e-Prospectus February 2014

Issued pursuant to section 90 of the Companies Act, 1965

Offer for sale of up to 30,800 Grower Plots at a Grower’s Fee of RM9,600.00 for each Grower Plot

Investors are advised to read and understand the contents of this Prospectus and the Trust Deed (available on request) pertaining to the Scheme before purchasing any Grower Plot. Investors should rely on their own evaluation to assess the merits and risks of the investment. In considering the investment, investors who are in any doubt as to the action to be taken should consult a professional advisor.

INVESTORS ARE GIVEN A COOLING-OFF PERIOD OF 10 DAYS FROM THE DATE THE APPLICATION TO BUY A GROWER PLOT IS SUBMITTED TO THE MANAGEMENT COMPANY TO WITHDRAW HIS APPLICATION AND RESCIND HIS GROWER’S MANAGEMENT AGREEMENT WITHOUT ANY DEDUCTION OR PENALTY.

A copy of this Prospectus has been lodged with and registered by the Registrar of Companies who takes no responsibility for its contents.

This Prospectus is dated 20 February 2014 and expires on 19 August 2014.

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Company No.762196-T Golden Palm Growers Berhad

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TABLE OF CONTENTS

CONTENTS PAGE DEFINITIONS 3

1. SCHEME OVERVIEW 7

1.1 Introduction 7 1.2 Summary of Scheme 7

2. DETAILS OF THE SCHEME 10

2.1 Nature of Scheme 10 2.2 Number of Grower Plots and Reserved Grower Plots 10 2.3 Cooling-Off Period 10 2.4 Grower’s Fee 11 2.5 Net Yield 11 2.6 Grower’s Rights and Liabilities 13 2.7 Transfer of Grower Plots 13 2.8 Request for Prospectus and Certificate of Good Standing 14 2.9 Repurchase of Grower Plots 14 2.10 Termination of Scheme 20 2.11 Refund of Investment upon Expiry or Termination of Scheme 21 2.12 Computation of Refund upon Expiry or Termination of Scheme 21

3. DETAILS OF PLANTATION 22

3.1 Particulars of Land 22 3.2 Location Plan of the Plantation 23 3.3 Site Plan of the Plantation 24 3.4 Feasibility Study 25 3.5 Status of Plantation Development 25 3.6 Insurance Coverage 26 3.7 Independent Consultant 26

4. ACCOUNTANTS’ REPORT 27

5. INDEPENDENT CONSULTANT’S REPORT 70

6. CORPORATE STRUCTURE AND RELATIONSHIP 82

7. THE MANAGEMENT COMPANY 83

7.1 Background Information 83 7.2 Corporate Information 83 7.3 Profile of Key Management Team 87 7.4 Duties and Responsibilities of Management Company 89 7.5 Retirement, Removal or Replacement of Management Company 91

8. THE TRUSTEE 92

8.1 Appointment of Trustee 92 8.2 Background Information 92 8.3 Corporate Information 92 8.4 Functions, Duties and Responsibilities of Trustee 93 8.5 Powers and Liabilities of Trustee 97 8.6 Remuneration of Trustee 99 8.7 Retirement, Removal and Replacement of Trustee 99

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9. THE MARKETING COMPANY 101

9.1 Appointment of Marketing Company 101 9.2 Background Information 101 9.3 Corporate Information 101 9.4 Profile of Chief Executive Officer 103 9.5 Profile of Senior Management 103

10. RISK FACTORS 104

11. APPLICATION PROCEDURE FOR GROWERS 109

11.1 Application Procedure 109 11.2 Grower’s Certificate and Register of Growers 109

12. ADDITIONAL INFORMATION 111

12.1 Appointment, Retirement and Replacement of Auditor 111 12.2 Trust Deed 111 12.3 Meeting of Growers 112 12.4 Consents 114 12.5 Documents for Inspection 114 12.6 No Grower Plots to be sold 6 months after the date of Prospectus 115 12.7 Disclaimer Statements 115 12.8 Directors’ Responsibility Statements 116

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D E F I N I T I O N S In this Prospectus, except where the context requires otherwise, the following words and expressions shall have the following meanings: Applicant

: a person who has submitted an Application Form to the Management Company to become a Grower

Application Form : the application form prescribed by the Management Company from time to time for the purpose of acquiring a Grower Plot

Approved Company Auditor

: a person approved as such by the Minister under section 8 of the Companies Act whose approval has not been revoked as defined in the Companies Act

Business Day : any day (other than a Saturday or Sunday) on which banks are open for business in Kuala Lumpur

Business Office

: the business office of the Management Company at Unit A-25-12, Level 25, Menara UOA Bangsar, 5 Jalan Bangsar Utama 1, 59000, Kuala Lumpur

Commencement Date

: the date of commencement of the respective Grower’s Management Agreement being the date stated in paragraph 11.1(e)

Companies Act : the Malaysian Companies Act, 1965

Cooling-Off Period : the period of 10 days after the date on which an Applicant submits the Application Form to the Management Company

Court : the High Court of Malaya

First Phase : the period commencing from the Launch Date and ending on the 6th anniversary of the Launch Date

Gazette : the official Gazette of the Federation of Malaysia and, includes supplements thereto as defined in section 66 of the Interpretation Acts 1948 and 1967

Grower : a person who is registered as a holder of a Grower Plot in the Register of Growers and includes the Management Company for so long as the Management Company holds a Grower Plot

Grower’s Certificate : the certificate of ownership issued by the Management Company to the Grower with respect to his Grower Plots in accordance with the provisions of the Trust Deed

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Grower’s Fee : the fee payable by a Grower to the Management Company for a Grower Plot referred to in paragraph 2.4

Grower’s Fee Trust Account

: the trust account by that name to be opened by the Trustee and referred to in paragraph 8.4(a)(i)(1)

Grower’s Management Agreement

: the agreement entered into, or to be entered into, between the Grower and the Management Company in respect of the Scheme

Grower Plot : an interest under the Scheme that entitles the holder to the Net Yield

Independent Consultant

: Chik Lwi Siang

Land : the 3 pieces of land measuring approximately 11,280 acres held under H.S(D)4185 PT5535, H.S(D)4186 PT5536 and H.S(D)4187 PT5641 in Mukim of Ulu Nenggiri, District of Gua Musang, State of Kelantan which is the subject of the Plantation Land Development Agreement

Launch Date : 20 August 2010, being the date of the first Prospectus in respect of the Scheme

Management Company : Golden Palm Growers Berhad (Company No.762196-T)

Management Fee : the fee of RM20 or such other amount as may be prescribed by the Management Company from time to time payable each year by the Grower and referred to in paragraph 2.6(a)

Marketing Company : Golden Palm Marketing Sdn Bhd (Company No.874002-K)

Maturity Date : the date upon which the Scheme expires being the date of expiry of the 23rd year from the Launch Date

Minister : the Minister charged with the responsibility for companies as defined in the Companies Act

Net Yield : the yield payable to a Grower and referred to in paragraph 2.5

Plantation : the 11,000 acres of the Land designated by the Management Company for the Scheme

Plantation Concession

: the concession to develop, manage and maintain an oil palm plantation on the Land granted to the Management Company under the Plantation Land Development Agreement

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Plantation Land Development Agreement

: the Plantation Land Development Agreement dated 12 September 2007 between the Management Company and PPLRNK (as amended from time to time)

PPLRNK : Perbadanan Pembangunan Ladang Rakyat Negeri Kelantan, a body corporate incorporated pursuant to Perbadanan Pembangunan Ladang Rakyat Negeri Kelantan Enactment 2006 (Enactment No.2 of 2006)

Prospectus : the statement issued pursuant to section 90 of the Companies Act

Register of Growers : the register of holders of Grower Plots established and maintained by the Management Company in accordance with the provisions of the Trust Deed

Registrar of Companies : the Registrar of Companies as designated under section 7(1) of the Companies Act

Reserve Fund Trust Account

: the trust account by that name to be opened by the Trustee and referred to in paragraph 8.4(a)(i)(2)

Reserved Grower Plots : the 13,200 Grower Plots that are held by the Management Company and referred to in paragraph 2.2

Rules : the rules and regulations of the Scheme made in accordance with the Grower’s Management Agreement (as amended from time to time)

RM : Ringgit Malaysia being the lawful currency of Malaysia

Scheme : the scheme known as the Golden Palm Growers Scheme established pursuant to Division 5 of Part IV of the Companies Act

Second Phase : the period commencing from the day after the 6th anniversary of the Launch Date and ending on the Maturity Date

Term : the period commencing on the Launch Date and ending on the Maturity Date

Trust Deed : the trust deed dated 26 July 2010 entered into between the Management Company, the Trustee and the Growers (as amended from time to time)

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Trustee : AmTrustee Berhad (Company No.163032-V) and includes the trustee for the time being of the Scheme whether original, additional or substituted


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1. SCHEME OVERVIEW

1.1 Introduction

On 12 September 2007, the Management Company entered into the Plantation Land Development Agreement with PPLRNK, an agency of the Kelantan state government. Under that agreement, PPLRNK granted a concession to develop, manage and maintain an oil palm plantation on the Land to the Management Company. The Management Company has designated 11,000 acres of the Land to establish an oil palm plantation scheme. The Scheme involves the creation of interests under Division 5 of Part IV of the Companies Act. Each such interest - a Grower Plot - entitles its holder to the Net Yield for a term of 23 years from the Launch Date. With the establishment of the Scheme, the Management Company will be in charge of the operation of the Scheme. The Registrar of Companies has approved the Scheme and the offer to the public of the Grower Plots. A total of 44,000 Grower Plots has been created with respect to the Plantation. Each Grower Plot relates to a quarter (¼) acre of the Plantation. The Management Company will offer to the public only 70% of the Grower Plots (i.e. 30,800 plots). It will retain 30% of the Grower Plots (i.e. 13,200 plots). As at 10 February 2014, a total of 24,670 Grower Plots have been sold to the public. The remaining number of Grower Plots available to the public as at 10 February 2014 is 6,130.

1.2 Summary of Scheme

This paragraph is only a summary of the salient information about the Scheme and is extracted from the full text of this Prospectus. Investors should read and understand this paragraph together with the full text of this Prospectus before deciding whether to invest in the Scheme and if necessary, consult their own professional advisors. FOR INFORMATION CONCERNING RISK FACTORS WHICH SHOULD BE CONSIDERED BY INVESTORS, PLEASE SEE “RISK FACTORS” IN PARAGRAPH 10 OF THIS PROSPECTUS.

The salient features of the Scheme are as follows.

Name of Scheme : Golden Palm Growers Scheme

Scheme type : Share farming interest scheme established pursuant to Division 5 of Part IV of the Companies Act 1965

Type of interest (Grower Plot)

: Interest relating to a quarter (¼) acre of the Plantation entitling the holder to the Net Yield

Location of the Plantation : Gua Musang, Kelantan

Size of the Plantation : 11,000 acres as at the date of this Prospectus

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Total No. of Grower Plots at the date of this Prospectus

: 44,000

No. of Grower Plots offered to the public

: 30,800 (70% of total)

No. of Grower Plots retained by Management Company

: 13,200 (30% of total)

Grower’s Fee : RM9,600 per Grower Plot

(see paragraph 2.4)

Net Yield

: During the First Phase (i.e. from 20 August 2010 to 19 August 2016) – a guaranteed Net Yield of 6% per annum of the Grower’s Fee.

In addition to the guaranteed Net Yield, the Management Company may from time to time offer to pay a bonus yield on such terms and conditions as it deems fit.

During the Second Phase (i.e. from 20 August 2016 to 19 August 2033) – a proportionate share of returns from the Plantation based on audited net profits of the Plantation with a minimum return based on average crude palm oil prices

(see paragraph 2.5)

Transfer of Grower Plots : Grower Plots are freely transferable after a period of 12 months

(see paragraph 2.7)

Repurchase of Grower Plots

: The Management Company will repurchase Grower Plots at the request of a Grower during the Second Phase

(see paragraph 2.9)

Scheme period : 23 years from the Launch Date

Continuation of Scheme : The Scheme may continue beyond the Maturity Date if a proposal for replanting of the Plantation is approved by Growers

(see paragraph 2.10(d))

Expiry or termination of Scheme

: The Scheme will expire on the Maturity Date unless early termination is triggered

(See paragraph 2.10)

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Payment on expiry or termination

: Upon expiry or early termination of the Scheme, a Grower will receive his proportionate share of the net sale proceeds of that part of the Plantation Concession relating to the Plantation

(see paragraph 2.11)

Management Company : Golden Palm Growers Berhad

Trustee : AmTrustee Berhad

Marketing Company : Golden Palm Marketing Sdn Bhd

Auditors : BDO

Solicitors : Zul Rafique & Partners

Independent Consultant : Chik Lwi Siang

Launch Date : 20 August 2010, being the date of the first Prospectus

Offer period : 6 months from the date of this Prospectus


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2. DETAILS OF THE SCHEME 2.1 Nature of Scheme

The Scheme is a type of share farming interest scheme established and governed under Division 5 of Part IV of the Companies Act. The Scheme involves an offer to the public of interests deriving from the Plantation known as Grower Plots. Each Grower Plot relates to a quarter (¼) acre of the Plantation and entitles a Grower to the Net Yield during the Term.

2.2 Number of Grower Plots and Reserved Grower Plots

11,000 acres of the Land have been designated by the Management Company for the Scheme. A total of 44,000 Grower Plots have been created with respect to the 11,000 acres of which 30,800 Grower Plots (70%) have been offered to the public. The Management Company will hold the remaining 13,200 Grower Plots (30%). The Reserved Grower Plots may only be released for sale to the public upon the approval of the Registrar of Companies. As at 10 February 2014, a total of 24,670 Grower Plots have been sold to the public. The number of plots created and allowed to be sold are as follows:-

Number of Plots Number of Grower Plots created with respect to the 11,000 acres of the Land

44,000

Number of Grower Plots held by the Management Company (30%) 13,200 Number of Grower Plots offered to the public (70%) 30,800 Number of Grower Plots sold at the following prices: (a) RM 7,000.00 5,999 (b) RM 8,000.00 10,184 (c) RM 8,800.00 6,917 (d) RM 9,600.00 1,570

Total number of Grower Plots sold as at 10 February 2014

24,670 Grower Plots available for sale as at 10 February 2014 6,130 Number of Grower Plots sold between 8 August 2013 (being the cut-off date for the Prospectus dated 20 August 2013) and 10 February 2014

1,052

2.3 Cooling-Off Period

An Applicant may by written notice to the Management Company withdraw his application for Grower Plots or rescind his Grower’s Management Agreement at any time within the Cooling-Off Period without any deduction or penalty. The Management Company will refund the Grower’s Fee free of interest to the Applicant within 14 days of receipt of such notice.

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2.4 Grower’s Fee

At the date of this Prospectus, each Grower Plot will be offered to the public at RM9,600 only and all subsequent Grower Plots will be at such price as shall be decided by the Management Company from time to time based on market forces. The Management Company may from time to time offer a discount to the Grower’s Fee on such terms and conditions as it deems fit.

2.5 Net Yield

A Grower will be entitled to receive the Net Yield subject to the following terms and conditions:

(a) First Phase

During the First Phase (i.e. from 20 August 2010 to 19 August 2016), the guaranteed Net Yield for a Grower Plot is 6% per annum of the Grower’s Fee. In addition to the guaranteed Net Yield, the Management Company may from time to time offer to pay a bonus yield on such terms and conditions as it deems fit.

(b) Second Phase

(i) During the Second Phase (i.e. from 20 August 2016 to 19 August 2033),

the Net Yield for a Grower Plot in any year shall, subject to paragraph 2.5(b)(iii), be an amount equal to the higher of:

(1) the Plantation Profit attributable to a quarter acre of the

Plantation; and (2) the Specified Amount.

(ii) For the purposes of calculating the Net Yield in any year:

“Average CPO Price” means the average crude palm oil price for that year based on data published by the Malaysian Palm Oil Board or its successor; “Plantation Profit” means the audited net profit for the Plantation operations for the latest financial year after adjusting for non-cash items (other than depreciation and amortization); and “Specified Amount” means:

(1) where the Average CPO Price for that year exceeds RM1,500 per

metric tonne – 9% of the Grower’s Fee; (2) where the Average CPO Price for that year is between RM1,000 –

RM1,500 per metric tonne – 6% of the Grower’s Fee; and

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(3) where the Average CPO Price for that year is less than RM1,000 per metric tonne – zero.

(iii) If:

(1) in any year the Specified Amount exceeds the Plantation Profit

attributable to a quarter acre of the Plantation; and

(2) the Management Company has paid the Specified Amount, then:

(3) the Management Company may, notwithstanding anything to the

contrary, recover, at any time and from time to time, the excess mentioned in paragraph 2.5(b)(iii)(1) from the Plantation Profits for the next or future years as long as this does not result in the Net Yield in any year falling below the Specified Amount.

(c) Certification by auditors

A certificate from the auditors of the Company certifying the Plantation Profit shall, in the absence of manifest error, be conclusive evidence of the Plantation Profit.

(d) Apportionment of Net Yield

The Net Yield in any year shall be calculated based on a period of 365 days except that the Net Yield for the first year shall be pro-rated based on the number of days from the Commencement Date until the first anniversary of the Launch Date to occur after the Commencement Date.

(e) Time of payment

The Management Company will pay to a Grower the Net Yield:

(i) within 60 days after the end of each anniversary of the Launch Date during the First Phase; and

(ii) within 90 days after the end of each anniversary of the Launch Date during

the Second Phase.

(f) Income tax payable on Net Yield received

A Grower will be subjected to normal rates of income tax on any Net Yield received annually. A Grower shall be responsible for his own personal or corporate income tax (as the case may be) which may be payable in any jurisdiction in respect of the Net Yield and/or monies received by the Grower under the Scheme.

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2.6 Grower’s Rights and Liabilities (a) Annual Management Fee

A Grower (other than the Management Company) is required to pay to the Management Company an annual Management Fee from the 1st anniversary of the Launch Date for as long as his Grower’s Management Agreement is not terminated. The Management Company may deduct any outstanding Management Fees from the Net Yield payable to a Grower. Any increase of more than 5% of the Management Fee must be approved by Trustee and be informed to the Growers.

(b) Limitation of Grower’s rights

Each Grower Plot represents an undivided interest in the Scheme and the rights conferred by each Grower Plot shall rank pari passu with each other unless otherwise specified in the Grower’s Management Agreement. The rights of each Grower are limited in the following manner:

(i) the rights held by the Grower rest in contract only and do not create or

confer any tenancy or any estate or any proprietary right, title, or interest in or over the Plantation or the Land or the Plantation Concession;

(ii) except for the Net Yield, the Grower’s Management Agreement or the Trust

Deed do not confer any right on the Grower to a share of the profits of the Management Company howsoever arising and whether or not derived from the Land or the Plantation Concession; and

(iii) no Grower shall have any right by reason of his Grower Plots to attend

meetings of shareholders, stockholders or debenture holders of the Management Company or to vote or take part in or consent to the Management Company’s or its shareholders’, stockholders’ or debenture holders’ actions.

(c) Limitation of Growers’ liability

The liability of each Grower in his capacity as such is limited to the Grower’s investment in the Scheme. A Grower will not be required to indemnify the Trustee or the Management Company or a creditor of either or both of them against any liability of the Trustee or the Management Company in respect of the Scheme. In addition, nothing in or under the Trust Deed or the Grower’s Management Agreement makes either the Trustee or the Management Company the agent of a Grower nor does it create any relationship other than that of Grower and Management Company or beneficiary and trustee.

2.7 Transfer of Grower Plots

A Grower may, after a period of 12 months from the Commencement Date, request to transfer one or more of his Grower Plots to any other person in accordance with the procedures, terms and conditions set out in the Grower’s Management Agreement and Rules.

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Where: (a) a Grower is a natural person, the Grower dies, becomes a bankrupt or is legally

incapacitated; or

(b) a Grower is a corporate person, the Grower is wound up or liquidated,

any person claiming to be entitled to his Grower Plots may request to be registered as the new Grower in place of the original Grower in accordance with the procedures, terms and conditions set out in the Grower’s Management Agreement and Rules.

The Management Company reserves the right to refuse a transfer request without assigning any reason for such refusal.

2.8 Request for Prospectus and Certificate of Good Standing

Any Grower who wishes to sell, assign or transfer his Grower Plots may obtain the following documents from the Management Company by submitting a written request to the Management Company: (a) a copy of the current Prospectus for a fee of RM20 or such other amount as may

be prescribed by the Management Company from time to time – the Grower is required to furnish to a transferee a copy of the current Prospectus failing which the Grower will commit an offence under section 363 of the Companies Act; and

(b) a certificate stating:

(i) whether, as far as the Management Company is aware, there are any legal proceedings in existence in respect of the Scheme or the Management Company; and

(ii) whether the Plantation is sufficiently covered by insurance,

for a fee of RM5 or such other amount as may be prescribed by the Management Company from time to time.

The Management Company will furnish such documents within 14 days from the date on which the written request is made provided that the respective fee for such documents has been paid in full by the Grower to the Management Company.

2.9 Repurchase of Grower Plots (a) No obligation to repurchase during the First Phase

Under section 88(1)(b)(iii) of the Companies Act, the Management Company is required to repurchase any Grower Plot at the request of the Grower at any time during the Term. However, the Minister has granted an exemption to the Management Company from such obligation to repurchase Grower Plots during the First Phase.

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(b) Obligation to Repurchase during the Second Phase

The following is a summary of the provisions of the Trust Deed in relation to the Management Company’s obligation to repurchase Growers Plots during the Second Phase.

(i) In this clause:

“Annual Repurchase Limit”:

(1) in relation to the first Year means 10% of the Number of Grower

Plots; and

(2) in relation to a subsequent Year:

(A) if repurchase requests in the previous Year is not more than 10% of the Number of Grower Plots, Annual Repurchase Limit means the lower of 20% of the Number of Grower Plots or the relevant percentage of the Number of Grower Plots calculated in accordance with the following formula:

RP = 20% – TRR%,

where: RP is the relevant percentage of the Number of Grower Plots; and

TRR is the total number of repurchase requests in the previous Year expressed as a percentage of the Number of Grower Plots; and

(B) if repurchase requests in the previous Year exceeds 10% of the Number of Grower Plots, Annual Repurchase Limit means 10% of the Number of Grower Plots,

provided that in each case the Annual Repurchase Limit is rounded up or down to the closest whole number of Grower Plots;

“Number of Grower Plots” means the number of Grower Plots as recorded in the Register of Growers excluding Grower Plots held by the Management Company;

“Repurchase Documents”, in relation to a Grower who has submitted a Repurchase Form with respect to a Grower Plot, means:

(1) the Grower’s Certificate with respect to that Grower Plot; and (2) the Grower’s original signed and stamped copy of the Grower’s

Management Agreement;

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“Repurchase Form” means the form prescribed by the Management Company from time to time for the purpose of making a request to repurchase a Grower Plot;

“Repurchase Price”, in relation to a Grower Plot, means an amount equal to the Grower’s Fee for that Grower Plot; and “Year” means: (1) the 12 month period commencing on the first day of the Second

Phase; and (2) each subsequent 12 month period commencing from each

anniversary of the first day of the Second Phase.

(ii) A Grower may at any time during the Second Phase request the Management Company to repurchase one or more of his Grower Plots by submitting a Repurchase Form in accordance with the procedures set out in the Grower’s Management Agreement and the Rules and paying to the Management Company such processing fee, if any, as the Management Company may prescribe from time to time.

(iii) The Management Company shall within 14 days after receipt of the

Repurchase Form notify the Grower whether:

(1) the repurchase request has been approved or rejected;

(2) payment of the Repurchase Price is deferred in accordance with paragraph 2.9(b)(viii); or

(3) the Management Company has exercised its option to convene a

meeting of Growers for the purpose of putting forward a proposal to close the Scheme under paragraph 2.9(b)(xii).

(iv) The Management Company may reject a repurchase request if:

(1) the Repurchase Form is not duly completed and signed; (2) the repurchase request is not in accordance with the procedures set

out in the Grower’s Management Agreement or the Rules;

(3) there are any amounts outstanding from the Grower under the Grower’s Management Agreement or the Rules; or

(4) the Grower has not complied with any of the terms and conditions of

the Grower’s Management Agreement or the Rules. (v) Except as provided under paragraph 2.9(b)(iv), the Management Company

is obliged to approve a repurchase request.

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(vi) If the Management Company approves the repurchase request, the Grower shall deliver to the Management Company the Repurchase Documents within 14 days of the date of approval failing which:

(1) the approval of the repurchase request lapses;

(2) the Repurchase Form is deemed to have been cancelled; and

(3) the Management Company shall forfeit the processing fee, if any,

paid or payable with respect to the repurchase request.

(vii) Subject to the following provisions of this paragraph 2.9(b), the Management Company shall pay to the Grower the Repurchase Price within 30 days of receipt of the Repurchase Documents under paragraph 2.9(b)(vi).

(viii) If repurchase requests in any Year exceed the Annual Repurchase Limit, the

Management Company may defer payment of the Repurchase Price with respect to the excess:

(1) to the next Year if the Annual Repurchase Limit for the next Year has

not been exceeded; and (2) if the Annual Repurchase Limit for the next Year has been exceeded,

to the first Year after that in which the Annual Repurchase Limit has not been exceeded,

so that the total number of Grower Plots repurchased in any Year does not exceed the Annual Repurchase Limit. For illustration purposes, the table at the end of this paragraph sets out sample calculations of the Annual Repurchase Limit and the application of this paragraph 2.9(b)(viii).

(ix) For the purposes of determining whether the Annual Repurchase Limit has

been exceeded, repurchase requests shall be paid on a ‘first come first served’ basis.

(x) If payment of the Repurchase Price is deferred under paragraph

2.9(b)(viii), the Management Company shall, at least 30 days before the expected payment date, request the Grower to deliver to the Management Company the Repurchase Documents within 14 days of the date of the request failing which:

(1) the approval of the repurchase request lapses; (2) the Repurchase Form is deemed to have been cancelled; and (3) the Management Company shall forfeit the processing fee, if any,

paid or payable with respect to the repurchase request.

(xi) Subject to paragraph 2.9(b)(xii), if payment has been deferred under paragraph 2.9(b)(viii), the Management Company shall pay to the Grower

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the Repurchase Price within 30 days of the commencement of the Year to which payment has been deferred.

(xii) The Management Company may convene a meeting of Growers for the

purpose of putting forward a proposal to close the Scheme before the Maturity Date for the consideration of the Growers if:

(1) there are insufficient funds to meet repurchase requests or the

Management Company is of the view that there will be insufficient funds to meet anticipated repurchase requests; or

(2) the Management Company is of the view that the volume or timing

of repurchase requests is such that the Scheme is no longer viable or it would be unfair to Growers in general to meet such requests.

(xiii) If the proposal to close the scheme is passed by a majority in number

representing 3/4 in value of the Growers present and voting either in person or by proxy at the meeting, the Management Company will:

(1) agree with the Trustee the timing and procedure for selling its

interest in that part of the Plantation Concession relating to the Plantation and paragraphs 2.11(b) and 2.11(c) shall apply with any necessary changes;

(2) refund to the Grower an amount calculated in accordance with paragraph 2.12 within 30 days of the date of receipt of the net proceeds of sale of that part of the Plantation Concession relating to the Plantation; and

(3) enter into a deed of termination with the Trustee to terminate the

Scheme.

If the proposal to close the scheme is rejected by the Growers, the Management Company may recommend to the Trustee to wind up the Scheme.

(xiv) All Grower Plots repurchased belong to the Management Company and may

be resold at such price as may be determined by the Management Company from time to time.



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Table of Sample Calculations of Annual Repurchase Limit and the Application of Paragraph 2.9(b)(viii)

Year within Second Phase Year 7 Year 8 Year 9 Year 10 Year 11 Year 12

TRR

(Total repurchase request in the previous Year)

n/a 0% 21% 3% 13% 20%

Annual Repurchase Limit (%)

Note:

If TRR ≤ 10%, Annual Repurchase Limit shall be RP = 20% -TRR %.

If TRR > 10%, the Annual Repurchase Limit shall be 10%.

10% (1) 20% (2) 10% (3) 17 % (4) 10% (5) 10% (6)

Total repurchase requests in the Year (%) 0% 21% 3% 13% 20% 3%

Payment of Repurchase Price No payment will be made since no repurchase requests are made in Year 7.

Management Company to pay the first 20% of the repurchase requests in Year 8 and defer the next 1% to Year 9.

Management Company to pay 4% repurchase requests (1% deferred from Year 8 and 3% from Year 9).

Management Company to pay all 13% repurchase requests in Year 10.

Management Company to pay the first 10% of repurchase requests in Year 11 & defer the next 10% to Year 12.

Management Company to pay 10% repurchase request deferred from Year 11. The payment of 3% repurchase requests in Year 12 will be deferred to Year 13.

Note:

(1) (2) (3)

Annual Repurchase Limit for Year 7 shall be 10% (see paragraph 2.9(b)(i)(1)) For Year 8, TRR ≤ 10%, as such:

Annual Repurchase Limit (%) = RP = 20% - TRR% = 20% - 0% = 20%

(see paragraph 2.9(b)(i)(2)(A)) For Year 9, TRR > 10%, as such Annual Repurchase Limit shall be 10% (see paragraph 2.9(b)(i)(2)(B))

(4)

(5)

(6)

For Year 10, TRR ≤ 10%, as such: Annual Repurchase Limit (%) = RP

= 20% - TRR% = 20% - 3% = 17%

(see paragraph 2.9(b)(i)(2)(A)) For Year 11, TRR > 10%, as such Annual Repurchase Limit shall be 10% (see paragraph 2.9(b)(i)(2)(B)) For Year 12, TRR > 10%, as such Annual Repurchase Limit shall be 10% (see paragraph 2.9(b)(i)(2)(B))

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2.10 Termination of Scheme

(a) Termination event

The Scheme will terminate on the earliest to occur of the following:

(i) the date on which the Management Company closes the Scheme under paragraph 2.9(b)(xii);

(ii) the date on which the Scheme is voluntarily closed under paragraph 2.10(b); (iii) the date on which the Scheme is wound up under paragraph 2.10(c); or (iv) the Maturity Date.

(b) Voluntary closure

The Scheme may be voluntarily closed if the holders of at least 1/10 in value of Grower Plots request the Management Company to convene a meeting of Growers to consider a resolution to close the Scheme before the Maturity Date and at such meeting the resolution is passed by a majority in number representing 3/4 in value of the Growers present and voting either in person or by proxy at the meeting. If such resolution is passed, the Management Company shall:

(i) agree with the Trustee the timing and procedure for the sale of its interest

in that part of the Plantation Concession relating to the Plantation and paragraphs 2.11(b) and 2.11(c) shall apply with any necessary changes;

(ii) refund to the Grower an amount calculated in accordance with paragraph

2.12 within 30 days from the date of receipt of the net proceeds of sale of that part of the Plantation Concession relating to the Plantation; and

(iii) enter into a deed of termination with the Trustee to terminate the Scheme.

(c) Winding up on liquidation etc

The Scheme may be wound up if the Management Company is in liquidation or where the Trustee is of the opinion that the Management Company has ceased to carry on business or has, to the prejudice of the Growers, failed to comply with the Trust Deed and a resolution for such winding up is passed by a majority in number representing 3/4 in value of the Growers present and voting in a meeting of Grower’s held in accordance with and in the manner provided under section 95 of the Companies Act.

(d) Continuation of the Scheme

The Management Company shall, at any time between the 18th and 19th anniversary of the Launch Date, submit a proposal to the Trustee with respect to the replanting of the Plantation. The proposal shall contain information about the following:

(i) a replanting program for the Plantation;

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(ii) the cost of the replanting program and how it is to be funded including funding the replanting program through deductions from future yield payments;

(iii) the effects of the replanting program on Growers including whether the

Scheme will continue beyond the Maturity Date; and (iv) such other information that the Management Company deems appropriate.

If the Trustee is of the view that the proposal is in the interests of Growers, the Trustee shall convene a meeting of Growers for the purpose of considering the proposal and, if thought fit, approving the proposal.

2.11 Refund of Investment upon Expiry or Termination of Scheme

(a) At least 18 months before the Maturity Date, the Management Company shall agree with the Trustee the timing and procedure for the sale of its interest in that part of the Plantation Concession relating to the Plantation in accordance with the Trust Deed.

(b) The procedures for the sale shall include, but not be limited to, a procedure

requiring the appointment of an independent valuer to determine the fair market value of that part of the Plantation Concession relating to the Plantation.

(c) Notwithstanding paragraph 2.11(a), the Management Company may in its sole

and absolute discretion elect to acquire that part of the Plantation Concession relating to the Plantation based on a fair market value as determined by an independent valuer.

(d) The Management Company will refund to the Grower the amount calculated in

accordance with paragraph 2.12 within 30 days of the date of receipt of the net proceeds of sale of that part of the Plantation Concession relating to the Plantation.

2.12 Computation of Refund upon Expiry or Termination of Scheme Upon termination of the Scheme under paragraph 2.9(b)(xii), 2.10(b) or expiry of the Scheme under paragraph 2.11, the Management Company shall refund to a Grower for each Grower Plot an amount equal to the Net Sale Proceeds attributable to a quarter acre of the Plantation. For the purposes of calculating the amount to be refunded, “Net Sale Proceeds” means the proceeds of sale of that part of the Plantation Concession relating to the Plantation after deducting costs and expenses incurred in relation to the sale (including, but not limited to, valuation, legal and audit costs), taxes, duties, lawful set-offs, deductions, costs, expenses, charges and outgoings.

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3. DETAILS OF PLANTATION

3.1 Particulars of Land

The Land is located in Gua Musang, Kelantan and measures approximately 11,280 acres. The registered owner of the Land is PPLRNK, an agency of the Kelantan state government. PPLRNK has via the Plantation Land Development Agreement conferred on the Management Company full rights to develop, manage and maintain an oil palm plantation on the Land for 60 years commencing on 12 September 2007 with an option to renew for another 30 years. Given existing land laws in Kelantan, it is not uncommon for the State to deal with land of this nature by way of the grant of such concession rights. Concessions are common in Malaysia and generally, concessionaires are only granted a right to use the land for the purpose stated in the concession. The Kelantan state government has alienated the Land to PPLRNK and titles to the Land have been issued to PPLRNK.

Under the terms of the Plantation Land Development Agreement, the Management Company is prohibited from creating any charge or encumbrances over the Land. Such restriction provides protection for Growers as it ensures that the Management Company is unable to use the Plantation as security for any other purpose.


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3.2 Location Plan of the Plantation

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3.3 Site Plan of the Plantation

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3.4 Feasibility Study

In September 2008, the Management Company appointed an independent planting adviser to conduct a feasibility study on the suitability of the Land for development as an oil palm plantation. The planting adviser confirmed that the development was feasible and, in particular, that: (a) the soil on the Land is fertile and suitable for oil palm cultivation; (b) there were plenty of natural resources like water (for consumption and future oil

mill), timber (for construction of buildings, bridges, etc) and stones (for roadwork); (c) there was generally high annual rainfall which was quite evenly distributed

throughout the year and hence very conducive to oil palm cultivation; and

(d) there was ready access to the Land and available local labour as there are existing orang asli settlements in the vicinity of the Plantation.

3.5 Status of Plantation Development

Since the date of the last prospectus, works on the plantation development have progressed further with additional planting out of oil palms as well as land clearing and terracing works. As at 31 December 2013, 3,076 hectares (7,601 acres) was under development. Of this area, 2,480 hectares (6,128 acres) have been planted out with oil palms. In addition, 349 hectares (862 acres) have been developed and is ready for immediate planting. Further, 150 hectares (371 acres) are in the course of development at various stages (clearing and terracing for eventual planting). With the recent planting activities, the stock of seedlings as at 31 December 2013 currently stands at 183,455 seedlings at various stages of growth. This is sufficient to plant out approximately 1,100 hectares (2,718 acres) after selection.

Staff quarters for the growing workforce have been built and additional quarters will be put up as the development progresses. The Plantation has its own complement of vehicles and agricultural machinery and equipment. These include a pick up, tipper lorry, backhoe, bulldozers, excavator, tractors, water pumps and generator sets. The Plantation development has been approved by the Department of Environment Negeri Kelantan under the Environmental Quality Act 1974, subject to, amongst others, continued compliance by the Management Company of the conditions imposed under the approval.

A detailed description of the status of the Plantation development is set out in the Independent Consultant’s Report. Please refer to paragraph 5 for the report.

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3.6 Insurance Coverage In accordance with industry practice, the Management Company has taken out the following insurances for the Plantation: (a) fire and allied perils; (b) equipment all risks (off road vehicles); and (c) all risks (other site equipment). In addition, the Management Company has taken out crop insurance.

3.7 Independent Consultant

The Independent Consultant will conduct semi-annual reviews of the operations of the Plantation. This will include a review of the progress of development of the Plantation and quality of work carried out at the Plantation. A copy of the Independent Consultant’s report will be provided to the Trustee and the Registrar of Companies.


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4. ACCOUNTANTS’ REPORT (prepared for inclusion in this Prospectus)

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31

32

33

34

35

36

37

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41

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43

44

45

46

47

48

49

50

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55

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5. INDEPENDENT CONSULTANT’S REPORT (prepared for inclusion in this Prospectus)

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6. CORPORATE STRUCTURE AND RELATIONSHIP

The structure and relationship between the Management Company, the owner of the Land, the Marketing Company, the Trustee and the Growers is summarised as follows:

The ultimate holding company of the Management Company is Sterling Plantations Limited, a company listed on the Australian Stock Exchange.

Trustee

AmTrustee Berhad

Land Owner

PPLRNK

Investment Holding Company

Sterling Plantations Sdn Bhd

Management Company

Golden Palm Growers Berhad

Marketing Company

Golden Palm Marketing Sdn Bhd

Growers

Land concession

100%

99.66%

Ultimate Holding Company

Sterling Plantations Limited

(Listed on Australian Stock Exchange)

100%

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7. THE MANAGEMENT COMPANY

7.1 Background Information

The Management Company was incorporated in Malaysia under the Companies Act on 8 February 2007 as a private limited company under the name UTE Power Sdn Bhd. The Management Company changed its name to SPC Sawit Sdn Bhd on 10 October 2007 and subsequently on 27 April 2010 the Management Company was converted into a public company and renamed Golden Palm Growers Berhad. The Management Company is principally engaged in plantation development and cultivation of fresh fruit bunches and will operate and manage the Scheme.

The Management Company is a 99.66% subsidiary of Sterling Plantations Sdn Bhd which, in turn, is ultimately wholly owned by Sterling Plantations Limited. Sterling Plantations is listed on the Australian Stock Exchange.

7.2 Corporate Information

(a) Share capital

The present authorised share capital of the Management Company is RM5,000,000 comprising 5,000,000 ordinary shares of RM1.00 each of which RM5,000,000 is currently issued and paid-up.

(b) Registered office

Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur, Wilayah Persekutuan.

(c) Business office

Unit A-25-12, Level 25, Menara UOA Bangsar, 5 Jalan Bangsar Utama 1, 59000, Kuala Lumpur.

(d) Secretary

Name Residential address Designation

Chua Siew Chuan

(MAICSA 0777689)

No. 6 Jalan SS 14/8E

Subang Jaya

47500 Petaling Jaya

Selangor

Company Secretary

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Mak Chooi Peng

(MAICSA 7017931)

No.49, Jalan USJ 17/3B,

47630 UEP Subang Jaya,

Selangor Darul Ehsan

Company Secretary

(e) Directors


Phang Tuck Keong

No. 6 Jalan 5/58C

Gasing Indah

46000 Petaling Jaya

Selangor

Executive Chairman

Rajan V. Thurairatnam

No. 139 Jalan Teratai

Taman Uda Jaya

68000 Ampang

Selangor

Chief Executive Officer

Leong Wei Choo

No 4 BU 11/5

Bandar Utama

Damansara

47800 Petaling Jaya

Selangor

Director

Ezani Bin Abu Bakar

6 Jalan Mesra

55000 Kuala Lumpur

Independent Director

Rosli Bin Abd Shukor

9 Jalan 4/F

Ampang Jaya

68000 Ampang

Selangor


Zaliha Binti Che Muda

7B Jalan 6/71B

Pinggir Taman Tun Dr Ismail

60000 Kuala Lumpur


(f) Chief Executive Officer

Name Business Address Designation


Unit A-25-12, Level 25,

Menara UOA Bangsar,


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5 Jalan Bangsar Utama 1,

59000, Kuala Lumpur.

Tel: +603 2283 6886

Fax:+603 2287 8886

(g) Senior management



No. 139 Jalan Teratai

Taman Uda Jaya

68000 Ampang

Selangor


T. Rajendran MDLD 6530

Taman Lily

91100 Lahad Datu

Sabah

General Manager - Plantation

Imran Bin Abdul Hamid

22 Jalan SS 3/80

Kelana Jaya

47300 Petaling Jaya

Selangor

Marketing Head

Dhanesh Gunaratnam

280, Lorong Kurau 5/2

Taman Permai

Jalan Sungai Ujong

70200 Seremban

Negeri Sembilan

Head. Finance

Chai Foong Chu 6, Elitis Pinggiran Ancala

Valencia

47000 Sungai Buloh

Selangor

Finance Manager

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(h) Shareholders

Name No of shares Percentage shareholding

Sterling Plantations Sdn Bhd 4,985,000(1) 99.70

Saham Bangga Sdn Bhd 15,000 0.30

Notes:

(1) Saham Bangga Sdn Bhd has been granted by Sterling Plantations Sdn Bhd an option to purchase 735,000 shares.

(i) Trustee

AmTrustee Berhad Level 15, Menara AmFirst, No. 1, Jalan 19/3, 46300 Petaling Jaya, Selangor Malaysia Tel: +603 7954 6862 Fax: +603 7954 3712

(j) Marketing Company

Golden Palm Marketing Sdn Bhd Unit A-25-12, Level 25, Menara UOA Bangsar, 5 Jalan Bangsar Utama 1, 59000 Kuala Lumpur, Malaysia Tel: +603 2283 6886 Fax:+603 2287 8886

(k) Auditors

BDO 12th Floor, Menara Uni.Asia, 1008, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Tel: +603 2616 2888 Fax: +603 2616 3190 /3191

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(l) Solicitors

Zul Rafique & Partners D3-3-8 Solaris Dutamas, No.1 Jalan Dutamas 1, 50480 Kuala Lumpur, Malaysia Tel: +603 6209 8228 Fax: +603 6209 8221

(m) Independent Consultant

Chik Lwi Siang Semai Bukit Maju, Ladang Bukit Beruntung, KB216, 48000 Rawang, Selangor, Malaysia

7.3 Profile of Key Management Team

(a) Directors

Phang Tuck Keong Mr Phang is the Executive Chairman of the Management Company. Previously a partner of a major Malaysian law firm, Mr Phang subsequently joined an investment bank in Kuala Lumpur before serving as a member of the senior management team of Danaharta, the national non-performing loans resolution agency. He has also served in a non-executive capacity on the board of AKPK, the national credit counseling and debt management agency. Rajan V. Thurairatnam Mr Rajan holds a BBA from Singapore University and an MBA from MIM-University of Bath. He worked with the Sime Darby Group for 34 years in various positions rising from management trainee to Managing Director of motor operations in Malaysia. His breadth of experience ranges from advertising and promotions, sales and marketing, through to product introduction and brand development. Mr Rajan retired from the Sime Darby Group as Senior Vice President/Managing Director.

Leong Wei Choo Ms Leong is an accountant by training and obtained audit experience with a leading international accounting firm before continuing her career in corporate finance and investment banking in Arab-Malaysian Merchant Bank (now AmInvestment Bank) and Public Investment Bank. She has extensive experience in advising corporate transactions such as IPOs, capital raising in debt and equity markets and mergers and acquisitions. She currently handles corporate finance related matters for the Management Company.

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Ezani Bin Abu Bakar En Ezani is a retired banker and has had substantial entrepreneurial experience spanning the financial services and information technology sectors in Malaysia and overseas. He was Deputy Manager of Bank Bumiputra Malaysia Berhad’s London branch from 1978 to 1984 before being appointed Financial Controller of MMC Services Ltd London, a wholly-owned subsidiary of Malaysia Mining Corporation Berhad. En Ezani has held senior positions in a number of IT focused organisations including Cadcentre Sdn Bhd, one of the world’s leading suppliers of engineering IT solutions, and CSA Malaysia Berhad, a company listed on Bursa Malaysia Berhad (formerly Kuala Lumpur Stock Exchange). He currently runs his own consulting business.

Rosli Bin Abd Shukor En Rosli is a retired senior civil servant having served government for 32 years. An economics graduate of the University of Malaya, En Rosli joined the Malaysia Administrative and Diplomatic Service in August 1974. He began his career with the Ministry of International Trade and Industry (MITI) and held various posts including Assistant Trade Commissioner in Lebanon, Trade Commissioner in Denmark, Trade Commissioner in Japan, Director of the Malaysian Export Promotion Centre, Director of the Bilateral Trade Division and Director of the Trade Support Division. En Rosli subsequently served as Undersecretary for Finance and then Undersecretary for Procurement in the Ministry of Defence before retiring as Deputy Secretary General of the Ministry of Energy, Water and Communications in May 2007.

Zaliha Binti Che Muda

Pn Zaliha holds a BEc (Hons) from University Malaya. She worked with Malayan Banking Group for 33 years. Throughout her career as a banker with Maybank, Pn Zaliha held a number of senior management positions including branch manager of one of the largest branches within the Maybank group, head of human capital for retail financial services, and head of various strategic projects. Pn Zaliha retired from Maybank as Vice President.

(b) Management team

Rajan V. Thurairatnam – Chief Executive Officer As above

T. Rajendran – General Manager – Plantation Mr T. Rajendran has a Bachelor of Chemical Engineering from the University of Mysore, India. He has had thirty-five years of experience in management for leading plantation companies. Mr T. Rajendran has a wide range of experience including the management of oil palm plantation, the construction, commissioning and management of palm oil mills, a refinery, kernal crushing plant, biomass power plant and edible oil packaging plant amongst others.

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Imran Bin Abdul Hamid – Marketing Head

En. Imran has a Diploma in Marketing and has had close to 30 years of experience in the plantation industry. He has worked with Sime Darby for close to 20 years, focusing primarily in the trading and marketing of the Sime Darby Group’s oil palm products (from marketing of fresh fruit bunches to implementing marketing strategies for oil palm mills as well as trading of CPO in the international markets). Prior to joining the Management Company, En. Imran held the position of Senior Marketing Manager at Sime Darby Plantations. En. Imran is tasked with developing the marketing strategies for the Management Company especially with regards to the production and marketing of the Management’s Company’s FFB produce. Dhanesh Gunaratnam – Head, Finance

Mr. Dhanesh is an accountant by training and is a fellow member from Association of Chartered Certified Accountant ("ACCA"). He obtained audit experience with a few leading international accounting firms before continuing his career in accounting and finance positions in a shipping company and subsequently in IJM Corporation Berhad. He previously held the position of Accounts and Finance Manager in IJM Corporation Berhad. He currently handles the accounting and finance related matters for the Management Company.

Chai Foong Chu – Finance Manager

Ms. Chai holds Diplomas from Association of Business Executives (“ABE”) from UK as well as London Chamber of Commerce and Industry (“LCCI”). She has close to 20 years of finance and administrative experience. Ms Chai was previously attached to an exhibition company as well as a large foreign shipping company and in her role of Administration and Accounts Manager, she was in charge of the accounting and finance functions of those companies.

7.4 Duties and Responsibilities of Management Company

The Management Company shall be subject to the provisions of the Trust Deed in carrying out all activities as it may deem necessary for the operation and management of the Scheme. Under the Trust Deed, the general duties and responsibilities of the Management Company include, among others, the following:

(a) use its best endeavours to carry on and conduct its business in a proper and efficient

manner and ensure that the Scheme is carried on and conducted in a proper and efficient manner in accordance with the provisions of the Trust Deed;

(b) maintain accurate and complete accounting and other financial records in respect of the Plantation in accordance with the requirements of all applicable laws and generally accepted accounting principles;

(c) make available to the Trustee or its Approved Company Auditor for inspection the

whole of the books of the Management Company whether kept at its registered

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office or elsewhere during the normal business hours of the Management Company;

(d) give to the Trustee or its Approved Company Auditor such oral or written

information as the Trustee or Approved Company Auditor requires with respect to all matters relating to the operation and management of the Scheme or any property forming part of the Scheme or otherwise relating to the affairs thereof;

(e) make available or ensure that there is made available to the Trustee such details

as the Trustee requires with respect to all matters relating to the Scheme;

(f) furnish to the Trustee copies of notices of all annual general meetings or extraordinary general meetings of the shareholders of the Management Company and in this respect, the Management Company shall invite the Trustee to attend such meetings provided always that the Trustee shall not be vested nor deemed to be vested with any right whatsoever to vote at such meetings;

(g) ensure that any advertisement and circular with respect to the Scheme does not

in any manner whatsoever contain any untrue or false statement, information or description with the intent to misrepresent to, or mislead, the public;

(h) obtain the approval of the Trustee in relation to, and lodge with the Registrar of

Companies (if required) a copy of, any advertisement and circular with respect to the Scheme prior to its publication of any such advertisement and circular;

(i) fulfil all promises or obligations which have been made to the Growers and which

are contained or published in any advertisement, circular or any other document offering for sale of Grower Plots;

(j) ensure that the Prospectus is renewed every 6 months and that each succeeding

Prospectus shall be registered with the Registrar of Companies not later than 6 months from the date of the preceding Prospectus unless otherwise approved by the Registrar of Companies or unless any extension of the validity period of such Prospectus has been approved by the Registrar of Companies;

(k) procure and maintain the relevant insurance policy(ies) relating to the Plantation

which a prudent oil palm plantation will normally acquire according to industry practice and to pay all premiums and other monies payable in respect of such insurance policy(ies) and on request by the Trustee produce for the inspection of the Trustee all insurance policies effected;

(l) pay to the Trustee within 30 days after the receipt by the Management Company,

any moneys that, under the Trust Deed, are payable by the Management Company to the Trustee;

(m) not sell the Grower Plots otherwise than at a price determined in accordance with

the Trust Deed; (n) not charge or encumber the Land or the Plantation to any party whatsoever in any

way except with the prior written consent of the Trustee;

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(o) maintain the Plantation in a condition conducive for oil palm growth;

(p) duly pay to PPLRNK the annual consideration and the management fee payable under the Plantation Land Development Agreement;

(q) comply with all relevant laws relating to environment as may be amended from time to

time; and (r) during the continuance of the Plantation Land Development Agreement, not to without

the prior written consent of PPLRNK:

(i) use the Land for any other purpose except for oil palm or rubber plantation only;

(ii) do or suffer anything to be done whereby the insurance policy(ies) relating to the Plantation may be or become void or voidable or the terms thereof may be breached; and

(iii) alter or vary it’s nature of business as an oil palm plantation developer and/or

operator.

In addition to the above, the duties and responsibilities of the Management Company are also set out in other paragraphs of this Prospectus.

7.5 Retirement, Removal or Replacement of Management Company The Management Company is not liable to be removed by the Trustee or the Growers.


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8. THE TRUSTEE

8.1 Appointment of Trustee

Pursuant to section 87 of the Companies Act, the establishment of the Scheme requires a trustee to be appointed to protect the interest and rights of the Growers under the Scheme. With the prior approval of the Minister, the Management Company has appointed AmTrustee Berhad as the trustee for the Scheme.


The Trustee was incorporated in Malaysia under the Companies Act on 28 July 1987. It is registered as a trust company under the Trust Companies Act, 1949. The principal activity of the Trustee is the provision of trust services. The Trustee has been in the trustee business since March 1992. As at December 2013, there are 18 unit trust funds under its trusteeship.


(a) Share capital

The present authorised share capital of the Trustee is RM1,000,000 comprising 100,000 ordinary shares of RM10.00 each of which RM500,000 is currently issued comprising 100,000 ordinary shares of RM10.00 each, paid up to RM5.00 in accordance with section 3(c) of the Trust Companies Act 1949.


22nd Floor, Bangunan AmBank Group, 55 Jalan Raja Chulan, 50200 Kuala Lumpur.

(c) Business office

Level 15, Menara AmFirst, No. 1, Jalan 19/3, 46300 Petaling Jaya, Selangor.

(d) Secretary

Name Designation

Ooi Choi Mei (MAICSA 7022997) Company Secretary

Ooi Lay Chin (MAICSA 7008555) Company Secretary

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(e) Board of Directors

Name Designation

Pushparani d/o A Moothathamby Chairman (Non-independent Director)

Shaharuddin bin Hassan Director (Non-independent Director)

Dato’ Ng Mann Cheong Independent Director

Datuk Hj Mohd Idris bin Hj Mohd Isa Independent Director

Wong Yew Sen Independent Director

(f) Senior management

Name Designation

Tan Kok Cheeng Chief Executive Officer

Nurizan Binti Jalil Head

Trustee Business

Sharon Khaw Cheng Sim Senior Manager

Sales & Marketing

Anderson Ng Tia Ching Senior Manager

Client Services & Operations

Hafizul Hassan Manager

Legal Administration

8.4 Functions, Duties and Responsibilities of Trustee

The Trustee’s functions, duties and responsibilities are set out in the Trust Deed. The general function, duties and obligations of the Trustee include the following:

(a) Trust accounts (i) Opening of Trust Account

The Trustee shall open the following trust accounts for the Management Company with a licensed financial institution in Malaysia approved by the Management Company:

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(1) an interest earning deposit account (“Grower’s Fee Trust Account”) for the purpose of depositing the Grower’s Fees received; and

(2) an interest earning deposit account (“Reserve Fund Trust Account”) for the purpose of depositing the Reserve Fund described in paragraph 8.4(a)(iii).

The Grower’s Fee Trust Account and the Reserve Fund Trust Account shall be held on trust by the Trustee and utilised in the manner as set out below.

(ii) Grower’s Fee Trust Account

All Grower’s Fees received by the Management Company will be remitted by the Management Company to the Trustee within 30 days from the date of receipt and the Trustee shall forthwith deposit such Grower’s Fees into the Grower’s Fee Trust Account. The Management Company may at any time instruct the Trustee to deal with the relevant Grower’s Fee in accordance with paragraphs 8.4(a)(iii) and 8.4(a)(iv).

(iii) Reserve Fund Trust Account

Within 3 days from the receipt of such instruction by the Trustee under paragraph 8.4(a)(ii), the Trustee shall transfer the following amounts (“Reserve Fund”) from the Grower’s Fee Trust Account into the Reserve Fund Trust Account:

(1) an amount equal to 10% of the Grower’s Fee to be used for the

following purposes: First Phase

to pay for unbudgeted development expenditure and cost overruns, if any; and

Second Phase

to satisfy requests to repurchase Grower Plots.

(2) an amount equal to:

at any time before the 1st anniversary of the Launch Date – 36% of the Grower’s Fee; or

at any time on or after the 1st anniversary of the Launch Date

– 6% of the Grower’s Fee for each year or part thereof remaining in the First Phase,

to be released to the Management Company at the following times and manner:

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Date of release % to be released 1st anniversary of the Launch Date 6% 2nd anniversary of the Launch Date 6% 3rd anniversary of the Launch Date 6% 4th anniversary of the Launch Date 6% 5th anniversary of the Launch Date 6% 6th anniversary of the Launch Date 6%

The Reserve Fund may be invested by the Trustee in suitably liquid and secure investments or in any other investments authorised by law and approved by the Management Company provided that no Reserve Fund shall be invested in or lent to the Management Company, or to the Trustee, or to any company (other than a prescribed corporation within the meaning of section 38(6) of the Companies Act) which by virtue of section 6 of the Companies Act is deemed to be related to the Management Company or the Trustee, unless exempted by the Minister.

(iv) Utilisation of balance of Grower’s Fee

The Trustee will pay the balance of the Grower’s Fees (after deducting the Reserve Fund transferred to the Reserve Fund Trust Account in accordance with paragraph 8.4(a)(iii)) to the Management Company within 3 days after the receipt of an instruction under paragraph 8.4(a)(ii).

(b) Trustee’s Covenants

The Trustee hereby covenants that during the term of its appointment under the Trust Deed it shall:

(i) exercise all due diligence and vigilance in carrying out its functions and duties

stipulated in the Trust Deed and ensure that the rights and interest of the Growers are upheld and safeguarded;

(ii) deal with the funds in the Grower’s Fee Trust Account and the Reserve Fund

Trust Account in the manner stipulated in the Trust Deed; (iii) keep or cause to be kept proper books or accounts in relation to the funds in

the Grower’s Fee Trust Account and the Reserve Fund Trust Account and of all disbursements thereof;

(iv) cause the Grower’s Fee Trust Account and the Reserve Fund Trust Account

to be audited at the end of each financial year by an Approved Company Auditor;

(v) send or cause to be sent by post a statement of the accounts with the report

of the Approved Company Auditor within 2 months of the end of the financial year to each Grower;

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(vi) ensure that the Register of Growers is properly maintained by the

Management Company; (vii) ensure that the insurance policy(ies) in respect of the Plantation is obtained

by the Management Company; (viii) hold meetings with the Independent Consultant to obtain the necessary

feedback on the operations of the Plantation; (ix) procure and obtain reports from the Independent Consultant to ensure that

the development of the Plantation is fulfilled; (x) make visits to the Plantation to inspect the condition of the Plantation and

seek remedial action if matter is unsatisfactory; (xi) act continuously as trustee until the Scheme is terminated or until it is

replaced or removed from the Scheme in the manner provided in the Trust Deed;

(xii) investigate any reasonable complaints made by any Grower to the Trustee in

relation to the Scheme; and (xiii) immediately report to the Registrar of Companies of any irregularity, any non-

compliance of the term and conditions of the Trust Deed and/or such guidelines and requirements of the relevant authorities by the Management Company or any other matter properly regarded by the Trustee as not being in the interest of the Growers.

(c) Joint covenants with Management Company

The Management Company and the Trustee covenant with each other and the Growers that:

(i) as from a day to be fixed by the Minister by notice published in the Gazette that each shall not exercise the right to vote in respect of any shares relating to the interests to which the Trust Deed relates held by the Management Company or the Trustee, as the case may be, at any election for directors of a corporation whose shares are so held, without the consent of the majority of the Growers present in person and voting given at a meeting of Growers summoned in the manner stated in the Trust Deed for the purpose of authorising the exercise of the right at the next election;

(ii) each shall comply with all the guidelines and requirements of the relevant

authorities which may be imposed from time to time, unless variations are allowed or exemptions granted, and within the provisions of the Trust Deed; and

(iii) each shall fulfill its respective duties and responsibilities imposed by all

other provisions of the Trust Deed, the Grower’s Management Agreement

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and Rules and each of them declares that its duties and responsibilities imposed on it by the Trust Deed, the Grower’s Management Agreement and Rules are in addition to, and not in derogation from, the duties which are otherwise imposed on it by law.

8.5 Powers and Liabilities of Trustee

(a) Trustee’s discretion absolute

Except as otherwise expressly provided in the Trust Deed, the Trustee shall have an absolute and unfettered discretion in exercising all the powers, authorities and discretion conferred on the Trustee under the Trust Deed. In the absence of fraud or negligence, the Trustee shall not in any way be accountable for any loss, costs, damages or liabilities that may result from the exercise or non-exercise of the powers, authorities and discretion hereof.

(b) Trustee not responsible for the act of Management Company

The Trustee shall not be responsible for any loss incurred through any act, neglect, mistake or default of the Management Company or of its agent and shall not be under any liability on account of anything done or suffered by the Trustee in good faith in accordance with or pursuant to any request or advice of the Management Company. Whenever pursuant to any provision of the Trust Deed, any certificate, notice, instruction or other communication is to be given by the Management Company to the Trustee, the Trustee may accept as sufficient evidence thereof a document signed or purported to be signed on behalf of the Management Company by any person or persons whose signature(s) the Trustee is for the time being authorised by the Management Company to accept.

(c) Trustee not responsible for errors of judgment

The Trustee may act upon any advice of or information obtained from any attorneys, bankers, accountants, lawyers, agent or other persons appointed as agents or advisers of the Trustee. The Trustee shall not be liable for anything done, omitted or suffered in reliance upon such advice or information provided that the Trustee has acted in good faith and with due care in the appointment thereof. The Trustee shall not be responsible for any misconduct, mistake, oversight, error of judgment, or want of prudence, on the part of any such attorney, banker, lawyer, agent or other person provided that the Trustee has acted in good faith and with due care in the appointment thereof.

(d) Legal Proceedings

The Trustee shall not be under any obligation to institute, acknowledge service of, appear in, prosecute or defend any action, suit, proceeding or claim in respect of the provisions of the Trust Deed or any part thereof which in its opinion would or might

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involve it in expense or liability, unless the Management Company shall so request in writing, and shall so often as require by the Trustee furnish it with an indemnity satisfactory to it against any such expense or liability.

The Trustee may, in relation to the enforcement of the provisions contained in the Trust Deed, act upon the opinion or advice of any lawyer or any information furnished in writing by any Grower. Any such advice, opinion or information may be sent by letter or facsimile transmission and the Trustee shall not be liable for acting on any advice, opinion or information purported to be conveyed by any such letter or facsimile transmission although the same may contain errors and/or is not authentic. The Trustee shall have full power to determine all questions and doubts relating to any of the provisions in the Trust Deed and every such determination whether made upon a question actually raised or implied in the acts or proceedings of the Trustee or the Management Company shall be conclusive and binding on the Management Company and Growers.

(e) Indemnity

(i) The Trustee shall have no duties or responsibilities other than those expressly set forth in the Trust Deed. The Trustee shall be under no liability to the Management Company and/or its agents and /or the Growers by reason of any failure on the part of the Management Company and/or its agents and/or the Growers to obligations under the Trust Deed or under any such other document.

(ii) The Trustee shall not be liable for any action taken or omitted by it based on any document presented by the Management Company and/or its agents and/or the Growers which is reasonably believed by the Trustee to be genuine or signed or presented by the Management Company and/or its agents and/or the Growers. Except as provided in paragraph 8.5(e)(iii), the Trustee shall not incur any liability for following the instructions contained in the Trust Deed or expressly provided for or written instructions given by the Management Company and/or its agents and/or the Growers hereto in accordance with the provisions the Trust Deed.

(iii) The Trustee shall be indemnified and held harmless jointly and severally by

the Management Company and/or its agents and/or the Growers and against any expenses, including reasonable counsel fees and disbursements, damages or losses suffered by the Trustee in connection with any claim or demand which in any way, directly or indirectly, arises out of or relates to the Trust Deed or the services of the Trustee hereunder on a full indemnity basis; except that if the Trustee is guilty of willful misconduct, fraud or gross negligence under the Trust Deed then the Trustee shall bear the losses, damages and expenses arising as a result of such wilful misconduct, fraud or gross negligence.

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(f) Breach of Trust

Nothing in this paragraph 8.5 shall be construed in any way so as to exempt the Trustee against liability for breach of trust arising out of the willful negligence, dishonesty or fraud of the Trustee.

8.6 Remuneration of Trustee

In consideration of the services rendered by the Trustee under the Trust Deed, the Management Company will pay the Trustee by way of remuneration such sum as shall be agreed upon between the Trustee and the Management Company commencing from the date of the Trust Deed and throughout the period the Trustee remains as a trustee of the Trust Deed. All remuneration and out of pocket expenses to be incurred by the Trustee for the performance of its duties and obligations under the Trust Deed shall be reimbursed out of the Scheme’s funds as and when the same is incurred.

8.7 Retirement, Removal and Replacement of Trustee

(a) Retirement

The Trustee may retire upon giving 3 months’ notice to the Management Company or such shorter period as the Management Company and the Trustee may agree. The Management Company will within 3 months after becoming aware of the intention of the Trustee to retire, appoint by way of deed, a replacement trustee who is eligible to be appointed to act as trustee under the Companies Act and duly approved by the relevant authorities.

(b) Removal by Management Company

If the Trustee:

(i) has ceased to exist; (ii) is not validly appointed; (iii) is not eligible to be appointed or to act as trustee pursuant to section 87 of

the Companies Act;

(iv) fails or refuses to act as trustee in accordance with the provisions of the Trust Deed or the Companies Act;

(v) has a receiver appointed over the whole or a substantial part of its assets or

undertaking, or a petition is presented for the winding up of the Trustee; or

(vi) is under investigation for conduct that contravenes the Trust Companies Act 1949, the Trustee Act 1949, or the Companies Act,

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the Management Company shall as soon as practicable after becoming aware of any of the above events take all reasonable steps to remove the Trustee from its appointment under the Trust Deed and appoint by way of deed a replacement trustee who is eligible to be appointed to act as trustee under the Companies Act and duly approved by the relevant authorities.

(c) Removal by Growers

The Trustee may be removed on grounds that the Trustee is in breach of its obligations under the Trust Deed and the Trustee has failed to remedy the breach despite the request from the Management Company to remedy the breach and another trustee (who is eligible to be appointed to act as trustee under the Companies Act and duly approved by the relevant authorities) is appointed if the Growers decide on such removal and replacement by a resolution passed by a majority in number representing 3/4 in value of the Growers present and voting at a duly convened meeting summoned by the Management Company upon the request by the Growers holding not less than 1/10 in value of Grower Plots.


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9. THE MARKETING COMPANY 9.1 Appointment of Marketing Company

The Management Company has appointed Golden Palm Marketing Sdn Bhd as the Marketing Company for the Scheme to promote and offer/sell Grower Plots to the public.


The Marketing Company was incorporated in Malaysia under the Companies Act on 5 October 2009. The principal activity of the Marketing Company is the marketing and sales of Grower Plots. The Marketing Company is a wholly owned subsidiary of Sterling Plantations Sdn Bhd, the holding company of the Management Company.


(a) Share Capital

The present authorised share capital of the Marketing Company is RM500,000 comprising 500,000 ordinary shares of RM1.00 each of which RM200,000 is currently issued and paid-up.


Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur

(c) Business office

Unit A-25-12, Level 25, Menara UOA Bangsar, 5 Jalan Bangsar Utama 1, 59000 Kuala Lumpur, Malaysia

(d) Secretary


Chua Siew Chuan (MAICSA 0777689)

No. 6 Jalan SS14/8E

Subang Jaya

47500 Petaling Jaya

Selangor

Company Secretary

Mak Chooi Peng

(MAICSA 7017931)

No.49, Jalan USJ 17/3B,

47630 UEP Subang Jaya,

Selangor Darul Ehsan

Company Secretary

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(e) Directors


Phang Tuck Keong

No. 6 Jalan 5/58C

Gasing Indah

46000 Petaling Jaya

Selangor

Chairman

Leong Wei Choo No 4 BU 11/5

Bandar Utama

Damansara

47800 Petaling Jaya

Selangor

Director

(f) Chief Executive Officer

Name Business Address Designation


Unit A-25-12, Level 25,

Menara UOA Bangsar,

5 Jalan Bangsar Utama 1,

59000, Kuala Lumpur.

Tel: +603 2283 6886

Fax:+603 2287 8886


(g) Senior management


Chai Foong Chu

6, Elitis Pinggiran Ancala

Valencia

47000 Sungai Buloh

Selangor

Finance Manager

(h) Shareholders

Name Percentage shareholding (%)

Sterling Plantations Sdn Bhd 100

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9.4 Profile of Chief Executive Officer

Mr. Rajan holds a BBA from Singapore University and an MBA from MIM-University of Bath. Mr Rajan worked with the Sime Darby Group for 34 years in various positions rising from management trainee to Managing Director of motor operations in Malaysia. His breadth of experience ranges from advertising and promotions, sales and marketing, through to product introduction and brand development. Mr Rajan retired from the Sime Darby Group as Senior Vice President/Managing Director.

9.5 Profile of Senior Management

Chai Foong Chu – Finance Manager

Ms. Chai holds Diplomas from Association of Business Executives (“ABE”) from UK as well as London Chamber of Commerce and Industry (“LCCI”). She has close to 20 years of finance and administrative experience. Ms Chai was previously attached to an exhibition company as well as a large foreign shipping company and in her role of Administration and Accounts Manager, she was in charge of the accounting and finance functions of those companies.


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10. RISK FACTORS

In making a decision on whether to invest in the Scheme, it is important that an investor consider the various risk factors that may affect such an investment. Many of these factors are outside the control of the Management Company. The Scheme and its activities are subject to the regulatory, economic and business environment in Malaysia and globally. Before making a decision to invest in the Scheme, an investor should carefully consider the risk factors set out below in addition to the other matters set out in this Prospectus. The risk factors set out below are not exhaustive. Other risks (whether current or in the future) may affect the Management Company, the Plantation or the Scheme.

10.1 General industry and business risks

As the Plantation involves the cultivation of oil palm and marketing of oil palm fresh fruit bunches (“FFB”), the Scheme is susceptible to certain business risks inherent in the oil palm industry as well as general business risks. Those risks include but are not limited to:

availability and rising costs of labour supply; availability and rising costs of raw materials; cyclical pattern of FFB production yields; adverse weather conditions; changes in world demand for edible oils and fats; commodity price and foreign currency fluctuations; threat of substitute products; climate change and sustainability issues; and changes in the regulatory, economic and business conditions.

While the Management Company may seek to mitigate the impact of those risks through various risk management practices, there is no assurance that such practices will successfully mitigate those risks and that those risks will not have an impact on the Scheme.

Operational risks

10.2 FFB yield an important factor in profitability

The FFB yield for oil palm plantations is generally dependent on a number of factors including the following: the quality of seedlings; the soil and terrain; weather conditions; seasonal variations; age of the palms; and the overall management of the plantation.

The Management Company aims to adopt best agricultural practices wherever possible in order to obtain optimum yields from the Plantation. However, consistent production of high yields in relation to the industry average cannot be guaranteed.

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10.3 Quality of seedlings

Poor quality seedlings affect the growth and survival rates, and sustainability, of the trees and importantly FFB yields. The selection of quality seedlings is, therefore, a key consideration during the planting phase. The Management Company sources quality seedlings from licensed oil palm nurseries which have procured Oil Palm Nursery Certificate of Competencies from the Malaysian Palm Oil Board. In addition, it procures seedlings from several different companies in order to avoid over reliance on one supplier and to ensure consistency and ready supplies of seedlings to meet the needs of the Plantation.

10.4 Weather conditions

Adverse weather conditions such as drought and floods have a detrimental effect on FFB production. Low crop production usually follows after 9 months of severe drought periods. Very wet weather also has an adverse effect on harvesting and evacuation of FFB. Over the last decade, the weather in Malaysia has been affected by open burning within and outside of the country, deforestation due to urban development and agricultural cultivation as well as weather phenomenon such as El Nino and La Nina. The Management Company periodically reviews and implements practices aimed at attaining a consistent and optimum FFB yield. However, there can be no guarantee that adverse weather patterns will not have an adverse impact on FFB yields.

10.5 Seasonal variations in FFB yield

Although oil palm trees produce fruit crop throughout the year, FFB yields may be affected by seasonal variations. Annual FFB yields typically experience a cyclical pattern with higher yields at intervals of 5 years. An exceptionally high yielding year will be followed by gradually low yielding years when the trees produce lower output as a result of biological reaction after a period of production stress.

10.6 Pests and diseases

Oil palm plantations are susceptible to pests and diseases. Outbreaks of leaf eating insects such as bagworms and nettle caterpillars are common. Pests such as rodents can cause damage to FFB. The outbreak of pests and diseases may result in the destruction of oil palm trees and a decrease in FFB production. The ultimate result is not only loss of crop and lower profitability but also higher expenditure incurred in order to control such outbreaks. As part of its estate management practices, the Management Company will implement appropriate measures to control the population of pests and reduce diseases. Such measures may include the planting of appropriate plants to attract predators of insect pests, use of baits and natural predators of rodents (such as owls), destroying potential breeding grounds of pests and frequent inspections to monitor and control the pest population. Despite these measures, no guarantee can be given that large scale attacks by pests and/or diseases will not occur and thus adversely affect FFB yields.

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10.7 Human resources

Availability of labour

The plantation industry is labour intensive. The mechanisation of certain plantation practices (such as in the application of fertiliser and FFB evacuation) to improve production efficiency may assist in reducing dependency on labour which may become increasingly scarce and costly. The Management Company also aims to provide competitive remuneration and benefits. As availability of local labour is often insufficient to meet the demands of the industry, oil palm plantations are often dependent on foreign workers. Changes in immigration and labour policies by the Malaysian government in respect of foreign workers may therefore have an adverse impact on the Management Company’s ability to attract and recruit workers. Any shortage of labour could materially and adversely affect the operations of the Plantation.

Key personnel

The success of the Management Company will depend on its ability to retain existing key personnel and experienced employees and recruit and integrate new key personnel and experienced employees. The loss of any key personnel could affect the Management Company’s ability to compete effectively in the oil palm industry. As part of the Management Company’s management succession planning, the Management Company will make efforts to train and groom younger employees to gradually take on more responsibility. In addition, the Management Company aims to provide a healthy working and living environment as a means of attracting and retaining employees. However, there can be no assurance that the Management Company will be successful in attracting new and/or retaining such personnel. Any failure to do so could materially and adversely affect the operations of the Plantation.

10.8 FBB processing during high crop season During times of high crop production, usually two cycles, palm oil mills can curtail the acceptance of FFB from the Plantation due to congestion at the palm oil mill. This may result in losses at the Plantation as crop will not be harvested. In order to mitigate such risk, the Management Company will be taking steps to build its own palm oil mill. This is subject to getting an operating licence from MPOB.

10.9 Significant interruptions to operations

A significant interruption to the Plantation’s operations, for example, as a result of a breakdown in machinery, union strikes or natural disasters (such as fires) could materially and adversely affect the profitability of the Plantation.

10.10 Insurance coverage

The Management Company has taken out takaful insurance to ensure that assets such as buildings and plant and machinery are adequately covered by insurance. In addition, although the industry practice is not to insure trees, the Management Company has taken out limited crop cover. There can of course be no assurance that any insurance coverage taken would be adequate for the replacement cost of such assets. A significant uninsured

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or underinsured claim would materially and adversely affect the profitability of the Plantation.

10.11 Increases in operating and other costs Increases in operating and other costs are likely to have an adverse effect on the profitability of the Plantation. Factors that could increase such costs include inflation, increases in payroll expenses, changes in regulations, government policies or industry practices that increase the cost of compliance, and increases in taxes and other statutory charges. Increases in fertiliser costs (which can amount to over one third of plantation expenditure) can also have an adverse impact on the profitability of the Plantation.

Market risks

10.12 Fluctuations in the demand and prices of edible oils and fats

Crude palm oil prices are affected by global edible oil prices such as soya bean, sunflower and rapeseed oils which are substitutes for palm oil. Crude palm oil prices tend to be cyclical and fluctuate in accordance with the global supply and demand of major oils and fats. Such fluctuation and adverse movements in the prices of crude palm oil and other palm oil products will accordingly affect the performance of the Plantation. The Malaysian Government is supportive of the palm oil industry and, in times of falling palm oil prices, has introduced initiatives such as replanting subsidies and increases in duty-free exports. Nevertheless, the prices of crude palm oil and refined palm oil products are fundamentally dependent on the demand and supply in the global oils and fats market. Accordingly, there can be no guarantee that adverse movements in the demand and supply and prices of crude palm oil and palm kernel will not have an adverse effect on the profitability of the Plantation.

10.13 Competition from substitute products and other competitors

As mentioned in paragraph 10.12 above, other edible oils (namely soya bean, rapeseed and sunflower oil) are direct substitutes for palm oil. Malaysia faces increasing competition from other palm oil producing countries namely, Indonesia, which enjoys a lower industry cost structure in terms of labour and raw materials. With the continued support from the Malaysian government (including extensive research, development, marketing and promotion undertaken by Government bodies as well as other incentives given to the industry), Malaysian palm oil producers have in the past maintained or grown their market share in the world vegetable oil market. However, there is no guarantee that this trend will continue in the future.

Legal risks

10.14 Regulatory

The palm oil industry in Malaysia is closely regulated. The main legislation governing the palm oil industry is the Malaysian Palm Oil Board (“MPOB”) Act pursuant to which MPOB was established to regulate the palm oil industry under the purview of the Ministry of Plantation Industries and Commodities. MPOB’s roles include the formulation of policies, administration and regulating the development of the industry. In addition, the Plantation

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operations are subject to licences, approvals and permits issued by other authorities under the Environmental Quality Act 1974, Factories and Machinery Act 1967 and Occupational Safety and Health Act 1994. These licences, approvals and permits are valid for a stipulated period of time and are renewable subject to compliance with the requirements and conditions imposed thereunder. The requirements and conditions in these licences, approvals and permits, and any policies and regulations issued by the relevant authorities, are subject to changes that could affect the operations of the Plantation. Failure of the Management Company to renew, maintain or obtain the required licences, approvals and permits could materially and adversely affect its business operations. In addition, the Management Company may also be affected by the introduction of new regulations that could materially and adversely affect the operations and profitability of the Plantation.

10.15 Environmental laws and risks

Environmental issues (including those relating to climate change and sustainability) are increasingly becoming more important in the oil palm plantation industry. Non-compliance with environmental laws or recommended practices may adversely affect the market for FFB produced from the Plantation. The Management Company monitors its environmental practices to ensure that it complies with the requirements of applicable laws. In addition, it recognises the need to conform to accepted industry practices and aims to meet industry best practices that are continually evolving to meet the growing challenges of climate change.

10.16 Management Company’s rights over the Land rest in contract only

As mentioned in paragraph 3.1, the Plantation forms an integrated part of the Land which is legally owned by PPLRNK, a state government agency incorporated by statute. The Management Company’s rights over the Land consists of a contractual right to develop, manage and maintain an oil palm plantation on the Land granted by PPLRNK under the Plantation Land Development Agreement for a period of 60 years with an option to renew for another 30 years. Titles to the Land have been issued and registered in the name of PPLRNK. If PPLRNK acts in a manner inconsistent with its legal obligations under the Plantation Land Development Agreement, the Scheme will be materially and adversely affected. In such circumstances, the Management Company’s recourse is to commence proceedings to claim for damages under contract law for any breach by PPLRNK which affects its rights and interests under the Plantation Land Development Agreement.

Other risk

10.17 Economic and political uncertainty

Political developments and uncertain economic conditions, if any, in Malaysia and other countries where palm oil products are currently exported could affect the profitability of the Plantation. Examples of such political and economic uncertainties include, but are not limited to, changes in labour laws and availability of foreign labour, interest rates, foreign exchange rates, methods of taxation, tariffs and duties. The occurrence of any unforeseen event such as the outbreak of war, disease and natural disasters may disrupt the demand and supply of FFB and crude palm oil thus affecting their prices.

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11. APPLICATION PROCEDURE FOR GROWERS

11.1 Application Procedure

(a) An Applicant may apply for Grower Plots by completing and executing an Application Form and the Grower’s Management Agreement and submitting the same to the Management Company with a sum equivalent to the Grower’s Fee to be paid together with the submission of the Application Form.

(b) An Applicant may by written notice to the Management Company withdraw his

application for Grower Plots or rescind his Grower’s Management Agreement at any time within the Cooling-Off Period without any deduction or penalty. The Management Company will refund the Grower’s Fee free of interest to the Applicant within 14 days of receipt of such notice.

(c) The Management Company reserves the right to reject an application without

assigning any reason for such refusal. In the event the Management Company rejects the application, the Management Company shall immediately notify the Applicant of such rejection and refund the Grower’s Fee free of interest to the Applicant within 14 days of the notice of rejection.

(d) The Management Company will, upon its acceptance of an Applicant’s application,

notify the Applicant of the success of his application and deliver to the Applicant a duly stamped and executed Grower’s Management Agreement for his retention.

(e) The Grower’s Management Agreement shall take effect on the date of the Application

Form (“Commencement Date”) subject to:

(i) the payment of the Grower’s Fee to the Management Company; (ii) the execution by the Applicant of the Grower’s Management Agreement; and

(iii) the approval by the Management Company for the Grower to acquire the

Grower Plot.

(f) Any refund of money pursuant to the above will be made by cheque in the name of the Applicant and sent by ordinary post to the address of the Applicant specified in the Application Form. No third party cheque will be made.

11.2 Grower’s Certificate and Register of Growers The Management Company will issue the Grower’s Certificate to the Grower and register the Grower in the Register of Growers in accordance with the provisions of the Trust Deed within 30 days of the last to occur of the following:

(a) the receipt of the Grower’s Fee from the Grower;

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(b) the receipt of the Grower’s Management Agreement duly executed by the Grower; and

(c) the approval by the Management Company for the Grower to acquire the Grower

Plot.

The Register of Growers will be updated from time to time and maintained by and kept under the control of the Management Company at the Business Office and the Trustee and any Grower shall be entitled to inspect the Register of Growers free of charge at the Business Office at any time during normal business hours.

The Register of Growers will be conclusive evidence that the Grower Plot described therein is

vested in the Grower for the time being named therein.


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12. ADDITIONAL INFORMATION 12.1 Appointment, Retirement and Replacement of Auditor

The provisions of the Trust Deed governing the appointment, retirement, removal and replacement of auditor are set out below:

(a) Appointment

The Trustee will appoint an Approved Company Auditor as the auditor in relation to the funds in the Grower’s Fee Trust Account and Reserve Fund Trust Account. The Approved Company Auditor appointed must be independent of the Management Company and the Trustee whereby such independence is to be determined by the relevant by-laws issued from time to time by the Malaysian Institute of Accountants.

(b) Retirement, Removal and Replacement by Trustee The Approved Company Auditor may voluntarily retire upon giving 3 months’ notice to the Trustee. Upon the retirement of the Approved Company Auditor, the Trustee shall, with the consent of the Management Company, appoint another Approved Company Auditor in its place. In addition, the Trustee, after consultation with the Management Company, may from time to time remove the Approved Company Auditor and appoint another Approved Company Auditor in its place.

Any costs and expenses incurred in connection with the removal or retirement of the Approved Company Auditor shall be paid out of the Scheme’s funds.

12.2 Trust Deed

Pursuant to section 91(1) of the Companies Act, the establishment of the Scheme and the offering of the Grower Plots requires a trust deed. The Trust Deed was executed on 26 July 2010 between the Management Company and AmTrustee Berhad as the trustee of the Scheme to act in their respective capacities. The Trust Deed was approved and registered with the Registrar of Companies on 23 July 2010 and 26 July 2010 respectively and came into effect on the date when it was registered with the Registrar of Companies. The main purpose of the Trust Deed is to set out the terms and conditions governing the Scheme in particular the duties and responsibilities of the Trustee and the Management Company with regards to the Scheme. Such terms and conditions of the Trust Deed are summarised in various paragraphs in this Prospectus. However, investors should refer to the Trust Deed itself to confirm specific information or for a more detailed understanding of the Scheme.

(a) Inspection of Trust Deed

Copies of the Trust Deed is available at all reasonable times for inspection by investors or any Grower at the Business Office during normal business hours and the Management Company will at the request of such investor or Grower and upon

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payment by him to the Management Company a fee to be determined by the Management Company but not exceeding RM50 supply such investor or Grower with a copy of the Trust Deed.

(b) Grower bound by Trust Deed

Each Grower and all persons claiming through him will be entitled to the benefit of, be bound by, and be deemed to have notice of the provisions of the Trust Deed as if he had been a party to the Trust Deed.

(c) Modification of Trust Deed

The Trust Deed may not be modified or amended without the sanction of a resolution passed by a majority in number representing 3/4 in value of the Growers present and voting at a meeting of Growers unless the Trustee certifies that the modification or amendment does not prejudice the interests of the Growers and does not operate to release the Trustee or Management Company from any responsibility to the Growers or unless the modification or amendment is one which the Trustee and Management Company consider appropriate to comply with the guidelines, written law or any direction of any relevant authority.

All proposals to modify, alter or add to this Deed must first be submitted to the Registrar of Companies for its approval unless the proposed modification, alteration, or addition is minor or immaterial. All modifications to the Trust Deed must be made through a deed supplementary to the Trust Deed and will take effect only upon registration of the supplementary deed with the Registrar of Companies.

(d) Governing Law The Trust Deed is governed by, and shall be construed in accordance with, the laws of Malaysia. The Trustee, the Management Company and the Growers are bound by the decision, ruling or order of the Malaysian courts with respect to any proceedings in Malaysia in connection with any matter or issue relating to the Trust Deed.

12.3 Meeting of Growers

A summary of the provisions of the Trust Deed relating to meeting of Growers are set out below:

(a) Convening of meetings A meeting of Growers may be called by the Trustee, Management Company or the Grower for any of the purposes set out in the Trust Deed. Any such meeting must be convened and conducted in accordance with the provisions of the Trust Deed and Companies Act.

At least 14 days' notice in writing shall be given by the Management Company or the Trustee (as the case may be) of any meeting of Growers and such notice shall

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specify the general nature of the business to be transacted and any further information as the Trustee or the Management Company may think fit.

(b) Chairman

A meeting of Growers shall be chaired by:

(i) such person as is appointed on that behalf by the Growers present at the meeting; or

(ii) where no such appointment is made, a nominee of the Trustee or representative approved by the Registrar of Companies

If the nominee of the Management Company or the Trustee is appointed as chairman by the Growers, then such chairman shall not have the right to a casting vote.

(c) Proxy and Quorum

Every Grower is entitled to attend and vote at any meeting of Growers or appoint another person as his proxy to attend and vote subject to provisions of the Trust Deed governing the appointment of proxy.

No business shall be transacted at any meeting unless a quorum is present at the commencement of business. The quorum necessary for a meeting shall be at least 50 Growers registered in the Register of Growers holding or representing by proxy at least 1/10 in value of the Grower Plots under the Scheme on the date of the meeting. The Management Company shall be entitled to be counted in the quorum at any meeting with regards to any Grower Plots held by the Management Company.

(d) Voting and Resolution

Every resolution and question raised at any meeting will be decided in the first instance by a show of hands unless a poll is demanded or if it is a question which under the Trust Deed requires a resolution to be passed by a majority in number representing 3/4 in value of the Growers present and voting at the meeting, in which case a poll shall be taken in accordance with the provisions of the Trust Deed.

On a show of hands, every Grower who is present in person or by proxy will have 1 vote. Upon a poll, every Grower present in person or by proxy shall have 1 vote for every Grower Plot held by him. In the case of an equality of votes, the chairman shall have a casting vote in addition to its votes (if any) as a Grower both on a show of hands and on a poll.

All and any resolution shall be passed by a simple majority of votes (unless otherwise specified in the Trust Deed) of the Growers present in person or by proxy at a meeting.

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(e) Attendance by the Management Company

The Management Company is entitled to receive notice of and to attend any meeting of the Growers. Any director, secretary, solicitors of the Management Company and any other person authorised in that behalf by the Management Company may also attend and speak at such meeting. All voting rights conferred on the Management Company by the Reserved Grower Plots shall be exercised in such manner as the Management Company may wish or may refrain at its own discretion and no parties shall have any right to interfere with the exercise of such rights by the Management Company.

12.4 Consents

The written consents of the solicitors, auditors, Independent Consultant, Marketing Company and Trustee to the inclusion in this Prospectus of their names in the manner and form in which such names appear have been given before the issue of this Prospectus and have not subsequently been withdrawn. The written consent of BDO to the inclusion in this Prospectus of the Accountants’ Report relating to the profit and loss accounts and balance sheets of the Management Company in the manner and form in which they are contained in this Prospectus has been given before the issue of this Prospectus and has not subsequently been withdrawn.

The written consent of the Independent Consultant to the inclusion in this Prospectus of the Independent Consultant’s Report in the manner and form and context in which they are contained in this Prospectus has been given before the issue of this Prospectus and has not subsequently been withdrawn.

12.5 Documents for Inspection

Copies of the following documents are available for inspection at the Business Office during normal business hours: (a) Memorandum and Articles of Association of the Management Company;

(b) Accountant’s Report dated 14 February 2014 prepared by BDO;

(c) Independent Consultant’s Report dated 10 February 2014 prepared by the

Independent Consultant; (d) Letter of consents as referred to in paragraph 12.4; and (e) the Trust Deed.

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12.6 No Grower Plots to be sold 6 months after the date of Prospectus

Unless otherwise approved by the Registrar of Companies from time to time, no Grower Plots will be sold to any person pursuant to this Prospectus later than 6 months after the date of this Prospectus.

12.7 Disclaimer Statements

No person is authorised to give any information or to make any representation not contained in this Prospectus in connection with the Scheme and, if given or made, such information or representation must not be relied upon as having been authorised by the Management Company. Neither the delivery of this Prospectus nor any sale made in connection with this Prospectus shall, in any circumstance and at any time, constitute a representation or create any implication that there has been no change in the Scheme’s affairs since the date hereof.


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