Ocean Fresh Berhad Releases Circular on Proposed Shareholders’ Mandate: Detailed Analysis for Investors

Ocean Fresh Berhad (OFB) has issued a detailed Circular to its shareholders concerning the following significant corporate proposals:

• Proposed Renewal of Existing Shareholders’ Mandate for Recurrent Related Party Transactions (RRPTs) of a Revenue or Trading Nature
• Proposed New Shareholders’ Mandate for Additional RRPTs of a Revenue or Trading Nature

Key Points Investors Must Note

1. What Are the Proposed Mandates?

The Company seeks shareholder approval to renew and expand its mandates allowing OFB Group to enter into recurrent related party transactions essential for its day-to-day operations. These transactions involve buying and selling of seafood products and related services with parties connected to major shareholders and directors.

2. Why Is This Important?

• RRPTs are material: These transactions are necessary for the Group’s business and are likely to occur frequently, involving substantial amounts (some transactions are estimated up to RM5 million per annum per party).
• Shareholder protection: The mandates are subject to annual renewal and will only be effective until the next AGM, unless renewed.
• Price-sensitive nature: These mandates allow the company to quickly and efficiently transact with related parties, potentially impacting costs, supply chain stability, and ultimately, earnings.

Details of the Transactions and Related Parties

The Circular provides comprehensive tables listing all related parties, the nature of their relationships, actual values transacted in the past year, and estimated values for the coming year. Key related parties include:

• Mr Siang Hai Yong (Executive Director and major shareholder)
• Dato’ Sri Chia Hooi Huak (Non-Independent Non-Executive Director and substantial shareholder)
• Mr Teo Chee Han (Non-Independent Non-Executive Director and son-in-law of Dato’ Sri Chia)

Transactions involve purchases and sales of seafood, sourcing services, and vessel maintenance, with several family members and private entities controlled by these directors and their connected persons.

3. Estimated Transaction Values

The total value of the RRPTs could be substantial, with multiple parties involved and the highest single transaction estimated at RM5 million.

4. Review and Safeguard Mechanisms

• Market-based pricing: Transaction prices are benchmarked against market rates and, where possible, at least two third-party quotations are used for comparison.
• Quarterly review: The Audit and Risk Management Committee (ARMC) reviews all RRPTs quarterly to ensure they are fair, at arm’s length, and not detrimental to minority shareholders.
• Directors’ abstention: Interested Directors and Major Shareholders will abstain from all discussions and voting on the relevant resolutions, and ensure connected persons do likewise.
• Annual renewal and disclosure: The mandate is subject to annual renewal, and all significant RRPTs are disclosed in the Company’s annual report.

5. Effects and Risks

• No immediate financial impact: The mandates themselves will not affect the share capital or directly impact earnings or net assets, but the underlying transactions could affect future profitability, especially if market conditions or relationships with related parties change.
• Potential conflicts of interest: Given the close involvement of major shareholders and directors in these RRPTs, investors should monitor disclosures for any signs of unfair terms or significant deviations from market norms.
• Transparency: The document asserts that all RRPTs are conducted at arm’s length and on commercial terms not more favourable to related parties than third parties.

6. Shareholder Action Required

• The ordinary resolutions on these mandates will be put to vote at the 3rd AGM scheduled for Friday, 12 June 2026 at 10:30 a.m. at OFB’s Head Office in Kuantan, Pahang.
• Proxy forms must be lodged by Wednesday, 10 June 2026 at 10:30 a.m.
• Shareholders are entitled to appoint proxies and are urged to consider the implications of these mandates before voting.

Shareholding Structure and Related Interests

The Circular discloses the direct and indirect shareholdings of the interested parties:

• Mr Siang: Direct (5.85%), Indirect (7.96%)
• Dato’ Sri Chia: Direct (6.52%)
• Mr Teo: Direct (0.10%)
• Sierra Mode Sdn Bhd and Chia Siew Lee are also listed as connected parties with significant holdings.

Additional Corporate and Legal Disclosures

• No material litigation: OFB Group is not engaged in any material litigation or arbitration that could affect its financial position.
• No material contracts outside the ordinary course of business: Except for the underwriting agreement for its IPO in 2024.

What Could Move the Share Price?

• Shareholder approval of these mandates enables OFB to secure its seafood supply chain and maintain established business relationships, which is critical for its revenue streams.
• Any issues in executing RRPTs at fair value, or signs of conflicts of interest not being managed, could negatively impact investor confidence, making the AGM outcome and subsequent implementation highly price sensitive.
• Investors should monitor the execution, value, and transparency of these RRPTs in subsequent quarterly and annual reports for any red flags or positive surprises.

Conclusion

OFB’s proposed shareholders’ mandates for RRPTs are critical for its operational continuity, cost management, and business relationships with key insiders. Investors should consider both the benefits of securing supply and the governance risks associated with related party transactions, and closely follow AGM developments and future disclosures for any material impacts on the company’s performance and share value.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should read the full Circular and consult their own financial advisors before making investment decisions. The author and publisher accept no liability for actions taken based on this article.

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