Sin Heng Chan (Malaya) Berhad: In-Depth Review of Recurrent Related Party Transactions Mandate Proposal

Introduction

Sin Heng Chan (Malaya) Berhad (“SHC”) has issued a comprehensive circular to its shareholders in connection with the proposed renewal of its existing shareholders’ mandate for recurrent related party transactions (RRPT) of a revenue or trading nature. This proposal will be tabled as special business at the company’s 64th Annual General Meeting (AGM) scheduled for 11 June 2026.

Key Highlights of the Proposal

• Mandate Renewal: SHC seeks shareholders’ approval for the renewal of its RRPT mandate, which allows the Group to transact with related parties in the ordinary course of business, specifically for the supply of cooling energy by Tunas Cool Energy Sdn. Bhd. (TCE) to Sime Darby Property Selatan Satu Sdn. Bhd. (SDPSSSB).
• Estimated Transaction Value: The estimated aggregate value of these RRPTs is RM30 million for the period from the forthcoming AGM until the next, with the actual value transacted from 29 May 2025 to 8 April 2026 being RM15.1 million.
• Outstanding Receivables: As of 31 December 2025, there remains an outstanding RRPT receivable of approximately RM600,000, arising from the implementation of a revised tariff structure following Tenaga Nasional Berhad (TNB) tariff revisions in July 2025. SDPSSSB has committed to settle this amount by 2026.
• Nature of Related Party Relationships: Several directors and major shareholders have direct or indirect interests in the involved entities, including Tan Sri Dato’ Sri Haji Esa bin Haji Mohamed, Dato’ Choo Keng Weng, and Choo Kin Choong.

Important Details for Shareholders

• Voting Restrictions: Interested related parties and persons connected to them are required to abstain from voting on the RRPT mandate at the AGM. They must also abstain from board deliberation and voting at all board meetings related to this mandate.
• Governance and Oversight: SHC has established internal procedures to ensure that all RRPTs are conducted at arm’s length, on terms not more favourable to related parties than those available to the public, and not to the detriment of minority shareholders. Transactions above RM3 million require Audit Committee review, while those below are approved by a disinterested director and later reviewed quarterly by the Audit Committee.
• Disclosure and Transparency: Details of all RRPTs are disclosed in the company’s annual report, and a register of all RRPTs is maintained for periodic review by the Audit Committee. The company confirms adequacy of their procedures and processes for monitoring RRPTs.

Potentially Price-Sensitive Issues

• Outstanding Receivables: The RM600,000 outstanding due from SDPSSSB, while not alarming, is noteworthy as it arose from a tariff revision and remains outstanding for under a year. Prompt settlement is promised, but persistent collection issues could signal credit risk or operational friction.
• Material Litigation: Urun Plantations Sdn. Bhd., a wholly-owned subsidiary of SHC, is a defendant in a material litigation case involving claims of native customary rights to land in Sarawak. The claim, filed in June 2025, covers a significant area (54,478 hectares) and seeks, among other reliefs, declarations of rights, invalidation of leases, and injunctions against the company’s operations. SHC’s legal counsel believes the claim is frivolous or vexatious, and applications to strike out the suit are pending. Nevertheless, investors should monitor the outcome closely, as an adverse result could have material financial implications.

Effects of the RRPT Mandate

• The RRPT mandate is not expected to have any effect on the share capital, net assets, earnings, or shareholding structure of SHC.
• The board believes these transactions are in the best interest of SHC and recommends shareholders vote in favour of the mandate.

Conclusion

The proposed RRPT mandate renewal facilitates efficient operations by reducing the need for ad hoc general meetings and ensuring timely execution of necessary related party transactions. However, shareholders should pay close attention to the outstanding RRPT receivables and the ongoing litigation, as both represent potential risks that could impact SHC’s future financial performance and share price.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult professional advisers before making investment decisions. The author and publisher are not responsible for any actions taken based on the information provided herein.

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