Y.S.P. Southeast Asia Holding Bhd. Circular: Proposed Shareholders’ Mandate for Recurrent Related Party Transactions

Overview

Y.S.P. Southeast Asia Holding Bhd. (“Y.S.P.SAH” or “the Company”) has released a Circular to Shareholders ahead of its Twenty-fifth Annual General Meeting (AGM), scheduled for 20 May 2026. The Circular seeks shareholders’ approval to renew the mandate for the Company and its subsidiaries to enter into existing recurrent related party transactions (RRPT) of a revenue or trading nature. This mandate is required to comply with Bursa Malaysia Securities Berhad’s Listing Requirements, and it is necessary for the Company’s day-to-day operations.

Key Points for Investors

• Renewal of RRPT Mandate: The current shareholders’ mandate will lapse at the conclusion of the AGM unless renewed. The renewal authorizes Y.S.P.SAH Group to continue entering into RRPTs with specified related parties, which are essential for routine business activities.
• Nature of Transactions: The RRPTs include:
  • Payment of royalty and license fees to Yung Shin Pharmaceutical Industries Co., Ltd. (Taiwan) (“YSP (Taiwan)”) under a Technology Transfer Agreement (TTA).
  • Purchase and sale of pharmaceutical products and raw materials with related parties including YSP (Taiwan), Yung Zip Chemical Ind. Co., Ltd. (YZC), Angel Associates (Taiwan), Yungshin Tiente (Shanghai), Yung Shin (HK), Agricode Sdn. Bhd., Quality Reputation Sdn. Bhd., Vetnostrum Animal Health Co., Ltd., Chemix Inc., Carlsbad Technology, Inc., and others.
  • Transactions are estimated to total tens of millions of Ringgit, with some single-party RRPTs having estimated values up to RM35 million.
• Review and Approval Procedures:
  • All RRPTs are subject to strict review procedures to ensure they are conducted on an arm’s length basis, on normal commercial terms, and are not more favourable to related parties than those offered to the public.
  • The Audit Committee reviews these transactions quarterly, and individual directors with interests must abstain from both deliberation and voting.
  • Transactions above RM1 million require Audit Committee approval before execution.
• Disclosure and Transparency:
  • Aggregate values of RRPTs are disclosed in the Annual Report, with additional disclosures mandated if actual values exceed estimates by 10% or more.
  • No outstanding RRPT receivables exceeding credit terms as at 31 December 2025.

Potential Price-Sensitive Information

• Significant Transaction Values: The scale of RRPTs is substantial, including annual transactions with YSP (Taiwan) (up to RM35 million), YST (RM15 million), QRSB (RM15 million), and others. These large values reflect the Group’s reliance on related parties for supply chain and sales, which may affect share price if there are disruptions or changes in these relationships.
• Royalty and Technology Transfer: The ongoing Technology Transfer Agreement with YSP (Taiwan) is central to Y.S.P.SAH’s manufacturing capabilities and brand licensing. Any change, termination, or dispute in this arrangement would be material to the Company’s business.
• Directors’ and Major Shareholders’ Interests: Several directors and major shareholders, including Dato’ Dr. Lee Fang Hsin and Lee Ling Chin, have significant direct and indirect interests in both Y.S.P.SAH and various related parties. They are required to abstain from voting and deliberation on RRPT matters, ensuring governance and avoiding conflict of interest.
• Audit Committee Oversight: The Audit Committee has affirmed that the review procedures for RRPTs are adequate and that all transactions are monitored. Any failure in these controls could be detrimental and affect minority shareholders, which is a matter of investor concern.
• Rationale and Strategic Importance: The RRPTs are described as necessary for operational efficiency, providing access to technology, stable supply chains, and competitive pricing. The flexibility to transact with related parties allows Y.S.P.SAH to maintain quality and reliability, which are critical for its market position.
• No Material Contracts or Litigation: The Company confirms no material contracts or litigation outside of ordinary business in the past two years, which reduces legal risk for investors.

Financial Impact

• The renewal of the RRPT mandate is not expected to materially affect the Company’s share capital, major shareholders’ holdings, net assets per share, gearing, or earnings per share. However, given the size and nature of RRPTs, any significant change in these arrangements could impact the Company’s financial performance and share price.

Shareholder Action Required

• Shareholders are advised to review the Circular carefully and vote on the resolutions regarding the RRPT mandate at the AGM. Interested directors and major shareholders will abstain from the vote, as required by Bursa Malaysia regulations.
• Proxy forms must be submitted by 18 May 2026, either physically or electronically.

Conclusion

The renewal of the RRPT mandate is a routine but essential corporate action for Y.S.P.SAH, reflecting its reliance on related parties for business operations. The scale of transactions, the strategic importance of the TTA, and the oversight mechanisms in place are all material for investors to consider. Any failure in governance, disruption in related party relationships, or material changes in RRPTs could have a direct impact on Y.S.P.SAH’s share price and investor value. Shareholders should monitor these developments closely and participate in the AGM vote.

Disclaimer: This article is a summary and analysis based on the Company’s Circular to Shareholders. It does not constitute investment advice. Investors should conduct their own due diligence and consult their financial advisers before making investment decisions. All information is as of the latest practicable date and may be subject to change.

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