FRONTLINE COVER FA 070606 CR2.indd

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100 frontline technologies corporation ltd annual report 2006 > explanatory notes to notice of annual general meeting (“notice”) 7.3 Approval Sought. Shareholders’ approval is sought to renew the mandate for the Directors to make Shares Purchases from time to time within the Relevant Period in accordance with the Companies Act (Cap 50) of up to ten per cent. (10%) of the issued ordinary share capital of the Company ascertained as at the date of this AGM at the price of up to but not exceeding the Maximum Price in accordance with the “Guidelines on Shares Purchases” set out in Appendix 1 of this Notice and the rules of the SGX-ST. The authority conferred on the Directors by the proposed Shares Purchase Mandate to purchase Shares shall continue in force for the Relevant Period. 7.4 Regulatory Updates The Company may purchase Shares by way of Off-Market Purchases and/or Market Purchases, as described in the “Guidelines on Share Purchases” set out in Appendix 1. In the event that subsequent to the EGM, there are new rules, regulations, directives or laws enacted or promulgated by the relevant competent authorities including but not limited to the SGX-ST and the Council (hereinafter, collectively referred to as the “Further Rules”) that augment, supplement or vary the existing provisions governing provisions set out in the Companies Act and/or the Listing Manual, the Company shall, to the extent that the Further Rules impact on the Shares Purchase Mandate, disseminate to the public by announcements), a Memorandum setting out such Further Rules and the extent to which the Shares Purchase Mandate is affected by such Further Rules. In such an event, the Company shall not undertake any purchase of Shares until such a Memorandum has been publicly disseminated. The Company does not intend to set up a special trading counter for the purpose of the Shares Purchases. 7.5 Rationale As previously stated in the 2002 Circular, the proposed Shares Purchase Mandate will: (a) (b) (c) provide Directors with the flexibility to purchase Shares when circumstances permit, with the objective of enhancing the earnings per share of the Company and its Subsidiaries. Such flexibility will also allow the Directors to better manage the Company’s capital structure and cash reserves, and to return surplus cash in excess of the Group’s needs; provide Directors with the opportunity to purchase Shares when the Shares are under-valued, and help buffer short-term share price volatility and off-set the effects of short-term speculators and investors. This will, in turn, bolster shareholder confidence; provide the Company with an efficient mechanism to enhance returns to Shareholders (including the earnings per share of the Group) when circumstances permit. Shares purchases will only be made when the Directors believe that they are beneficial to and in the best interests of the Company and its Shareholders.
frontline technologies corporation ltd annual report 2006 101 > explanatory notes to notice of annual general meeting (“notice”) 7.6 Manner of Purchases or Acquisitions of Shares Purchases or acquisitions of Shares may be made by way of: (a) (b) Market Purchases transacted on the SGX-ST or any other stock exchange on which the Shares may for the time being be listed and quoted (“Other Exchange”) through one or more duly licensed dealers appointed by the Company for the purpose; and/or Off-Market Purchases effected pursuant to an equal access scheme. The Directors may impose such terms and conditions which are not inconsistent with the Share Purchase Mandate, the Listing Manual and the Act, as they consider fit in the interests of the Company in connection with or in relation to any equal access scheme or schemes. An Off-Market Purchase must, however, satisfy all the following conditions: (i) (ii) (ii) offers for the purchase or acquisition of Shares shall be made to every person who holds Shares to purchase or acquire the same percentage of their Shares; all of those persons shall be given a reasonable opportunity to accept the offers made; and the terms of all the offers shall be the same, except that there shall be disregarded (1) differences in consideration attributable to the fact that offers may relate to Shares with difference accrued dividend entitlements and (2) differences in the offers introduced solely to ensure that each person is left with a whole number of Shares. If the Company wishes to make an Off-Market Purchase in accordance with an equal access scheme, it will issue an offer document containing at least the following information: (I) (II) the terms and conditions of the offer; the period and procedures for acceptances; and (III) the information required under Rule 883(2). (3), (4) and (5) of the Listing Manual For the avoidance of doubt, there shall be no use of contingent purchase contracts. 7.7 Source of Funds In purchasing Shares, the Company may only apply funds legally available for such purchase in accordance with its Articles of Association and the applicable laws in Singapore. The Company may not purchase Shares for a consideration other than cash or for settlement otherwise in accordance with the trading rules of the SGX-ST. Any Shares Purchase undertaken by the Company shall be made out of profits that are available for distribution as dividends but not from amounts standing in the Company’s share premium account and capital redemption reserve. The Company will use its internal sources of funds (comprising cash and fixed deposits) for the Shares Purchases. The Company has not obtained or incurred nor does it intend to obtain or incur any borrowings to finance the Shares Purchases. (See Paragraph 7.10 for impact on Company’s financial health)
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