SMIS Corporation Berhad: Major Shareholder Mandate Renewal & Share Buy-Back Proposal – Key Details for Investors

Overview

SMIS Corporation Berhad (“SMIS” or “the Company”) has issued a comprehensive circular to shareholders ahead of its upcoming 27th Annual General Meeting (AGM) scheduled for 28 May 2026. The circular outlines several key proposals that are highly relevant to investors, including:

• Renewal of Existing Shareholders’ Mandate for Recurrent Related Party Transactions (RRPT) of a Revenue or Trading Nature
• Proposed New Shareholders’ Mandate for Additional RRPTs
• Proposed Renewal of Authority for the Company to Purchase Its Own Ordinary Shares (Share Buy-Back) of up to 10% of the total issued shares

Key Points Investors Must Know

1. Recurrent Related Party Transactions (RRPT): Mandate Renewal and New Mandate

• Background & Importance: RRPTs are transactions of a trading or revenue nature with related parties, which are necessary for the Group’s day-to-day operations. The renewal and new mandate allow the Group to continue entering these transactions without seeking fresh shareholder approval each time, streamlining operations and reducing administrative burden.
• Related Parties Involved: Transactions are primarily with Sugihara Co. Ltd, PT Grand Sugihara Techno (PTGST), PT Sugihara Grand Automotive (PTSGA), Yamaguchi Mfg Co. Ltd (Yama JP), San Yes Automotive Technology, MIYES Holdings Sdn. Bhd., and other connected parties. Some directors and major shareholders, such as Ng Wai Kee and Yap Siew Foong, have direct and indirect interests in these entities.
• Nature & Value of Transactions: Key RRPTs include purchase of equipment, royalty payments for manufactured automotive carpets, raw material purchases, subcontract manufacturing services, rental payments for factory/hostel spaces, and support services.
  • For example, Sugi (a subsidiary of SMIS) is estimated to pay Sugihara Co. Ltd. up to RM3.0 million for equipment, RM2.7 million in royalties, and RM4.3 million for carpeting components for the coming financial year.
  • PTGST will pay up to RM400,000 in royalties and RM840,000 for subcontract services to PTSGA, and RM70,000 in rental to PT Grand Ventures Hartamas.
  • SGI (another subsidiary) will pay Cendana RM850,000 in rental for factory space, while Yama MY will pay SGI RM180,000 for subleased space and RM100,000 for support services.
  • A new mandate covers Sugi renting factory space from GCI for RM3.0 million.
• Why It Matters: These recurring transactions ensure continuity of business, operational efficiency, and maintain strategic relationships with key partners in the automotive supply chain. The close commercial ties with Sugihara Co. Ltd. and others provide technical, operational, and market support that are critical for SMIS’s competitiveness, especially in Malaysia and Indonesia.
• Governance & Safeguards: All RRPTs must be conducted at arm’s length, on normal commercial terms, and not detrimental to minority shareholders. Internal controls and audit committee oversight are in place. Interested directors and major shareholders will abstain from voting and deliberation.
• Potential Risks: If mandates are not renewed, SMIS would face operational disruptions and potential business delays, impacting earnings and profitability.

2. Proposed Share Buy-Back of Up to 10% of Issued Shares

• Key Proposal: SMIS seeks approval to renew the authority to buy back up to 10% of its issued shares (up to 4,480,000 shares, including 2,637,000 already held as treasury shares).
• Funding & Financials: The buy-back will be financed wholly from retained profits (RM32.21 million as at 31 December 2025). As at the latest practicable date, the company has no bank borrowings.
• Price & Execution: Shares can be repurchased at prices not more than 15% above the weighted average market price for the preceding 5 market days. Treasury shares may be cancelled, held, re-sold, or distributed as dividends.
• Potential Price-Sensitive Impacts:
  • Share buy-backs may support or increase the market price of SMIS shares by reducing supply and improving key financial ratios such as EPS (if shares are cancelled).
  • If the shares are cancelled, the number of issued shares will decrease, potentially enhancing shareholder value.
  • Conversely, buy-backs will reduce working capital and cash reserves, which could affect future investment or dividend capacity.
  • Buy-back activity may trigger a mandatory general offer if the equity interest of major shareholders (MIYES, San Yes, Ng Wai Kee, Yap Siew Foong) increases by more than 2% in six months, but these parties intend to seek exemption from the SC if applicable.
• Shareholding Impact: If the maximum buy-back is executed and all repurchased shares are cancelled, the issued shares will fall to 40,320,000. MIYES’s direct holding would rise from 37.19% to 38.89% of the total, and public shareholding would decrease slightly but remain above the 25% threshold.
• No Purchases in Last 12 Months: The company has not made any share purchases, resales, transfers, or cancellations in the past year.

3. Material Contracts & Litigation

• Material Contract: On 30 September 2024, SMIS entered into a conditional Share Sale Agreement with Yamaguchi JP to dispose of 2,300,000 ordinary shares (46% of SGI, a subsidiary) for RM5.07 million. The disposal was completed on 25 March 2025; SGI is now a 54%-owned subsidiary.
• No Material Litigation: As at the date of the circular, SMIS Group is not involved in any material litigation.

What Shareholders Must Do

• The resolutions relating to the above proposals will be tabled as special business at the 27th AGM on 28 May 2026 at Kelab Golf Negara Subang, Petaling Jaya, Selangor.
• Shareholders unable to attend should submit their proxy forms by 26 May 2026, 10:00 AM, either physically or via the Boardroom Smart Investor Portal.
• Price-Sensitive Implications: Approval of the share buy-back could positively impact share price via supply reduction and enhanced financial metrics. The RRPT mandates ensure continuity of strategic business relationships and operational stability, both of which are vital for future earnings and share value.

Concluding Remarks

These proposals are significant for the strategic and operational management of SMIS Corporation Berhad. They present both opportunities (via potentially higher EPS, operational continuity, and shareholder rewards) and risks (reduced working capital, potential for decreased liquidity, and regulatory obligations if a mandatory offer threshold is breached).

Investors and shareholders are strongly advised to read the full circular, consider the proposals carefully, and exercise their voting rights at the AGM.

Disclaimer: This article is a summary and interpretation of SMIS Corporation Berhad’s shareholder circular and related documents. It is not intended as investment advice. Investors are advised to perform their own due diligence and consult professional advisers before making any investment decisions.

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