NOVA MSC BERHAD
05 September 2023
|NOVA MSC BERHAD (“NOVA” OR “THE COMPANY”) – JOINT VENTURE AND SHAREHOLDERS’ AGREEMENT BETWEEN THETA EDGE BERHAD AND NOVA MSC BERHAD
The Board of Directors of NOVA is pleased to announce that NOVA had on 5 September 2023 entered into a Joint Venture & Shareholders’ Agreement (“JVSA”) with Theta Edge Berhad (“TEB”) (collectively referred to as the “Parties”) to regulate the rights and relationship of TEB and NOVA inter se as shareholders of the joint venture company (“JVCo”) upon its incorporation, to regulate the rights and obligations of TEB and NOVA in respect of the JVCo, upon its incorporation and to bind each other to their obligations upon the terms and conditions stipulated in the JVSA (“Joint Venture”).
2. RATIONALE FOR THE JOINT VENTURE
The Joint Venture is expected to pave the way for future collaboration between the Parties to identify and procure future project(s) for the JVCo, which is consistent with the objectives of NOVA in seeking strategic alliances from time to time for mutual benefits.
It is the intention of TEB and NOVA to cooperate for the purpose of providing e-government solutions and/or other IT solutions, including system integration, outsourcing, consultancy and infrastructure system services, on a commercially viable basis in Malaysia and/or other countries as determined by the JVCo.
3. INFORMATION ON TEB
THETA is one of Malaysia’s pioneer Information Communication and Technology (ICT) Service Provider. The company made its debut on the Second Board of the Kuala Lumpur Stock Exchange in 1994 and moved to the Main Board in 1999 and currently is categorized under the Technology sector of the main market of Bursa Malaysia Securities Berhad. The Group has been in business for more than 30 years focusing on the following: –
- Information Technology Solutions
- Telecommunication Engineering Services & Civil Works
- Green Energy Consultant and System Integrator
4. SALIENT TERMS OF THE JVSA
The salient terms as extracted from the JVSA include, inter-alia, the following:
4.1 The leading partner for the joint venture shall be NOVA. The Parties agree to collaborate in forming the joint venture to procure project(s) for the JVCo and to undertake and perform the project(s) and the services thereunder using the JVCo. TEB and NOVA shall be jointly and severally liable to the JVCo for all obligations of the JVCo.
4.2 The joint venture shall commence from the date of the JVSA and shall continue to be effective unless terminated in accordance with the provisions in the JVSA.
4.3 The JVCo shall have an equity shareholding structure of TEB: 60% and NOVA: 40% (“Respective Proportions”) during the entire duration of the JVSA. The shares to be held by the Parties in the JVCO will be as follows:
|No. of shares
|Shareholding Percentage (%)
Any new shares shall be first offered to each of the shareholders in their Respective Proportions and if any shareholder fails to subscribe, its shareholding in the JVCo will be diluted and the other shareholder may subscribe for such new shares.
The cash contribution by TEB would be made in stages upon the requirement by the Board of Directors of the JVCo based on the JVCo’s business plan. NOVA’s capital contribution shall be made through the transfer of NOVA’s IP for the Malaysian region and shall be made upon requirement of equity capitalization for the purpose of execution of the Project and formalization of transfers to the JVCo.
4.4 The board of the JVCo shall comprise a maximum of 5 directors, TEB shall be entitled to appoint up to 3 directors and NOVA up to 2 directors. The chairman of the board of the JVCo shall be from TEB directors. Except for directors reserved matters, the decisions of the board shall be based on simple majority of votes of the directors present.
4.5 The directors reserved matters can only be passed with the unanimous decision of the directors.
4.6 The quorum at any general meeting is at least 2 shareholders, i.e. both TEB and NOVA. Members’ resolution shall be passed by simple majority except for where a majority of not less than 75% is prescribed by the Companies Act 2016.
5. RISK FACTORS
NOVA does not foresee any exceptional risk other than operational risk associated with the proposed JV Co which are similar to the operational risks that NOVA is already accustomed to. Hence the Board believes that the experience and expertise of its management team will enable the Group to mitigate these risks effectively.
6. EFFECTS OF THE JOINT VENTURE
The Joint Venture has no effect on the issued and paid-up share capital and the substantial shareholders’ shareholding of NOVA.
The JV Co will become a 40% owned company of NOVA. In the event the JVCo is awarded any project(s), then barring any unforeseen circumstances, the JVCo is expected to contribute positively to NOVA Group consolidated earnings and earnings per share in the future arising from any profits derived from the project(s).
7. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS
None of the Directors and/or substantial shareholders of NOVA and/or persons connected with such Directors or substantial shareholders have any interest, either directly or indirectly, in the Joint Venture.
8. APPROVALS REQUIRED
The Joint Venture does not require the approval of the shareholders of NOVA or any authority.
9. STATEMENT BY DIRECTORS
The Board of Directors of NOVA is of the opinion that the Joint Venture is in the best interest of NOVA.
This announcement is dated 5 September 2023
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