NetX Holdings Berhad: Detailed Investor Update on Proposed Shareholders’ Mandate for Recurrent Related Party Transactions

Key Highlights from the Circular to Shareholders

• NetX Holdings Berhad (“NetX” or “the Company”) is seeking shareholders’ approval for the Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions (RRPTs) of a revenue or trading nature at its upcoming 25th Annual General Meeting (AGM) on 19 May 2026.
• The AGM will be held in a hybrid format: physically at Menara Lien Hoe, Persiaran Tropicana, PJ, and virtually via an online platform.
• The mandate, if approved, will allow the NetX Group to continue entering into RRPTs with specified related parties, without the need to seek prior shareholder approval on a case-by-case basis, provided transactions are at arm’s length and not detrimental to minority shareholders.
• The mandate is subject to annual renewal and detailed disclosure of aggregate RRPT values in the annual report if certain thresholds are met.

Details of Proposed Mandate and Transaction Categories

The RRPTs covered by the mandate include:

• Provision of turnkey solutions on network infrastructure, security management, system design, integration and installation, including supply and maintenance of hardware/software.
• Provision of management services (property management, legal, shared services) to or from related parties.
• Provision of advertising and media content management services.
• Provision of celebration events planning and gifting services.
• Sales of any kind of machinery and equipment.

The principal subsidiaries of NetX cover a range of activities from fintech, IT services, property holding, to money services and retail. This business diversity means RRPTs may arise frequently and across a variety of business scenarios.

Classes of Related Parties and Transaction Values

The main related parties involved include Fintec Group, Symphony Group, XOX Group, and Mlabs Group. The proposed mandate covers substantial estimated transaction values (see table below for selected examples):

Governance, Review and Safeguards

• All RRPTs must be at arm’s length and on normal commercial terms, not more favourable to related parties than the public.
• Transactions above RM1 million or 1% of NetX’s net assets require Audit and Risk Management Committee (ARMC) review and Board approval (excluding interested parties).
• Quarterly ARMC review of RRPTs; annual review of internal audit reports to ensure compliance with procedures; interested Directors/Shareholders must abstain from voting and discussions on related transactions.
• Disclosure of RRPTs in the annual report is mandatory if thresholds are met.
• Any deviation from procedures or inadequacy triggers a requirement for a fresh mandate from shareholders.

Potential Shareholder and Price-Sensitive Implications

• Major Transactions Involving Key Shareholders: Fintec Group, a major shareholder, is a significant counterparty in high-value RRPTs. Executive Director Tan Sik Eek has cross-holdings and directorships in both NetX and Fintec. All such relationships are disclosed and subject to abstention from voting to prevent conflicts of interest.
• Materiality of Transactions: The potential transaction values are substantial—up to RM10 million for a single category with one party (Fintec Group). While not anticipated to affect net assets, EPS, or gearing in the short term, the scale and frequency of these transactions could affect future earnings and business focus.
• Transparency and Recurring Nature: The mandate, if renewed, allows NetX to conduct significant recurrent business with related parties efficiently. This could lead to streamlined operations and cost savings but also raises concerns about related party risk and the need for robust governance.
• Investor Considerations: Investors should note that the mandate’s renewal is subject to annual shareholder approval and all related party safeguards are in place. Any breach or perceived inadequacy of these safeguards, or any major change in transaction values, could be price-sensitive.

Other Important Information

• No material litigation, claims, or arbitration involving NetX or its subsidiaries as at the latest practicable date.
• One material contract in the past 2 years: Emicro Services Sdn. Bhd. (NetX subsidiary) issued RM5 million Redeemable Non-Convertible Preference Shares to Globetronics Manufacturing Sdn. Bhd., completed 31 July 2024.
• Documentation and audited financials available for inspection at the registered office up to the AGM date.
• The mandate, if not renewed, will lapse at the next AGM or as per statutory timelines.

Conclusion and Recommendation

The Board of NetX (excluding interested parties) recommends shareholders vote in favour of the Proposed Shareholders’ Mandate, citing administrative efficiency, expedited business operations, and mutual benefits for related parties. However, shareholders should consider the scale of related party exposure and governance practices when making their decision, as these could influence investor sentiment and share price over the medium to long term.

AGM Details

Date & Time: 19 May 2026, 10:00 a.m.
Venue: Lot 4.1, 4th Floor, Menara Lien Hoe, No. 8, Persiaran Tropicana, Tropicana Golf & Country Resort, 47410 Petaling Jaya, Selangor Darul Ehsan, and via online platform.
Proxy Form: Must be lodged 48 hours before the meeting or as specified.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should refer to the official circular and consult their own advisers before making investment decisions. The information herein is based on the latest available company documents and may be subject to change.

View NETX HOLDINGS BERHAD Historical chart here