UMS-Neiken Group Berhad: Key Shareholder Proposals for 2026 AGM

UMS-Neiken Group Berhad (UMSNGB) has issued a detailed circular to its shareholders ahead of its Twenty-Second Annual General Meeting (22nd AGM), scheduled for 26 May 2026. The circular outlines two significant proposals that could have important implications for the company’s operations, governance, and potentially its share price.

1. Proposed Renewal of Existing Shareholders’ Mandate for Recurrent Related Party Transactions (RRPTs)

Key Points:

• The Group seeks to renew its shareholders’ mandate to enter into recurrent related party transactions (RRPTs) of a revenue or trading nature. This is a common practice for listed companies, especially those with significant related party dealings, as it streamlines operations and reduces administrative burdens.
• These transactions must be made in the ordinary course of business and on terms not more favourable to related parties than those generally available to the public. This is to protect minority shareholders from potential conflicts of interest.
• The proposed renewal, if approved, will be effective from the date of the 22nd AGM and remain in force until the next AGM, unless revoked or varied by the shareholders.

Details of RRPTs and Related Parties

• Main Related Parties: High Project Limited, Ming Kee Manufactory Ltd, United MS Cables Mfg. Sdn. Bhd. (UMSC), and several directors and major shareholders including Mr. Ip Tai Hoi Paul, Mr. Cheng Wong, and Madam Dee Kim Huay.
• Nature of Transactions: These include purchases of power cord sets, cables, cable reels, and rental of warehouse space; as well as sales of electrical wiring accessories and products between UMSNGB subsidiaries and related parties.
• Estimated Transaction Values: For the forthcoming mandate period, the estimated total value of RRPTs includes:
  • Up to RM5 million for purchases of cables from UMSC to NES
  • Up to RM4 million for purchases of copper wires and cables from UMSC to UMSE
  • Up to RM3 million for purchases of cables from UMSC to UMSI
  • Up to RM2 million for sales of electrical wiring accessories from UMSE to UMSC, among others.
• No Overdue Receivables: The company confirms there are no overdue amounts from related parties beyond the allowed credit period, reflecting sound financial management.
• Governance & Safeguards: The Audit and Risk Management Committee (ARMC) will continue reviewing RRPTs to ensure they are conducted at arm’s length and are not detrimental to minority shareholders.
• Required Abstentions: Directors and major shareholders with interests in the RRPTs—namely Cheng Wong, UMSH, CWLF, Ip Tai Hoi Paul, and Dee Kim Huay—will abstain from voting on the relevant resolutions, as will persons connected to them.

Potential Impact on Shareholders and Share Price

• Smoother Operations: Approval of the new mandate reduces the need for ad-hoc general meetings for each RRPT, allowing the company to respond more efficiently to operational needs.
• Transparency and Oversight: Detailed disclosures and ARMC oversight may bolster investor confidence in the company’s governance practices, potentially supporting share value.
• No Immediate Financial Impact: The proposal itself does not directly affect share capital, net assets, earnings per share (EPS), or gearing. However, the ability to transact efficiently with related parties may indirectly benefit business performance.

2. Proposed Renewal of Share Buy-Back Authority

Key Points:

• The company seeks shareholders’ approval to renew its authority to buy back up to 10% of its issued shares (maximum 8,000,000 shares, inclusive of 1,264,800 shares already held as treasury shares).
• The buy-back can be executed using retained profits (RM2.75 million as at 31 December 2025) and/or external borrowings, and will be in force until the next AGM unless renewed.
• Share Buy-Back Price Limits: Purchases cannot exceed 15% above the five-day weighted average market price. Treasury shares may be resold on Bursa Malaysia at not less than the five-day average price or at a discount of up to 5% under certain conditions.
• Potential Corporate Actions: Shares bought back can be cancelled, held as treasury shares, resold, transferred for employee share schemes, or distributed as dividends.
• The buy-back will only be implemented if it does not reduce the public shareholding spread below 25%. As at the latest practicable date, UMSNGB’s public spread stood at 25.77%.

Potential Impact on Shareholders and Share Price

• Enhanced EPS and Share Value: Cancelling purchased shares reduces the number of shares in circulation, thereby potentially increasing EPS and supporting share price.
• Market Support: The buy-back authority can be used to stabilize share price in periods of volatility or low liquidity, which could be price-sensitive.
• Risks: The main risks are the reduction in working capital and the opportunity cost of funds used for buy-backs, which could otherwise be invested or distributed as dividends.
• No Material Litigation or New Material Contracts: The company states there is no material litigation or new material contracts (other than those in the ordinary course of business) that would affect the proposals.

Important Dates for Shareholders

• Last date and time to lodge Proxy Form: 24 May 2026, 10:00 a.m.
• Date and time of 22nd AGM: 26 May 2026, 10:00 a.m.
• Venue: Pavilion Hall, Tasik Puteri Golf & Country Club, Bandar Tasik Puteri, Rawang, Selangor

Conclusion and Recommendation

The Board (except interested parties) recommends shareholders vote in favour of both proposals, emphasizing that they are in the best interest of the company and its shareholders. These proposals reflect UMSNGB’s ongoing commitment to transparency, corporate governance, and operational flexibility.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any shares. Investors should consult their financial advisers and consider their own circumstances before making any investment decisions. The information is based on the company’s circular and may be subject to change. UMSNGB and its directors accept no responsibility for any losses arising from reliance on this article.

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