Oct 2023 :- Circular to Shareholders - Proposed Renewal of Shareholders Mandate

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in doubt as to the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional advisers immediately.

Bursa Malaysia Securities Berhad ("Bursa Securities") has not perused the contents of this Circular prior to its issuance as it is an exempt document pursuant to the provisions of Guidance Note 22 of Bursa Securities ACE Market Listing Requirements.

Bursa Securities takes no responsibility for the contents of this Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular.

SCOPE INDUSTRIES BERHAD

[Registration No.: 200201023713 (591376-D)]

(Incorporated in Malaysia)

CIRCULAR TO SHAREHOLDERS IN RELATION TO PROPOSED RENEWAL OF EXISTING SHAREHOLDERS' MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE ("PROPOSED RENEWAL OF SHAREHOLDERS' MANDATE")

The above proposal will be tabled as Special Business at the Twenty-First ("21st") Annual General Meeting of Scope Industries Berhad ("Scope" or "the Company") to be held at Conference Room, O&G Hotel, 1-L1-5 and 1-L1-6, Jalan Wawasan 4, Taman Wawasan Jaya, 34200 Parit Buntar, Perak on Wednesday, 29 November 2023 at 10.30 a.m. or at any adjournment thereof. The Notice of 21st Annual General Meeting together with the Form of Proxy are enclosed in the Annual Report of the Company for the financial year ended 30 June 2023.

A member entitled to attend, participate, speak and vote at the 21st Annual General Meeting is entitled to appoint proxy(ies) to attend, participate, speak and vote on his/her behalf. In such event, the Form of Proxy must be lodged at our Registered Office at No. 48, Jalan Chow Thye, 10050 George Town, Pulau Pinang not less than 48 hours before the stipulated time appointed for holding the 21st Annual General Meeting or at any adjournment thereof. The lodging of the Form of Proxy shall not preclude you from attending, participating, speaking and voting at the 21st Annual General Meeting should you subsequently wish to do so.

Last day and time for lodging the Form of Proxy	:	Monday, 27 November 2023 at
		10.30 a.m.
Date and time of Twenty-First (21st) Annual General Meeting	:	Wednesday, 29 November 2023 at
		10.30 a.m.

This Circular is dated 31 October 2023

DEFINITIONS

For the purposes of this Circular, except where the context otherwise requires, the following definitions shall apply:

"Act"	:	The Companies Act 2016 as amended from time to time, and
		includes every statutory modification or any re-enactment thereof
		for the time being in force
"AGM"	:	Annual General Meeting
"21st AGM"	: Twenty-First Annual General Meeting of the Company
"Audit Committee"	: The Audit Committee of Scope
"Board"	: The Board of Directors of Scope
"Bursa Securities"	: Bursa Malaysia Securities Berhad [200301033577 (635998-W)]
"Circular"	: Circular to Shareholders in relation to the Proposal
"Constitution"	:	Constitution of Scope
"Director"	: Shall have the same meaning given in Section 2(1) of the Capital
		Markets and Services Act 2007 and includes any person who is or
		was within the preceding six (6) months of the date on which the
		terms of the transaction were agreed upon, a director or a chief
		executive of Scope or any other company which is a subsidiary of
		Scope or a holding of Scope
"EPS"	:	Earnings Per Share
"LPD"	:	2 October 2023, being the latest practicable date prior to the
		printing of this Circular
"Listing Requirements"	: ACE Market Listing Requirements of Bursa Securities, including
		any amendments made in respect thereof from time to time

"Major Shareholder(s)": Means a person who has an interest or interests in one or more voting shares in a company and the number or the aggregate number of those shares, is:

1. 10% or more of the total number of voting shares in the Company; or
2. 5% or more of the total number of voting shares in the Company where such person is the largest shareholder of the Company,

and includes any person who is or was within the preceding six

1. months of the date on which the terms of the transaction were agreed upon, such major shareholder of the company or any other company which is its subsidiary or holding company

For the purpose of this definition, "interest in shares" has the meaning given in Section 8 of the Act

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DEFINITIONS (CONT'D)

"NA"	: Net assets attributable to ordinary equity holders of Scope
"Proposed Renewal of	: Proposed renewal of existing shareholders' mandate for Scope
Shareholders'	Group to enter into RRPTs of a revenue or trading nature
Mandate"
"Proposal"	: Proposed Renewal of Shareholders' Mandate
"Related Party(ies)"	: Director(s), major shareholder(s) or person(s) connected with
	such director(s) or major shareholder(s) of Scope
"RRPT(s)"	: A transaction entered into by the Company or its subsidiaries
	which involves the interest, direct or indirect, of a Related Party,
	which is recurrent, of a revenue or trading nature and which is
	necessary for day to day operations of the Company or its
	subsidiaries
"RM" and "sen"	: Ringgit Malaysia and sen, respectively
"Scope" or "Company"	: Scope Industries Berhad [200201023713 (591376-D)]
"Scope Group" or "Group"	: Scope and its subsidiaries
"Scope Share(s)" or "Share(s)"	: Ordinary share(s) in Scope
"Shareholders"	: Shareholders of Scope
"SMSB"	: Scope Manufacturers (M) Sdn. Bhd.
	[199101019061 (229373-P)]
"Substantial Shareholder(s)"	: A person who has interest or interests in one or more voting
	Shares in the Company and the number of that Share, or
	aggregate number of those Shares, is not less than 5% of the
	total number of all the voting Shares in the Company
"2023 Annual Report"	: Annual Report of Scope issued for the financial year ended 30
	June 2023

Words incorporating the singular shall, where applicable, include the plural and vice versa and words incorporating the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. Reference to persons shall include a corporation, unless otherwise specified.

Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any reference to a time of a day in this Circular shall be a reference to Malaysian time, unless otherwise specified.

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TABLE OF CONTENTS

LETTER TO THE SHAREHOLDERS CONTAINING :	PAGE
1.	INTRODUCTION	1
2.	DETAILS OF THE PROPOSED RENEWAL OF SHAREHOLDERS'	2
	MANDATE
3.	RATIONALE FOR THE PROPOSED RENEWAL OF SHAREHOLDERS'	7
	MANDATE
4.	EFFECTS OF THE PROPOSED RENEWAL OF SHAREHOLDERS'	7
	MANDATE
5.	INTEREST OF DIRECTORS / MAJOR SHAREHOLDERS / PERSON	7
	CONNECTED
6.	APPROVALS REQUIRED	8
7.	DIRECTORS' RECOMMENDATION	8
8.	ANNUAL GENERAL MEETING	9
9.	FURTHER INFORMATION	9
APPENDIX I - FURTHER INFORMATION	10

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SCOPE INDUSTRIES BERHAD

[Registration No.: 200201023713 (591376-D)]

(Incorporated in Malaysia)

Registered Office

48, Jalan Chow Thye

10050 George Town

Pulau Pinang

31 October 2023

Board of Directors
Lee Min Huat	(Executive Chairman)
Lim Chiow Hoo	(Managing Director)
Lim Ee Tatt	(Non-IndependentNon-Executive Director)
Hsu, Ching-Chen	(Non-IndependentNon-Executive Director)
Law Kim Fatt	(Independent Non-Executive Director)
Yap Ee Seong	(Independent Non-Executive Director)
Yau Khai Ling	(Independent Non-Executive Director)

To : The Shareholders of Scope

Dear Sir/Madam,

PROPOSED RENEWAL OF SHAREHOLDERS' MANDATE

1. INTRODUCTION

At the AGM of the Company held on 29 November 2022, the Company sought and obtained from its shareholders the general mandate for Scope Group to enter into RRPTs of a revenue or trading nature in the ordinary course of business based on commercial terms which are not more favourable to the Related Parties than those generally available to the public and which are necessary for Scope Group's day to day operations. The aforesaid mandate shall, in accordance with the Listing Requirements, lapse at the conclusion of the forthcoming 21st AGM of the Company unless authority for its renewal is obtained from the Shareholders.

On 13 October 2023, the Board of Directors of Scope had announced that the Company has proposed to seek its shareholders' approval for the Proposed Renewal of Shareholders'

Mandate pursuant to Rule 10.09 of the Listing Requirements.

The purpose of this Circular is to provide you with the relevant information of the Proposed Renewal of Shareholders' Mandate and to seek your approval on the ordinary resolution pertaining to the Proposed Renewal of Shareholders' Mandate to be tabled at the forthcoming 21st AGM, which will be held at Conference Room, O&G Hotel, 1-L1-5 and 1-L1-6, Jalan Wawasan 4, Taman Wawasan Jaya, 34200 Parit Buntar, Perak on Wednesday, 29 November 2023 at 10.30 a.m. or at any adjournment thereof. The notice of the 21st AGM together with the Form of Proxy is enclosed in the 2023 Annual Report.

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SHAREHOLDERS OF SCOPE ARE ADVISED TO READ AND CONSIDER THE CONTENTS OF THIS CIRCULAR CAREFULLY BEFORE VOTING ON THE ORDINARY RESOLUTION PERTAINING TO THE PROPOSED RENEWAL OF SHAREHOLDERS' MANDATE AT THE FORTHCOMING 21ST AGM.

2. DETAILS OF THE PROPOSED RENEWAL OF SHAREHOLDERS' MANDATE

2.1 The Listing Requirements

Pursuant to Rule 10.09(2) of the Listing Requirements, a listed issuer may seek a mandate from its shareholders in respect of RRPTs subject to the following :

1. the transactions are in the ordinary course of business and are on terms not more favourable to the Related Party than those generally available to the public;
2. the shareholders' mandate is subject to annual renewal and disclosure is made in the annual report of the aggregate value of the transactions conducted pursuant to the shareholders' mandate during the financial year where the aggregate value is equal to or more than the threshold below in relation to a listed issuer with a share capital of RM60.0 million and above :
3. 1. the consideration, value of the assets, capital outlay or costs of the RRPT is RM1.0 million or more; or
   2. the percentage ratio of such RRPT is 1% or more,

whichever is the higher.

1. the listed issuers' circular to shareholders for the shareholder mandate includes the information as may be prescribed by Bursa Securities. The draft circular relating to shareholders' mandate for new RRPT must be submitted to Bursa Securities together with a checklist showing compliance with such information;
2. in a meeting to obtain shareholders' mandate, the interested directors, interested major shareholders or interested person connected with a director or major shareholder; and where it involves the interest of an interested person connected with a director or major shareholder, such directors or major shareholder, must not vote on the resolution to approve the RRPT. An interested director or interested major shareholder must ensure that persons connected with him abstain from voting on the resolution approving the RRPT; and
3. the listed issuer immediately announces to Bursa Securities when the actual value of a RRPT entered into by the listed issuer, exceeds the estimated value of the RRPT disclosed in the circular by 10% or more and must include the information as may be prescribed by Bursa Securities in its announcement.

2.2 Principal Activities of Scope Group

The principal activities of Scope consist of investment holding, while its subsidiary companies are involved in manufacturing of electrical and electronics components and products, property investments and provision of dormitory accommodation and services, trading of electronic products as well as oil palm plantation. The details of Scope's subsidiaries as well as their principal activities as at the LPD are set out in the table below :

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Name of Company	Effective	Principal Activities
	Equity
	Interest
Scope Manufacturers (M)	100%	Manufacturing and assembling of
Sdn. Bhd.		electrical and electronics components
		and products.
Benua Mutiara Sdn. Bhd.	100%	Cultivation of oil palm.
Scope Realty Sdn. Bhd.	100%	Property investments and provision of
		dormitory accommodation and
		services.
Pioneer Glow Sdn. Bhd.	70%	Cultivation of oil palm.
Scope Global Distributor	80%	Trading in electrical and electronics
Pte. Ltd.		products.

Due to the diversity of Scope Group, it is anticipated that Scope Group would, in the normal course of business, continue to enter into transactions with the Related Parties, details of which are set out in Section 2.4 below. It is likely that such transactions will occur with some degree of frequency and could arise at any time.

The Board proposes to seek the shareholders' approval for the Proposed Renewal of Shareholders' Mandate for the Scope Group to enter into transactions in the normal course of business within the classes of Related Parties set out in Section 2.4 below, provided such transactions are entered into at arm's length and on transaction prices and normal commercial terms which are not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders. Such mandate will enable the Group to enter into the RRPTs without the necessity, in most instances, to make the otherwise required announcement or to convene meetings in order to procure specific prior approval of its shareholders. The RRPTs will also be subject to the review procedures set out in Section 2.5 below.

2.3 Validity Period of the Proposed Renewal of Shareholders' Mandate

The Proposed Renewal of Shareholders' Mandate, if approved by the shareholders, shall take effect from the passing of the ordinary resolution proposed at the forthcoming AGM and shall continue to be in force until :

1. the conclusion of the next AGM of Scope following the general meeting at which such mandate was passed, at which time it will lapse, unless by a resolution passed at the general meeting, the mandate is renewed;
2. the expiration of the period within which the next AGM of the Company after the date is required to be held pursuant to Section 340 (2) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 340 (4) of the Act); or
3. revoked or varied by resolution passed by the shareholders in general meeting,

whichever is earlier.

Thereafter, approval from shareholders will be sought for the Proposed Renewal of Shareholders' Mandate.

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2.4 Classes of Related Parties and Nature of RRPTs

The details of the nature and estimated annual value of the RRPT in respect of which the Company is seeking for Proposed Renewal of Shareholders' Mandate is as follows:

Related Party &	Scope	Nature of	Estimated	Actual value	Estimated	Nature of relationship between Scope Group and the
Its Principal	Group	Transaction	aggregate value	transacted from	aggregate value	Related Party
Activities	-	with Scope	as disclosed in	date of AGM on	of transaction
	Transacting	Group	the previous	29 November	for the period
	Party		Circular to	2022 to the LPD	from the
			Shareholders	("Actual Value")	forthcoming
			dated 31 October	(RM'000)	AGM to the next
			2022		AGM *
			("Estimated		(RM'000)
			Value") *
			(RM'000)
Inventec	SMSB	sales of	60,000	29,562	60,000	•	Inventec Appliances Corp. is a Substantial
Appliances Corp.		electrical and					Shareholder of Scope, with direct holdings of
- Manufactures and		electronics					7.32% of the total number of issued Shares of
sells wire and		products by					Scope as at LPD.
wireless		SMSB to				• Inventec Corporation is a Substantial
communication		Inventec					Shareholder of Scope, with indirect holdings of
products.		Appliances					7.32% of the total number of issued Shares of
		Corp.					Scope as at LPD, through its wholly-owned
							subsidiary, Inventec Appliances Corp..
						•	Mr. Hsu, Ching-Chen, the Non-Independent
							Non-Executive Director of Scope, was
							nominated by Inventec Appliances Corp. to sit
							on the Board of Scope. As such, Mr. Hsu,
							Ching-Chen is deemed interested in the above-
							mentioned RRPTs.

Notes :

• The estimated values are calculated based on the historical data and best estimates by the management. Accordingly, the actual value of the transaction may be varied from the estimated value disclosed above and subject to changes.

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2.5 Review Methods or Procedures for the Recurrent Related Party Transactions

Scope Group has established various methods and procedures to ensure the RRPTs are undertaken on arms' length and on normal commercial terms, which are consistent with Scope Group's usual business practices and policies, on transaction prices and terms which are not more favourable to the Related Parties than those extended to the public and are not detrimental to the minority shareholders.

The review and disclosure procedures are as follows :

1. The Related Parties, interested Directors and persons connected will be advised that they are subject to the shareholders mandate and will also be advised of the review and disclosure procedures;
2. The transaction prices, terms and conditions which are market driven are to be determined at arms' length on a customer/supplier relationship basis at mutually agreed rates after due consideration of benefits to be derived from the transaction, under similar commercial terms for transactions with unrelated third parties, which depend on demand and supply, quality, level of service and other related factors;
3. The management of the Scope Group is cognisant that all RRPTs are required to be undertaken on an arm's length basis and on normal commercial terms. Where practicable and feasible, quotation and/or tenders will be obtained from at least two
4. 1. other contemporaneous transactions with unrelated third parties for similar products/services and/or quantities will be used as comparison, wherever possible, to determine whether the price and terms offered to/by the Related Parties are fair and reasonable and comparable to those offered to/by other unrelated third parties for the same or substantially similar type of produces/services and/or quantities. In the event that quotation or comparative pricing from unrelated third parties cannot be obtained, the terms of the transactions for the products or services will be in accordance with the usual business practice of Scope Group and at rates not more favourable to the Related Parties than those generally available to the public and is not detrimental to the Group;
5. Where RRPT is one with a value equal to or in excess of RM1.0 million or 1% of the applicable percentage ratio as stated in the Listing Requirements (whichever is lower), it will be reviewed by the Audit Committee and recommended to be approved by the Board of Directors who has no interest in the transaction. Where the RRPT is one with a value below RM1.0 million or 1% of the applicable percentage ratio as stated in the Listing Requirements (whichever is lower), it will be reviewed and approved by any one (1) of the Executive Director or the Board who has no interest in the transaction;
6. If a member of the Board or of the Audit Committee has an interest, as the case may be, he/she shall declare their interest in transaction and abstain from any decision making by the Board or Audit Committee in respect of the said transactions;
7. The Audit Committee shall amongst others, review any RRPT and conflict of interest situation that may arise within the Group including any transaction procedures or course of conduct that raises questions of management integrity;
8. Records will be maintained by the respective companies to capture all RRPTs which are entered pursuant to the shareholders' mandate;

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(viii) The Audit Committee shall review on a quarterly basis any related party transaction that may arise within the Company or the Group to ensure that such transactions will be carried out at arm's length, on normal commercial terms, on terms not more favourable to the Related Parties than those generally available to the public and on terms not detrimental to the minority shareholders;

(ix) The Audit Committee will consider, from time to time, whether the established guidelines and procedures for RRPTs have become inappropriate and/or it is unable to ensure that the transactions will be on normal commercial terms and/or will prejudice the interests of shareholders generally. Notwithstanding the above, the guidelines and procedures for RRPTs will be reviewed by the Audit Committee at least once in a financial year; and

(x) The Board shall have overall responsibility for the determination of the review procedures. If a member of the Board and Audit Committee has an interest in the transaction to be reviewed by the Board and Audit Committee, as the case may be, he will abstain from any decision making by the Board or Audit Committee in respect of the said transaction.

2.6 Amount Due and Owing Under Recurrent Related Party Transactions

As at the financial year ended 30 June 2023, the amount due and owing to Scope Group by the following party which has exceeded the credit term given arising from the RRPT(s) as

	per Section 2.4 are as follows :
	Company Name		Credit Terms	Amount (RM)
	Inventec Appliances		a period of 1 year or less	1,168,570
	Corp.
	There were no interest and late payment charges imposed by Scope Group on the overdue
	trade receivable as the imposition of late charges is generally not the normal practice of the
	Group.
	The Board of Directors is of the opinion that there will be no recoverability issue for the
	outstanding amount owing by Inventec Appliances Corp. as Inventec Appliances Corp. has
	been gradually making the payments for the settlement of the outstanding sum and the
	management has followed up closely with Inventec Appliances Corp. on the above-
	mentioned outstanding amount. As of LPD, the above-mentioned outstanding amount has
	been fully paid by Inventec Appliances Corp..
2.7	Statement by Audit Committee
	The Audit Committee has the overall responsibility of determining whether the procedures
	for reviewing all RRPTs are appropriate. The Audit Committee will review and ascertain at

least once a year whether the procedures established to monitor RRPTs have been complied with. If it is determined that the procedures stated in Section 2.5 are inadequate to ensure that (i) the RRPTs will be conducted at arms' length and on normal commercial terms and (ii) such transactions are not prejudicial to the interest of the shareholders, the Company will obtain a fresh shareholders' mandate based on the new procedures.

The Audit Committee will also have the discretion to request for limits to be imposed or for additional procedures to be followed if it considers such requests to be appropriate. In that event, such limits or procedures may be implemented without the approval of shareholders, provided that they are more stringent than the existing limits or procedures.

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