Metro Healthcare Berhad Releases Circular on Proposed Shareholders’ Mandate for RRPTs

Key Points for Investors

• Metro Healthcare Berhad (“Metro”) will table the Proposed Renewal of Existing Shareholders’ Mandate and a Proposed New Shareholders’ Mandate regarding Recurrent Related Party Transactions (RRPTs) of a revenue or trading nature at its upcoming 16th Annual General Meeting (AGM) on 29 June 2026 at 2:30 p.m.
• The Proposed Mandates, if approved, will grant Metro the authority to continue entering into RRPTs with related parties, which are crucial for the company’s day-to-day operations and must be conducted on an arm’s length basis—not more favourable to related parties than to the public.
• Shareholders are advised that the mandate is subject to annual renewal and that the company is obliged to disclose the aggregate value of such transactions annually, especially when they pass a materiality threshold.
• Interested Directors, Major Shareholders, and their connected persons will abstain from voting on the relevant resolutions to avoid conflicts of interest.

Details of the Proposed Shareholders’ Mandate

The Proposed Shareholders’ Mandate covers both the renewal of existing mandates and the approval of new RRPTs, which involve facilities rental transactions between Metro’s subsidiaries and companies substantially owned or controlled by Metro’s directors and major shareholders.

Nature of RRPTs and Related Parties Involved

• Key RRPTs include the rental of premises for Metro’s fertility centres, hospitals, clinics, and diagnostic imaging services.
• Major counterparties include companies owned or controlled by Dr. Tay Swi Peng (DTSP), Dr. Kong Lan Moon (DKLM), and their connected companies such as PFSB, CRSB, FLCSB, and others.
• For the upcoming validity period, estimated annual rental values for individual transactions range from approximately RM60,000 to RM390,000, with several properties involved across locations in Klang, Puchong, Ipoh, Johor Bahru, Banting, and Kuala Selangor.

Review, Oversight, and Safeguards

• Metro has established clear procedures to ensure that all RRPTs are conducted at arm’s length and on commercial terms not more favourable to related parties than those available to the public.
• Any RRPTs valued at RM200,000 or more must be reviewed and approved by the Audit and Risk Management Committee (ARMC) and the Board, while smaller transactions are reviewed by top management.
• At least two comparable third-party transactions will be used as benchmarks where possible; if not possible, industry norms and past practices will apply.
• All RRPTs are subject to annual internal audit and ongoing oversight by the ARMC, which may call for independent advice if required.
• Disclosure of aggregate RRPT values and involved parties will be made in the annual report.

Potential Price Sensitive Implications

• Shareholder value and minority protection: The mandates, if not properly managed, could raise concerns about related party transactions favouring insiders. However, the extensive oversight, benchmarking, and required abstentions from voting by interested parties are designed to mitigate these concerns.
• Operational continuity and cost efficiency: Having the mandate in place allows Metro to quickly execute necessary property rental and service contracts with related parties, avoiding the cost and delay of seeking shareholder approval for each transaction. This efficiency could be favourable for Metro’s ongoing operations and flexibility, potentially supporting earnings stability.
• No current material litigation or overdue payments: As of the latest practicable date, there are no overdue amounts owed by related parties, no pending or threatened material litigation, and no contingent liabilities that could negatively affect Metro’s financial position.
• Material contracts disclosed: Recent significant contracts include the termination of a property acquisition by K.W. Tee Sdn. Bhd. and the completed acquisition of RMC Specialist Sdn. Bhd. for RM320,000 cash, which may have implications for Metro’s expansion strategy.

What Shareholders Need to Do

• Review the Circular and AGM Notice: All relevant documents, including the proxy form and administrative notes, are available on Metro’s website and Bursa Malaysia’s website.
• Participate or vote by proxy at the AGM: If unable to attend in person, shareholders should submit proxy forms by 27 June 2026, 2:30 p.m.
• Understand the resolutions: The resolutions relate to the continued authority for Metro to enter into RRPTs, and a new mandate for additional transactions described in detail in the circular.

Directors’ Recommendation

The Board of Directors (excluding interested Directors) recommends that shareholders vote in favour of the Proposed Shareholders’ Mandate, viewing it as beneficial to the company and its shareholders.

Conclusion

The approval of the Proposed Shareholders’ Mandate is integral to Metro’s operational flexibility, cost efficiency, and ability to pursue business opportunities in a timely manner. While the RRPTs involve related parties, the company has set up extensive safeguards to protect minority shareholders and ensure transparency.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors are advised to read the full circular and consult their professional advisors before making any investment decisions. The author and publisher accept no liability for any investment decisions made based on this summary.

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