Hong Leong Finance : Letter to Shareholders dated 30 March 2022

HONG LEONG FINANCE LIMITED

(Incorporated in Singapore)

Company Registration No. 196100003D

LETTER TO SHAREHOLDERS

DATED 30 MARCH 2022

IN RELATION TO

THE PROPOSED ADOPTION OF THE NEW CONSTITUTION

CONTENTS

PARAGRAPH	PAGE
1.	INTRODUCTION ...................................................................................................... 1
2.	THE PROPOSED ADOPTION OF THE NEW CONSTITUTION ............................. 2
3.	DIRECTORS' RECOMMENDATION ..................................................................... 10
4.	ACTIONS TO BE TAKEN BY SHAREHOLDERS .................................................. 10
5.	DIRECTORS' RESPONSIBILITY STATEMENT .................................................... 11
6.	DOCUMENTS AVAILABLE FOR INSPECTION .................................................... 11
APPENDIX 1	................................................................................................................................ 12

HONG LEONG FINANCE LIMITED

(Incorporated in Singapore)

Company Registration No. 196100003D

Board of Directors:

Registered Office:

Executive Director:

Kwek Leng Beng (Chairman and Managing Director)

16 Raffles Quay #01-05

Non-Independent Non-Executive Directors:

Hong Leong Building Singapore 048581

Kwek Leng Peck

Kwek Leng Kee Kevin Hangchi

Lead Independent Director: Peter Chay Fook Yuen

Independent Non-Executive Directors: Tan Tee How

Tan Siew San

Christian Gautier de Charnace Clarence Yeo Gek Leong

30 March 2022

To:

The Shareholders of Hong Leong Finance Limited (the "Company")

Dear Sir/Madam

• 1. INTRODUCTION

• 1.1 We refer to the Notice of the Annual General Meeting ("AGM") of the Company dated 30 March 2022 (the "Notice") accompanying the Annual Report for the financial year ended 31 December 2021 convening the AGM of the Company to be held on 29 April 2022, and in particular, Special Resolution 8 as set out in the Notice in relation to the proposed adoption of the New Constitution (as defined in paragraph2.2below).

• 1.2 The purpose of this Letter is to provide shareholders of the Company ("Shareholders") with information relating to Special Resolution 8 as set out in the Notice in relation to the proposed adoption of the New Constitution, and may not be relied upon by any persons (other than Shareholders) or for any other purpose.

• 1.3 If you are in any doubt as to the contents herein or as to the course of action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional advisers immediately.

• 1.4 If you have sold or transferred your holdings of shares of the Company ("Shares"), you should immediately forward this Letter to the purchaser or the transferee or to the stockbroker or other

agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee.

• 1.5 The Singapore Exchange Securities Trading Limited (the "SGX-ST") takes no responsibility for the accuracy of any statements or opinions made or reports contained in this Letter.

• 1.6 WongPartnership LLP is the legal adviser to the Company in relation to the proposed adoption of the New Constitution.

• 2. THE PROPOSED ADOPTION OF THE NEW CONSTITUTION

• 2.1 Background

  After the adoption of the existing constitution of the Company (the "Existing Constitution") in 2016, there have been several changes to the legislative landscape and listing rules applicable to the Company. For example, the Companies (Amendment) Act 2017 (the "Amendment Act"), which was passed in Parliament on 10 March 2017 and took effect in phases on 31 March 2017,

  23 May 2017, 11 October 2017 and 31 August 2018 respectively, introduced several changes to the Companies Act 1967 ("the Companies Act"). The said changes to the Companies Act aimed to ensure that Singapore's corporate regulatory regime continues to stay robust, relevant, and in line with international norms, and supports Singapore's growth as a global hub for businesses. Key changes include the removal of the requirement for a company to have a common seal and the alignment of the timeline for the holding of a company's annual general meeting with its financial year end. Likewise, the SGX-ST has also introduced continual changes to the listing rules of the SGX-ST (the "Listing Manual") to enhance and refine the regulatory framework governing listed issuers.

• 2.2 The Company is proposing to adopt a new constitution (the "New Constitution"), which will fundamentally comprise of the provisions of the Existing Constitution, with certain amendments and additions to inter alia take into account the changes to the Companies Act (including those introduced pursuant to the Amendment Act as described above), the changes to the prevailing listing rules of the SGX-ST, as well as introduce certain other proposed changes. Each of these groups of changes is described in further detail below. As mentioned above, the revised provisions of the New Constitution take into consideration the changes which have been introduced to the Companies Act since the adoption of the Existing Constitution, and also seek to avoid inconsistencies between the constitution and the Companies Act. Further, in line with

  Rule 730(2) of the Listing Manual, which provides that an issuer must make its constitution consistent with all the listing rules of the Listing Manual prevailing at the time of the amendment of its constitution, the Company has also updated the provisions of the New Constitution for consistency with the said listing rules. In addition, other general amendments have been made to streamline and rationalise certain provisions in the New Constitution, including for greater clarity, and to adopt the new citation of Acts of Parliament following the 2020 Revised Edition of Acts, which came to effect on 31 December 2021. In addition to the above, the New Constitution also contains new provisions which will facilitate the potential implementation of a scrip dividend scheme by the Company in the future. Shareholders are advised to read paragraphs2.5to 2.8 below for detailed discussions of these proposed changes.

• 2.3 The adoption of the New Constitution is subject to the approval of the Shareholders by way of a special resolution.

• 2.4 Summary of Key Changes Reflected in the New Constitution

  Key provisions in the New Constitution (the "New Clauses", and each, a "New Clause", or "Amended Clauses", and each, an "Amended Clause", as the case may be) which differ significantly from the provisions in the Company's Existing Constitution (the "Existing

  Clauses", and each, an "Existing Clause") are summarised in paragraphs2.5to 2.8 below. This summary should be read together with Appendix 1 to this Letter, which sets out the principal provisions of the New Constitution which are new, or which are significantly different from the corresponding Existing Clauses in the Company's Existing Constitution.

• 2.5 Changes Incorporating Amendments to the Companies Act

  The following Amended Clauses give effect to the amendments made by the Amendment Act to the Companies Act.

(a)

Amended Clauses 1, 23, 124 and 127 (Existing Clauses 1, 23, 124 and 127).

Existing Clauses 1, 23, 124 and 127 contain provisions relating to (or referencing) the common seal of the Company, including its safe custody and how the common seal may be affixed.

Amended Clause 127 additionally provides that nothing in Amended Clause 127 (which concerns inter alia the safe custody of the common seal of the Company) shall prevent or prohibit the execution by the Company of deeds and documents (including, without limitation, those required to be under or executed under the common seal of a company) in any manner as may be permitted by the Companies Act. This makes clear that the Company may execute deeds and documents otherwise than by the use of its common seal, in line with new Section 41B of the Companies Act, as introduced by the Amendment Act. The new Section 41B of the Companies Act provides that a company may execute a document described or expressed as a deed without affixing its common seal, by signature on behalf of the company by (i) a director and a secretary, (ii) at least two directors or (iii) a director in the presence of a witness who attests the signature. A consequential amendment has also been made to the definition of "Seal" in Amended

Clause 1 to reflect that the Company will retain its existing common seal, but need not affix the same to documents unless required by law or unless directed by the Directors.

New Section 41C of the Companies Act, as introduced by the Amendment Act, provides that where a written law or rule of law requires any document to be affixed with the common seal, a document signed in the manner described in new Section 41B satisfies such written law or rule of law. Therefore, while Section 123 of the Companies Act provides that share certificates shall be affixed with the common seal, new Section 41C effectively removes this requirement. In line with new Section 41C, and in order to give the Company more flexibility in the way it issues share certificates, the requirement for share certificates of the Company to be affixed with the common seal has been removed in Amended Clause 23, and the reference to certificates of securities has similarly been removed in Amended Clause 127. A reference to the common seal has