DRB-HICOM Berhad Seeks Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions at Upcoming AGM

Key Highlights for Investors

• Proposed Renewal of Shareholders’ Mandate: DRB-HICOM Berhad is seeking shareholders’ approval at its upcoming 36th Annual General Meeting (AGM), scheduled for 26 May 2026, for the renewal of its mandate to enter into recurrent related party transactions (RRPTs) of a revenue or trading nature.
• Significant Transaction Values: The total estimated value of RRPTs under the proposed mandate for the coming year is approximately RM4.13 billion, a substantial increase from the previous year’s actual RRPTs of approximately RM2.28 billion, driven primarily by increased transactions with the Geely Group and other related parties.
• Major RRPTs Involvement: Notable parties include Geely Group, Teck See Plastic, Compounding & Colouring, Aurora Mulia, MMC Group, Malakoff, Tradewinds Group, and others, with some transactions involving technical support, royalties, component supplies, media services, property rentals, insurance, and more.
• Control and Governance Measures: The company has outlined robust internal controls and review procedures to ensure all RRPTs are conducted at arm’s length, on normal commercial terms, and are not detrimental to minority shareholders. All interested directors and major shareholders will abstain from voting and deliberations regarding the mandate.
• Outstanding Receivables: As of 31 December 2025, certain related parties owed DRB-HICOM Group RM18.54 million in RRPT-related receivables that exceeded the credit term, though most of this has since been settled.
• Recent Strategic Acquisition: DRB-HICOM completed the acquisition of Spirit AeroSystems Malaysia Sdn Bhd (now CTRM AeroSystems Sdn Bhd) for an estimated USD110.6 million (RM464.2 million) in December 2025, enhancing its aerospace capabilities.

Details of the Proposed Shareholders’ Mandate

The mandate, if approved, will allow DRB-HICOM and its subsidiaries to carry out RRPTs necessary for their day-to-day operations without needing to convene separate general meetings for each transaction. Such transactions must be:

• In the ordinary course of business;
• On terms not more favourable to the related parties than those generally available to the public;
• Subject to annual renewal and comprehensive disclosure in the annual report.

The mandate will be valid from the AGM date until the next AGM unless earlier revoked or varied by shareholders.

Major RRPTs and Estimated Values

The above values are management’s best estimates based on historical trends and projected business growth. Actual values transacted may vary.

Related Party Relationships

• Tan Sri Dato’ Seri Syed Mokhtar Shah Syed Nor (TSSM): Indirect major shareholder of DRB-HICOM via Etika Strategi Sdn Bhd (55.92% shareholding). TSSM holds 90% of Etika Strategi.
• Directors’ Interests: Tan Sri Wan Zulkiflee Wan Ariffin, Chairman of DRB-HICOM, is also Chairman of Gas Malaysia and Malakoff but has no shareholding in those entities. He will abstain from all deliberations and voting related to the mandate.
• Voting Abstentions: All interested major shareholders and persons connected to them will abstain from voting on the proposed resolution.

Governance and Safeguards

• Comprehensive review procedures ensure RRPTs are fair, at arm’s length, and not detrimental to minority shareholders.
• Internal Audit & Integrity Division regularly reviews RRPTs, with reports submitted to the Board Audit Committee (BAC) quarterly.
• All procurement follows the Group Procurement Policy.
• Disclosure of aggregate RRPT values will be made in the annual report and immediate announcements made if actual values exceed estimates by 10% or more.

Recent Strategic Developments Likely to Impact Share Value

• Acquisition of CTRM AeroSystems: On 8 December 2025, DRB-HICOM completed the acquisition of Spirit AeroSystems Malaysia Sdn Bhd (renamed CTRM AeroSystems Sdn Bhd) for an estimated USD110.6 million (RM464.2 million). This acquisition, which followed regulatory and shareholder approvals, significantly expands DRB-HICOM’s aerospace manufacturing capabilities, positioning the company for future growth in the sector.
• Substantial Upsizing of RRPTs: The projected near-doubling of RRPTs—especially with Geely Group—signals increased operational activity and collaboration, which could materially impact future revenue streams and operational scale.
• Management of Outstanding Receivables: While DRB-HICOM had notable overdue RRPT receivables from Tradewinds Plantation Group and MMC Group at year-end 2025, these amounts have mostly been recovered, reflecting effective credit management and ongoing strong relationships with related parties.

Potential Impact on Shareholders and Share Price

• Upside Potential: The renewal of the shareholders’ mandate allows DRB-HICOM to operate efficiently and capitalize on lucrative business dealings with major partners in the automotive, property, utilities, and infrastructure sectors—potentially enhancing revenue, operational synergies, and shareholder value.
• Risk Factors: Investors should monitor the scale of RRPTs, the group’s ability to manage related party risks, and the successful integration of new strategic assets such as CTRM AeroSystems.
• Governance Assurance: The company’s governance mechanisms, including abstention from voting by interested parties and robust review procedures, should provide comfort to minority shareholders regarding the fairness and transparency of RRPTs.

AGM and Voting Information

The 36th AGM will be held on Tuesday, 26 May 2026 at 10.00 a.m. at the Glenmarie Ballroom, Hilton Shah Alam Glenmarie. Shareholders are strongly encouraged to review the full circular and participate in the meeting. Proxy forms must be submitted no later than Sunday, 24 May 2026 at 10.00 a.m.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors are advised to conduct their own research and consult their professional advisers before making any investment decisions regarding DRB-HICOM Berhad. The information presented is based on materials provided in the company’s official circular and may be subject to change. The author and publisher accept no responsibility for any actions taken based on this article.

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