s share capital, earnings, net assets, or the shareholdings of substantial shareholders.

Details of the Proposed Shareholders’ Mandate

The renewal allows Parkson and its subsidiaries to continue transacting with related parties in the ordinary course of business. Transactions are primarily for obtaining building, construction, management, support services, office equipment, vehicle component parts, training, and other related products and services. The estimated value of such transactions for the mandate period is up to RM20 million each in both the building/construction and management/support services categories.

The mandate is structured to ensure compliance with Bursa Malaysia’s Main Market Listing Requirements. Parkson is required to disclose the aggregate value of RRPTs conducted under the mandate in its annual report. If any RRPT exceeds the estimated value by 10% or more, an immediate announcement must be made to Bursa Malaysia.

Classes of Related Parties

Notably, the related parties include significant companies within the Lion Group, such as:

• LCB Group
• LICB Group
• LPB Group
• Amble Bond Group

These companies are linked to Parkson’s Managing Director, Tan Sri Cheng Heng Jem, and other major shareholders, with extensive cross-shareholdings detailed in the appendices.

Governance and Review Procedures

• All RRPTs are reviewed according to strict authority levels. Smaller contracts (< RM1 million) require approval from the Accountant/Financial Controller and General Manager, while larger ones require escalating levels of oversight, up to the Audit Committee for contracts ≥ RM5 million.
• Interested directors and major shareholders, and persons connected to them, must abstain from deliberation and voting on the relevant resolutions and transactions.
• Annual internal audits and ongoing reviews by the Audit Committee ensure compliance with established procedures.
• Parkson compares prices and terms with those offered to unrelated parties, and at least three quotations are sought where possible. Independent valuations may also be conducted for significant transactions.

Rationale and Benefits

The RRPTs are considered critical for Parkson’s operations, given the group’s business diversity and the complementary nature of its related parties’ businesses. The mandate streamlines business operations by reducing administrative costs and the need for frequent shareholder meetings, while ensuring operational efficiency and cost competitiveness.

Shareholder and Price Sensitive Information

• Conflicts of Interest: Several directors and major shareholders, including Tan Sri Cheng Heng Jem and companies in the Lion Group, have direct and indirect interests in the related parties. These connections are significant and could attract scrutiny from minority shareholders and the market.
• Mandate Utilisation: As of 31 March 2026, none of the actual RRPTs exceeded the prior estimated values, indicating strong compliance and control.
• Material Contracts & Litigation: The circular provides a comprehensive disclosure of material contracts entered into by Parkson and its subsidiaries, mainly concerning multi-year tenancy and lease agreements in China, some involving substantial rental commitments and profit-sharing arrangements. No material outstanding related party receivables were noted.
• Litigation Updates: The report includes updates on significant litigation, including:
  • Parkson (Cambodia) Co., Ltd.: An arbitration in Singapore against Hassan (Cambodia) Development Co. Ltd., with Parkson winning a significant award (~RM33.1 million). However, Cambodian courts have issued a conflicting default judgment against Parkson, which is being contested.
  • Parkson Corporation Sdn Bhd: A claim by PKNS involving the EVO Shopping Mall was ultimately dismissed in Parkson’s favour, with costs awarded to Parkson.

  These litigation outcomes reduce legal uncertainties and potential liabilities.

Potential Share Price Impact

The renewal of the shareholders’ mandate is a routine but essential resolution for Parkson’s ongoing operations and corporate governance. While the transactions themselves are not expected to have a material impact on Parkson’s financial performance, the robust governance, transparency, and positive litigation outcomes may enhance investor confidence by demonstrating sound risk management and compliance practices.

However, the extent of related party transactions and the significant cross-holdings within the Lion Group will continue to be closely watched by investors, regulators, and the market, given the potential for conflicts of interest. Any significant changes in the value or nature of these RRPTs, or adverse litigation decisions, could have a material impact on Parkson’s share price in the future.

Shareholder Actions

Shareholders are advised to review the full details of the mandate and related party transactions, available in the 2025 Annual Report and on the company’s website. The last date for lodging proxy forms for the 42nd AGM is 19 May 2026 at 10:30 am.

Disclaimer

This article is provided for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult with professional advisors before making any investment decisions. The information herein is based on publicly available documents as of 22 April 2026 and may be subject to change.

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