As filed with the Securities and Exchange Commission on August 27, 2025
Registration No. 333-
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CCH Holdings Ltd
(Exact Name of Registrant as Specified in its Charter)
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Not Applicable
(Translation of Registrant’s Name into English)
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Cayman Islands |
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(State or Other Jurisdiction of |
(Primary Standard Industrial |
(IRS Employer |
No. 1, Jalan Perda Jaya, Kawasan Perniagaan Perda Jaya, 14000
Bukit Mertajam, Pulau Pinang, Malaysia
+(60) 4-5307694
(Address, including Zip Code, and Telephone Number, Including
Area Code, of Registrant’s Principal Executive Offices)
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Cogency Global Inc.
122 East 42nd Street, 18th Floor
New York, NY 10168
(800) 221-0102
(Name, Address, including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
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Copies to:
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Stephanie Tang, Esq. |
Joseph M. Lucosky, Esq. |
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Approximate date of commencement of proposed sale to the public: as soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth company ☒
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
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† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the United States Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS (Subject to Completion)
Dated , 2025.
[ ] Ordinary Shares
CCH Holdings Ltd
This is an initial public offering of our ordinary shares. We are offering on a firm commitment basis our ordinary shares, par value US$0.00001 per share. We expect the initial public offering price to be $[ ], which is the midpoint between the range of $[ ] to $[ ] per ordinary share.
Prior to this offering, there has been no public market for our ordinary shares. We plan to apply to list our ordinary shares on the Nasdaq Capital Market (“Nasdaq”) under the symbol “CCHH.” The closing of this offering is conditioned upon Nasdaq’s final approval of our listing application, and there is no guarantee or assurance that our ordinary shares will be approved for listing on Nasdaq.
Investing in our ordinary shares involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors” beginning on page 10 to read about factors you should consider before buying our ordinary shares.
Our issued and outstanding share capital consists of ordinary shares. Mr. Goh Kok Foong, our founder, chairman of board of directors and chief executive officer, currently beneficially owns 54% of our total issued and outstanding ordinary shares and total voting power. Upon the completion of this offering, Mr. Goh Kok Foong will beneficially own [ ]% of our total issued and outstanding ordinary shares and total voting power, [assuming that the underwriters do not exercise their over-allotment option, or [ ]% of our total issued and outstanding ordinary shares and total voting power, assuming that the over-allotment option is exercised in full,] and therefore Mr. Goh Kok Foong would be a controlling shareholder of our Company (our “Controlling Shareholder”). Accordingly, our Controlling Shareholder could control or significantly influence the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including the election of directors, amendment of organizational documents and approval of major corporate transactions, such as a change in control, mergers, consolidations, and sale of assets. As a result, we will be a “controlled company” as defined under the Nasdaq Listing Rules. As a “controlled company,” we are permitted to elect not to comply with certain corporate governance requirements. See “Risk Factors — Risks Related to Our Initial Public Offering and Ownership of Our Ordinary Shares — We are a ‘controlled company’ within the meaning of the Nasdaq Listing Rules and, as a result, will rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.” and “Risk Factors — Risks Related to Our Initial Public Offering and Ownership of Our Ordinary Shares — Our Controlling Shareholder has substantial influence over the Company. His interests may not be aligned with the interests of our other shareholders, and he could prevent or cause a change of control or other transactions.”
We are an “emerging growth company” as defined under applicable U.S. securities laws and are eligible for reduced public company reporting requirements. Please read the disclosures beginning on page 4 of this prospectus for more information.
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Proceeds, before expenses, to us |
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(1) See “Underwriting” in this prospectus for more information regarding our arrangements with the underwriter.
[We have granted the underwriter an option for a period of 45 days from the date of closing of this offering to purchase up to 15% of the total number of the ordinary shares to be offered by us pursuant to this offering (excluding ordinary shares subject to this option), solely for the purpose of covering over-allotments, at the public offering price less the underwriting discounts.] If the underwriter exercises the option in full, the total underwriting discounts payable will be $[ ] based on the assumed offering price of $[ ] per ordinary share, and the total gross proceeds to us, before underwriting discounts, non-accountable expense allowance, and expenses, will be $[ ].
Neither the U.S. Securities and Exchange Commission nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the ordinary shares against payment as set forth under “Underwriting” on or about [ ], 2025.

Prospectus dated [ ], 2025
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA |
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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F-1 |
You should rely only on the information contained in this prospectus or in any related free writing prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus or in any related free writing prospectus. We are offering to sell, and seeking offers to buy, the ordinary shares only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is current only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the ordinary shares. The information contained in this prospectus is current only as of the date on the front cover of the prospectus. Our business, financial condition, results of operations, and prospects may have changed since that date.
Neither we nor any of the underwriters has taken any action to permit a public offering of the ordinary shares outside the United States or to permit the possession or distribution of this prospectus or any filed free writing prospectus outside the United States. Persons outside the United States who come into possession of this prospectus or any filed free writing prospectus must inform them about and observe any restrictions relating to the offering of the ordinary shares and the distribution of this prospectus or any filed free writing prospectus outside the United States.
Until [ ], 2025 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade ordinary shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
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The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus, especially our consolidated financial statements and the related notes and sections titled “Risk Factors,” “Business,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” This prospectus contains information from an industry report commissioned by us and prepared by Frost & Sullivan, an independent research firm, to provide information regarding our industry and our market position in Malaysia.
Overview
We are one of the leading specialty hotpot restaurant chains in Malaysia, specializing in chicken hotpot and fish head hotpot. With roots in George Town, Penang, Malaysia since 2015, we have become a top player in the specialty hotpot market in Malaysia. According to Frost & Sullivan, we were the third largest specialty hotpot restaurant chain in Malaysia in terms of revenues generated by company-owned restaurants for the year ended December 31, 2024. Our Chicken Claypot House (鸡煲之家) brand, according to Frost & Sullivan, was the largest chicken hotpot brand in Malaysia in terms of number of restaurant outlets as of June 30, 2025.
We are committed to providing the most authentic Sichuan hotpot experience with Hong Kong style chicken hotpot traditions, to suit the discerning Malaysian palate. With our established brands in specialty hotpot and exclusive signature dishes that are well received by customers, we are committed to further expanding our reach in Malaysia and beyond.
We offer catering services in Malaysia and outside Malaysia mainly under two brands, namely Chicken Claypot House (鸡煲之家) for our chicken hotpot restaurants and Zi Wei Yuan (紫薇园) for our fish head hotpot restaurants through a combination of company-owned restaurant outlets and franchised restaurant outlets. As of the date of this prospectus, we operate or license a total of 32 restaurant outlets, among which there are 20 Chicken Claypot House restaurant outlets, four Zi Wei Yuan restaurant outlets, three Chicken Claypot House-Zi Wei Yuan cross-over restaurant outlets, a food court, three restaurant outlets under the brand Bibixian (比比鲜) focusing on Teochew-style chicken hotpot, and a restaurant outlet under the brand Banbudian Bistro (先启半步颠) offering Sichuan cuisine. Among the 28 restaurant outlets operated or licensed by us in Malaysia, there are 15 company-owned restaurant outlets and 13 franchised restaurant outlets, as of the date of this prospectus. Currently, we also have four franchised restaurant outlets located in three other countries including Thailand, Indonesia and China.
For the years ended December 31, 2023 and 2024, we derived substantially all of our revenues from our restaurant operations business, which amounted to US$9.78 million and US$8.92 million, respectively. Our restaurant operations business is consisted of three parts, namely company-owned restaurant operations, sales of food ingredients and condiments and franchise licensing. For the years ended December 31, 2023 and 2024, our revenues breakdowns for restaurant operations were US$8.21 million and US$6.64 million from company-owned restaurant operations, US$1.01 million and 1.24 million from sales of food ingredients and condiments, and US$0.31 million and $0.67 million from franchise licensing, respectively.
The cultural diversity in Southeast Asia has created a distinctive fusion cuisine landscape, and hotpot with traditions rooted in China has become a popular dining choice among customers. According to Frost & Sullivan, the market size in terms of revenues of specialty hotpot restaurants in Southeast Asia increased from US$1,592.3 million in 2019 to US$1,827.7 million in 2024 at a CAGR of 2.8%, and is expected to reach US$2,645.1 million in 2029, representing a CAGR of 7.7% from 2025 to 2029. To seize the market opportunity, we have been actively but also prudently expanding the network of our restaurant outlets in Malaysia. We are also poised for strategic expansion into other locations in Southeast Asia, such as Vietnam, Cambodia and Indonesia, as well as other international locations with significant growth potentials such as Hong Kong, Taiwan and the U.S.
Our Strengths
We believe the following strengths have contributed to our continued success:
• we are one of the leading hotpot restaurant chains in Malaysia with strong brand identity;
• we provide high-quality food featuring exclusive signature dishes;
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• we are able to maintain consistency and operational efficiency with our central kitchen management;
• we have strong supply chain capabilities for our restaurant operations; and
• we have a dedicated and experienced management team.
Our Strategies
We intend to implement the following business strategies going forward:
• strategic expansion in existing markets and into international locations with strong market potentials;
• continuous development of new menu for our restaurant outlets;
• further upgrade our supply chain capabilities; and
• identify opportunities to expand and diversify our business portfolio.
Summary of Risk Factors
Investing in our shares involves significant risks. You should carefully consider all of the information in this prospectus before making an investment in our shares. Below please find a summary of the principal risks we face, organized under relevant headings. These risks are discussed more fully in the section titled “Risk Factors.”
Risks Related to Our Business and Industry
• Market recognition of our brands is crucial to our continued success, and any damage to our reputation could have an adverse impact on our business.
• Our financial condition and business operations may be materially and adversely affected if we are unable to retain existing customers or attract new ones by delivering high-quality dining experience.
• Our continued success depends on our ability to react to evolving customer preferences.
• We may not be successful in expanding our network of restaurant outlets.
• We may need to obtain financing for our expansion. If we fail to obtain sufficient funding, our growth may be adversely affected.
• Our historical financial and operating results may not be indicative of future performance, and we may not be able to achieve and sustain the historical level of our profitability.
• Any shortage or interruption in supply could have a material adverse effect on our business, financial condition and results of operations.
• Our profit margins and operating results are susceptible to fluctuations in the costs of raw materials used in our restaurants.
• We rely on our central kitchen to procure, prepare, supply and store certain food ingredients to be used in our restaurants and a significant disruption in the operations of our central kitchen could negatively impact our business.
• Food safety concerns and concerns about the health risk of our food offerings may have an adverse effect on our business.
• The specialty hotpot restaurant market in Malaysia is highly competitive and any failure to successfully compete with other restaurants may adversely affect our business.
• As we expand our geographic reach in the future, our multi-jurisdictional operations may lead to increasing risks and uncertainties and our management system may not be effective to address such risks and uncertainties.
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Risks Related to the Jurisdictions Where We Operate
• Any adverse changes in the political, economic, legal, regulatory taxation or social conditions in the jurisdictions that we operate in or intend to expand our business may have a material adverse effect on our operations, financial performance and future growth.
• Our business is heavily dependent on the macroeconomic conditions of Malaysia, the overall economic growth of which could adversely affect our business.
• Rising employment costs in Malaysia could further affect our financial position.
• Unforeseeable events such as natural disasters, inclement weather, acts of war, terrorist attacks, political unrest, health epidemics and other uncontrollable events could significantly disrupt our business operations.
Risks Related to Our Initial Public Offering and Ownership of Our Ordinary Shares
• The market price of our ordinary shares may be volatile or may decline regardless of our operating performance, and could result in significant losses and you may not be able to resell your shares at or above the initial public offering price.
• We are a “controlled company” within the meaning of the Nasdaq Listing Rules and, as a result, will rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.
• We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our ordinary shares less attractive to investors.
• As an exempted company with limited liability incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the corporate governance requirements in the Nasdaq Listing Rules. These practices may afford less protection to shareholders than they would enjoy if we complied fully with the corporate governance requirements in the Nasdaq Listing Rules.
Corporate History and Structure
We commenced operations in 2015 when we opened our restaurant outlet offering chicken hotpot in Malaysia and has expanded into a specialty hotpot restaurant chain with a total of 32 company-owned restaurant outlets and franchised restaurant outlets in Malaysia and outside Malaysia as of the date of this prospectus. CCH Holdings Ltd was incorporated in the Cayman Islands on December 2, 2024 as an exempted company with limited liability under the Companies Act. As a holding company without any business operations, CCH Holdings Ltd wholly owns our Malaysian subsidiary, Signature Tasty Claypot House Holding Sdn. Bhd. (“STCH Holding”), which, in turn, wholly owns our other five Malaysian subsidiaries.
STCH Holding was incorporated on May 8, 2019, currently the operating entity of four of our company-owned restaurant outlets. It also serves the following operational functions: (i) the operator of our central kitchen; (ii) the licensor for our brands Chicken Claypot House and Zi Wei Yuan and (iii) a general trader since we are involved in the business of selling food ingredients and condiments to local distributors or franchised restaurant outlets. CCH Holdings Ltd acquired 100% of the equity interests in STCH Holding on June 5, 2025.
Each of our other five Malaysian subsidiaries was originally incorporated as an operating entity of our restaurant outlets during the course of our continued expansion. STCH Holding acquired 100% of the equity interests in each of the following entities in May 2025 as a result of a reorganization in preparation of this offering.
• Signature Tasty Claypot House (GH) Sdn. Bhd. (“STCH GH”), incorporated on October 1, 2019, is currently the operating entity of one of our company-owned restaurant outlets.
• CHH KL Group Sdn. Bhd. (“CHH KL”), incorporated on March 9, 2021, is currently the operating entity of four of our company-owned restaurant outlets.
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• GTL F&B Sdn. Bhd. (“GTL F&B”), incorporated on November 11, 2021, is currently the operating entity of the food court operated by us.
• Zi Wei Yuan (Raja Uda) Sdn. Bhd. (“ZWY Raja Uda”), incorporated on April 11, 2022, is currently the operating entity of four of our company-owned restaurant outlets.
• CCH Tropika Sdn. Bhd. (“CCH Tropika”), incorporated on October 21, 2022, is currently the operating entity of one of our company-owned restaurant outlets.
The following diagram illustrates our corporate structure as of the date of this prospectus.

Implications of Being an Emerging Growth Company
As a company with less than US$1.235 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”). An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. Pursuant to the JOBS Act, we have elected to take advantage of the benefits of this extended transition period for complying with new or revised accounting standards. As a result, our operating results and financial statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised accounting standards. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.235 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which would occur if the market value of our ordinary shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.
Implications of Being a Controlled Company
Mr. Goh Kok Foong, our founder, chairman of board of directors and chief executive officer, currently beneficially owns 54% of our total issued and outstanding ordinary shares and total voting power. Upon the completion of this offering, Mr. Mr. Goh Kok Foong will beneficially own [ ]% of our total issued and outstanding ordinary shares
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and total voting power[, assuming that the underwriters do not exercise their over-allotment option, or [ ]% of our total issued and outstanding ordinary shares and total voting power, assuming that the over-allotment option is exercised in full]. As a result, we will be a “controlled company” as defined under the Nasdaq Listing Rules because Mr. Goh Kok Foong will hold more than 50% of the voting power for the election of directors. As a “controlled company,” we are permitted to elect not to comply with certain corporate governance requirements. If we rely on these exemptions, including an exemption from the requirement that a majority of our board of directors must be independent directors, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. See “Risk Factors — Risks Related to Our Initial Public Offering and Ownership of Our Ordinary Shares — We are a ‘controlled company’ within the meaning of the Nasdaq Listing Rules and, as a result, will rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.” Even if we cease to be a controlled company, we may still rely on exemptions available to foreign private issuers, including being able to adopt home country practices in relation to corporate governance matters and an exemption from the requirement that a majority of our board of directors must be independent directors. See the section of this prospectus captioned “Implications of Being a Foreign Private Issuer.”
Implications of Being a Foreign Private Issuer
We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers. Moreover, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. In addition, as an exempted company with limited liability incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq Listing Rules corporate governance listing standards. See “Risk Factors — Risks Related to Our Initial Public Offering and Ownership of Our Ordinary Shares — We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.” and “Risk Factors — Risks Related to Our Initial Public Offering and Ownership of Our Ordinary Shares — As an exempted company with limited liability incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the corporate governance requirements in the Nasdaq Listing Rules. These practices may afford less protection to shareholders than they would enjoy if we complied fully with the corporate governance requirements in the Nasdaq Listing Rules.” For details on the home country practice in relation to corporate governance matters that we elect to follow, see “Management — Committees of the Board of Directors — Compensation Committee” and “Management — Committees of the Board of Directors — Nominating and Corporate Governance Committee.”
Corporate Information
Our principal executive offices are located at No. 1, Jalan Perda Jaya, Kawasan Perniagaan Perda Jaya, 14000 Bukit Mertajam, Pulau Pinang, Malaysia. Our telephone number at this address is +(60) 4-5307694. Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168.
Investors should contact us for any inquiries through the address and telephone number of our principal executive offices. Our website is https://www.chickenclaypothouse.com.my. The information contained on our website is not a part of this prospectus.
Conventions that Apply to this Prospectus
Except where the context otherwise requires and for purposes of this prospectus only:
• “A&R Company Listing Articles” refers to the amended and restated memorandum and articles of association of the Company, substantially in the form set forth in Exhibit 3.2 to this prospectus;
• “CAGR” refers to compound annual growth rate;
• “China” or “PRC” refers to the People’s Republic of China, and for the purpose of this prospectus only, does not include the Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan;
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• “Companies Act” refers to the Companies Act (As Revised) of the Cayman Islands;
• “Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
• “Frost & Sullivan” refers to Frost & Sullivan Limited;
• “GAAP” refers to generally accepted accounting principles in the United States as in effect from time to time, consistently applied;
• “GDP” refers to gross domestic product;
• “Hong Kong” refers to the Hong Kong Special Administrative Region of China;
• “Indonesia” refers to the Republic of Indonesia;
• “JOBS Act” refers to the Jumpstart Our Business Startups Act of 2012, as amended;
• “MYR,” “RM” or “Malaysian Ringgit” refers to the legal currency of Malaysia;
• “Nasdaq Listing Rules” refers to the listing rules of the Nasdaq Stock Market LLC;
• “SEC” refers to the United States Securities and Exchange Commission;
• “Securities Act” refers to the Securities Act of 1933, as amended;
• “shares” or “ordinary shares” refers to our ordinary shares, par value US$0.00001 per share;
• “Thailand” refers to the Kingdom of Thailand;
• “U.S.,” “US” or “United States” refers to United States of America, its territories, its possessions and all areas subject to its jurisdiction;
• “U.S. dollars,” “USD,” “US$,” “dollars” or “$” refers to the legal currency of the United States; and
• “we,” “us,” “our,” “our company,” or the “Company” refers to CCH Holdings Ltd, a Cayman Islands company and its subsidiaries.
Substantially all of our revenues and expenditures are denominated in Malaysian Ringgit, whereas our reporting currency is the U.S. dollar. This prospectus contains translations of Malaysian Ringgit into U.S. dollars solely for the convenience of the reader. Unless otherwise stated, all translations of Malaysian Ringgit into U.S. dollar in this prospectus were made at the rate of MYR4.4695 to US$1.00, the noon buying rate on December 31, 2024, as set forth in the H.10 statistical release of the U.S. Federal Reserve Board. We make no representation that the Malaysian Ringgit or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Malaysian Ringgit, as the case may be, at any particular rate or at all.
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THE OFFERING
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Offering Price |
We currently estimate that the initial public offering price will be $[ ], which is the midpoint between US$[ ] and US$[ ] per ordinary share. |
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Ordinary shares offered by us |
[ ] ordinary shares (or [ ] ordinary shares if the underwriters exercise in full the over-allotment option). |
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Ordinary shares outstanding prior to the completion of this offering |
30,000,000 ordinary shares. |
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Ordinary shares outstanding immediately after this offering |
[ ] shares (or [ ] shares if the underwriters exercise in full the over-allotment option). |
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Over-Allotment Option |
[We have granted to the underwriters an option, which is exercisable within 45 days from the date of closing of this offering, to purchase up to an aggregate of 15% additional ordinary shares at the initial public offering price, less underwriting discounts.] |
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Use of Proceeds |
We estimate that we will receive net proceeds of approximately US$[ ] million (or US$[ ] million if the underwriters exercise their options to purchase additional ordinary shares in full) from this offering, assuming an initial public offering price of US$[ ] per ordinary share, which is the mid-point of the estimated range of the initial public offering price, after deducting estimated underwriting discounts, non-accountable expense allowance, and estimated offering expenses payable by us. We anticipate using the net proceeds of this offering primarily for expansion of our restaurant network and strategic investments or acquisitions, brand building and marketing, diversification of our peripheral products of food ingredients and condiments and/or sales channels of such products, and general corporate purposes. See “Use of Proceeds” for more information. |
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Lock-up |
[We, our directors and executive officers and existing shareholders holding 5% or more of the Company’s ordinary shares have agreed with the underwriter, subject to certain exceptions, not to sell, transfer or otherwise dispose of any ordinary shares or similar securities or any securities convertible into or exchangeable or exercisable for our ordinary shares, for a period of [six months] from the date of closing of this offering.] See “Shares Eligible for Future Sale” and “Underwriting.” |
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Listing |
We intend to apply to have our ordinary shares listed on the Nasdaq Capital Market under the symbol “CCHH.” The closing of this offering is conditioned upon Nasdaq’s final approval of our listing application. |
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Risk Factors |
See “Risk Factors” and other information included in this prospectus for a discussion of risks you should carefully consider before investing in our ordinary shares. |
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Capital Structure and Voting Rights |
Our authorized share capital is US$50,000 divided into 5,000,000,000 shares of a par value of US$0.00001 per share. Holders of ordinary shares are entitled to one vote per one ordinary share. See “Description of Share Capital.” |
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SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary consolidated statements of operations data and summary consolidated cash flow data for the years ended December 31, 2023 and 2024, and summary consolidated balance sheet data as of December 31, 2023 and 2024 have been derived from our audited consolidated financial statements included elsewhere in this prospectus.
Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our historical results are not necessarily indicative of results expected for future periods. You should read this Summary Consolidated Financial Data section together with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.
The following table presents our summary consolidated statements of operations data for the periods indicated.
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For the Years Ended |
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2023 |
2024 |
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Revenues |
$ |
9,775,038 |
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8,915,344 |
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||
|
– Revenues from third parties |
|
8,584,748 |
|
|
7,724,976 |
|
||
|
– Revenues from related parties |
|
1,190,290 |
|
|
1,190,368 |
|
||
|
Cost of revenues |
|
(7,565,559 |
) |
|
(6,509,083 |
) |
||
|
Gross profit |
|
2,209,479 |
|
|
2,406,261 |
|
||
|
|
|
|
|
|||||
|
Operating expenses |
|
|
|
|
||||
|
Selling and marketing expenses |
|
(493,101 |
) |
|
(263,871 |
) |
||
|
General and administrative expenses |
|
(979,973 |
) |
|
(816,122 |
) |
||
|
Gain from equity method investments |
|
28,747 |
|
|
8,873 |
|
||
|
Total operating expenses |
|
(1,444,327 |
) |
|
(1,071,120 |
) |
||
|
|
|
|
|
|||||
|
Income from operations |
|
765,152 |
|
|
1,335,141 |
|
||
|
|
|
|
|
|||||
|
Other income/(expenses) |
|
|
|
|
||||
|
Other income, net |
|
37,572 |
|
|
77,735 |
|
||
|
Financial expenses, net |
|
(118,256 |
) |
|
(131,683 |
) |
||
|
Total other expenses, net |
|
(80,684 |
) |
|
(53,948 |
) |
||
|
|
|
|
|
|||||
|
Income before income tax expense |
|
684,468 |
|
|
1,281,193 |
|
||
|
Income tax expense |
|
(315,854 |
) |
|
(367,792 |
) |
||
|
Net income |
$ |
368,614 |
|
$ |
913,401 |
|
||
8
The following table presents our summary consolidated balance sheet data as of the dates indicated.
|
As of December 31, |
||||||
|
2023 |
2024 |
|||||
|
Cash and cash equivalents |
$ |
1,094,705 |
$ |
545,472 |
||
|
Accounts receivable |
|
44,832 |
|
582,640 |
||
|
Inventories |
|
331,312 |
|
311,425 |
||
|
Amount due from related parties, current |
|
1,798,928 |
|
2,697,519 |
||
|
Prepaid expenses and other current assets |
|
880,304 |
|
1,259,867 |
||
|
Total current assets |
|
4,150,081 |
|
5,396,923 |
||
|
Amounts due from related parties, non-current |
|
128,205 |
|
727,891 |
||
|
Total non-current assets |
|
6,197,808 |
|
5,767,954 |
||
|
Total assets |
$ |
10,347,889 |
$ |
11,164,877 |
||
|
|
|
|||||
|
Bank overdrafts |
|
523,083 |
|
458,275 |
||
|
Deferred revenue |
|
58,969 |
|
36,952 |
||
|
Accounts payable |
|
302,751 |
|
562,304 |
||
|
Notes payable |
|
90,440 |
|
48,075 |
||
|
Income tax payable |
|
47,866 |
|
18,133 |
||
|
Current portion of long-term bank loans |
|
64,552 |
|
72,579 |
||
|
Amounts due to related parties, current |
|
349,793 |
|
177,075 |
||
|
Operating lease liabilities, current |
|
829,420 |
|
656,536 |
||
|
Finance lease liabilities, current |
|
33,280 |
|
35,265 |
||
|
Accrued expenses and other current liabilities |
|
1,070,540 |
|
713,130 |
||
|
Total current liabilities |
|
3,370,694 |
|
2,778,324 |
||
|
Long-term bank loans |
|
1,833,795 |
|
1,812,131 |
||
|
Total non-current liabilities |
|
2,852,303 |
|
2,180,893 |
||
|
Total liabilities |
|
6,222,997 |
|
4,959,217 |
||
|
Total shareholders’ equity |
|
4,124,892 |
|
6,205,660 |
||
|
Total liabilities and equity |
$ |
10,347,889 |
$ |
11,164,877 |
||
The following table presents our selected consolidated statements of cash flow data for the periods indicated.
|
For the Years Ended |
||||||||
|
2023 |
2024 |
|||||||
|
Net cash provided by/(used in) operating activities |
$ |
27,428 |
|
$ |
(297,730 |
) |
||
|
Net cash used in investing activities |
|
(989,700 |
) |
|
(1,081,507 |
) |
||
|
Net cash provided by financing activities |
|
789,247 |
|
|
767,919 |
|
||
|
Effect of exchange rate changes |
|
63,498 |
|
|
62,085 |
|
||
|
Net change in cash |
|
(109,527 |
) |
|
(549,233 |
) |
||
|
Cash, at beginning of the year |
|
1,204,232 |
|
|
1,094,705 |
|
||
|
Cash, at end of the year |
$ |
1,094,705 |
|
$ |
545,472 |
|
||
9
An investment in our ordinary shares involves significant risks. You should carefully consider all of the information in this prospectus, including the risks and uncertainties described below, before making an investment in our ordinary shares. Any of the following risks could have a material adverse effect on our business, financial condition, and results of operations. In any such case, the market price of our ordinary shares could decline, and you may lose all or part of your investment.
Risks Related to Our Business and Industry
Market recognition of our brands is crucial to our continued success, and any damage to our reputation could have an adverse impact on our business.
We believe that our continued success is attributed to the market recognition of our brands, especially Chicken Claypot House and Zi Wei Yuan. Our ability to safeguard and enhance the reputation of our brands is crucial to our continued success. However, customer confidence in us may decline due to negative publicity, even if proven to be inaccurate at a later stage, regarding food safety issues, quality of service, public health concerns or government or industry findings concerning our restaurant outlets or the restaurant industry as a whole.
Our reputation may be further damaged by complaints lodged by customers. We are committed to addressing the customer complaints towards the satisfaction of the affected customers and would try to reduce such incidents to the largest extent possible by implementing various remedial measures and improving our operation protocols. To the best of our knowledge, we are not aware of any customer complaints seeking material compensation that could have a material adverse effect on our business and results of operations during the two years ended December 31, 2023 and 2024. Nevertheless, if there are a significant number of complaints or claims against us, even if meritless or unsuccessful, they could force us to divert management and other resources from our business concerns and result in negative publicity. Customers may lose confidence in our brands, which may lead to decline in number of customer visits and business of our restaurant outlets.
Meanwhile, as we continue to open more company-owned restaurant outlets as well as to cooperate with more licensees to open up more franchised restaurant outlets under our brands, and also extend our geographic reach while doing so, maintaining quality and consistency in our food and services may become increasingly difficult and there is no assurance that customer confidence in our brands will not diminish. If customers perceive or experience a deterioration in our food quality, service, or ambiance, or believe in any way that we fail to deliver a consistently positive dining experience, the value of our brands could suffer, which could have an adverse effect on our business, results of operations and financial condition.
Our financial condition and business operations may be materially and adversely affected if we are unable to retain existing customers or attract new ones by delivering high-quality dining experience.
Guest satisfaction level is an important factor in the success of restaurants in the catering services industry. As we continue to grow in size, expand our geographic outreach and diversify our food offerings, maintaining food and services quality and consistency may become increasingly difficult and we cannot assure you that customer confidence in our brand will not diminish. The quality of our dining experience may be adversely impacted by the following factors, including, among others:
• long waiting time;
• decline in the quality of current food offerings;
• failure to provide services to the satisfaction of our guests;
• inability to introduce new menu items that gain popularity among guests;
• inability to meet the needs of our guests and adapt to changes in consumer tastes and preferences in each of the countries/regions that we operate in;
• any significant liability claims or food contamination complaints from our guests;
• inability to offer quality food at affordable prices; and
• decrease in the attractiveness or quality of design of our restaurants.
10
If our consumers experience or believe to have encountered one or more of the above, they may conclude that we are failing to deliver an enjoyable dining experience that meet their expectations, our reputation could hence be adversely affected. The number of customers visiting our restaurant outlet may decrease and we may also be unable to attract new customers, both of which could have a material and adverse impact on our business.
Our continued success depends on our ability to react to evolving customer preferences.
We have been striving to keep abreast to the ever-changing customer preferences in order to remain competitive in the market. We are committed to regularly updating our menu and introducing innovative dishes from time to time to adapt to dining trends in different geographical locations, shifts in consumer tastes and nutritional trends. In the past, we have launched a number of new soup base flavors of our chicken hotpot and fish head charcoal pot with a view to cater to our customers’ changing tastes and bring about new experiences, which are all well-received. Nevertheless, we cannot guarantee that our restaurant outlets’ existing and new menu items will be commended by our target customers in the future. We cannot assure you that hotpot is always preferred by guests among all cuisine styles as well. In addition, consumer tastes and preferences are constantly changing and if we fail to anticipate, identify and interpret the latest food trends, or are unable to respond to such changes in a timely manner or at all, or if our competitors are able to address these concerns more effectively, we may face a decrease in guest visits and our business or lose one of our competitive edges to our competitors in developing and introducing dishes, thus our financial condition and results of operations may be materially and adversely affected.
We may not be successful in expanding our network of restaurant outlets.
To further increase our market share, we plan to expand our geographic coverage and deepen our market penetration by opening more restaurant outlets in both our existing markets and new markets by opening up more company-owned restaurant outlets and cooperating with more licensees to open up more franchised restaurant outlets under our brands. However, we may face various challenges in achieving our planned expansion of our network of restaurant outlets. The number and timing of the restaurant outlets opened during any given period are subject to a number of risks and uncertainties, including but not limited to our ability to:
• identify, or assist our licensees to identify suitable locations for opening new restaurant outlets and secure leases on commercially reasonable terms;
• effectively manage our supply chain and ensuring our suppliers continue to meet our quality and other standards and satisfy our current and future operations’ needs for all franchised restaurant outlets throughout our network;
• hire qualified employees and provide adequate training;
• engage and retain qualified new licensees;
• control operational costs; and
• obtain or assist our licensees to obtain, the required licenses, permits and approvals;
There is no assurance that we will be able to open new restaurant outlets. Any factors listed above, either individually or in aggregate, may delay or fail our plan to increase the number of our company-owned restaurant outlets or franchised restaurant outlets in desirable locations at manageable cost levels. In addition, our licensees, as the case may be, may not be able to successfully operate the existing restaurant outlets and may choose to close certain restaurant outlets from time to time, reducing the royalties payable to us, which would adversely affect our business, financial condition or results of operations.
The costs incurred in the opening of new restaurant outlets and the expansion plans may place substantial stress on our managerial, operational and financial resources. There is no assurance that our managerial, operational and financial resources will be adequate to support the pace of our expansion. If it is determine that such resources are insufficient, our expansion plans may be slowed down or halted.
Even if new restaurants are opened, they may be less profitable than our existing restaurants if they turn out to be popular in the communities they are located in or fail to compete against other established brands, or there is any decrease in average sales or average spending per customer and/or any increase in construction, occupancy or operating
11
costs due to any reason. If any new restaurant outlet experiences prolonged delay in breaking even or achieving our desired level of profitability or operates at a loss, our operational and financial resources could be strained and our overall profitability could be adversely affected.
We may need to obtain financing for our expansion. If we fail to obtain sufficient funding, our growth may be adversely affected.
We primarily fund our operations, expansion and capital expenditures with cash generated from our operations, banking facilities and, in the future, net proceeds we received from this offering. As our business scale grows, we may in the future require additional cash resources to finance our continued growth or other developments. The amount and timing of such additional financing needs will vary depending on the timing of our new restaurant openings, investments in new restaurants and the amount of cash flow from our operations. Our ability to obtain the necessary capital on acceptable terms is subject to a variety of uncertainties, some of which are beyond our control, including macroeconomic climate and capital market conditions, the performance of the catering services industry in general, credit availability from banks or other lenders, investors’ confidence in us, and our operating and financial performance in particular. There is no assurance that we will be able to obtain any future financing in amounts or on terms acceptable to us. The unavailability of financing on terms acceptable to us or at all could materially adversely affect our business, results of operations and implementation of our growth prospects.
Our historical financial and operating results may not be indicative of future performance, and we may not be able to achieve and sustain the historical level of our profitability.
For the years ended December 31, 2023 and 2024, we recorded a net income of US$368,614 and US$913,401, respectively. However, our historical financial and operating results may not be indicative of our future performance. Our future profitability will depend on a variety of factors, including the performances of our new and existing restaurant outlets, competitive landscape, prices of supplies, customer preferences and macroeconomic and regulatory environment. In particular, as we open or license new restaurant outlets, our historical financial and operating results for the existing restaurant outlets may not be indicative of that of our new restaurant outlets. You should not rely on our historical results to predict the future performance of our ordinary shares.
Any shortage or interruption in supply could have a material adverse effect on our business, financial condition and results of operations.
Our business is underpinned by a stable supply of fresh food ingredients, especially Chinese garden chicken and grouper fish, which are key ingredients of our signature dishes. Any significant interruption in the supply of raw food materials could have a material adverse effect on our business and profitability. However, we cannot ensure that all of our suppliers will continue to provide us with food ingredients and other raw materials that satisfy our selection criteria and quality requirements in a timely manner at all times since the supply of food ingredients are subject to a variety of factors, some of which are beyond our control. These factors include fluctuations in aggregate supply and demand and external conditions, such as seasonal shifts, climate, natural disasters, diseases, suppliers’ ceasing operations, delays in logistics and transportation, labor strikes or changes in laws and regulations. In addition, our arrangements with suppliers and service providers generally do not prohibit them from working with our competitors, and these parties may be more incentivized to prioritize the orders of our competitors in case of a short supply. If we were to change suppliers, there is no assurance that we will be able to find suitable replacements in time, or at all, or that our contractual terms with any new supplier or service provider will be as favorable as our exiting arrangements. If any of the above risks relating to disruption of supply materializes, we may be forced to remove certain menu offerings from our restaurants or even suspend operation in certain restaurant outlets before the resumption of supply, which in turn could materially affect our business, financial condition and results of operations.
Our profit margins and operating results are susceptible to fluctuations in the costs of raw materials used in our restaurants.
We are committed to offer delicious food to customers at an affordable price. However, any rise in our costs, particularly a rise in the cost of the ingredients we use, may lead to declines in our profit margins and increase in our operating costs. Our suppliers may be affected by costs of production and transportation, rising labor costs and other expenses and they may pass that onto us from time to time. If we are unable to manage such increase in costs or to
12
locate alternative suppliers on commercially viable terms within a short period of time, our profit margin could be adversely affected. There is no assurance that we can continuously purchase food ingredients from our suppliers at commercially agreeable prices without any interruption.
We may not be able to adequately manage our inventory.
Due to the nature of our business, we routinely handle a large amount raw food material that have limited shelf lives such as poultry, fish, vegetables and other food ingredients. The shorter the shelf life and the longer we possess such inventories, the higher our risk of inventory obsolescence is. We operate an inventory management system in our central kitchen, our warehouse in Kuala Lumpur, Malaysia and each of our restaurant outlets, recording the expiry date of each batch of raw materials. However, real-time consumption level of our food ingredients is subject to various factors beyond our control, including spontaneous fluctuation of customer flow and diners’ preferences. Our inventory levels may not be able to meet the demands of every guest, which may have an adverse impact on our sales revenue. We also cannot guarantee that all of our food inventory can be consumed within its shelf life. In order to maintain our high food quality standard, any food material reaching the expiry date will be disposed of in time with zero tolerance, which may increase our operation costs which could hinder our level of profitability.
We rely on our central kitchen to procure, prepare, supply and store certain food ingredients to be used in our restaurants and a significant disruption in the operations of our central kitchen could negatively impact our business.
We operate a central kitchen to serve as (i) the centralized processing facility for certain ingredients (including pre-made soup bases, sauces and pre-cut vegetables; (ii) the central storage of processed ingredients such as frozen chicken and seafood, dried spices and (iii) our procurement center in managing supplies and ingredients purchased in bulk.
Our central kitchen is an essential part of our daily operations because it has an industrial grade kitchen equipped with a number of kitchen appliances to cook pre-made soup bases and process ingredients to be delivered to each of our restaurant outlets. Any interruption of electricity and water supplies at our central kitchen, or delays in logistics may result in failure to store, process or deliver food ingredients to our restaurant outlets in a timely manner. Additionally, limited use or a break in operations of our central kitchen due to any reason may force our food processing procedures to be relocated to smaller commercial kitchens or at each of our restaurant outlets, which, in turn, could result in an increase the workload of our restaurant staff. It may also cause our restaurant outlets to suspend the provision of certain items from the menu, whether temporarily or for a longer period which could, in turn, affect our customer satisfaction level and result in an adverse impact on our financial performance and result of operations.
We will continue to incur costs on marketing campaigns, but there is no guarantee that such marketing efforts will be effective.
We regularly incur costs in our marketing efforts to attract and retain customers. Our marketing activities include launching of promotion campaigns during holidays, engagement of celebrities as our ambassadors and posting of advertisements both online and offline. However, some of our marketing activities may not be successful, resulting in expenses incurred without the benefit of higher revenue. Additionally, our competitors may have greater financial resources, which allow them to spend more on marketing and advertising than we are currently able to. Should our competitors increase spending on marketing and advertising, or our marketing budget is decreased for any reason, or should our promotional efforts be less effective than those of our competitors, there could be a material adverse effect on our results of operations and financial condition.
Food safety concerns and concerns about the health risk of our food offerings may have an adverse effect on our business.
As a restaurant operator, the quality and safety of the food we serve in our restaurant outlet is our priority and we face risks in relation to instance of food safety incidents. Maintaining consistent food quality depends significantly on the effectiveness of our quality control protocols that we currently have in place, which in turn depends on a number of factors, including but not limited to the design of such protocols in our central kitchen and restaurant outlets, the effectiveness of employee trainings to ensure our employees adhere to our quality control protocols and the ability to identify and prevent any potential violation of such protocols. There can be no assurance that our quality control
13
protocols will always prove to be effective and can identify all the potential risks and issues in relation to food safety arising from our restaurant operations. While we have been maintaining vigilance in ensuring the quality of food products provided by our suppliers, there can be no assurance that our suppliers may always be able to adopt appropriate quality controls and meet our stringent quality control requirements. We cannot guarantee that we can successfully prevent all failures in our or our suppliers’ quality control system. Any significant failure or deterioration of such may result in food safety incidents, which could lead to related liability claims, complaints and negative publicity, reduced customer traffic at our restaurants, imposition of penalties on us by relevant authorities and compensation ordered by courts and revocation or suspension of our food and beverage licenses. All of these consequences, if materialized, may have an adverse effect on our reputation, financial condition and results of operations.
Our business may also be affected by media reports in connection with health concerns of certain food products. Our food offerings and soup bases contain fats, salts, pre-made sauces and other compounds, the health effects of which are the subject of public scrutiny, including the suggestion that excessive consumption of fats, salts and other condiments may lead to a variety of adverse health effects. An unfavorable report on the health effects of such substances presents in our products, or negative publicity or litigation arising from other health risks such as obesity, could significantly reduce the demand for our food products. A decrease in customer traffic as a result of these health concerns or negative publicity could materially and adversely affect our brand image and our results of operations.
The specialty hotpot restaurant market in Malaysia is highly competitive and any failure to successfully compete with other restaurants may adversely affect our business.
According to Frost & Sullivan, the catering services market in Malaysia is fragmented and characterized by increased competition, as numerous establishments strive to capture the attention of the same customer base. Key competitive factors include types of cuisine, quality of food and services, price, restaurant locations and overall dining experience. Many of our competitors are chain restaurant operators who possess an abundance of financial and operational resources, enjoy economies of scale and have established prominent market position and brand recognition, with which they can significantly boost their competitive advantage. Any failure to compete favorably against them on those fronts would have an adverse impact on our business, operational results and financial position.
In addition, with the plethora of dining options available to customers for specialty hotpot, including a greater variety of broths, sauces and dishes, gaining an edge in the industry has become more difficult. We may need to modify or include new items in our menu to enrich our offerings from time to time. However, there is no guarantee that such attempts will be successful or will not reduce our profitability.
Our business may be affected by a lack of new suitable locations on commercially viable terms, or any increase in rental costs of the existing tenancy agreements of our leased properties, a failure to renew the same, or our current restaurant locations may become unattractive.
We operate all of our restaurant outlets on leased properties and we may be vulnerable to fluctuations in rental costs. We may be unable to accurately predict rental rates when we renew our existing tenancy agreements and substantial increase in rentals will adversely affect our profitability and financial position. There is also no guarantee that we can negotiate the terms of renewal with the landlords before the expiry of our existing tenancy agreements.
The success of any restaurant depends on its location selection and we maintain a set of selection criteria at high standards. In particular, our restaurant outlets will aim to be located in areas with high pedestrian traffic and can be easily accessed by customers by a wide range of modes of transportation. The floor area of each of our restaurants must be large enough to accommodate customers’ needs. In view of our stringent criteria in selecting restaurant locations, commercially viable choices in Malaysia or other jurisdictions that we may have operations in the future may be limited.
In addition, the demographics or economic conditions of the communities where our restaurant outlets are currently operating in could change in the future, potentially resulting in reduced sales in these locations. If we cannot relocate or secure new premises at desirable locations at prices within our budget, our ability to implement our growth strategy will be strained.
14
Our results of operations may fluctuate due to seasonality.
We experience certain levels of seasonal fluctuations. For instance, we normally record higher customer traffic and revenues during Chinese New Year and other public holidays due to customs of the Chinese community of family gathering. As we expand our network of restaurant outlets to various other regions, our financial condition and results of operations may fluctuate due to seasonality in accordance with local cultures and practice and our historical results may not be indicative for further performance.
As we expand our geographic reach in the future, our multi-jurisdictional operations may lead to increasing risks and uncertainties and our management system may not be effective to address such risks and uncertainties.
Our restaurant outlets, including both company-owned and franchised outlets, are current located in four different jurisdictions. We also plan to further extend our company-owned and franchised restaurant network to additional jurisdictions. However, operation in those jurisdictions and expanding to new regions may expose us to various risks, which may include, among others:
• failure to anticipate changes to the competitive landscape in the new market due to lack of familiarity with the local business environment;
• different consumer preferences and discretionary spending patterns;
• difficulty in finding reliable suppliers of food ingredients meeting our quality standards at acceptable prices and quantities;
• the infringement of our intellectual property rights in foreign jurisdictions;
• economic, financial and market instability and credit risks;
• material tariffs imposed on our food ingredients imported from other countries;
• difficulties and costs associated with complying with, and enforcing remedies under, a wide variety of complex local and international laws, treaties and regulations;
• difficulties with localized management and training of licensees or employees of licensees;
• exposure to litigation or third-party claims in different jurisdictions;
• foreign currency exchange controls and fluctuations;
• uncertainties in the interpretation and application of tax laws and regulations, more onerous tax obligations and unfavorable tax conditions; and
• cultural differences and language difficulties.
As a result of the above factors, our ability to operation in jurisdictions other than Malaysia may be restricted, or our restaurants in those jurisdictions may take longer than expected to be established and reach, or may never reach, expected sales and profit levels, thereby affecting our overall profitability. Our brand image and reputation may also be adversely and materially affected as a result.
We may not be able to collect all of our accounts receivable and thus are exposed to credit risk.
Our accounts receivable are primarily receivables from local distributors to whom we sell food ingredients and condiments, credit card networks, food delivery platforms and payment platforms and others. At the end of each year or period, we assess whether the credit risk of a financial instrument has increased significantly since its initial recognition. When making the assessment, we compare the risk of a default occurring on the financial instrument as of the reporting date with the risk of a default occurring on the financial instrument as of the date of initial recognition and consider reasonable and supportive forward-looking information. Accounts receivable that are ultimately deemed to be uncollectible, and for which collection efforts have been exhausted, are written off against the provision for credit losses. As of December 31, 2023 and 2024, the provision of allowance for expected credit losses of our accounts receivable was US$52,430 and US$138,326, respectively. We believe that this amount would not materially affect
15
our operations and from past experience, credit risk from credit card networks, food delivery platforms and payment platforms are relatively low. However, we cannot assure you that we will be able to collect our accounts receivable in full, or at all, in the future, despite our efforts to conduct credit assessment on them.
We have engaged in transactions with related parties, and such transactions present possible conflicts of interest that could adversely affect our business and results of operations.
We have entered into a number of transactions with related parties, including with entities controlled by Mr. Goh Kok E, our chief operating officer and a director nominee of our Company, and entities controlled by Mr. Goh Kok E and Mr. Goh Kok Foong, our chairman of board of directors and chief executive officer. These transaction are mainly consisted of sales of food ingredients and condiments to and franchise income from related parties who are our licensees. See “Related Party Transaction — Other Related Party Transactions” for details. For the years ended December 31, 2023 and 2024, our revenues generated from entities controlled by Mr. Goh Kok E were US$909,739 and US$879,196, which consisted of 9.3% and 9.9% of our total revenues for each of the two years, respectively. For the years ended December 31, 2023 and 2024, our revenues generated from entities controlled by Mr. Goh Kok E and Mr. Goh Kok Foong were US$11,727 and US$66,522, which consisted of 0.1% and 0.7% of our total revenues for each of the two years, respectively. We may in the future enter into additional transactions with entities controlled by Mr. Goh Kok E and/or Mr. Goh Kok Foong. Transactions with these related parties may present potential conflicts of interest, as the interests of these entities and their shareholders may not align with the interests of us and our minority shareholders with respect to the negotiation of, and certain other matters related to, our business transactions with such entities.
We rely on the laws of Cayman Islands, which provide that directors owe fiduciary duties to the company, including a duty of loyalty, a duty to act honestly and a duty to act in what they consider in good faith to be in our best interests. Nevertheless, we may have achieved more favorable terms if such transactions had not been entered into with related parties and these transactions, individually or in the aggregate, may have adverse effect on our business and results of operations, attract scrutiny from regulators and result in government enforcement actions or other litigations.
Any failure of our information technology system could interrupt our operations and adversely affect our business.
We have installed a computerized Point of Sale (“POS”) system at each of our restaurant outlets for settling digital payments, recording invoices, sales revenues and operating expenditure incurred. We rely on the POS system and network infrastructure to monitor the daily operations of our restaurant outlets and to collect accurate up-to-date financial and operating data for business analysis. Any damage or failure of our computer system or network infrastructure could limit our ability to collect important sales data, which is highly likely to have an adverse effect on our business and results of operations.
The payment methods that we accept subject us to third-party payment-related risks.
We have set up third-party payment with credit card service providers and various payment platforms, such as Visa, Mastercard, American Express, Touch ‘n Go eWallet and DuitNow, to facilitate digital payments widely used by our customers. Therefore, the ability to accept payments through these channels are important for our day-to-day operation. If we fail to extend or renew the agreements with these third-party payment providers on acceptable terms or if they are unwilling or unable to provide us with payment service, or if they increase the fees they charge for these services, our business and results of operations could be harmed. Moreover, to the extent we rely on the settlement of payment through these third-party payment processors, any defects, failures and interruptions in their systems could disrupt our business.
We may be unable to detect, deter and prevent all instances of fraud or other misconduct committed by our employees, suppliers or other third parties.
We may be exposed to fraud, bribery or other misconduct committed by our employees, suppliers or third parties that could subject us to financial losses and sanctions imposed by governmental authorities, which may adversely affect our reputation. In particular, being in the restaurant business, we usually receive and handle relatively large amounts of cash in our daily operations. We implement internal procedures and policies to monitor our operations and ensure overall compliance, specifically in relation to employee conduct and cash management. As of the date of this prospectus, we are not aware of any instances of fraud, bribery, and other misconduct involving employees, suppliers and other third parties that had any material and adverse impact on our business and results of operations. However,
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we cannot assure you that there will not be any such instances in the future. Although we consider our internal control policies and procedures to be adequate, we may be unable to prevent, detect or deter all such instances of misconduct. Any such misconduct committed against our interests, which may include past acts that have gone undetected or future acts, may have a material and adverse effect on our business and results of operations.
We may be involved in claims or proceedings in connection with certain proprietary know-how or intellectual property, including our recipes, which, in turn, could harm the value of our brand and adversely affect our business.
Our proprietary know-how, recipes, trade secrets and other intellectual property, including our brand names and logos are important to our business. We include confidentiality and non-disclosure provisions in letter of employment issued to key management and operating personnel and licensing agreements to our licensees who may have access to our proprietary know-how, recipes and trade secrets. We also take other precautionary measures to protect our intellectual properties. However, we cannot assure you that these measures are adequate and effective in preventing others from independently developing or otherwise obtaining access to our proprietary know-how, recipes and trade secrets. In particular, our signature dish, Special Taste Chicken Claypot, is well known to our customers and is essential to our success and competitiveness in the catering services industry. However, we do not have any intellectual property rights over this self-formulated dish, we may be unable to protect the recipe of our signature dish. Hence, if our recipe for our Special Taste Chicken Claypot is advertently leaked or misappropriated by our competitors, we may not be able to request desistance from such behavior by bringing legal proceedings. The uniqueness and the appeal of dishes in our restaurants may be reduced as a result, and our business and results of operations could be adversely affected.
We are also susceptible to brand infringement such as counterfeiting and other unauthorized uses of our intellectual property rights. Unauthorized use of our trademarks and trade names by unrelated third parties or the presence of imitators who operate restaurants with misleadingly similar names with our restaurants but offering inferior food and services may tarnish our brand image and damage our reputation. However, it is not possible to detect all instances of brand infringement in a timely manner. Additionally, if instances of brand infringement are detected, we may, from time to time, be required to institute litigation, arbitration or other proceedings to enforce our intellectual property rights, which could be time-consuming and expensive to resolve and would divert our management’s time and attention regardless of its outcome, materially and adversely affecting our business, financial conditions and results of operations. We also cannot guarantee the outcome of such proceedings as there may be legal or factual circumstances which give rise to uncertainty as to the validity, scope and enforceability of our intellectual property rights in the brand assets. Even if these proceedings are resolved in our favor, we may not be able to successfully enforce the judgment and remedies awarded by the relevant authority and the remedies may not be adequate to compensate us for our actual or anticipated losses, whether tangible or intangible.
On the other hand, we may face claims of infringement of intellectual rights against us. While we spend effort to avoid infringement of intellectual property during the ordinary course of our business, there may be existing intellectual property that we are unaware of, which we might inadvertently infringe. If we become subject to a claim of infringement, regardless of the merit of the claim or its defenses, the claim could require costly litigation to resolve and the payment of substantial royalty or license fees, lost profits or other damages, divert significant time and attention of the management, require us to discontinue materials with intellectual property rights in our operations, cause us to enter into unfavorable royalty or license agreements, and/or require us to spend additional resources to develop an alternative on our own. Any one or more of the above could harm our business, results of operations and financial condition.
Engagement with our key personnel is pivotal to our future success, and our business could be adversely affected if we lose their services or they are unable to successfully manage our growing operations.
The continuing service and performance of our key management personnel of our Company is crucially important to our operation. We need to be able to attract, retain and motivate sufficient number of highly experienced management and operating personnel, including our directors, head chef and restaurant managers, to maintain the quality of offering at our restaurant outlets and materialize our expansion plan. If any member of our key management personnel is unable to perform his or her duties or effectively manage our business, we may be unable to expand at the pace or in the manner that we expected. Qualified management team and operating personnel in the restaurant industry in Malaysia are highly sought after. We may not be able to retain our existing key management and operating personnel or attract such talents in the future.
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If any of our key personnel is unable or unwilling to continue his or her service with the Company, we may not be able to find a replacement in time or at all, and our business could be disrupted and our results of operations could be adversely affected. In addition, if any member of our key personnel joins a competitor or sets up a competing business, we may lose business secrets and knowhow as a result.
We cannot guarantee that we will not be involved in claims, disputes and legal proceedings in our ordinary course of business.
From time to time, we may be involved in claims, disputes and legal proceedings in our ordinary course of business. These may concern issues relating to, among others, food safety and quality incidents, breach of contract, labor disputes from our employees and former employees and infringement of intellectual property rights. As of the date of this prospectus, we are not involved in any litigations or legal proceedings that may materially affect our business and results of operations. Furthermore, claims, disputes or legal proceedings against us may be caused by defective supplies sold to us by our suppliers, who may not be able to indemnify us in full and in a timely manner, or at all, for any costs that we incur as a result of such claims, disputes and legal proceedings. Any claims, disputes or legal proceedings initiated by us or brought against us, with or without merit, may result in substantial costs and diversion of resources, and if we are unsuccessful, could materially harm our reputation and results of operations.
Our insurance coverage may be insufficient to protect us against potential liabilities arising in the course of operations.
We maintain various insurance policies, such as employees’ compensation insurance, fire insurance and public liability insurance. However, our insurance coverage is still limited in terms of amount, scope and benefit. Consequently, we are exposed to risks including, but not limited to, accidents or injuries in our restaurants, food factory and office that are beyond the scope of our insurance coverage, or other accidents for which we do not currently maintain insurance, loss of key management and personnel, business interruptions, natural disasters, terrorist attacks and social instability or any other events beyond our control. Any business disruption, litigation or legal proceedings or natural disaster, such as epidemics, pandemics or earthquakes, or other events beyond our control could result in substantial costs and the diversion of our resources. Our business, financial condition and results of operations may be materially and adversely affected as a result.
Fluctuations in exchange rates could have a material and adverse effect on our results of operations
Because we conduct a significant and growing portion of our business in currencies other than the US dollars but report our consolidated financial results in US dollars, we face exposure to fluctuations in currency exchange rates. As exchange rates vary, revenue, cost of raw materials, depreciation and amortization, operating expenses, other income and expenses, and assets and liabilities, when translated, may also vary materially and thus affect our overall financial results. We have not entered into any hedging transactions to reduce our exposure to foreign exchange risk. Currently, these risks are not material to our financial condition or results of operations. As we expand internationally, our exposure to foreign currency translation and transaction risks may become more significant.
Rising interest rates could negatively impact our performance and restaurant expansion plans.
We are exposed the risk of increased interest rates on our bank overdrafts, long-term bank loans and lease liabilities. We are also exposed to cash flow interest risk in relation to variable-rate bank balances, and variable-rate bank borrowings which carry prevailing market interests. We attempt to minimize this risk and lower our overall borrowing costs through maintaining a balanced portfolio of fixed rate and floating rate bank borrowings and bank balances.
This risk has not had a material impact on our overall borrowing cost or our financial performance. However, in the event that we fail to control this risk in the future, rising interest rates could significantly increase our cost of borrowing or could make it difficult for us to obtain financing in the future. An increased cost of borrowing would make it more expensive for us to acquire or lease properties to convert into a company-owned restaurant, which may negatively affect our performance. If we are unable to obtain financing in the future, our growth could be limited, which could negatively impact our expansion plans.
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Risks Related to the Jurisdictions Where We Operate
Any adverse changes in the political, economic, legal, regulatory taxation or social conditions in the jurisdictions that we operate in or intend to expand our business may have a material adverse effect on our operations, financial performance and future growth.
Our business, prospects, financial condition and results of operations are dependent on and may be adversely affected by political, economic, social and legal developments that are beyond our control in Malaysia or other jurisdictions in which we operate or intend to expand our business into. Such political and economic uncertainties may include risks of war, terrorism, nationalism, expropriation or nullification of contracts, changes in interest rates, economic growth, national fiscal and monetary policies, inflation, deflation, methods of taxation and tax policy. Negative developments in the socio-political climate of these jurisdictions may also adversely affect our business, prospects, financial condition and results of operations. These developments may include, but are not limited to, changes in political leadership, nationalization, price and capital controls, sudden restrictive changes to government policies, introduction of new taxes on goods and services and introduction of new laws, as well as demonstrations, riots, coups and war. These may result in the nullification of contracts and/or prohibit us from continuing our business operations.
There can also be no assurance that we will be able to adapt to the local conditions, regulations and business practices and customs of the jurisdictions in which we expand into. Any changes implemented by the government of these regions resulting in, amongst others, currency and interest rate fluctuations, capital restrictions and changes in duties and taxes detrimental to our business could materially and adversely affect our business, prospects, financial condition and results of operations.
Our business is heavily dependent on the macroeconomic conditions of Malaysia, the overall economic growth of which could adversely affect our business.
The catering services industry in Malaysia is affected by macro-economic factors, including changes in international, national, regional and local economic conditions, employment levels, visitor arrivals and spending power of our target customers. Any global financial crisis, global or regional political and economic instability, wars, terrorism, civil unrest, deterioration of the economy in Malaysia, decrease in disposable income of consumers, fear of a recession and decrease in consumer confidence may lead to a reduction in the number of customer visits and average spending per customer at our restaurant outlets. In addition, if inflation were to significantly increase our business costs, our financial condition and results of operations may be adversely affected.
These macroeconomic factors could also affect the ability of our current or potential suppliers to produce or supply materials or services relevant to our business. Our licensees may also have a reduced ability to fulfill their obligations under their contractual arrangement to us, or even remain in business. If they are unable to perform their contracts with us, we may experience significant disruption in business, which reduces our revenues and profitability.
Rising employment costs in Malaysia could further affect our financial position.
According to Frost & Sullivan, salary levels of employees in the catering services industry in Malaysia have been on the rise in recent years. During the two years ended December 31, 2023 and 2024, our staff costs amounted to approximately US$2.4 million and US$2.0 million, respectively, representing approximately 32% and 30% of our total cost of revenues, respectively. In addition, on February 1, 2025, the new minimum wage in Malaysia has increased from MYR1,500 to MYR1,700, which applies to employers with five or more employees and those involved in professional activities as defined by the Malaysia Standard Classification of Occupations 2020 (“MASCO”), regardless of the number of employees. Starting from August 1, 2025, such minimum wage will extend to all employers, regardless of the number of employees they have. This rise in salary level, our staff costs would likely increase as a result. As wages increase, competition for qualified employees also increases, which may indirectly result in further increase in our staff costs, which in turn would materially affect our business and results of operations adversely.
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Unforeseeable events such as natural disasters, inclement weather, acts of war, terrorist attacks, political unrest, health epidemics and other uncontrollable events could significantly disrupt our business operations.
Our operations are susceptible to interruption by fires, floods, typhoons, hardware and software failures, computer viruses, power failures and shortages, health epidemics, terrorist attacks and other events beyond our control.
Our business activities are principally carried out in Malaysia, and we intend to expand our operations across new markets in Southeast Asia, Hong Kong, Taiwan and the U.S. Our geographic presence in Southeast Asia may make us vulnerable in the event of increased tension or hostilities in certain countries. There is also a possibility of natural disasters such as floods, fires, extreme weather conditions and earthquakes happening, leading to evacuations and other prolonged disruptions to our operations. However, prompt delivery of our food ingredients and other supplies to our restaurant outlets is essentially to our business. If such events beyond our control happen, it could lead to delays or loss of deliveries of food supplies, especially for perishable food materials, such as fresh or frozen ingredients. This may lead to in an increase in our operating costs, a loss of revenue or claims by customers concerning the quality food and services we provide, hence damaging our business and reputation. Other events such as public demonstrations, traffic accidents, power outages, unexpected software or hardware malfunction or our information technology systems, travel restrictions, labor strikes or terrorist attacks that are beyond our control may also prevent us from providing quality food and services to our customers, thereby adversely affecting our business and results of operations and damaging our reputation.
We also face risks related to health epidemics, such as COVID-19, avian flu or various types of influenza. Most recently, during the outbreak COVID-19, the government of Malaysia had imposed disease control and social distancing measures that significantly restricted the operations of catering businesses, such as quarantines, travel restrictions, limitation of the number of seats per table, a minimum distance between tables and virus-testing and disinfection requirements if any customer or employee is infected. These measures have caused material decline in number of customer visits, reduction in our staffing level and disruptions to our operations. If there is a recurrence of COVID-19 or an outbreak of any other epidemics or pandemics, in the areas where we have restaurant outlets and similar policies were to be imposed again, they may cause material adverse impact on our business and results of operations.
We may become subject to comply with increasingly stringent laws, regulations, standards and policies, and any actual or perceived failure to comply could harm our reputation and brand, subject us to significant fines and liability, or otherwise adversely affect our business.
The laws, regulations, standards and policies in Malaysia or other jurisdictions that we may in the future operate in are continuously evolving. The costs of compliance, including remediation of any discovered issues and any changes to our operations regulated by new or amended laws, may be significant, and any failures to comply could result in additional expenses, delays or fines. As we expand our business into the new markets, we are in the process of reviewing the applicable laws and regulations in each jurisdiction, including required approvals, licenses and permits. Such laws, regulations, standards and policies continue to change, which increases the likelihood of a patchwork of complex or conflicting regulations, or which could increase our compliance costs or otherwise affect our business.
We may fail to be in compliance with regulatory requirements or obtain related licenses required by relevant authorities that have jurisdiction over us in the catering services industry.
In accordance with the relevant laws and regulations in jurisdictions in which we currently operate or may operate in the future, we are required to maintain various approvals, licenses and permits to operate our restaurant business, for example, restaurant operation license, food processing permits, fire safety verification, land use authorizations and environmental protection assessment. These approvals, licenses, permits and authorizations are obtained upon satisfactory compliance with, amongst other things, the applicable food hygiene and safety, fire safety, land use and environmental protection laws and regulations. We have experienced instances of non-compliance, including operating business premises without valid business/premise licenses, failing to register certain food premises as required, not being able to verify the availability of valid Certificate of Fitness and/or Certificate of Completion and Compliance for some of our properties, and not obtaining certifications for employee accommodations provided. These lapses may expose us to regulatory actions, including fines, imprisonment of responsible personnel, or both, as stipulated under the respective legislation. In some cases, penalties may reach up to MYR250,000 or
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imprisonment for up to 10 years. We have taken measures and plan to continue to take measures to remedy such incompliance and we believe the risk of enforcement is low. However, as the laws, regulations, standards and policies in the jurisdictions in which we operate or may in the future operate are continuously evolving and we may not be familiar with the legal framework of the markets which we expand into, we cannot assure you similar situations will not arise in the future.
Going forward, if we fail to obtain all of the necessary licenses, permits and approvals, we may be subject to fines or the suspension of operations of the restaurants, which could materially and adversely affect our business and results of operations. We may also experience adverse publicity arising from such non-compliance with government regulations that negatively impacts our brand. We may experience difficulties or failures in obtaining the necessary approvals, licenses and permits for new restaurants. If we fail to obtain the material licenses, our restaurant opening, and expansion plan may be delayed. In addition, there can be no assurance that we will be able to obtain, renew and/or convert all of the approvals, licenses and permits required for our existing business operations upon expiration in a timely manner or at all. If we cannot obtain and/or maintain all licenses required by us, our ongoing business could be interrupted, and we may also be subject to fines and penalties. In such event, our business, reputation and prospects will be materially and adversely affected.
Failure to comply with data privacy, data protection and cybersecurity laws and regulations could have a material adverse impact on our reputation, results of operations or financial condition, or have other consequences.
We receive and maintain certain personal information about our customers when accepting online reservations or operating our membership program. Any collection, storage, hosting, transfer, processing, disclosure, use, security and retention and destruction of personal information required to provide our services in Malaysia is governed by Personal Data Protection Act 2010 (“PDPA 2010”) and may be subject to other laws and regulations relating to data privacy, data protection and cybersecurity. If our network security is compromised and such information is stolen or obtained by unauthorized persons or used inappropriately, we may be held responsible for the leakage. Non-compliance with the PDPA 2010 could subject us to investigation, enforcement actions and penalties, which may even involve imprisonment. This could adversely impact our business, results of operations and financial condition. In addition, if there are more stringent data privacy, data protection and cybersecurity laws, rules or regulations that become applicable to us in the future, we may be required to incur increased costs or efforts in complying with such requirements and any breaches could result in more rigorous enforcement actions or investigations in the future which could have a materially adverse impact on our operations.
We may be exposed to liabilities under the Foreign Corrupt Practices Act and anti-corruption and anti-money laundering laws of Malaysia and various international jurisdictions in which we may in the future have business operations.
In connection with this offering, we will become subject to the U.S. Foreign Corrupt Practices Act (the “FCPA”), and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute for the purpose of obtaining or retaining business. Although we believe that we have complied in all material respects with the provisions of the FCPA, our existing safeguards and any future improvements may prove to be less than effective, and the employees, licensees, or business partners of our Company may engage in conducts for which we might be held responsible. Violations of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our operating results and financial condition. In addition, the government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.
Doing business in Malaysia and, in the future, various international locations also requires us to comply with certain laws and regulations relating to anti-corruption and anti-money laundering in those jurisdictions. These laws and regulations apply to companies, individual directors, officers, employees, and agents, and may restrict our operations, trade practices, investment decisions and partnering activities. For example, in Malaysia, we are subject to the Malaysian Anti-Corruption Commission Act 2009, which establishes an independent and specialized agency responsible for combating corruption and promoting transparency and upholding integrity in both the public and private sector by providing the legal framework for the prevention, investigation and prosecution of corruption in Malaysia, and the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001, which mandates the maintenance of records and documentation related to financial transactions and imposes reporting
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obligations on certain institutions to report any suspicious transactions as a counter-measure to prevent money laundering and terrorism financing. Any violation of these legal requirements are punishable by criminal fines and imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts as well as other remedial measures. We may also be subject to laws and regulations of similar nature in other jurisdictions that we may in the future operate in.
We have adopted relevant policies and procedures designed to prevent any violations of these regulations. However, there can be no assurance that our policies and procedures will effectively prevent us from violating these regulations in every transaction in which we may engage, and such a violation could adversely affect our reputation, business, financial condition and results of operations.
Risks Related to Our Initial Public Offering and Ownership of Our Ordinary Shares
The market price of our ordinary shares may be volatile or may decline regardless of our operating performance, and could result in significant losses and you may not be able to resell your shares at or above the initial public offering price.
The initial public offering price for our ordinary shares will be determined through negotiations between the underwriters and us and may vary from the market price of our ordinary shares following our initial public offering. If you purchase our ordinary shares in our initial public offering, you may not be able to resell those ordinary shares at or above the initial public offering price. We cannot assure you that our ordinary shares’ initial public offering price, or the market price following our initial public offering, will equal or exceed prices in privately negotiated transactions of our ordinary shares that have occurred from time to time prior to our initial public offering. The market price of our ordinary shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:
• actual or anticipated fluctuations in our revenues and other operating results;
• the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
• actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow the Company, or our failure to meet these estimates or the expectations of investors;
• announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;
• price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;
• lawsuits threatened or filed against us; and
• other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.
Furthermore, the trading price of our ordinary shares is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, akin to the performance and fluctuation of the market prices of other companies with business operations located in Malaysia and Southeast Asia that have listed their securities in the United States.
In addition to market and industry factors, the price and trading volume for our ordinary shares may be highly volatile for factors specific to our own operations, including the following:
• variations in our revenues, earnings and cash flow;
• changes in financial estimates by securities analysts;
• additions or departures of key personnel;
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• release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and
• potential litigation or regulatory investigations.
Any of these factors may result in large and sudden changes in the volume and price at which our ordinary shares will trade.
In the past, shareholders of public companies have often brought securities class action suits against companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.
We may not maintain the listing of our ordinary shares on Nasdaq, which could limit investors’ ability to make transactions in our ordinary shares and subject us to additional trading restrictions.
We intend to list our ordinary shares on the Nasdaq concurrently with this offering. In order to continue listing our ordinary shares on Nasdaq, we must maintain certain financial and share price levels, and we may be unable to meet these requirements in the future. We cannot assure you that our ordinary shares will continue to be listed on Nasdaq in the future. If Nasdaq delists our ordinary shares and we are unable to list our ordinary shares on another national securities exchange, we will endeavor to have our ordinary shares quoted on an over-the-counter market in the United States. If this were to occur, we could face significant material adverse consequences, including:
• a limited availability of market quotations for our ordinary shares;
• reduced liquidity for our ordinary shares;
• a determination that our ordinary shares are a “penny stock,” which would require brokers trading in our shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our ordinary shares;
• a limited amount of news and analyst coverage; and
• a decreased ability to issue additional securities or obtain additional financing in the future.
As long as our ordinary shares are listed on Nasdaq, U.S. federal law prevents or preempts states from regulating their sale of those listed ordinary shares. However, the law does permit states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of those listed ordinary shares. Further, if our ordinary shares are no longer listed on the Nasdaq, we would be subject to regulations in each state in which we offer our ordinary shares.
Future issuances or sales, or perceived issuances or sales, of substantial amounts of our ordinary shares in the public market could materially and adversely affect the prevailing market price of our ordinary shares and our ability to raise capital in the future.
The market price of our ordinary shares could decline as a result of future sales of substantial amounts of our ordinary shares in the public market after the completion of this offering, or the perception that these sales could occur. Future sales, or perceived sales, of substantial amounts of the shares could adversely affect the market price of our ordinary shares and could materially impair our ability to raise capital through equity offerings in the future. As of the date of this prospectus, we have 30,000,000 ordinary shares issued and outstanding. The ordinary shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, and the ordinary shares held by our existing shareholders may also be sold in the public market in the future subject to the restrictions in Rule 144 under the Securities Act and applicable lock-up agreements. There will be [ ] ordinary shares outstanding immediately after this offering. [In connection with this offering, we have agreed not to sell any of our ordinary shares without the prior written consent of the Representative of the underwriters for a period of [six months] from the closing of this offering; [our directors, executive officers and shareholders holding more than 5.0% of our ordinary
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shares] have agreed not to sell any of our ordinary shares for a period of [six months] from the date of closing of this offering, both subject to certain exceptions and applicable notice requirements. See “Underwriting” and “Shares Eligible for Future Sale” for a more detailed description of the restrictions on selling our securities after this offering.
Short selling may drive down the market price of our ordinary shares.
Short selling is the practice of selling shares that the seller does not own but rather has borrowed from a third party with the intention of buying identical shares back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the shares between the sale of the borrowed shares and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than what is received in the sale. Since it is in the short seller’s interest for the price of the shares to decline, many short sellers publish, or arrange for the publication of, negative opinions and allegations regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling the shares short. These negative opinions have, in the past, led to selling of shares in the market. If we were to become the subject of any unfavorable publicity, whether such allegations are proven to be true or untrue, we could have to expend a significant amount of resources to investigate such allegations and/or defend ourselves. While we would strongly defend against any negative opinions of short sellers, we may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend our Company. This situation will be costly and time-consuming and distract our management from developing our growth. If such allegations are not proven to be groundless, we and our business operations will be severely affected and you could sustain a significant decline in the value of our shares.
Because we may not expect to pay dividends in the foreseeable future, you may rely on price appreciation of our ordinary shares for a return on your investment.
We currently intend to retain all of our available funds and any future earnings after this offering to fund the development and growth of our business. As a result, we may not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our ordinary shares as a source for any future dividend income. Our board of directors has complete discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our securities will likely depend entirely upon any future price appreciation of our ordinary shares. There is no guarantee that our ordinary shares will appreciate in value after this offering or even maintain the price at which you purchased our ordinary shares. You may not realize a return on your investment in our ordinary shares and you may even lose your entire investment.
We are a holding company, and we depend on the ability of our subsidiaries to distribute funds to us in order to make dividend payments or satisfy our financial obligations, if any.
We are a holding company incorporated under the laws of the Cayman Islands and our subsidiaries, which are all wholly-owned by us, conduct all of our operations and own all of our operating assets. We have no material assets other than the equity interests in our wholly-owned subsidiaries. Currently, we intend to retain all of our available funds and any future earnings after this offering to fund the development and growth of our business. As a result, we may not expect to pay any cash dividends in the foreseeable future. See “— Because we may not expect to pay dividends in the foreseeable future, you may rely on price appreciation of our ordinary shares for a return on your investment.” Even if we decide to pay dividends, as a holding company, our ability to make dividend payments to you depends on the results of operations of our subsidiaries and their ability to distribute funds to us. See “Dividend Policy.” Additionally, we may also depend on funds from our subsidiaries to pay for any operating expenses or other financial obligations that we may incur. If we are unable to obtain funds from our subsidiaries, our ability to pay dividends or satisfy our financial obligations, if any, would be adversely affected.
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Because our public offering price is substantially higher than our net tangible book value per ordinary share, you will experience immediate and substantial dilution.
If you purchase ordinary shares in the assumed completion of this offering, you will pay substantially more than the corresponding amount paid by existing shareholder for their shares and more than our net tangible book value per share. As a result, you will experience immediate and substantial dilution of US$[ ] per ordinary share, representing the difference between our net tangible book value per ordinary share of US$[ ] as of [ ], after giving effect to the net proceeds to us from this offering, assuming no change to the number of ordinary shares offered by us as set forth on the cover page of this prospectus and an assumed initial public offering price of US$[ ] per ordinary share (being the mid-point range of US$[ ] and US$[ ] per ordinary share). See “Dilution” for a more complete description of how the value of your investment in our ordinary shares will be diluted upon the completion of this offering.
You must rely on the judgment of our management as to the uses of our net proceeds from this offering, and such uses may not produce income or increase our share price.
We plan to use the net proceeds of this offering primarily for expansion of our restaurant network and strategic investments or acquisitions, brand building and marketing, diversification of our peripheral products of food ingredients and condiments and/or sales channels of such products, and general corporate purposes. See “Use of Proceeds” for more information. However, our management will have considerable discretion in the application of the net proceeds received by us in this offering. You will not have the opportunity, as part of your investment decision, to assess whether proceeds are being used appropriately. The net proceeds may be used for corporate purposes that do not improve our efforts to achieve or maintain profitability or increase our share price. The net proceeds from this offering may be placed in investments that do not produce income or that lose value.
There can be no assurance that we will not be a passive foreign investment company (“PFIC”) in any taxable year, which could result in significant adverse U.S. federal income tax consequences to U.S. investors investing in our ordinary shares.
A non-U.S. corporation, such as the Company, will be classified as a PFIC for U.S. federal income tax purposes for any taxable year if either (i) 75% or more of our gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the gross value of our assets (generally determined on the basis of a quarterly average) during such year produce or are held for the production of passive income (the “PFIC asset test”). Passive income generally includes dividends, interest, royalties, rents, annuities, net gains from the sale or exchange of property producing such income and net foreign currency gains. For this purpose, cash and assets readily convertible into cash are categorized as passive assets and the Company’s goodwill and other unbooked intangibles are generally taken into account when determining the value of its assets. [Based upon our current and expected income and assets, including goodwill and other unbooked intangibles not reflected on our balance sheet (taking into account the expected proceeds from this offering) and projections as to the market price of our ordinary shares immediately following the offering, we do not expect to be classified as a PFIC for the current taxable year or the foreseeable future].
[While we do not expect to be classified as a PFIC,] because the value of our assets for purposes of the PFIC asset test may be determined by reference to the market price of our ordinary shares, fluctuations in the market price of our ordinary shares may cause us to be classified as a PFIC for the current or subsequent taxable years. The determination of whether we will be classified as a PFIC will also depend, in part, on the composition of our income and assets. In addition, the composition of our income and assets will also be affected by how, and how quickly, we use our liquid assets and the cash raised in this offering. If we determine not to deploy significant amounts of cash for active purposes, our risk of being a PFIC may substantially increase. It is also possible that the U.S. Internal Revenue Service (the “IRS”) could challenge our classification of certain income and assets as non-passive, which could result in the Company being or becoming a PFIC for the current or future taxable years. Because PFIC status is a factual determination made annually after the close of each taxable year, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year.
If we are a PFIC in any taxable year, a U.S. Holder (as defined in “Taxation — United States Federal Income Taxation — Passive Foreign Investment Company (‘PFIC’)”) may incur significantly increased U.S. income tax on gain recognized on the sale or other disposition of the ordinary shares and on the receipt of distributions on the ordinary shares to the extent such distribution is treated as an “excess distribution” under the U.S. federal income tax rules, and such U.S. Holder may be subject to burdensome reporting requirements. Further, if we are a PFIC for any year during which a U.S. Holder holds our ordinary shares, we generally will continue to be treated as a PFIC for all
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succeeding years during which such U.S. Holder holds our ordinary shares, unless we were to cease to be a PFIC and the U.S. Holder were to make a “deemed sale” election with respect to the ordinary shares. For more information see “Taxation — United States Federal Income Taxation — Passive Foreign Investment Company (‘PFIC’).”
You are strongly urged to consult your tax advisors regarding the impact of our being a PFIC in any taxable year on your investment in our ordinary shares as well as the application of the PFIC rules.
Our Controlling Shareholder has substantial influence over the Company. His interests may not be aligned with the interests of our other shareholders, and he could prevent or cause a change of control or other transactions.
Mr. Goh Kok Foong, our founder, chairman of board of directors and chief executive officer, currently beneficially owns 54% of our total issued and outstanding ordinary shares and total voting power. Upon the completion of this offering, Mr. Goh Kok Foong will beneficially own [ ]% of our total issued and outstanding ordinary shares and total voting power[, assuming that the underwriters do not exercise their over-allotment option, or [ ]% of our total issued and outstanding ordinary shares and total voting power, assuming that the over-allotment option is exercised in full], and therefore Mr. Goh Kok Foong would be the Controlling Shareholder of our Company. Accordingly, our Controlling Shareholder could control or significantly influence the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including the election of directors, amendment of organizational documents and approval of major corporate transactions, such as a change in control, mergers, consolidations, and sale of assets. The interests of our Controlling Shareholder may differ from the interests of us and our other shareholders, and we may be prevented from entering into transactions that could be beneficial to us or our other shareholders without the consent of our Controlling Shareholder. In addition, our directors and officers could violate their fiduciary duties by diverting business opportunities from us to themselves or others. The concentration in the ownership of our shares may cause a material decline in the value of our ordinary shares. For more information regarding our principal shareholders and their affiliated entities, see “Principal Shareholders.”
We are a “controlled company” within the meaning of the Nasdaq Listing Rules and, as a result, will rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.
Upon the completion of this offering, we will be a “controlled company” as defined under the Nasdaq Listing Rules. For so long as we remain a controlled company under that definition, we are permitted to elect to rely, and may choose to rely, on certain exemptions from the corporate governance requirements in the Nasdaq Listing Rules, including an exemption from the rule that a majority of our board of directors must be independent directors. As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. Even if we cease to be a controlled company, we may still rely on exemptions available to foreign private issuers, including being able to adopt home country practices in relation to corporate governance matters. See “— As an exempted company with limited liability incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the corporate governance requirements in the Nasdaq Listing Rules. These practices may afford less protection to shareholders than they would enjoy if we complied fully with the corporate governance requirements in the Nasdaq Listing Rules.”
You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.
We are an exempted company with limited liability incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our A&R Company Listing Articles, the Companies Act and the common law of the Cayman Islands. The rights of shareholders to take action against our directors and us, actions by minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are, to a large extent, governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the English common law, which is generally persuasive authority, but is not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions of the United States. In particular, the Cayman Islands has a different body of securities laws than the United States, which provides significantly less protection to investors. In addition, Cayman Islands companies may not have the standing to initiate a shareholder derivative action in a federal court of the United States.
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Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect or obtain register of members or corporate records (other than the memorandum and articles of association, special resolutions which have been passed by shareholders and register of mortgages and charges). Under Cayman Islands law, the names of our current directors can be obtained from a search conducted at the Registrar of Companies. Our directors have discretion under our A&R Company Listing Articles to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder resolution or to solicit proxies from other shareholders in connection with a proxy contest.
Certain corporate governance practice in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions, such as the U.S. Currently, we plan to rely on home country practice with respect to certain corporate governance matters. Accordingly, our shareholders will be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.
As a result of all of the above, shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of the board of directors or Controlling Shareholder than they would as shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Act and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital — Differences in Corporate Law.”
Our A&R Company Listing Articles provide that the United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) is the exclusive judicial forum within the United States for the resolution of any complaint asserting a cause of action arising out of or relating in any way to the federal securities laws of the United States, including but not limited to claims arising under the Exchange Act or the Securities Act, which could limit the ability of holders of our ordinary shares to obtain a favorable judicial forum for disputes with us, our directors and officers, and potentially others.
Our A&R Company Listing Articles provide that the United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) is the exclusive forum within the United States for the resolution of any complaint asserting a cause of action arising out of or relating in any way to the federal securities laws of the United States, including but not limited to claims arising under the Exchange Act or the Securities Act, regardless of whether such legal suit, action, or proceeding also involves parties other than our company. See “Description of Share Capital — Ordinary Shares — Exclusive Forum.” The enforceability of similar federal court choice of forum provisions in other companies’ organizational documents has been challenged in legal proceedings in the United States, and it is possible that a court could find this type of provision to be inapplicable or unenforceable. If a court were to find the federal choice of forum provision contained in our A&R Company Listing Articles to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions. If upheld, the forum selection clause in our A&R Company Listing Articles may limit a shareholder’s ability to bring a claim against us, our directors and officers, and potentially others in his or her preferred judicial forum, lead to increased costs to bring a claim, limit his or her access to information, cause other imbalances of resources between such shareholder and us, and therefore discourage such lawsuits. Holders of our ordinary shares will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder pursuant to the exclusive forum provision in the our A&R Company Listing Articles. In any case, with respect to Securities Act claims, holders of our ordinary shares cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
Our A&R Company Listing Articles contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our ordinary shares.
We will adopt the A&R Company Listing Articles that will become effective immediately prior to the completion of this offering. Such A&R Company Listing Articles contain provisions to limit the ability of others to acquire control of the Company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of the Company in a tender offer or similar transaction. Our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights,
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terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares. Preferred shares could be issued quickly with terms calculated to delay or prevent a change in control of the Company or make removal of management more difficult. If our board of directors decides to issue preferred shares, the price of our ordinary shares may fall and the voting and other rights of the holders of our ordinary shares may be materially and adversely affected.
If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent fraud, and investor confidence and the market price of our ordinary shares may be materially and adversely affected.
Prior to the completion of this offering, we have been a private company with limited accounting personnel. Furthermore, prior to the completion of this offering, our management has not performed an assessment of the effectiveness of our internal control over financial reporting, and our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, is designed to prevent fraud.
Our failure to implement and maintain effective internal controls over financial reporting could result in errors in our financial statements that could result in a restatement of our financial statements, cause us to fail to meet our reporting obligations and cause investors to lose confidence in our reported financial information, which may result in volatility in and a decline in the market price of our ordinary shares.
Upon the completion of this offering, we will become a public company in the United States subject to the Sarbanes-Oxley Act. Section 404 of the Sarbanes-Oxley Act, or Section 404, will require that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F. In addition, if we cease to be an “emerging growth company” as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting on an annual basis. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a burden on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.
During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify material weaknesses and deficiencies in our internal control over financial reporting. The Public Company Accounting Oversight Board, or PCAOB, has defined a material weakness as “a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim statements will not be prevented or detected on a timely basis.”
In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may be unable to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. Generally speaking, if we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations and lead to a decline in the trading price of our ordinary shares. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud, misuse of corporate assets and legal actions under the United States securities laws and subject us to potential delisting from Nasdaq to regulatory investigations and to civil or criminal sanctions.
In the course of auditing our consolidated financial statements for the financial statements included elsewhere in this prospectus, we identified two material weaknesses in our internal control over financial reporting: (i) lack of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting requirements to properly address U.S. GAAP technical accounting issues and prepare and review financial statements and related disclosures in accordance with U.S. GAAP and reporting requirements set forth by the SEC; and (ii) lack of formal risk assessment process and internal control framework over financial reporting, including lack of a formal
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group-wide risk assessment process to identify, assess, address or mitigate the risks in internal control, and lack of sufficient IT general controls designed and implemented surrounding the key financial related systems. Following the identification of the material weaknesses, we have taken measures and plans to continue to take measures to remedy these material weaknesses. For details, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Internal Control over Financial Reporting.”
However, we cannot assure you that the implementation of these measures will be sufficient to remediate such material weaknesses, or that material weaknesses or significant deficiencies in our internal control over financial reporting will not be identified in the future. Our failure to correct the above mentioned material weaknesses or to discover and address any other material weaknesses or significant deficiencies could result in inaccuracies in our financial statements and impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. Moreover, ineffective internal control over financial reporting could significantly hinder our ability to prevent fraud.
Lack of experience as officers of publicly-traded companies of our management team may hinder our ability to comply with Sarbanes-Oxley Act.
It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance staff or consultants in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with the Sarbanes-Oxley Act’s internal controls requirements, we may not be able to obtain the independent auditor certifications that Sarbanes-Oxley Act requires, although, currently, as a foreign private issuer, we are not required to obtain such auditor certifications.
Because we are a Cayman Islands company and substantially all of our business is conducted in Malaysia, you may be unable to bring an action against us or our officers and directors or to enforce any judgment you may obtain.
Although we are a Cayman Islands exempted company, we conduct substantially all of our operations in Malaysia and all of our assets are located in Malaysia, outside of the United States. In addition, all of our directors and officers (including director and officer nominees) are nationals and residents of Malaysia. Substantially all of the assets of these persons are located in Malaysia and outside the United States. It may be difficult for our shareholders to effect service on these persons or bring an action against us or against these individuals in the Cayman Islands or in Malaysia in the event that they believe that their rights have been infringed under the securities laws of the United States or otherwise. Even if shareholders are successful in bringing an action of this kind, the laws of the Cayman Islands and Malaysia may render them unable to enforce a judgment against our assets or the assets of our directors and officers.
For Malaysia, there is currently no arrangement providing for the reciprocal enforcement of judgements between Malaysia and the United States, as such, judgments of United States courts will not be directly enforced in Malaysia. Under Malaysian laws, a foreign judgment must first be recognized by a Malaysian court either under applicable Malaysian laws or in accordance with common law principles. For Malaysian courts to accept the jurisdiction for recognition of a foreign judgment, the foreign country where the judgment is made must be a reciprocating country expressly specified and listed in the Reciprocal Enforcement of Judgments Act 1958, Maintenance Orders (Facilities for Enforcement) Act 1949 or Probate and Administration Act 1959. As the United States is not one of the countries specified under the statutory regime where a foreign judgment can be recognized and enforced in Malaysia, a judgment obtained in the United States may still be enforced pursuant to common law principles by commencing fresh proceedings in a Malaysian court. The requirements for a foreign judgment to be recognized and enforceable in Malaysia are: (i) the judgment must be a monetary judgment; (ii) the foreign court must have had jurisdiction accepted by a Malaysian court; (iii) the judgment was not obtained by fraud; (iv) the enforcement of the judgment must not contravene public policy in Malaysia; (v) the proceedings in which the judgment was obtained were not opposed to natural justice; and (vi) the judgment must be final and conclusive.
For Cayman Islands, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), the courts of the Cayman Islands will, at common law, recognize and enforce a foreign monetary judgment of a foreign court of competent jurisdiction without any re-examination of the merits of the underlying dispute based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay a liquidated sum for which such judgment has been given, provided such judgment (a) is given by a foreign court of competent jurisdiction, (b) imposes on the judgment debtor a liability to
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pay a liquidated sum for which the judgment has been given, (c) is final and conclusive, (d) is not in respect of taxes, a fine or a penalty; and (e) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands.
For more information regarding the relevant laws of the Cayman Islands and Malaysia, see “Enforceability of Civil Liabilities.” As a result of the foregoing, our shareholders may have more difficulties in protecting their interests through actions against us or our officers, directors or major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.
We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our ordinary shares less attractive to investors.
We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act for so long as we are an emerging growth company. As a result, if we elect not to comply with such auditor attestation requirements, our investors may not have access to certain information they may deem important.
The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition period, although we have adopted certain new and revised accounting standards based on transition guidance permitted under such standards. As a result of this election, our future financial statements may not be comparable to other public companies that comply with the public company effective dates for these new or revised accounting standards.
As an exempted company with limited liability incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the corporate governance requirements in the Nasdaq Listing Rules. These practices may afford less protection to shareholders than they would enjoy if we complied fully with the corporate governance requirements in the Nasdaq Listing Rules.
As a foreign private issuer that has applied to list our ordinary shares on Nasdaq, we rely on provisions in the corporate governance requirements in the Nasdaq Listing Rules that allow us to follow Cayman Islands law with regard to certain aspects of corporate governance. This allows us to follow certain corporate governance practices that differ in significant respects from the corporate governance requirements applicable to U.S. companies listed on Nasdaq.
For example, we are exempt from the Nasdaq Listing Rules that require a listed U.S. company to:
• have a majority of the board of directors consist of independent directors;
• require non-management directors to meet on a regular basis without management present;
• have an independent compensation committee;
• have an independent nominating and corporate governance committee; and
• seek shareholder approval for the implementation of certain equity compensation plans and issuances of ordinary shares.
As a foreign private issuer, we are permitted to follow home country practice in lieu of the above requirements. We currently plan to follow our home country practice that does not require each member of our compensation committee and nominating and corporate governance committee to be an independent director. For details, see “Management — Committees of the Board of Directors — Compensation Committee” and “Management — Committees of the Board of Directors — Nominating and Corporate Governance Committee.” With respect to our audit committee, it is required to comply with the provisions of Rule 10A-3 of the Exchange Act applicable to U.S. companies listed on Nasdaq. However, because we are a foreign private issuer, our audit committee is not subject to additional corporate governance requirements in the Nasdaq Listing Rules applicable to listed U.S. companies, including using more stringent criteria than those applicable to us as a foreign private issuer.
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We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.
We are a foreign private issuer and, as a result, we are not subject to the same requirements as U.S. domestic issuers. Under the Exchange Act, we will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies. For example, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:
• the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;
• the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;
• the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and
• the selective disclosure rules by issuers of material non-public information under Regulation FD.
However, we will still be subject to the anti-fraud and anti-manipulation rules of the SEC, such as Rule 10b-5 under the Exchange Act. Since many of the disclosure obligations imposed on us as a foreign private issuer differ from those imposed on U.S. domestic reporting companies, you should not expect to receive the same information about us and at the same time as the information provided by U.S. domestic reporting companies. Moreover, we will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our financial results on a semi-annual basis through press releases distributed pursuant to the rules and regulations of the Nasdaq. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you if you were investing in a U.S. domestic issuer.
We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
As discussed above, we are a foreign private issuer, and, therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter. Accordingly, the next determination will be made with respect to us on June 30, 2026. In the future, we would lose our foreign private issuer status if (1) more than 50% of our outstanding voting securities are owned by U.S. residents, and (2) a majority of our directors or executive officers are U.S. citizens or residents, or we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. If we were to lose our foreign private issuer status, we would be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We also would be required to comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders would become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we would lose our ability to rely upon exemptions from certain corporate governance requirements under the Nasdaq Listing Rules. As a U.S. listed public company that is not a foreign private issuer, we would incur significant additional legal, accounting and other expenses that we do not incur as a foreign private issuer.
We will incur significantly increased costs and devote substantial amount of our management’s time as a result of becoming a public company and the eventual listing of our ordinary shares on Nasdaq.
As a public company, we will be subject to the reporting requirements of the SEC, as amended from time to time, or the Exchange Act, the Sarbanes-Oxley Act, the Dodd — Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the securities exchange on which we list, and other applicable securities rules and regulations. Despite recent reforms made possible by the JOBS Act, we will incur additional legal, accounting and other expenses as a public reporting company that we did not incur as a private company, particularly after we cease to qualify as an emerging growth company. For example, we will be required to comply with the additional requirements
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of the rules and regulations of the SEC and the Nasdaq Listing Rules, including applicable corporate governance requirements. We expect that compliance with these requirements will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. In addition, we expect that our management and other personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. We cannot predict or estimate the number of additional costs we may incur as a result of becoming a public company or the timing of such costs.
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure create uncertainty for public companies, increasing legal and financial compliance costs and make some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidelines are provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may also initiate legal proceedings against us and our business may be adversely affected.
Future financing may cause a dilution in your shareholding or place restrictions on our operations.
We may need to raise additional funds immediately after the completion of this offering or in the future to finance further expansion of our capacity and business relating to our existing operations, acquisitions or strategic partnerships. If additional funds are raised through the issuance of new equity or equity-linked securities of the Company other than on a pro rata basis to existing shareholder, the percentage ownership of such shareholders in the Company may be reduced, and such new securities may confer rights and privileges that take priority over those conferred by the shares. Alternatively, if we meet such funding requirements by way of additional debt financing, we may have restrictions placed on us through such debt financing arrangements which may:
• further limit our ability to pay dividends or require us to seek consents for the payment of dividends;
• increase our vulnerability to general adverse economic and industry conditions;
• require us to dedicate a substantial portion of our cash flows from operations to service our debt, thereby reducing the availability of our cash flow to fund capital expenditure, working capital requirements and other general corporate needs; and
• limit our flexibility in planning for, or reacting to, changes in our business and our industry.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This prospectus contains forward-looking statements that involve risks and uncertainties. All statements other than statements of current or historical facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.
You can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, but are not limited to, statements about:
• our goals and strategies;
• our future business development, financial condition and results of operations;
• general economic and business conditions in Malaysia;
• expected changes in our revenue, costs or expenditures;
• competition in our industry;
• our proposed use of proceeds;
• government policies and regulations relating to our industry; and
• the outlook of specialty hotpot market in Malaysia, Southeast Asia, Hong Kong, Taiwan, and the U.S.
You should read this prospectus and the documents that we refer to in this prospectus with the understanding that our actual future results may be materially different from and worse than what we expect. Other sections of this prospectus include additional factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.
This prospectus contains certain data and information that we obtained from industry publications and reports generated by third-party providers of market intelligence. We have not independently verified the accuracy or completeness of the data and information contained in these publications and reports. Statistical data in these publications also include projections based on a number of assumptions. The specialty hotpot market in Malaysia may not grow at the rate projected by market data, or at all. Failure of these markets to grow at the projected rate may have a material and adverse effect on our business and the market price of the ordinary shares. If any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions.
You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
33
We estimate that the aggregate net proceeds to us from this offering of approximately US$[ ] million, after deducting underwriting discounts and estimated expenses payable by us in connection with this offering, and assuming an initial offering price of US$[ ] per ordinary share, being the midpoint of the estimated range of the initial public offering price shown on the cover page of this prospectus. Assuming the number of ordinary shares offered by us as set forth on the cover page of this prospectus remains the same, and after deduction of underwriting discounts and estimated expenses payable by us in connection with this offering, a US$1.00 increase (decrease) in the assumed initial public offering price of US$[ ] per ordinary share would increase (decrease) the net proceeds of this offering by approximately US$[ ] million.
We plan to use the net proceeds of this offering for the following purposes:
• approximately 40% of the net proceeds, or approximately US$[ ], for expansion of our restaurant network, and strategic investments or acquisitions;
• approximately 30% of the net proceeds, or approximately US$[ ], for brand building and marketing;
• approximately 20% of the net proceeds, or approximately US$[ ], for diversification of our peripheral products of food ingredients and condiments and/or sales channels of such products; and
• the balance for general corporate purposes.
Accordingly, our management will have discretion in the application of net proceeds to us from this offering, and investors will be relying on the judgment of our management regarding the use of these net proceeds. With respect to our plans on expansion of our restaurant network and strategic investments or acquisitions, we expect to open a new franchised restaurant outlet under the brand Banbudian Bistro in Penang, Malaysia in the third quarter of 2025, while we have not identified or engaged in any material discussion with any potential partner or target for any other investments or acquisitions, as of the date of this prospectus.
The forward-looking statements made in this prospectus relate only to events or information as of the date on which these statements are made in this prospectus. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this prospectus.
34
We have never declared or paid cash dividends on our ordinary shares. We do not have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future after this offering. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and grow our business.
We are a holding company incorporated in the Cayman Islands. We may rely on dividends from our Malaysian subsidiaries for our cash requirements, including any payment of dividends to our shareholders. There are no foreign exchange restrictions under Malaysian law which would affect the payment or remittance of dividends by our Malaysian subsidiaries to us.
Our board of directors has complete discretion on whether to distribute dividends, subject to applicable laws. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. Under the Cayman Islands law, a Cayman Islands company may pay a dividend either out of profit or share premium account, provided that in no circumstances may a dividend be paid if the dividend payment would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to pay dividends, the form, frequency, and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, and other factors that the board of directors may deem relevant.
35
The following table sets forth our capitalization as of December 31, 2024:
• on an actual basis; and
• on a pro forma as-adjusted basis to reflect the issuance and sale of the ordinary shares by us in this offering at an assumed initial public offering price of US$[ ] per ordinary share, which is the midpoint of the estimated range of initial public offering price set forth on the cover page of this prospectus, after deducting the underwriting discounts and commissions and the estimated offering expenses payable by us.
You should read this capitalization table in conjunction with our consolidated financial statements and the related notes included elsewhere in this prospectus and the information under “Selected Consolidated Financial Data,” “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
|
As of December 31, 2024 |
|||||||
|
Actual |
Pro Forma as |
Pro Forma as |
|||||
|
US$ |
US$ |
US$ |
|||||
|
Bank overdraft |
458,275 |
|
|||||
|
Current portion of long-term bank loans |
72,579 |
|
|||||
|
Long-term borrowings |
1,812,131 |
|
|
|
|||
|
Total Indebtedness |
2,342,985 |
|
— |
— |
|||
|
|
|||||||
|
Shareholders’ Equity |
|
||||||
|
Ordinary Shares (par value of $0.00001 per share; 5,000,000,000 ordinary shares authorized; 30,000,000 ordinary shares issued and outstanding as of December 31, 2024 on an actual basis)(3) |
300 |
|
|||||
|
Additional paid-in capital |
4,669,382 |
|
|||||
|
Subscription receivables |
(300 |
) |
|||||
|
Retained earnings |
1,648,144 |
|
|||||
|
Accumulated other comprehensive loss |
(111,866 |
) |
|
|
|||
|
Total Shareholders’ Equity |
6,205,660 |
|
— |
— |
|||
|
Total Capitalization |
8,548,645 |
|
— |
— |
|||
____________
(1) In the event that the underwriters’ over-allotment option is not exercised in this offering, pro forma as-adjusted total ordinary shares outstanding would be [ ] shares, pro forma as-adjusted additional paid-in capital would be US$[ ], and pro forma as-adjusted total equity would be US$[ ], reflecting the sum of net proceeds of this offering in the amount of US$[ ] and the actual equity of US$6,205,660.
(2) In the event that the underwriters’ over-allotment option is exercised in full in this offering, pro forma as-adjusted total ordinary shares outstanding would be [ ] shares, pro forma as-adjusted additional paid-in capital would be US$[ ], and pro forma as- adjusted total equity would be US$[ ], reflecting the sum of net proceeds of this offering in the amount of US$[ ] and the actual equity of US$6,205,660.
(3) The share and per share information are presented on a retrospective basis to reflect the recapitalization completed on June 5, 2025.
36
If you invest in our ordinary shares, your interest will be diluted for each ordinary share you purchase to the extent of the difference between the initial public offering price per ordinary share and our net tangible book value per ordinary share after this offering. Dilution results from the fact that the initial public offering price per ordinary share is substantially in excess of the net tangible book value per ordinary share attributable to the existing shareholders for our presently outstanding ordinary shares.
Our net tangible book value as of December 31, 2024, was US$5.07 million, or US$0.17 per ordinary share. Net tangible book value represents the amount of our total consolidated tangible assets, less the amount of our total consolidated liabilities. Dilution is determined by subtracting the net tangible book value per ordinary share (as adjusted for the offering) from the initial public offering price per ordinary share and after deducting the estimated discounts to the underwriter, non-accountable expense allowance and the estimated offering expenses payable by us.
After giving effect to our sale of [ ] ordinary shares offered in this offering, based on the initial public offering price of US$[ ] per ordinary share after deduction of the estimated discounts to the underwriter and the estimated offering expenses payable by us, our as adjusted net tangible book value as of December 31, 2024 would have been US$[ ] million, or US$[ ] per outstanding ordinary share. This represents an immediate increase in net tangible book value of US$[ ] per ordinary share to the existing shareholders, and an immediate dilution in net tangible book value of US$[ ] per ordinary share to investors purchasing ordinary shares in this offering.
The as adjusted information discussed above is illustrative only.
The following table illustrates such dilution:
|
Post Offering |
|||
|
Assumed initial public offering price per ordinary share |
US$ |
|
|
|
Net tangible book value as of December 31, 2024 |
US$ |
|
|
|
Increase in pro forma as adjusted net tangible book value per ordinary share attributable to new investors purchasing ordinary shares in this offering |
US$ |
|
|
|
Pro forma net tangible book value per ordinary share immediately after this offering |
US$ |
|
|
|
Amount of dilution in net tangible book value per ordinary share to new investors in this offering |
US$ |
|
|
If the underwriters exercise their over-allotment option in full, the pro forma as adjusted net tangible book value per ordinary share after the offering would be US$[ ], the increase in net tangible book value per ordinary share to existing shareholders would be US$[ ], and the immediate dilution in net tangible book value per ordinary share to new investors in this offering would be US$[ ].
The following table summarizes, on a pro forma as adjusted basis as of December 31, 2024, the differences between existing shareholders and the new investors with respect to the number of ordinary shares purchased from us, the total consideration paid and the average price per ordinary share and per ordinary share paid before deducting underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us.
|
Ordinary Shares |
Total |
Average Price |
||||||||||
|
Number |
Percent |
Amount |
Percent |
|||||||||
|
Existing shareholders |
US$ |
|
% |
US$ |
|
|||||||
|
New investors |
|
|
US$ |
|
% |
US$ |
|
|||||
|
Total |
|
|
US$ |
|
% |
|
||||||
The pro forma as adjusted information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of our ordinary shares and other terms of this offering determined at pricing.
37
ENFORCEABILITY OF CIVIL LIABILITIES
Cayman Islands
We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We are incorporated in the Cayman Islands because of certain benefits associated with being a Cayman Islands exempted company, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions and the availability of professional and support services. However, the Cayman Islands has a less developed body of securities laws than the United States and provides significantly less protection for investors. In addition, Cayman Islands companies may not have standing to sue before the federal courts of the United States.
Substantially all of our assets and operations are located in Malaysia. All of our directors and officers are nationals or residents of jurisdictions other than the United States and all or a substantial portion of their assets are located outside the United States. Therefore, it may be difficult for investors to effect service of process within the United States upon us or these persons, or to enforce judgments obtained in U.S. courts against us or them, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. It may also be difficult for you to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors.
We have appointed Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168, as our agent upon whom process may be served in any action brought against us under the securities laws of the United States.
Maples and Calder (Hong Kong) LLP, our legal counsel as to the laws of the Cayman Islands has advised us that there is uncertainty as to whether the courts of the Cayman Islands would (1) recognize or enforce judgments of U.S. courts obtained against us or our directors or officers that are predicated upon the civil liability provisions of the federal securities laws of the United States or the securities laws of any state in the United States, or (2) entertain original actions brought in the Cayman Islands against us or our directors or officers that are predicated upon the federal securities laws of the United States or the securities laws of any state in the United States.
Maples and Calder (Hong Kong) LLP has informed us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), the courts of the Cayman Islands will, at common law, recognize and enforce a foreign monetary judgment of a foreign court of competent jurisdiction without any re-examination of the merits of the underlying dispute based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay a liquidated sum for which such judgment has been given, provided such judgment (a) is given by a foreign court of competent jurisdiction, (b) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (c) is final and conclusive, (d) is not in respect of taxes, a fine or a penalty; and (e) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
Malaysia
Teh & Lee, our Malaysian legal counsel, has further advised us that there are currently no statutes, treaties, or other forms of reciprocity between the United States and Malaysia providing for the mutual recognition and enforcement of court judgments. Under Malaysian laws, a foreign judgment cannot be directly or summarily enforced in Malaysia. The judgment must first be recognized by a Malaysian court either under applicable Malaysian laws or in accordance with common law principles. For Malaysian courts to accept the jurisdiction for recognition of a foreign judgment, the foreign country where the judgment is made must be a reciprocating country expressly specified
38
and listed in the Reciprocal Enforcement of Judgments Act 1958, Maintenance Orders (Facilities for Enforcement) Act 1949 or Probate and Administration Act 1959. As the United States is not one of the countries specified under the statutory regime where a foreign judgment can be recognized and enforced in Malaysia, a judgment obtained in the United States may still be enforced pursuant to common law principles by commencing fresh proceedings in a Malaysian court. The requirements for a foreign judgment to be recognized and enforceable in Malaysia are: (i) the judgment must be a monetary judgment; (ii) the foreign court must have had jurisdiction accepted by a Malaysian court; (iii) the judgment was not obtained by fraud; (iv) the enforcement of the judgment must not contravene public policy in Malaysia; (v) the proceedings in which the judgment was obtained were not opposed to natural justice; and (vi) the judgment must be final and conclusive.
39
CORPORATE HISTORY AND STRUCTURE
Our Corporate History
We commenced operations in 2015 when we opened our restaurant outlet offering chicken claypot hotpot in Malaysia and has expanded into a specialty hotpot restaurant chain with a total of 32 company-owned restaurant outlets and franchised restaurant outlets in Malaysia and outside Malaysia as of the date of this prospectus. CCH Holdings Ltd was incorporated in the Cayman Islands on December 2, 2024 as an exempted company with limited liability under the Companies Act. As a holding company without any business operations, CCH Holdings Ltd wholly owns our Malaysian subsidiary, STCH Holding, which, in turn, wholly owns our other five Malaysian subsidiaries.
STCH Holding was incorporated on May 8, 2019, currently the operating entity of four of our company-owned restaurant outlets. It also serves the following operational functions: (i) the operator of our central kitchen; (ii) the licensor for our brands Chicken Claypot House and Zi Wei Yuan and (iii) a general trader since we are involved in the business of selling food ingredients and condiments to local distributors or franchised restaurant outlets. CCH Holdings Ltd acquired 100% of the equity interests in STCH Holding on June 5, 2025.
Each of our other five Malaysian subsidiaries was originally incorporated as an operating entity of our restaurant outlets during the course of our continued expansion. STCH Holding acquired 100% of the equity interests in each of the following entities in May 2025 as a result of a reorganization in preparation of this offering.
• STCH GH, incorporated on October 1, 2019, is currently the operating entity of one of our company-owned restaurant outlets.
• CHH KL, incorporated on March 9, 2021, is currently the operating entity of four of our company-owned restaurant outlets.
• GTL F&B, incorporated on November 11, 2021, is currently the operating entity of the food court operated by us.
• ZWY Raja Uda, incorporated on April 11, 2022, is currently the operating entity of four of our company-owned restaurant outlets.
• CCH Tropika, incorporated on October 21, 2022, is currently the operating entity of one of our company-owned restaurant outlets.
Our Corporate Structure
The following diagram illustrates our corporate structure as of the date of this prospectus.

40
SELECTED CONSOLIDATED FINANCIAL DATA
The following summary consolidated statements of operations data and summary consolidated cash flow data for the years ended December 31, 2023 and 2024 and summary consolidated balance sheet data as of December 31, 2023 and 2024 have been derived from our audited consolidated financial statements included elsewhere in this prospectus.
Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our historical results are not necessarily indicative of results expected for future periods. You should read this Summary Consolidated Financial Data section together with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.
The following table presents our summary consolidated statements of operations data for the periods indicated.
|
For the Years Ended |
||||||||
|
2023 |
2024 |
|||||||
|
Revenues |
$ |
9,775,038 |
|
$ |
8,915,344 |
|
||
|
– Revenues from third parties |
|
8,584,748 |
|
|
7,724,976 |
|
||
|
– Revenues from related parties |
|
1,190,290 |
|
|
1,190,368 |
|
||
|
Cost of revenues |
|
(7,565,559 |
) |
|
(6,509,083 |
) |
||
|
Gross profit |
|
2,209,479 |
|
|
2,406,261 |
|
||
|
|
|
|
|
|||||
|
Operating expenses |
|
|
|
|
||||
|
Selling and marketing expenses |
|
(493,101 |
) |
|
(263,871 |
) |
||
|
General and administrative expenses |
|
(979,973 |
) |
|
(816,122 |
) |
||
|
Gain from equity method investments |
|
28,747 |
|
|
8,873 |
|
||
|
Total operating expenses |
|
(1,444,327 |
) |
|
(1,071,120 |
) |
||
|
|
|
|
|
|||||
|
Income from operations |
|
765,152 |
|
|
1,335,141 |
|
||
|
|
|
|
|
|||||
|
Other income/(expenses) |
|
|
|
|
||||
|
Other income, net |
|
37,572 |
|
|
77,735 |
|
||
|
Financial expenses, net |
|
(118,256 |
) |
|
(131,683 |
) |
||
|
Total other expenses, net |
|
(80,684 |
) |
|
(53,948 |
) |
||
|
|
|
|
|
|||||
|
Income before income tax expense |
|
684,468 |
|
|
1,281,193 |
|
||
|
Income tax expense |
|
(315,854 |
) |
|
(367,792 |
) |
||
|
Net income |
$ |
368,614 |
|
$ |
913,401 |
|
||
41
The following table presents our summary consolidated balance sheet data as of the dates indicated.
|
As of December 31, |
||||||
|
2023 |
2024 |
|||||
|
Cash and cash equivalents |
$ |
1,094,705 |
$ |
545,472 |
||
|
Accounts receivable |
|
44,832 |
|
582,640 |
||
|
Inventories |
|
331,312 |
|
311,425 |
||
|
Amount due from related parties, current |
|
1,798,928 |
|
2,697,519 |
||
|
Prepaid expenses and other current assets |
|
880,304 |
|
1,259,867 |
||
|
Total current assets |
|
4,150,081 |
|
5,396,923 |
||
|
Amounts due from related parties, non-current |
|
128,205 |
|
727,891 |
||
|
Total non-current assets |
|
6,197,808 |
|
5,767,954 |
||
|
Total assets |
$ |
10,347,889 |
$ |
11,164,877 |
||
|
|
|
|||||
|
Bank overdrafts |
|
523,083 |
|
458,275 |
||
|
Deferred revenue |
|
58,969 |
|
36,952 |
||
|
Accounts payable |
|
302,751 |
|
562,304 |
||
|
Notes payable |
|
90,440 |
|
48,075 |
||
|
Income tax payable |
|
47,866 |
|
18,133 |
||
|
Current portion of long-term bank loans |
|
64,552 |
|
72,579 |
||
|
Amounts due to related parties, current |
|
349,793 |
|
177,075 |
||
|
Operating lease liabilities, current |
|
829,420 |
|
656,536 |
||
|
Finance lease liabilities, current |
|
33,280 |
|
35,265 |
||
|
Accrued expenses and other current liabilities |
|
1,070,540 |
|
713,130 |
||
|
Total current liabilities |
|
3,370,694 |
|
2,778,324 |
||
|
Long-term bank loans |
|
1,833,795 |
|
1,812,131 |
||
|
Total non-current liabilities |
|
2,852,303 |
|
2,180,893 |
||
|
Total liabilities |
|
6,222,997 |
|
4,959,217 |
||
|
Total shareholders’ equity |
|
4,124,892 |
|
6,205,660 |
||
|
Total liabilities and equity |
$ |
10,347,889 |
$ |
11,164,877 |
||
The following table presents our selected consolidated statements of cash flow data for the periods indicated.
|
For the Years Ended |
||||||||
|
2023 |
2024 |
|||||||
|
Net cash provided by/(used in) operating activities |
$ |
27,428 |
|
$ |
(297,730 |
) |
||
|
Net cash used in investing activities |
|
(989,700 |
) |
|
(1,081,507 |
) |
||
|
Net cash provided by financing activities |
|
789,247 |
|
|
767,919 |
|
||
|
Effect of exchange rate changes |
|
63,498 |
|
|
62,085 |
|
||
|
Net change in cash |
|
(109,527 |
) |
|
(549,233 |
) |
||
|
Cash, at beginning of the year |
|
1,204,232 |
|
|
1,094,705 |
|
||
|
Cash, at end of the year |
$ |
1,094,705 |
|
$ |
545,472 |
|
||
42
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial statements and the notes to those statements included elsewhere in this prospectus. The discussion in this prospectus contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. The cautionary statements made in this prospectus should be read as applying to all related forward-looking statements wherever they appear in this prospectus. Our actual results could differ materially from those discussed here. Factors that could cause or contribute to these differences include those discussed in “Risk Factors,” as well as those discussed elsewhere. See “Risk Factors” and “Special Note Regarding Forward-Looking Statements and Industry Data.”
Overview
We are one of the leading specialty hotpot restaurant chains in Malaysia, specializing in chicken hotpot and fish head hotpot. With roots in George Town, Penang, Malaysia since 2015, we have become a top player in the specialty hotpot market in Malaysia. According to Frost & Sullivan, we were the third largest specialty hotpot restaurant chain in Malaysia in terms of revenues generated by company-owned restaurants for the year ended December 31, 2024. Our Chicken Claypot House (鸡煲之家) brand, according to Frost & Sullivan, was the largest chicken hotpot brand in Malaysia in terms of number of restaurant outlets as of June 30, 2025.
We are committed to providing the most authentic Sichuan hotpot experience with Hong Kong style chicken hotpot traditions, to suit the discerning Malaysian palate. With our established brands in specialty hotpot and exclusive signature dishes that are well received by customers, we are committed to further expanding our reach in Malaysia and beyond.
We offer catering services in Malaysia and outside Malaysia mainly under two brands, namely Chicken Claypot House (鸡煲之家) for our chicken hotpot restaurants and Zi Wei Yuan (紫薇园) for our fish head hotpot restaurants through a combination of company-owned restaurant outlets and franchised restaurant outlets. As of the date of this prospectus, we operate or license a total of 32 restaurant outlets, among which there are 20 Chicken Claypot House restaurant outlets, four Zi Wei Yuan restaurant outlets, three Chicken Claypot House-Zi Wei Yuan cross-over restaurant outlets, a food court, three restaurant outlets under the brand Bibixian (比比鲜) focusing on Teochew-style chicken hotpot, and a restaurant outlet under the brand Banbudian Bistro (先启半步颠) offering Sichuan cuisine. Among the 28 restaurant outlets operated or licensed by us in Malaysia, there are 15 company-owned restaurant outlets and 13 franchised restaurant outlets, as of the date of this prospectus. Currently, we also have four franchised restaurant outlets located in three other countries including Thailand, Indonesia and China.
For the years ended December 31, 2023 and 2024, we derived substantially all of our revenues from our restaurant operations business, which amounted to US$9.78 million and US$8.92 million, respectively. Our restaurant operations business is consisted of three parts, namely company-owned restaurant operations, sales of food ingredients and condiments and franchise licensing. For the years ended December 31, 2023 and 2024, our revenues breakdowns for restaurant operations were US$8.21 million and US$6.64 million from company-owned restaurant operations, US$1.01 million and 1.24 million from sales of food ingredients and condiments, and US$0.31 million and $0.67 million from franchise licensing, respectively.
The cultural diversity in Southeast Asia has created a distinctive fusion cuisine landscape, and hotpot with traditions rooted in China has become a popular dining choice among customers. According to Frost & Sullivan, the market size in terms of revenues of specialty hotpot restaurants in Southeast Asia increased from US$1,592.3 million in 2019 to US$1,827.7 million in 2024 at a CAGR of 2.8%, and is expected to reach US$2,645.1 million in 2029, representing a CAGR of 7.7% from 2025 to 2029. To seize the market opportunity, we have been actively but also prudently expanding the network of our restaurant outlets in Malaysia. We are also poised for strategic expansion into other locations in Southeast Asia, such as Vietnam, Cambodia and Indonesia, as well as other international locations with significant growth potentials such as Hong Kong, Taiwan and the U.S.
Key Factors that Affect Our Results of Operations
Our business and results of operations are affected by a number of factors. While these factors present significant opportunities for our business, they also pose important risks and challenges we need to successfully address in order to growth our business.
43
Macroeconomic Conditions in Malaysia
Macroeconomic conditions in Malaysia can significantly affect the disposable income and spending power of our customers, as well as the ability of our suppliers to support our business. In stronger economic conditions, customers tend to allocate more spending to dining out. Conversely, during weaker economies, customers become more cautious and rational about their dining expenses. Our revenue primarily comes from restaurant operations in Malaysia, making us closely tied to the country’s macroeconomic conditions. Any deterioration in the Malaysian economy may lead to reduced consumer expenditure on food, increased fears of recession, and decreased consumer confidence. This can materially and adversely impact overall salary levels, spending power, and dining trends, significantly affecting our financial conditions and operational results. During the COVID-19 pandemic, the Malaysian government imposed disease control and social distancing measures that severely restricted the operations of catering businesses. These measures resulted in a significant decline in customer visits, a reduction in staffing levels, and disruptions to our operations.
Further, if inflation or other factors were to significantly increase our business costs, we would be affected by inflationary increases in wages, benefits, and other costs and our profitability may decline. There is no assurance that future cost increases can be offset by higher menu prices, nor that these price increases will be fully absorbed by customers without impacting their visit frequencies or spending patterns.
Consumer Recognition of our Brands
Our ability to attract new consumers and retain existing consumers in a cost-effective manner is crucial to driving revenue growth and achieving higher profitability. By establishing a strong brand identity and implementing effective marketing strategies, we are dedicated to staying connected with our consumers. Over the past decade, we have effectively built brand awareness among consumers and maintained a strong presence in the specialty hotpot market in Malaysia, and we have received various awards and recognitions over the years. For details, see “Business — Our Competitive Strengths — We are one of the leading hotpot restaurant chains in Malaysia with strong brand identity.”
We have continued to invest in branding, sales and marketing to acquire and retain consumers in a cost-effective manner and actively adjust our sales and marketing strategies to fully utilize the strategies with higher conversion rates. We also strive to provide an enjoyable consumer dining experience by offering tasty signature dishes under each of our brands and continuously adding new items to our menus to cater to the changing preferences of consumers and encourage revisits.
Strategic Expansion of Our Network of Restaurant Outlets
The expansion of our restaurant network is a key driver of our revenue growth and operating efficiency. As of the date of this prospectus, we operate or license a total of 32 restaurants outlets, including 15 company-owned outlets in Malaysia, 13 franchised outlets in Malaysia and four franchised outlets outside Malaysia. We have developed a strategic restaurant expansion blueprint focused on increasing our presence in existing markets including Malaysia and Thailand as well as exploring new markets with strong potentials. Such plan is subject to market conditions, consumer demands, performance of existing outlets, availability of suitable locations, our capital resources and the identification of qualified franchise partners. On June 26, 2025, we opened a food court under our brand 888 Family Food Court in Penang, Malaysia. As of the date of this prospectus, we hold 80% of the equity interest in the operating entity of this food court. On August 21, 2025, we also opened a new company-owned restaurant outlet under our brand Chicken Claypot House in Ipoh, Malaysia. As of the date of this prospectus, we have entered into a licensing agreement with a licensee in Malaysia, granting it a master license to open new franchised restaurant outlets under the brand Banbudian Bistro, and such licensee currently plans to open up a new restaurant outlet in Penang, Malaysia in the third quarter of 2025. In the future, we intend to further expand in existing markets, and also explore new markets with strong potentials in Southeast Asia, such as Vietnam, Cambodia and Indonesia, East Asia such as Hong Kong and Taiwan, as well as the U.S. and the United Kingdom with a focus on locations with large Asian communities in the next three to five years.
We believe that our expanding network of restaurant outlets will enhance our brand image, attract more consumers and franchise partners, reduce consumer acquisition costs, promote brand loyalty, and in turn increase sales. A growing scale will also enable us to gain more bargaining power over suppliers, which we believe will further
44
lower our costs and expenses as a percentage of our net revenues. On the other hand, as we continue to expand our network of restaurant outlets, we will continue to encounter challenges in implementing our managerial, operating and financial strategies to sustain business growth, or achieve any growth at all.
Cost-effective Supply Chain Management
Our success depends on reliable and consistent sources of food ingredients such as meat, seafood, vegetables, beverages and condiments at stable competitive prices delivered to us in a timely manner. High quality, cost-efficient and integrated supply chain management provides a solid foundation for our operational efficiency and is an important factor in our financial performance. Historically, our costs have consisted primarily of material costs, payroll costs, and other operation costs. Among these, material costs related to the purchase of food, beverages, condiments and consumables packaging is the most significant component of our cost structure, representing 32.7% and 32.6% of our revenues for the years ended December 31, 2023 and 2024, respectively. We have established strong business relationships with a broad network of suppliers and streamlined our supply chain management practice in relation to food preparation at our central kitchen and each restaurant outlets. We are dedicated to continuously improving our negotiating powers with suppliers and reducing procurement costs through bulk purchasing of ingredients and supplies, with the aim to lower overall food costs and enhanced profitability through competitive pricing. With established stringent supplier selection procedures, inspection procedures, and a performance evaluation system, we are also able to assess the performance of each of our suppliers on a regular basis. In addition, we are continuing to strengthen our supply chain management to improve operational efficiency. For example, we have established a three-tier inventory system achieve higher efficiency and lower costs in storage and logistics.
Operational Efficiency with Central Kitchen Management
High quality and integrated central kitchen management provides a solid foundation for us to main consistency and operational efficiency across our hotpot restaurant chain and is an important factor in our financial performance. We have achieved standardization at various stages of our business operations to ensure that our food offerings and catering services are delivered consistently. By consolidating part of our food production in a central kitchen, we benefit from economies of scale. With a centralized production facility, we can continuously optimize processes, workflows, and equipment usage, which increases efficiency, reduces duplication of efforts, and boosts productivity, which translates into cost savings and faster turnaround times. Additionally, our central kitchen facilitates effective supply chain management, giving us better visibility and control over ingredient sourcing, inventory management, and distribution, which ensures a reliable and uninterrupted supply of ingredients to our restaurant outlets, minimizing the risk of stockouts and improving overall operational efficiency. Moreover, our central kitchen provides greater control over food quality and consistency by processing and distributing semi-finished food products and soup bases subject to unified stringent quality standards.
Seasonality
There are seasonal patterns for hot pot consumption. As such, our business and financial performance are subject to seasonal fluctuations, such as Chinese New Year and other holidays, school vacations, weather conditions and fluctuations in food prices, among others. As a result, our results of operations may fluctuate from year-to-year/period-to-period and comparison of different periods may not be meaningful.
45
Results of Operations
The following table sets forth a summary of our consolidated results of operations, in absolute amount and as a percentage of our revenues for the years ended December 31, 2023 and 2024. This information should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. The results of operations in any period are not necessarily indicative of the results that may be expected for any future periods.
|
For the Years Ended December 31, |
Variance |
|||||||||||||||||
|
2023 |
2024 |
Amount |
Percentage |
|||||||||||||||
|
US$ |
% |
US$ |
% |
US$ |
% |
|||||||||||||
|
Revenues |
9,775,038 |
|
100.0 |
|
8,915,344 |
|
100.0 |
|
(859,694 |
) |
(8.8 |
) |
||||||
|
Cost of revenues |
(7,565,559 |
) |
(77.4 |
) |
(6,509,083 |
) |
(73.0 |
) |
1,056,476 |
|
(14.0 |
) |
||||||
|
Gross profit |
2,209,479 |
|
22.6 |
|
2,406,261 |
|
27.0 |
|
196,782 |
|
8.9 |
|
||||||
|
|
|
|
|
|
|
|||||||||||||
|
Operating expenses |
|
|
|
|
|
|
||||||||||||
|
Selling and marketing expenses |
(493,101 |
) |
(5.0 |
) |
(263,871 |
) |
(3.0 |
) |
229,230 |
|
(46.5 |
) |
||||||
|
General and administrative |
(979,973 |
) |
(10.0 |
) |
(816,122 |
) |
(9.2 |
) |
163,851 |
|
(16.7 |
) |
||||||
|
Gain from equity method investments |
28,747 |
|
0.3 |
|
8,873 |
|
0.1 |
|
(19,874 |
) |
(69.1 |
) |
||||||
|
Total operating expenses |
(1,444,327 |
) |
(14.7 |
) |
(1,071,120 |
) |
(12.1 |
) |
373,207 |
|
(25.8 |
) |
||||||
|
Income from operations |
765,152 |
|
7.9 |
|
1,335,141 |
|
14.9 |
|
569,989 |
|
74.5 |
|
||||||
|
Other income/(expenses) |
|
|
|
|
|
|
||||||||||||
|
Other income, net |
37,572 |
|
0.4 |
|
77,735 |
|
0.9 |
|
40,163 |
|
106.9 |
|
||||||
|
Financial expenses, net |
(118,256 |
) |
(1.2 |
) |
(131,683 |
) |
(1.5 |
) |
(13,427 |
) |
11.4 |
|
||||||
|
Total other expenses, net |
(80,684 |
) |
(0.8 |
) |
(53,948 |
) |
(0.6 |
) |
26,736 |
|
(33.1 |
) |
||||||
|
|
|
|
|
|
|
|||||||||||||
|
Income before income tax |
684,468 |
|
7.1 |
|
1,281,193 |
|
14.3 |
|
596,725 |
|
87.2 |
|
||||||
|
Income tax expense |
(315,854 |
) |
(3.2 |
) |
(367,792 |
) |
(4.1 |
) |
(51,938 |
) |
16.4 |
|
||||||
|
Net income |
368,614 |
|
3.9 |
|
913,401 |
|
10.2 |
|
544,787 |
|
147.8 |
|
||||||
Key Components of Results of Operations
Revenues
We have a growing network of company-owned restaurant outlets in Malaysia and franchised restaurant outlets across Malaysia and outside Malaysia. Our revenues are derived principally from (i) restaurant operations, which further include revenues from company-owned restaurant operations, sales of food ingredients and condiments to local distributors or franchised restaurant outlets, and service fees from franchise licensing, and (ii) other revenues from leasing out buildings. The following table sets forth a breakdown of our revenues, in absolute amounts and as percentages of total revenues, for the periods indicated.
|
For the Years Ended December 31, |
Variance |
|||||||||||||
|
2023 |
2024 |
Amount |
Percentage |
|||||||||||
|
US$ |
% |
US$ |
% |
US$ |
% |
|||||||||
|
Revenues |
|
|
||||||||||||
|
Restaurant operations |
9,521,142 |
97.4 |
8,548,395 |
95.9 |
(972,747 |
) |
(10.2 |
) |
||||||
|
Company-owned restaurant operations |
8,209,810 |
84.0 |
6,640,706 |
74.5 |
(1,569,104 |
) |
(19.1 |
) |
||||||
|
Sales of food ingredients and condiments |
1,006,081 |
10.3 |
1,239,966 |
13.9 |
233,885 |
|
23.2 |
|
||||||
|
Franchise licensing |
305,251 |
3.1 |
667,723 |
7.5 |
362,472 |
|
118.7 |
|
||||||
|
Others |
253,896 |
2.6 |
366,949 |
4.1 |
113,053 |
|
44.5 |
|
||||||
|
Total revenues |
9,775,038 |
100.0 |
8,915,344 |
100.0 |
(859,694 |
) |
(8.8 |
) |
||||||
46
Restaurant Operations
Company-owned restaurant operations. We primarily generate revenues by offering customers a variety of cuisine including chicken hotpot with various flavors, charcoal fish head hotpot, food ingredients (meats, seafood and vegetables) with featured soup bases, hot-pot seasoning and dipping sauces, as well as other side dishes, special dishes, beverage and desserts at our company-owned restaurants.
Sales of food ingredients and condiments. We also generate revenues from sales of food ingredients and condiments to local distributors or our franchised restaurant outlets.
Franchise licensing. Pursuant to our standard licensing agreement, our licensees in Malaysia are required to a fixed amount of administrative fee and settle applicable costs and expenses, for pre-opening and ongoing support services and the authorization to operate a franchised restaurant using the trademarks, trade names, logos, and other proprietary marks associated with the brand of Chicken Claypot House and/or Zi Wei Yuan. Administrative fees are generally settled on a monthly basis. Applicable costs and expenses are charged as occurred.
For licensees outside of Malaysia, they are required to pay a master license fee as in a fixed upfront payment for pre-opening and ongoing support services, the authorization of the access to the proprietary marks associated with the brand of Chicken Claypot House and/or Zi Wei Yuan, and the right to operate a fixed number of restaurants under the authorized brands. Additionally, for each restaurant such master licensee opens above the fixed number agreed or sub-franchises to other third-parties, a fixed outlet license fee shall also be paid. Master license fee is higher than outlet license fee, since master license is granted with the overarching right to operate the business within a specified territory, including the power to grant outlet license within the territory.
During the effective license term, all the licensees are also required to share a certain percentage (generally between 5% to 7.5%) of each applicable restaurant outlet’s gross revenues as royalties, which are settled on a monthly basis.
Therefore, revenues from franchise licensing are generated from service fees that we receive from our licensees, which primarily include (i) royalties, (ii) license fees, and (iii) other service fees for providing support services.
Others
We also generate revenues from leasing out buildings.
Cost of Revenues
Our cost of revenues consists of costs directly related to revenue-generating activities, which is primarily consisted of material costs, payroll costs including salaries and related social insurance, and other operating costs directly linked to the revenues including rental costs, utilities costs, depreciation of property and equipment, repair and maintenance costs, and other miscellaneous costs. The following table sets forth a breakdown of our cost of revenues presented by cost categories, in absolute amounts and as percentages of total revenues, for the periods indicated.
|
For the Years Ended December 31, |
Variance |
|||||||||||||
|
2023 |
2024 |
Amount |
Percentage |
|||||||||||
|
US$ |
% |
US$ |
% |
US$ |
% |
|||||||||
|
Cost of revenues |
|
|
||||||||||||
|
Material costs |
3,197,559 |
32.7 |
2,905,793 |
32.6 |
(291,766 |
) |
(9.1 |
) |
||||||
|
Payroll costs |
2,410,704 |
24.7 |
1,979,175 |
22.2 |
(431,529 |
) |
(17.9 |
) |
||||||
|
Rental costs |
988,395 |
10.1 |
924,000 |
10.4 |
(64,395 |
) |
(6.5 |
) |
||||||
|
Utilities costs |
354,023 |
3.6 |
349,228 |
3.9 |
(4,795 |
) |
(1.4 |
) |
||||||
|
Depreciation of property and equipment |
290,492 |
3.0 |
227,412 |
2.6 |
(63,080 |
) |
(21.7 |
) |
||||||
|
Repairs and maintenance costs |
306,416 |
3.1 |
104,198 |
1.2 |
(202,218 |
) |
(66.0 |
) |
||||||
|
Others |
17,970 |
0.2 |
19,277 |
0.1 |
1,307 |
|
7.3 |
|
||||||
|
Total cost of revenues |
7,565,559 |
77.4 |
6,509,083 |
73.0 |
(1,056,476 |
) |
(14.0 |
) |
||||||
47
The following table sets forth a breakdown of our cost of revenues presented by revenue streams, in absolute amounts and as percentages of total revenues, for the periods indicated.
|
For the Years Ended December 31, |
Variance |
|||||||||||||
|
2023 |
2024 |
Amount |
Percentage |
|||||||||||
|
US$ |
% |
US$ |
% |
US$ |
% |
|||||||||
|
Cost of revenues |
|
|
||||||||||||
|
Restaurant operations |
7,477,062 |
76.5 |
6,389,726 |
71.7 |
(1,087,336 |
) |
(14.5 |
) |
||||||
|
Others |
88,497 |
0.9 |
119,357 |
1.3 |
30,860 |
|
34.9 |
|
||||||
|
Total cost of revenues |
7,565,559 |
77.4 |
6,509,083 |
73.0 |
(1,056,476 |
) |
(14.0 |
) |
||||||
Gross Profit and Gross Profit Margin
Gross profit represents revenues less cost of revenues. Gross profit margin represents gross profit as a percentage of our revenues. Our gross profit is primarily affected by our ability to generate revenues and the fluctuation of our costs. The following table below sets forth our gross profit and gross profit margin in respect of revenue streams for the periods indicated.
|
For the Years Ended December 31, |
Variance |
|||||||||||
|
2023 |
2024 |
Amount |
Percentage |
|||||||||
|
US$ |
Margin % |
US$ |
Margin % |
US$ |
% |
|||||||
|
Gross profit and gross profit margin |
||||||||||||
|
Restaurant operations |
2,044,080 |
21.5 |
2,158,669 |
25.3 |
114,589 |
5.6 |
||||||
|
Others |
165,399 |
65.1 |
247,592 |
67.5 |
82,193 |
49.7 |
||||||
|
Total |
2,209,479 |
22.6 |
2,406,261 |
27.0 |
196,782 |
8.9 |
||||||
Operating Expenses
Selling and Marketing Expenses
Our selling and marketing expenses primarily consist of (i) advertising and promotion expenses incurred to promote our brand image and awareness, (ii) payroll expenses including salaries and related social insurance expenses for marketing personnel, and (iii) others.
General and Administrative Expenses
Our general and administrative expenses primarily consist of (i) payroll expenses including salaries and related social insurance expenses for management and administrative personnel, (ii) office and utilities expenses, (iii) rental expenses for office space, (iv) professional services expenses, (v) travelling expenses, (vi) depreciation and amortization expenses for property and equipment and software used for office purpose, (vii) insurance expenses, and (viii) other miscellaneous administrative expenses.
Financial Expenses, Net
Our financial expenses, net primarily consist of interest expenses for borrowings and miscellaneous bank charges, partially offset by interest income from bank deposits.
Comparison of Years Ended December 31, 2023 and 2024
Revenues
We recorded total revenues of US$8.92 million for the year ended December 31, 2024, representing a decrease of 8.8% from US$9.78 million for the year ended December 31, 2023, primarily driven by the decrease in revenues generated from our company-owned restaurant operations, partially offset by the increase in revenues generated from sales of food ingredients and condiments, franchise licensing and others.
48
Restaurant Operations
Company-owned restaurant operations. Revenues from company-owned restaurant operations decreased by 19.1% from US$8.21 million for the year ended December 31, 2023 to US$6.64 million for the year ended December 31, 2024, primarily attributable to (i) the significant sales decrease in five company-owned restaurant outlets that led to a decrease in sales of US$1.27 million, among which we decided to close down two during the second half of 2024 with the plan to search for new restaurant locations with better customer traffic, and (ii) domestic economy instability affecting the market sentiment which led to the consumers being more prudent on daily spending.
Sales of food ingredients and condiments. Revenues from sales of food ingredients and condiments increased by 23.2% from US$1.01 million for the year ended December 31, 2023 to US$1.24 million for the year ended December 31, 2024, primarily attributable to the increased sales of products to one local distributor of food supply chain.
Franchised licensing. Revenues from franchised licensing increased by 118.7% from US$0.31 million for the year ended December 31, 2023 to US$0.67 million for the year ended December 31, 2024. The increase in revenues is primarily attributable to the increased master license fees and royalties contributed by the licensees outside Malaysia for the year ended December 31, 2024, as a result of our efforts to expand our brand footprints in Thailand and China during 2024, which we expect these master licensees outside Malaysia will contribute more royalties and outlet license fees in the future.
Others
Revenues from leasing out buildings increased by 44.5% from US$0.25 million for the year ended December 31, 2023 to US$0.37 million for the year ended December 31, 2024, primary attributable to the addition of three lease agreements as lessor in 2024.
Cost of Revenues
We recorded a total cost of revenues of US$6.51 million for the year ended December 31, 2024, representing a decrease of 14.0% from US$7.57 million for the year ended December 31, 2023, primarily driven by the decrease in cost of materials, salaries and related social insurance costs, and repairs and maintenance costs, which was (i) generally in line with the decreased revenues from company-owned restaurant operations, and also (ii) a result of our further optimization in standardized operations which led to improvement in overall cost control.
Material costs. Our costs of materials including costs of food, beverage and consumables, decreased from US$3.20 million for the year ended December 31, 2023 to US$2.91 million for the year ended December 31, 2024, which was in line with the decreased revenues from company-owned restaurant operations.
Payroll costs. Our payroll costs including salaries and related social insurance costs for restaurant staff decreased from US$2.41 million for the year ended December 31, 2023 to US$1.98 million for the year ended December 31, 2024, mainly due to the optimization in restaurant staff headcount and reduction in bonus provision related sales incentives, which was in line with the decreased revenues from company-owned restaurant operations.
Rental costs. Our rental costs incurred for restaurant premises were US$0.99 million and US$0.92 million for the years ended December 31, 2023 and 2024, respectively, which remained relatively stable.
Utilities costs. Our utilities costs incurred for restaurants’ daily operations were US$0.35 million and US$0.35 million for the years ended December 31, 2023 and 2024, respectively, which remained relatively stable.
Depreciation of property and equipment. Our depreciation of property and equipment primarily including depreciation of leasehold improvements and equipment used for restaurant operations, and depreciation of buildings for leasing out, decreased from US$0.29 million for the year ended December 31, 2023 to US$0.23 million for the year ended December 31, 2024, which due to the disposal of property and equipment in one restaurant outlet.
Repairs and maintenance costs. Our repairs and maintenance costs decreased from US$0.31 million for the year ended December 31, 2023 to US$0.10 million for the year ended December 31, 2024 mainly due to the decrease of consumable tool expenses for repairs and maintenance.
49
Others. Our other miscellaneous costs were approximately US$0.02 million for the year ended December 31, 2023 to US$0.02 million for the year ended December 31, 2024, respectively.
Gross Profit and Gross Profit Margin
Our gross profits were US$2.21 million and US$2.41 million for the years ended December 31, 2023 and 2024, respectively, representing a gross profit margin of 22.6% and 27.0%, respectively, primarily attributable to our efforts in further optimization in standardized operations to avoid waste of food ingredients and redundant staff, which led to improvement in overall cost control, especially in the material costs, payroll costs, and repairs and maintenance costs.
Operating Expenses
Selling and Marketing Expenses
Our selling and marketing expenses decreased by 46.5%, from US$0.49 million for the year ended December 31, 2023 to US$0.26 million for the year ended December 31, 2024, which was mainly attributable to the decrease in expenses we incurred to advertise and promote our brand and restaurants by actively reducing ineffective marketing activities.
General and Administrative Expenses
Our general and administrative expenses decreased by 16.7% from US$0.98 million for the year ended December 31, 2023 to US$0.82 million for the year ended December 31, 2024, respectively, primarily due to a decrease in insurance expenses of US$0.07 million and a decrease in rental expenses of US$0.05 million, which was mainly due to the disposal of one company-owned restaurant outlet during 2024.
Financial Expenses, Net
Our financial expenses, net slightly increased from US$0.12 million for the year ended December 31, 2023 to US$0.13 million for the year ended December 31, 2024, primarily attributable to the slight increase of interest expenses incurred for bank overdrafts and bank borrowings.
Net income
As a result of the foregoing, we recorded a net income of US$0.37 million and US$0.91 million for the years ended December 31, 2023 and 2024, respectively. The increase in net income was primarily attributable to (i) our efforts in further optimization in standardized operations which led to improvement in overall cost control and (ii) the decrease in marketing expenses we incurred to advertise our brand and restaurants in 2024.
Taxation
Cayman Islands
The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Act and accordingly, is exempted from Cayman Islands income and corporate tax. As such, the Company is not subject to tax on either income or capital gain. In addition, no withholding tax is imposed upon any payments of dividends by subsidiaries to the Company.
Malaysia
Our Malaysian subsidiaries, including STCH Holding, STCH GH, ZWY Raja Uda, CHH KL, CCH Tropika and GTL F&B, are governed by the income tax laws of Malaysia. The income tax provision in respect of operations in Malaysia is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations, and practices. Under the Income Tax Act of Malaysia, enterprises incorporated in Malaysia are usually subject to a unified 24% enterprise income tax rate while preferential tax rates, tax holidays, and tax exemptions may be granted on a case-by-case basis. The tax rate for small and medium sized companies (generally companies incorporated in Malaysia with paid-in capital of MYR2,500,000 or less, and gross income of not more than MYR50 million) is
50
15% for the first MYR150,000 (approximately US$37,500) taxable income, and 17% for taxable income between MYR150,001 (approximately US$37,500) to MYR600,000 (approximately US$150,000), with the remaining balance of taxable income being taxed at the 24% rate.
Liquidity and Capital Resources
Our primary sources of liquidity have been cash flows from our operating activities, capital contributions from shareholders and loans from banks. As of December 31, 2023 and 2024, we had cash and cash equivalents of US$1.09 million and US$0.55 million, and total positive working capital of US$0.78 million and US$2.62 million, respectively.
We incurred net income of US$0.37 million and US$0.91 million for the years ended December 31, 2023 and 2024, respectively. We incurred net cash provided by operating activities of US$0.03 million and net cash used in operating activities of US$0.30 million for the years ended December 31, 2023 and 2024, respectively. Retained earnings were US$0.73 million and US$1.65 million as of December 31, 2023 and 2024, respectively.
Our liquidity is based on our ability to generate cash from operating activities, obtain capital financing from equity interest investors and borrow funds from financial institutions. Our future capital requirements depend on many factors including our growth rate, the continuing market acceptance of our offerings, the timing and extent of spending to support our efforts to develop our platform, the expansion of sales and marketing activities, and the expansion and penetration of our business into different geographies and markets. To enhance our liquidity position or increase our cash reserve for future investments or operations through additional financing activities, we may in the future seek equity financing or obtain credit facilities. The issue of additional equity securities would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. There can be no assurances, however, that the current operating plan will be achieved or that additional funding will be available on terms acceptable to us, or at all. If we are unable to obtain sufficient funding, we could be required to delay our development efforts and limit activities, which could adversely affect our business and consolidated financial statements.
Cash Flows
The following table sets forth a summary of our cash flows for the periods indicated.
|
For the years ended |
||||||
|
2023 |
2024 |
|||||
|
US$ |
US$ |
|||||
|
Net cash provided by/(used in) operating activities |
27,428 |
|
(297,730 |
) |
||
|
Net cash used in investing activities |
(989,700 |
) |
(1,081,507 |
) |
||
|
Net cash provided by financing activities |
789,247 |
|
767,919 |
|
||
|
Effect of exchange rate changes |
63,498 |
|
62,085 |
|
||
|
Net change in cash |
(109,527 |
) |
(549,233 |
) |
||
|
Cash, at beginning of the year |
1,204,232 |
|
1,094,705 |
|
||
|
Cash, at end of the year |
1,094,705 |
|
545,472 |
|
||
Operating Activities
Our net cash used in operating activities was US$0.30 million for the year ended December 31, 2024, which was primarily attributable to a net income of US$0.91 million, as adjusted for (i) certain non-cash items, primarily including amortization of right-of-use assets of US$0.88 million, depreciation of property and equipment and amortization of software of US$0.27 million, provision for expected credit losses of US$0.08 million, and gain from disposal of property and other equipment of US$0.07 million; and (ii) changes in working capital that negatively affected the cash flow from operating activities, primarily including a decrease of US$0.94 million in operating lease liabilities, an increase of US$0.61 million in accounts receivable mainly due to the increased receivables for products sold to a local distributor, an increase of US$0.52 million in amount due from related parties mainly due to the increased receivables for products and services provided to related parties, a decrease of US$0.36 million in accrued liabilities and other current liabilities mainly due to the decreased accrued payroll and welfare, and a decrease of US$0.18 million in amount due to related parties; partially offset by (iii) changes in working capital that positively affected the cash flow
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from operating activities, primarily including an increase of US$0.25 million in accounts payable mainly due to the increased payables to suppliers benefiting from extension of credit term, and a decrease of US$0.12 million in other non-current assets.
Our net cash provided by operating activities was US$0.03 million for the year ended December 31, 2023, which was primarily attributable to a net income of US$0.37 million, as adjusted for (i) certain non-cash items, primarily including amortization of right-of-use assets of US$0.91 million, depreciation of property and equipment and amortization of software of US$0.33 million, provision for expected credit losses of US$0.06 million, and deferred taxes of US$0.04 million; and (ii) changes in working capital that positively affected the cash flow from operating activities, primarily including an increase of US$0.06 million in advances from customers, and an increase of US$0.06 million in amounts due to related parties; partially offset by (iii) changes in working capital that negatively affected the cash flow from operating activities, primarily including a decrease of US$0.95 million in operating lease liabilities, a decrease of US$0.28 million in accrued liabilities and other current liabilities mainly due to the decreased accrued payroll and welfare, an increase of US$0.24 million in amounts due from relate parties due to the increased receivables for products and services provided to related parties, an increase of US$0.19 million in prepaid expenses and other current assets.
Investing Activities
Our net cash used in investing activities for the year ended December 31, 2024 was US$1.08 million primarily attributable to (i) interest-free loans to related parties of US$1.38 million, (ii) interest-free loans to third parties of US$0.25 million, and (iii) purchase of property, equipment and software of US$0.08 million; partially offset by collection of interest-free loans to related parties of US$0.62 million.
Our net cash used in investing activities for the year ended December 31, 2023 was US$0.99 million primarily attributable to (i) purchase of property, equipment and software of US$0.76 million, (ii) interest-free loans to related parties of US$0.39 million, and (iii) interest-free loans to third parties of US$0.23 million; partially offset by collection of interest-free loans to related parties of US$0.47 million.
Financing Activities
Our net cash provided by financing activities for the year ended December 31, 2024 was US$0.77 million, primarily attributable to (i) capital injection from shareholders of US$0.95 million and (ii) proceeds from bank overdrafts of US$0.92 million; partially offset by (i) repayments of bank overdrafts of US$1.00 million, (ii) repayments of long-term bank loans of US$0.06 million and (iii) install payments of finance leases of US$0.04 million.
Our net cash provided by financing activities for the year ended December 31, 2023 was US$0.79 million, primarily attributable to (i) proceeds from bank overdrafts of US$1.09 million, (ii) proceeds from long-term bank loans of US$0.37 million, (iii) capital injection from shareholders of US$0.12 million and (iv) loans from third parties of US$0.06 million; partially offset by (i) repayments of bank overdrafts of US$0.75 million, (ii) repayments of long-term bank loans of US$0.07 million and (iii) install payments of finance leases of US$0.04 million.
Capital Expenditures
We incurred capital expenditures of US$0.76 million and US$0.08 million for the years ended December 31, 2023 and 2024, respectively, mainly for leasehold improvement and replacement of equipment. We expect that our capital expenditures will increase in the foreseeable future as we expand our business, and that our level of capital expenditures will be significantly affected by customer demand for our products and services. Our future capital requirements may be uncertain and actual capital requirements may be different from those we currently anticipate. To the extent cash flows from our business activities are insufficient to fund future capital requirements, we may need to seek equity or debt financing. We will continue to incur capital expenditures to support the expected growth of our business.
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Contractual Obligations
The following table sets forth our contractual obligations as of December 31, 2024:
|
Payments due by schedule |
||||||||||||
|
Less than |
1 – 3 years |
More than |
Total |
|||||||||
|
Operating leases |
$ |
691,696 |
$ |
192,826 |
$ |
4,564 |
$ |
889,086 |
||||
|
Finance lease |
$ |
38,649 |
$ |
77,298 |
$ |
14,901 |
$ |
130,848 |
||||
|
Bank overdrafts |
$ |
458,275 |
$ |
— |
$ |
— |
$ |
458,275 |
||||
|
Long-term bank loans plus accrued interests |
$ |
140,520 |
$ |
257,588 |
$ |
2,258,581 |
$ |
2,656,689 |
||||
Operating lease agreements represented non-cancellable operating leases for our use of office, food factory and restaurant store premises in Malaysia. Finance lease agreements represented the purchase of motor vehicles in financial installments. Other than those shown above, we did not have any other significant capital commitments, purchase commitments, long-term obligations or guarantees as of December 31, 2024.
Off-Balance Sheet Commitments and Arrangements
We have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee payment obligations of any third party. We have not entered into any derivative contract that is indexed to our shares and classified as shareholder’s equity or that is not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us, or engages in leasing, hedging or product development services with us.
Holding Company Structure
CCH Holdings Ltd is a Cayman Islands incorporated investment holding company. It facilitates group treasury activities and international financial transactions such as fund raising but does not have substantive business operations. We conduct our operations in Malaysia primarily through our subsidiaries and our consolidated affiliated entities. As a result, our ability to pay dividends depends upon dividends paid by our subsidiaries. If our subsidiaries or any newly formed subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us.
In addition, as determined in accordance with local regulations, our subsidiaries may be restricted from paying us dividends offshore or from transferring a portion of their assets to us, either in the form of dividends, loans or advances, unless certain requirements are met and regulatory approvals are obtained. Even though we currently do not require any such dividends, loans or advances from our entities for working capital and other funding purposes, we may in the future require additional cash resources from them due to changes in business conditions, to fund future acquisitions and development, or merely to declare and pay dividends or distributions to our shareholders.
Emerging Growth Company Status
Currently, the Company is qualified as an “emerging growth company” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. The Company will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration statement, (b) in which the Company has total annual gross revenues of at least $1.235 billion, or (c) in which the Company is deemed to be a large accelerated filer, which means the market value of the Company’s common equity that is held by non-affiliates exceeds $700 million as of the last Business Day of its most recently completed second fiscal quarter; and (ii) the date on which the Company has issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act. As such, the Company will be eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
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Internal Control over Financial Reporting
As a company with less than US$1.235 billion in revenues for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act, in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. We have elected to take advantage of such exemptions.
In the course of preparing and auditing our consolidated financial statements for the years ended December 31, 2023 and 2024, we and our independent registered public accounting firm identified two material weaknesses in our internal control over financial reporting as of December 31, 2024. The material weaknesses identified relates to:
(1) our lack of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting requirements to properly address U.S. GAAP technical accounting issues and prepare and review financial statements and related disclosures in accordance with U.S. GAAP and reporting requirements set forth by the SEC; and
(2) our lack of formal risk assessment process and internal control framework over financial reporting, including lack of a formal group-wide risk assessment process to identify, assess, address or mitigate the risks in internal control, and lack of sufficient IT general controls designed and implemented surrounding the key financial related systems.
We have implemented and plan to implement the following measures to address the material weaknesses:
(1) We will recruit staff with knowledge of U.S. GAAP in our financial reporting department, and are in the process of and establishing an ongoing program to provide sufficient and appropriate training for financial reporting and accounting personnel, especially training related to U.S. GAAP and SEC reporting requirement. Currently, we engaged a consulting firm with experience on U.S GAAP and SEC regulations to advise on complex accounting transactions, and standardize our financial reporting function.
(2) We are continuing to (i) set up a system of internal control framework with formal documentation of polices in place, appointing independent directors, establishing an audit committee, as well as strengthening corporate governance; (ii) develop a group-wide risk assessment process to allow early detection, prevention and resolution of potential risks related to internal control, and (iii) strengthen the supervision and control on the IT functions, including the enhancement of IT security policies and procedures setup, logical security, data backup and cyber security training.
However, we cannot assure you that we will remediate our material weaknesses in a timely manner. See “Risk Factors — Risks Relating to Business and Industry — If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent fraud, and investor confidence and the market price of our ordinary shares may be materially and adversely affected.”
Recently Adopted or Issued Accounting Pronouncements
A list of recently issued accounting pronouncements that are relevant to us is stated in Note 2 (aa) to our consolidated financial statements as of and for the fiscal years ended December 31, 2023 and 2024, included elsewhere in this prospectus.
Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. We continually evaluate these judgments and estimates based on our own experience, knowledge and assessment of current business and other conditions, and our expectations
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regarding the future based on available information and assumptions that we believe to be reasonable. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.
When reading our consolidated financial statements, you should consider our selection of critical accounting policies, the judgment and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions. Our critical accounting policies and practices include the following: (1) revenue recognition, (2) expected credit losses and (3) income taxes. See “Note 2 — Summary of Significant Accounting Policies” to our consolidated financial statements for the disclosure of these accounting policies. We believe the following accounting estimates involve the most significant judgments used in the preparation of our financial statements: (1) provision of allowance for expected credit losses, (2) estimates for inventory write-downs, and (3) valuation allowance for deferred tax assets.
Provision of Allowance for Expected Credit Losses
Our accounts receivable, amounts due from related parties, other receivables and deposits in prepaid expenses and other current assets are within the scope of ASC 326. We estimated provision of allowance for expected credit losses to reserve for potentially uncollectible receivable amounts periodically. We consider factors in assessing the collectability of the accounts receivable and related receivables and deposits in prepaid expenses and other current assets, such as historical distribution of the aging of the amounts due, historical collections data of the customers, creditworthiness, forward-looking adjustments to assess the credit risk characteristics. Additionally, external data and macroeconomic factors are also considered. We estimated the allowance by segmenting in-scope financial assets into groups based on their shared credit risk characteristics and the aging of the underlying receivables, and assessed the expected credit loss rate for each group periodically. If there is strong evidence indicating that the accounts receivable is likely to be unrecoverable, we also make specific allowance in the period in which there is strong evidence that a loss is determined to be probable. We would consider factors such as the customer’s financial condition and liquidity, the customer’s willingness and ability to settle payment and historical and subsequent collections data in making specific allowance. Our estimate of the key assumptions did not change significantly throughout the periods presented. For the years ended December 31, 2023 and 2024, we recognized expected credit loss of US$58,188 and US$83,669, respectively.
Estimates for Inventory Write-downs
Our inventories, consisting of foods, consumables and beverage, are stated at the lower of cost or net realizable value, with net realized value represented by estimated selling prices in the ordinary course of business, less reasonably predictable costs of disposal and transportation. Inventories are written down to estimated net realizable value, which could be impacted by certain factors including historical usage, expected demand, anticipated sales price, product shelf life, product obsolescence, and other factors. We periodically review our inventories for excess or slow-moving items and makes provisions as necessary to properly reflect inventory value. No inventory write-downs were recorded for years ended December 31, 2023 and 2024, respectively.
Valuation Allowance for Deferred Tax Assets
Deferred income taxes are provided using assets and liabilities method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Deferred tax assets are recognized to the extent that these assets are more likely than not to be realized. In making such a determination, we consider all positive and negative evidence, including future reversals of projected future taxable income and results of recent operation. We establish a valuation allowance against deferred tax assets to the extent we believe that recovery is not likely.
In general, deferred tax assets represent future tax benefits to be received when certain expenses previously recognized in the consolidated statements of operations become deductible expenses under applicable income tax laws, or loss or credit carryforwards are utilized. As we estimate the allowance for deferred tax assets by considering if sufficient future taxable income will be generated to utilize the existing deferred tax assets, it can be altered if we change our forecasts of future profitability. We recorded US$28,967 and US$2,560 valuation allowance for deferred tax assets for the years ended December 31, 2023 and 2024, respectively.
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Quantitative and Qualitative Disclosures about Market Risks
Interest Rate Risk
We are exposed to interest rate risk on our interest-bearing assets and liabilities. As part of our asset and liability risk management, we review and take appropriate steps to manage our interest rate exposures on our interest-bearing assets and liabilities. We have not been exposed to material risks due to changes in market interest rates, and not used any derivative financial instrument to manage the interest risk exposure during the years ended December 31, 2023 and 2024.
Inflation Risk
Inflationary factors, such as increases in raw materials, personnel and overhead costs, could impair our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and operating expenses as a percentage of sales revenues if the revenues do not increase with such increased costs.
Credit Risk
Credit risk is controlled by the application of credit approvals, limits and monitoring procedures. We manage credit risk through in-house research and analysis of Malaysian and worldwide economy and the underlying obligors and transaction structures. We consider many factors in assessing the collectability of our receivables, such as the age of the amounts due, the customer’s payment history, credit-worthiness and other specific circumstances related to the accounts.
Liquidity Risk
We are also exposed to liquidity risk, which is risk that we will be unable to provide sufficient capital resources and liquidity to meet our commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures. When necessary, we will turn to other financial institutions and related parties to obtain short-term funding to cover any liquidity shortage.
Foreign Currency Translation and Transaction
Our operating entities’ functional currency are MYR. As a result, we are exposed to foreign exchange risk as our results of operations may be affected by fluctuations in the exchange rate among MYR and USD. If MYR depreciates against the USD, the value of our MYR revenues, earnings, and assets as expressed in our USD financial statements will decline. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk. Currently, these risks are not material to our financial condition or results of operations. As we expand internationally, our exposure to foreign currency translation and transaction risks may become more significant.
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The information presented in this section has been derived from the industry report commissioned by us and prepared by Frost & Sullivan, an independent research firm, regarding the industry and market position of us in Malaysia. The preparation of such industry report involved in-depth interviews with leading industry participants and industry experts, and reviewing company reports, independent research reports and data based on Frost & Sullivan’s own research database.
Overview of Macroenvironment in Malaysia
According to Frost & Sullivan, the nominal GDP and nominal GDP per capita of Malaysia have witnessed steady growth during the period from 2019 to 2024. The nominal GDP of Malaysia increased from US$365.2 billion in 2019 to US$439.9 billion in 2024 at a CAGR of 3.8%. In the future, according to International Monetary Fund (“IMF”), the nominal GDP of Malaysia is expected to grow from US$488.3 billion in 2025 to US$621.3 billion in 2029, representing a CAGR of 6.2%. From 2019 to 2024, nominal GDP per capita also grew at a CAGR of 3.2% from US$11,200 to US$12,100, which was mainly driven by the Malaysian government’s initiatives to stimulate foreign investment and domestic demand, including the National Economic Recovery Plan (PENJANA) and the National Investment Aspiration, the post-pandemic recovery in tourism and consumption and the recovery of export of commodities. In the future, the nominal GDP per capita is expected to increase from US$14,400 in 2025 to US$17,600 in 2029 at a CAGR of 5.1%. With the rising affluence in Malaysia, the annual average spending per person on dining-out in the country gradually increased at a CAGR of 2.8% from US$525.8 in 2019 to US$603.7 in 2024, despite the impact of the COVID-19 pandemic in 2020. Going forward, the annual average spending per person on dining-out in Malaysia is projected to rise significantly, from US$679.5 in 2025 to US$988.1 in 2029, at a CAGR of 9.8%.

Source: Frost & Sullivan
Market Size of the Catering Services Industry in Malaysia
The catering services industry in Malaysia has recorded a revenue of US$15.8 billion in 2019. However, the onset of the COVID-19 pandemic in 2020 caused a sharp year-on-year decline of 21.6% as lockdowns and restrictions disrupted operations. The downward trend continued into 2021, with another year-on-year decrease of 10.0% reflecting the prolonged impact of the pandemic.
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By 2024, the industry achieved a full recovery, with the actual revenue reaching US$16.5 billion, slightly exceeding pre-pandemic levels, translating to a modest CAGR of 0.9% from 2019 to 2024. Looking ahead, the catering services industry is forecasted to expand significantly, reaching US$21.6 billion in 2029, representing a robust forecasted CAGR of 5.7% from 2025 to 2029, driven by economic growth, increased consumer spending, and rising demand for catering services across events and food service segments.

Source: Frost & Sullivan
Market Size of Specialty Hotpot Restaurant in Malaysia
According to Frost & Sullivan, a specialty hotpot restaurant refers to restaurants serving predominantly hotpot cuisine, where customers cook raw or semi-prepared ingredients such as meat, seafood, vegetables, and noodles in a boiling broth at their table. These restaurants typically provide a variety of broth flavors, dipping sauces and ingredient options, allowing customers to customize their meal. Hotpot restaurants emphasize social interaction, shared dining, and a highly personalized culinary experience. The market size of specialty hotpot restaurants in Malaysia has demonstrated a steady increase at a CAGR of 2.3% from US$236.4 million in 2019 to US$265.1 million in 2024, in terms of revenue, despite the challenges posed by COVID-19 pandemic in the intervening years, which reflects a gradual recovery driven by growing consumer interest in dining-out and the popularity of specialty hotpot cuisine. Looking ahead, specialty hotpot is expected to gain more popularity with an impressive CAGR of 8.1%, and the market size is expected to reach a total revenue of US$391.8 million in 2029, driven by factors such as increasing consumer spending, the expansion of specialty hotpot chains, and the rising appeal of experiential dining in Malaysia, highlighting promising opportunities for businesses operating in this segment.

Source: Frost & Sullivan
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Key Drivers and Trends of the Specialty Hotpot Market in Malaysia
Rising Demand for Diverse Flavors
Malaysian consumers are drawn to the culinary experiences of being able to select fresh food ingredients and add flavors to them in a simmering broth of their choice, allowing them to enjoy layered and evolving flavors throughout their meal. Specialty hotpot restaurants and chicken hotpot restaurants cater to this demand by providing a range of unique broth options and ingredient combinations. The ability to customize and experiment with different combinations has become a key driver for the popularity of these dining establishments, aligning with Malaysia’s multicultural food culture, which highly values variety and diversity.
Diverse Demographics and Multicultural Appeal
Malaysia has a multicultural society which comprises of residents of various ethnicities, including Malays, Chinese, Indians and others, which has created a unique market dynamic for the food and beverage industry. Specialty chicken hotpot restaurants benefit from such diversity by offering a variety of flavors and ingredients that align with the preferences of different communities. The adaptability of hotpot dining, with which ingredients and broths can be tailored to suit varying tastes and dietary needs, makes it a popular choice across demographic groups.
Surge in Demand for Dining-out amid Rising Affluence
The specialty hotpot industry in Malaysia is experiencing a steady growth, driven by a combination of rising disposable income, urbanization, and a strong dining-out culture. Urbanization rate has recorded a continuous growth, increasing from approximately 76.61% in 2019 to approximately 78.72% in 2023. Hotpot restaurants appeal to Malaysia’s growing middle class and young population as they offer a highly interactive and customizable dining experience that emphasizes on fresh, high-quality ingredients and communal dining, which is considered a key aspect of Malaysian food culture.
Positive Influence of Social Media
The influence of food trends on social media platforms plays an important role in driving the specialty hotpot and chicken hotpot market in Malaysia, particularly among young consumers. In Malaysia, where over 28.7 million people (83% of the population) are active social media users in 2024, food-related content consistently ranks among the most popular categories. Hotpot, as a highly shareable, interactive and visually appearing cuisine, is well-received by users of social platforms. Restaurants could leverage this by offering vibrant ingredient displays, unique broth flavors, and interactive dining setups that encourage customers to post and share their experiences online. Additionally, the rise of food influencers and bloggers in Malaysia has amplified the visibility of specialty hotpot establishments, with campaigns and trending hashtags that can often spark interest of the crowd.
Competitive Landscape and Key Market Players of Specialty Hotpot Industry in Malaysia
The specialty hotpot industry in Malaysia is highly competitive with over 800 restaurants operated by domestic and international brands. Driven by the country’s diverse demographics and dietary preferences, the market features intense competition across multiple styles, with Chinese hotpot, especially Sichuan and chicken hotpot, still dominating the market. Key players are predominantly chain operators, most of whom adopt the strategy of choosing locations characterized by high pedestrian traffic, including shopping districts and transportation hubs, and they have also
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established their competitive advantages through maximization of brand exposure, standardization of quality control systems, and optimization of services processes. By leveraging a dense network of restaurant outlets and extensive operations, leading brands are able to consolidate their market share advantage.

Source: Frost & Sullivan
According to Frost & Sullivan, the top five specialty hotpot restaurant chains have captured 41.7% of the market share in Malaysia in terms of revenue. Mainly operating under the brands of Chicken Claypot House and Zi Wei Yuan, we are ranked the third among the specialty hotpot restaurant chains in Malaysia in terms of revenues generated by company-owned restaurants for the year ended December 31, 2024, with a market share of 2.5% in 2024. Our brand Chicken Claypot House was the largest chicken hotpot brand in Malaysia in terms of number of restaurant outlets as of June 30, 2025.
Overview of Specialty Hotpot in Other Regions — Southeast Asia, Hong Kong, Taiwan and the U.S.
Southeast Asia
The restaurant services industry in Southeast Asia is undergoing a structural transformation in its operational formats and service delivery models. Traditional restaurants are diversifying their revenue streams, such as providing dine-in, takeaway, and delivery services. The market size of specialty hotpot restaurants by revenue in Southeast Asia is expected to rise at a CAGR of 7.7% from US$1,968.0 million in 2025, reaching US$2,645.1 million in 2029.
The cultural mix of Southeast Asia has also created a distinctive fusion cuisine landscape, especially in Singapore and Malaysia. In Singapore, 74.3% of its population is of Chinese ethnicity as of 2022. Hotpot is one of the most representative Chinese cuisine styles, with a history of over 1,700 years and a combination of culinary influences from other types of cuisines in the region, including Malaysian, Thai and Indonesian. This cultural mix has sparked the development of diverse dining concepts, including specialty hotpot with broths featuring local flavors and spices.
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Hong Kong
Overall, market size of the specialty hotpot restaurants by revenue in Hong Kong increased from US$347 million in 2019 to US$398.5 million in 2024, at a CAGR of 2.8%. As Hong Kong’s economic activities has been gradually recovering after the COVID-19 pandemic due to resumption of tourism and government support, the market size of the specialty hotpot restaurants in Hong Kong is expected to reach US$526.9 million in 2029, representing a CAGR of 5.6% from 2025 to 2029.
Taiwan
Hotpot is deeply rooted in Taiwanese food culture as a communal meal, which is a popular choice among the locals and the visitors for gatherings. The entry of international brands, such Haidilao from China, Mo-Mo-Paradise from Japan, raises competition and elevates industry standards. The market size of specialty hotpot by revenue in Taiwan increased from US$353.1 million in 2019 to US$483.7 million in 2024, at a CAGR of 6.5%. It is further expected to reach US$687.9 million in 2029, at a CAGR of 7.3% from 2025 to 2029.
The U.S.
Market size of specialty hotpot by revenue in the U.S. recorded a growth from US$10.5 billion in 2019 to US$19.5 billion in 2024, at CAGR of 13.2%. The rising acceptance of Asian cuisines, especially Chinese, Japanese, and Korean, has enhanced consumers’ interest in hotpot. This communal and interactive dining experience attracts American consumers looking for unique and social dining options. The increase of Asian restaurants in urban areas and exposure through food media, such as social media platforms like Instagram and TikTok, has popularized hotpot. The market size by revenue is projected to grow rapidly at a CAGR of 14.1% from 2025 to 2029.
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Overview
We are one of the leading specialty hotpot restaurant chains in Malaysia, specializing in chicken hotpot and fish head hotpot. With roots in George Town, Penang, Malaysia since 2015, we have become a top player in the specialty hotpot market in Malaysia. According to Frost & Sullivan, we were the third largest specialty hotpot restaurant chain in Malaysia in terms of revenues generated by company-owned restaurants for the year ended December 31, 2024. Our Chicken Claypot House (鸡煲之家) brand, according to Frost & Sullivan, was the largest chicken hotpot brand in Malaysia in terms of number of restaurant outlets as of June 30, 2025.
We are committed to providing the most authentic Sichuan hotpot experience with Hong Kong style chicken hotpot traditions, to suit the discerning Malaysian palate. With our established brands in specialty hotpot and exclusive signature dishes that are well received by customers, we are committed to further expanding our reach in Malaysia and beyond.
We offer catering services in Malaysia and outside Malaysia mainly under two brands, namely Chicken Claypot House (鸡煲之家) for our chicken hotpot restaurants and Zi Wei Yuan (紫薇园) for our fish head hotpot restaurants through a combination of company-owned restaurant outlets and franchised restaurant outlets. As of the date of this prospectus, we operate or license a total of 32 restaurant outlets, among which there are 20 Chicken Claypot House restaurant outlets, four Zi Wei Yuan restaurant outlets, three Chicken Claypot House-Zi Wei Yuan cross-over restaurant outlets, three restaurant outlets under the brand Bibixian (比比鲜) focusing on Teochew-style chicken hotpot, a food court, and a restaurant outlet under the brand Banbudian Bistro (先启半步颠) offering Sichuan cuisine. The map below shows the 28 restaurant outlets operated or licensed by us in Malaysia, including 15 company-owned restaurant outlets and 13 franchised restaurant outlets, as of the date of this prospectus. Currently, we also have four franchised restaurant outlets located in three other countries including Thailand, Indonesia and China.

For the years ended December 31, 2023 and 2024, we derived substantially all of our revenues from our restaurant operations business, which amounted to US$9.78 million and US$8.92 million, respectively. Our restaurant operations business is consisted of three parts, namely company-owned restaurant operations, sales of food ingredients and condiments and franchise licensing. For the years ended December 31, 2023 and 2024, our revenues breakdowns for restaurant operations were US$8.21 million and US$6.64 million from company-owned restaurant operations, US$1.01 million and 1.24 million from sales of food ingredients and condiments, and US$0.31 million and $0.67 million from franchise licensing, respectively.
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The cultural diversity in Southeast Asia has created a distinctive fusion cuisine landscape, and hotpot with traditions rooted in China has become a popular dining choice among customers. According to Frost & Sullivan, the market size in terms of revenues of specialty hotpot restaurants in Southeast Asia increased from US$1,592.3 million in 2019 to US$1,827.7 million in 2024 at a CAGR of 2.8%, and is expected to reach US$2,645.1 million in 2029, representing a CAGR of 7.7% from 2025 to 2029. To seize the market opportunity, we have been actively but also prudently expanding the network of our restaurant outlets in Malaysia. We are also poised for strategic expansion into other locations in Southeast Asia, such as Vietnam, Cambodia and Indonesia, as well as other international locations with significant growth potentials such as Hong Kong, Taiwan and the U.S.
Our Competitive Strengths
We are one of the leading hotpot restaurant chains in Malaysia with strong brand identity.
Establishing a strong brand identity and implementing effective marketing strategies are crucial for restaurants to attract a diverse and broad customer base. We currently have two home-grown brands within our restaurant portfolio:
• Chicken Claypot House (鸡煲之家) is our chicken hotpot brand established in 2015 in George Town, Penang, Malaysia. The signature dish under this brand is the Special Taste Chicken Claypot (奇味鸡煲) which features a unique fusion of authentic Sichuan flavors and Malaysian spicy secret recipes.
• Zi Wei Yuan (紫薇园) is our brand for fish head hotpot that serves authentic fish head soup originated from Butterworth, Penang, Malaysia. The signature dishes under this brand are the Fried Fish Head Charcoal Pot (炸鱼头炉) and Grouper Fish Head Charcoal Pot (石斑鱼头炉), which are served in charcoal-scented soup base.
Over the past decade, we have effectively built brand awareness through positive reviews from our patrons and have maintained a strong presence in the specialty hotpot market in Malaysia. According to Frost & Sullivan, our Chicken Claypot House brand was the largest chicken hotpot brand in Malaysia in terms of number of restaurant outlets as of June 30, 2025. With a total of 28 restaurant outlets in Malaysia and four restaurant outlets outside Malaysia, we have been able to reach a wide customer base. Given the warm reception of our brands and food offerings among the customers, we have opened a total of 18 restaurant outlets since 2022, including eight company-owned restaurant outlets and ten franchised restaurant outlets. Further, we have received various awards and recognitions over the years. In 2023, we were awarded the Golden Bull Award (亚洲金牛奖), a recognized award for small and medium sized enterprises in Singapore and Malaysia. In 2022, Mr. Goh Kok Foong and Mr. Goh Kok E, were jointly awarded the Enterprise Hero Honorary Gold Award at the Sixth Guangming Enterprise Hero Awards (光明企业勇士奖), sponsored by Guangming Daily, a prominent media outlet in Malaysia, for their entrepreneurship in establishing and building our Chicken Claypot House brand. This award recognized the spirit of hard work among business leaders in establishing their enterprises and their outstanding performance in fulfilling corporate social responsibility.
We provide high-quality food featuring exclusive signature dishes.
We are dedicated to enhance the taste and maximize the appeal of our high-quality food offerings. The signature dish of Chicken Claypot House is the Special Taste Chicken Claypot (奇味鸡煲), a unique fusion of authentic Sichuan flavors and a Malaysian secret recipe for spiciness. We use the finest ingredients to create a rich and mellow flavor, leaving a lingering aftertaste. Our commitment to food quality is illustrated by our choice of chickens in our specialty chicken hotpots. Our chicken hotpot is made with Chinese garden chicken (菜园鸡), which is renowned for its excellent taste and flavor. Carefully prepared with this fresh, tender type of chicken and other high-quality ingredients, the flavor of our chicken hotpot is rich and intense, ensuring that every bowl of soup leaves an unforgettable aftertaste for locals and visitors alike. At Zi Wei Yuan, the premier destination for authentic charcoal fish head hotpot, our commitment to excellence is evident in our use of imported charcoal, which ensures sustained heat and enhances the natural flavors of our signature Fried Fish Head Charcoal Pot (炸鱼头炉) and Grouper Fish Head Charcoal Pot (石斑鱼头炉). From the crackling sounds of the charcoal to the rich aromas that fill the air, the dining experience at Zi Wei Yuan offers a nostalgic experience to customers which captures the old-fashioned charm of Teochew cuisine.
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We are able to maintain consistency and operational efficiency with our central kitchen management.
We are committed to maintain consistency across all our restaurant outlets. We achieve standardization at various stages of our business operations to ensure that our food offerings and catering services are delivered consistently. With our central kitchen, we have greater control over food quality and consistency. Our central kitchen develops standardized recipes that specify the necessary ingredients, quantities, cooking methods, and presentation standards for our chefs and kitchen staff, which ensures consistent cooking and plating techniques while adhering to food safety and hygiene standards, helping maintain quality across all our restaurant locations. Additionally, our central kitchen produces semi-finished food products, including processed ingredients and pre-made soup bases, all of which meet our stringent quality standards. These products are distributed to our restaurant outlets in Malaysia and outside Malaysia, ensuring consistency in taste, presentation, and overall dining experience.
By consolidating part of our food production in a central kitchen, we benefit from economies of scale. Bulk purchasing of ingredients and supplies leads to cost savings and improved negotiating power with suppliers, resulting in lower overall food costs and enhanced profitability through competitive pricing. Our central kitchen allows for streamlined and standardized operations. With a centralized production facility, we can optimize processes, workflows, and equipment usage, which reduces duplication of efforts, and boosts productivity, translating into cost savings and faster turnaround times. In addition, our central kitchen facilitates effective supply chain management, giving us better visibility and control over ingredient sourcing, inventory management, and distribution, which ensures a reliable and uninterrupted supply of ingredients to our restaurant outlets, minimizing the risk of stockouts and improving overall operational efficiency.
We have strong supply chain capabilities for our restaurant operations.
Operating a successful specialty hotpot restaurant chain requires strong supply chain capabilities. Quality raw materials are crucial as they are decisive in the overall taste of the food offerings, and purchase prices of the raw materials constitute a certain proportion of the total operating cost of restaurants. Years of industry experience have provided us with strong supply chain capabilities, as well as extensive experience in managing our supply chains. We source Chinese garden chicken and grouper fish, key ingredients to our hotpot offerings, from a selection of suppliers that we have established long-term partnership with to ensure the quality of our food offerings, while seasonal vegetables and other raw materials are locally sourced from reliable suppliers close to our restaurant outlets to ensure freshness, and we have established strong business relationships with a broad network of suppliers. Furthermore, we have streamlined our supply chain management practice in relation to food preparation at our central kitchen as well as each restaurant outlet with the aim to maintain the consistency in taste, quality and food safety. With established stringent supplier selection procedures, inspection procedures, and a performance evaluation system, we assess the performance of each of our suppliers on a regular basis.
We have a dedicated and experienced management team.
We are led by a dedicated and experienced management team. Mr. Goh Kok Foong and Mr. Goh Kok E are both veterans in the food and beverage industry with over 15 years of experience. In addition to experience in the food and beverage industry, our management team has abundant experience in finance, accounting and general business management. We believe that the range of management experience promotes diverse perspectives and creative thinking, which in turn results in innovative and effective ways of operating our restaurants and growing our business. We trust that our management team’s collective experience, the ability to work as a collaborative team and ultimately, and the ability to effectively implement our business philosophy, are critical to our success and will continue to contribute to our growth and expansion.
Our Growth Strategies
Strategic expansion in existing markets and into international locations with strong market potentials
According to Frost & Sullivan, the market size of specialty hotpot restaurants in Malaysia has demonstrated a steady increase at a CAGR of 2.3% from US$236.4 million in 2019 to US$265.1 million in 2024, in terms of revenue, despite the challenges posed by COVID-19 pandemic in the intervening years, and is expected to reach a total revenue of US$391.8 million in 2029 with an impressive CAGR of 8.1%. Outside Malaysia, hotpot cuisine is also appreciated in many countries of the world, especially in regions with a strong Asian community. According to Frost & Sullivan, the market size in terms of revenues of specialty hotpot restaurants in Southeast Asia increased from US$1,592.3 million in 2019 to US$1,827.7 million in 2024 at a CAGR of 2.8%, despite the severe impact of
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COVID-19 pandemic. It is expected that from 2025 to 2029, the market size in terms of revenues of specialty hotpot restaurants in Southeast Asia will further increase at a CAGR of 7.7% to reach a total of US$2,645.1 million in 2029. Moreover, the markets of specialty hotpot in other international locations exhibit strong growth potentials, such as Asian locations including Hong Kong and Taiwan, as well as the U.S. According to Frost & Sullivan, the market sizes in terms of revenues of specialty hotpot in Hong Kong, Taiwan, and the U.S. increased at a CAGR of 2.8%, 6.5% and 13.2% from 2019 to 2024 and is expected to further increase at a CAGR of 5.6%, 7.3% and 14.1% from 2025 to 2029, respectively. The market trends in these regions create significant expansion opportunities for restaurant chains like us.
To seize the growth opportunities, we have developed a strategic restaurant expansion blueprint focused on increasing our presence in existing markets including Malaysia and Thailand, as well as exploring new markets with strong potentials. Such plan is subject to market conditions, consumer demands, performance of existing outlets, availability of suitable locations, our capital resources and the identification of qualified franchise partners. In the future, we intend to further expand in existing markets, and also explore new markets with strong potentials in Southeast Asia, such as Vietnam, Cambodia and Indonesia, East Asia such as Hong Kong and Taiwan, as well as the U.S. and the United Kingdom with a focus on locations with large Asian communities in the next three to five years. We plan to implement our expansion outside Malaysia by carefully selecting desirable locations, conducting market research, and leveraging our existing brand recognition.
Despite our plans, our business in Malaysia faces certain challenges, including rising operational costs, such as increases in ingredient prices, labor wages and utility bills, as well as growing competition in the catering services industry over the same customer base. We may also face market entry risks such as regulatory, cultural and operational complexities which may delay or limit the expansion of our restaurant network, especially in new markets where we do not currently have operations yet. Additionally, business expansion usually requires significant financial and managerial resources. If we are unable to secure additional funding or allocate resources effectively, our expansion plan may be constrained.
Continuous development of new menu for our restaurant outlets
We aim to stay at the forefront of culinary trends and constantly evolve to meet the changing preferences of our customers. The head chef and our management team collaborate to create and refine the menu, taking into account the concept, target market, and ingredient availability. Menu items are tested before new recipes are finalized to ensure consistency and quality. Each of our brands features its own menu, which is regularly updated with new and exciting dishes that incorporate seasonal ingredients and explore unique flavors and culinary techniques. By using seasonal produce, our restaurants keep the menu dynamic and aligned with evolving tastes throughout the year. We believe that adding new items to our menus while retaining popular ones ensures menu innovation and customer satisfaction. However, changes in macroeconomic conditions, consumer spending behavior and preferences may be unpredictable and we will face challenges to keep up with the latest trends and market conditions.
Further upgrade our supply chain capabilities
Steady availability of quality supplies is vital to ensuring our uninterrupted business operation. Our ability to offer consistently high-quality food across our restaurant outlets depends largely upon the ability to procure the highest quality raw food materials and food ingredients commercially available. We will continue to strengthen our upstream supply chain capabilities to enhance operational efficiency and profitability. In addition to continuing to explore opportunities to collaborate with high-quality suppliers, we plan to develop self-operated supply chain in the near future to ensure availability and stability of supplies of quality raw materials, reduce costs and enhance operational efficiency. In particular, we intend to enter into exclusive business partnerships with chicken farms and fish farms that are able to raise breeds that meet our high standards, with the aim to acquire certain of such farms in the long run, to enhance our supply chain capabilities. However, developing a self-operated supply chain requires substantial capital investment and operational expertise, which may fall outside our current core competencies and may expose us to new risks such as disease outbreaks and supply disruptions. Additionally, managing vertically integrated operations could increase our exposure to fluctuations in commodity prices, labor costs, and environmental regulations.
Identify opportunities to expand and diversify our business portfolio
We plan to further grow our business in sales of food ingredients and condiments and explore opportunities to diversify our business portfolio. In order to maintain our consistency and quality of food offerings across restaurant outlets, we sell pre-made soup bases and sauces and semi-prepared food ingredients made by our central kitchen
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as well as some raw food materials and condiments sourced from third-party suppliers to our franchised restaurant outlets. We also sell various grocery items including various packaged sauces and beverages to retail distributors. We plan to expand our products offerings to include other types of food products such as instant noodles in our existing markets and new markets in international locations such as Asia and United States that satisfy the local needs. In addition, we plan to establish manufacturing facilities or factories in international locations where there is large demand of our products, to lower operational costs and enhance our brand influence in the local communities. We will also identify potential partnership opportunities with high-quality businesses partners to achieve synergies with our existing business.
Expanding into new product categories and international markets requires careful market research, regulatory compliance, and brand adaptation. Despite the potential benefits, establishing overseas factories may involve complex legal, logistical, and financial challenges, including navigating foreign investment laws, labor regulations, and supply chain infrastructure. Additionally, identifying and securing reliable business partners may be difficult, and any failure to execute these partnerships effectively could result in operational inefficiencies or reputational harm. There is no assurance that our diversification efforts will be successful or profitable.
Our Restaurant Operations
Company-owned Restaurant Operations
Our Restaurant Network
As of the date of this prospectus, we operate a total of 15 restaurant outlets in Malaysia, including nine restaurant outlets under Chicken Claypot House, three restaurant outlets under Zi Wei Yuan, one Chicken Claypot House-Zi Wei Yuan cross-over restaurant outlet, one food court named 888 Family Food Court and one restaurant outlet focusing on Teochew-style chicken hotpot, a special category of chicken hotpot originated in Teochew, China, under the brand Bibixian.
Most of our restaurant outlets are located in shopping centers or near residential areas. The table below sets out the location, year of commencement of operation, approximate floor area and approximate seating capacity of each company-owned restaurant outlets as of the date of this prospectus.
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No. |
Brand |
Location |
Year of |
Approximate |
Approximate |
|||||
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1 |
Chicken Claypot House |
Georgetown, Penang |
2015 |
2,460 |
76 |
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2 |
Bibixian (previously Chicken Claypot House)* |
Kepong, the Federal Territory of Kuala Lumpur |
2018 |
2,551 |
94 |
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3 |
Chicken Claypot House |
Bukit Mertajam, Penang |
2020 |
3,595 |
107 |
|||||
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4 |
Chicken Claypot House |
Genting Highlands, Pahang |
2019 |
2,630 |
150 |
|||||
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5 |
Chicken Claypot House |
Cheras, Selangor |
2021 |
2,519 |
160 |
|||||
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6 |
Chicken Claypot House |
Petaling Jaya, Selangor |
2021 |
2,345 |
104 |
|||||
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7 |
Chicken Claypot House |
Cameron Highlands, Pahang |
2022 |
2,250 |
112 |
|||||
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8 |
Chicken Claypot House |
Kuala Lumpur, the Federal Territory of Kuala Lumpur |
2022 |
2,745 |
136 |
|||||
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9 |
Chicken Claypot House |
Kuala Lumpur, the Federal Territory of Kuala Lumpur |
2022 |
3,316 |
124 |
|||||
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10 |
Chicken Claypot House |
Ipoh, Perak |
2025 |
1,265 |
60 |
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|
No. |
Brand |
Location |
Year of |
Approximate |
Approximate |
|||||
|
11 |
Chicken Claypot House x Zi Wei Yuan |
Johor, Johor Bahru |
2023 |
7,756 |
304 |
|||||
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12 |
Zi Wei Yuan |
Butterworth, Penang |
2022 |
2,820 |
71 |
|||||
|
13 |
Zi Wei Yuan |
Petaling Jaya, Selangor |
2023 |
2,904 |
150 |
|||||
|
14 |
Zi Wei Yuan |
Georgetown, Penang |
2024 |
3,928 |
95 |
|||||
|
15 |
888 Family Food Court |
Bukit Mertajam, Penang |
2022 |
47,000 |
400 |
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Note:
* This restaurant outlet was operated under the brand of Chicken Claypot House until May 7, 2025. On May 8, 2025, it was re-opened and re-branded as a restaurant outlet under the brand of Bibixian.
Our restaurant outlets are famous for their welcoming atmosphere, with sharp colors highlighting our brand identities. Red, as the theme color for our brand Chicken Claypot House, stands for joyousness and enthusiasm in many cultures. We have also decorated the interior of several Chicken Claypot House restaurant outlets with dark, lacquered wood fences with screens, highlighting our oriental root. Whilst purple, the symbolization of our brand Zi Wei Yuan (with the literal meaning of “crape myrtle garden”), provides an intuitive recognition when observed.
A typical restaurant outlet operated by us usually comprises of an open dining area with several private dining rooms. The seating capacity normally ranges from 60 to 300.
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Entrance of our first Chicken Claypot House outlet in Georgetown, Penang |
Open dining area of our Chicken Clay House outlet in the Gardens Mall, Kuala Lumpur |
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Grand opening of our Zi Wei Yuan Centre Point outlet in Petaling Jaya, Selangor |
Our Chicken Claypot House x Zi Wei Yuan outlet, where customers are able to enjoy specialties of both brands |
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Our Menu
We offer a variety of cuisine including chicken hotpot with a spectrum of flavors and authentic charcoal fish head hotpot, served with fresh food ingredients such as meat, seafood and vegetables. Our customers can also customize their meal by choosing different soup bases, seasoning and dipping sauces.
• Chicken Claypot House
Our chicken hotpot mainly consists of two components, the chicken claypot and other ingredients to be cooked in the soup base. We have reinvented the way of consumption of chicken claypot that customers are able to enjoy mouth-watering chicken marinated with our special sauce made with a secret recipe first, followed by the addition of a soup base of their own choice. Other ingredients can then be cooked in the hotpot. This combination of traditional claypot chicken with hotpot brings value and a one-of-a-kind dining experience for our customers.
Set out below are pictures of some of the signature dishes at our Chicken Claypot House restaurant outlets, including Special Taste Chicken Claypot (奇味鸡煲), Sichuan Hot & Spicy Claypot (麻辣干锅鸡) and Herbal Chicken Claypot (药材鸡煲) (from left to right in the picture):

• Zi Wei Yuan
Zi Wei Yuan specializes in charcoal-styled fish head hotpot which upholds the rich tapestry of our culinary heritage in Malaysia. Farm-to-table ingredients are thoughtfully selected to ensure our dishes are of a distinctive taste that can leave a lasting impression. With Fried Fish Head Charcoal Pot (炸鱼头炉) and Grouper Fish Head Charcoal Pot (石斑鱼头炉) being our signature dishes, we serve the food in different flavors of soup base that appeal the most to local diners such as Laksa, curry and Tomyam. Apart from traditional hotpot side dishes, snack platters and drinks can also be ordered as the final touch to the flavor profile.
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Our offerings at Zi Wei Yuan |
The dipping sauce available at our restaurant outlets is highly commended by diners |
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Our Central Kitchen Management System
In order to maintain consistency and operational efficiency, we have established a central kitchen with a warehouse in Bukit Mertajam, Penang, Malaysia, with aggregate floor area of approximately 1,301 square meters. Our central kitchen serves as: (i) a procurement, storage and distribution center for raw materials, food ingredients, beverages, sauces, seasonings, and other supplies (such as utensils and takeaway containers) and (ii) the food factory to process and produce certain food products, including our soup bases, sauces and semi-prepared dishes for the use of our restaurant outlets in Malaysia and outside Malaysia. Our central kitchen is an industrial grade kitchen equipped with a number of kitchen appliances to process ingredients and to prepare soup bases, sauces and semi-prepared dishes. The warehouse at our central kitchen maintains two cold rooms, consisting of one freezer room and one chiller room maintained at minus 20 and minus six degrees Celsius, respectively, for the storage of raw materials and our soup bases, and it also has various storage areas at normal room temperature for keeping non-perishable items. We believe the centralized procurement and processing of raw materials and ingredients at the central kitchen increases our operational efficiency and helps us maintain the consistency of our food offerings.
Our central kitchen procures a substantial amount of the raw materials, food ingredients, beverages, sauces and other supplies needed in our restaurant operations. With a central kitchen, we are able to make bulk purchases at a lower cost with greater negotiating power with suppliers and effectively manage our inventory and logistics. We have set up a three-tiered inventory system consisting of our central kitchen with an integrated warehouse, our transit warehouse in Kota Damansara, Selangor outside Kuala Lumpur and each of our restaurant outlets. Like the warehouse at our central kitchen, the transit warehouse is also equipped with two cold rooms with the same temperature setup for storage. Our warehouse at the central kitchen directly sends supplies, pre-made soup bases and semi-prepared dishes to restaurant outlets in northern Malaysia region. For restaurant outlets in central and southern Malaysia regions, supplies would be sent from the warehouse at the central kitchen to the transit warehouse first, and then delivered to each outlet.
Our central kitchen is also a centralized production facility of our food offerings, where we prepare and pack our self-formulated and homemade soup bases, sauces and semi-prepared dishes that are delivered to our company-owned restaurants outlets and franchised restaurant outlets in Malaysia and outside Malaysia. We have developed standardized recipes that specify the necessary ingredients, quantities, cooking methods, and presentation standards for our chefs and kitchen staff, which ensures consistent cooking and plating techniques while adhering to food safety and hygiene standards, and help maintain quality across all our restaurant outlets. We also develop new recipes and dishes in our central kitchen before formally introducing them to our menus, which allows us to reduce the innovation cost and improve scalability, and boosts productivity, which translates into cost savings and faster turnaround times.
The soup bases, sauces and semi-prepared dishes are delivered to the transit warehouse and then restaurant outlets together with other supplies at a frequency of two to three times per week. We carry out all the transportation and logistics within Malaysia ourselves, except for delivery to Sabah and Sarawak, which are conducted by third-parties. Logistics for delivery to restaurant outlets outside Malaysia are also conducted by third-party carriers.
Sales of Food Ingredients and Condiments
We also generate revenues from selling food ingredients and condiments, which mainly consists of two parts. First, as generally required under our licensing agreements, our licensees purchase from us certain products including pre-made soup bases, sauces and semi-prepared food ingredients processed by our central kitchen, as well as some raw food materials and condiments sourced from third-party suppliers. By doing so, we are able to maintain consistency and quality of food offerings, especially our signature dishes, across our restaurant outlets, which enhances the overall dining experience associated with our brands among customers from home and abroad, strengthen our brand identity and encourage repeated visits. In addition, we sell various grocery items including packaged sauces and beverages to local retail distributors.
Franchise Licensing
Our licensees are important partners of ours in expanding our business network, especially internationally. The percentage of revenues from franchise licensing out of our total revenues increased from 3.1% for the year ended December 31, 2023 to 7.5% for the year ended December 31, 2024, indicating the healthy grow of our operations with our franchise partners.
As of the date of this prospectus, we have a total of 17 franchised outlets, in addition to our company-owned restaurant outlets, with 13 outlets in Malaysia and four outlets outside Malaysia. Among these franchised outlets: (i) 11 are under the brand Chicken Claypot House, consisting of eight outlets spreading out in eight cities of Malaysia,
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two outlets in Bangkok, Thailand and Jakarta, Indonesia and one outlet in Shenzhen China; (ii) one is under the brand Zi Wei Yuan in Sabah, Malaysia; (iii) two are crossover outlets between Chicken Claypot House and Zi Wei Yuan in Ipoh and Kuching of Malaysia; (iv) two are outlets under the brand Bibixian, one in Plaza Arkadia, Malaysia (which was operated as an outlet under the brand Chicken Claypot House until May 9, 2025 and re-opened and re-branded as an outlet focusing on Teochew-style chicken hotpot under the brand Bibixian on May 10, 2025) and the other in Gaozhou, Guangdong Province, China; and (v) one is an outlet under the brand Banbudian Bistro in Kuala Lumpur, Malaysia. Banbudian Bistro is a brand originated in China, and we have obtained a licensing right to open company-owned restaurant outlets or enter into sub-franchise licensing arrangements with third parties to open franchised restaurant outlets under such brand in Malaysia. The restaurant outlet under the brand Banbudian Bistro is operated by a licensee of ours.
For the franchised restaurant outlets that are already opened as of the date of this prospectus, the licensing agreements that we entered into with licensees are mainly two types. Under licensing agreements with licensees in Malaysia (substantially in the form of Exhibit 10.3 to this prospectus), each licensee is required to pay us royalties in terms of a certain percentage of the applicable restaurant outlet’s gross monthly revenues and a monthly administrative fee. Under licensing agreements with licensees outside Malaysia (substantially in the form of Exhibit 10.4 to this prospectus), each licensee is required to pay us a master license fee as the lump sum payment upfront for obtaining right to open up a fixed number of restaurant outlets under the authorized brand in a specified scope of territory. For each restaurant outlet such licensee opens above the fixed number agreed or sub-franchises to other third-party licensees in such territory, a fixed outlet licensee fee shall also be paid to us. Each licensees outside Malaysia is also required to pay a certain percentage of the applicable restaurant outlet’s gross revenues with us as royalties. As of the date of this prospectus, none of our licensees outside Malaysia has any sub-franchising arrangements with other third parties and all of our franchised restaurant outlets are operated by our licensees directly. Our royalty rates are usually between 5% to 7.5% for each restaurant outlet and royalties are settled on a monthly basis.
As we continue to grow our business, we also plan to enter into licensing agreements with the master license feature with licensees in Malaysia, which historically were only entered into with licensees outside Malaysia. As of the date of this prospectus, we have entered into a licensing agreement with a licensee in Malaysia, granting it a master license to open new franchised restaurant outlets under the brand Banbudian Bistro. Such licensee currently plans to open up a new restaurant outlet in Penang, Malaysia in the third quarter of 2025.
Our licensees are required to conform to our corporate guidelines which contain specifications on brand visual identity, premise decoration, mode of operation and other matters relating to the use of our brand names. We also arrange pre-opening training and on-site supervision and consultation for new licensees. Marketing campaigns may also be held by our licensees with promotional materials provided by us only.
Sales and Marketing
Our Membership Program
We operate a membership program across our restaurant outlets to encourage frequent revisits of our customers. Customers who join our membership program will receive free dish redeem coupons upon registration and enjoy cash rebates if they purchase our prepaid value-stored membership cards.
Marketing Strategies
Promotion Campaigns
We have, from time to time, rented billboards near busy highways and on building exteriors, in order to attract potential diners on the road and to boost our brand awareness among the public. During holidays such as Chinese New Year, Mother’s Day and Father’s Day, we offer special set menu choices at a discounted price to encourage family gatherings to be held at our restaurant outlets. We also offer discounts on our menu items during the opening months of certain of our restaurant outlets. Additionally, we run promotional campaigns from time to time throughout the year, offering discounts or giving out other benefits to customers such as free handbags upon ordering certain dishes and free movie tickets through lucky draw winnings to promote new dishes and encourage spending.
Celebrity Endorsement
To increase our brand’s visibility and accelerate customer outreach, we engaged celebrities who appeal to our target consumers as our spokespersons. Our brand ambassadors amplify our brand presence across key social media platforms like Facebook and Instagram.
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Social Media
We recognize the importance of having an online presence in this fast-evolving digital age. We emphasize developing unique brand personalities, values, and messages that resonate with our customers. Our social media marketing campaigns are focused on popularizing and promoting our brand image across various platforms.
We maintain Facebook, Instagram, and YouTube accounts for each of our brands, on which contents relating to our brand news, recent promotion campaigns or even operation behind the scenes can be accessed in a single click. As part of our online marketing campaigns, we create high-quality content in various formats such as social media posts and short videos. Specifically, we post advertisements for our new dishes and soup bases, special discounts for loyal members, new outlet openings, and holiday greetings on our Facebook and Instagram accounts, which have been well received by our target audience. Leveraging our channel resources and rich content, we have successfully launched a series of impactful marketing campaigns that foster fan interactions online.
Supply Chain Management and Food Quality Control
Quality of our food is a top priority in our operations. We have a broad network of suppliers from whom we procure raw materials and ingredients of our food offering, including Chinese garden chicken, fish, vegetables and others. The chickens are usually purchased by us in bulk and sourced to our central kitchen for initial processing before distributing country-wide in Malaysia and abroad, while vegetables and raw materials for other side dishes are sourced from local suppliers that are relatively close to our restaurant outlets to ensure the freshness.
While selecting suppliers, we conduct a thorough screening of potential suppliers, evaluating their certification, qualifications, supply capacity, quality control system, pricing record and market reputation. We also conduct on-site visits of suppliers of chicken, fish and vegetables. Only selected suppliers that pass our screenings and inspections are chosen as our partners. We usually enter into annual contracts with our suppliers and conduct yearly appraisals to evaluate our suppliers. When we assess our suppliers’ performance and their relationships with us, we consider factors such as supply quality, delivery timeliness, price, and services. We prioritize procurement from the highest graded suppliers while reducing or terminating procurement from lower graded suppliers based on regular reviews. This rigorous evaluation process ensures that we consistently collaborate with top-performing suppliers who meet our stringent quality requirements.
To enhance food safety and minimize potential hygiene concerns, we operate an inventory management system in our warehouses and each of our restaurant outlets, recording the expiry date of each batch of raw materials. Any materials reaching the expiry date will be disposed of in time with zero tolerance. Each month, we send out a team from our headquarter to conduct food quality and safety inspections at our restaurant outlets. Additionally, inventory checks are performed weekly to monitor stock levels and plan for supply purchases. Daily cleaning and hygiene inspections at central kitchen and restaurant outlets are also conducted as a part of our operation protocols.
For our franchised restaurant outlets, we are committed to thriving together with our licensees by providing them with sufficient support for operation and ensuring consistent and uncompromised delivery of high-quality food and services. Food materials and ingredients are supplied exclusively by us or our authorized suppliers to our licensees, including pre-made soup bases prepared by our central kitchen. We will also provide ongoing training for employees of our licensees and require training records to be provided on a fortnightly basis.
Intellectual Property
As our brand names are vital to our business and goodwill, we are committed to protecting our intellectual property by submitting trademark applications not only in Malaysia but also in other jurisdictions that we currently operate in or may do so in the future. As of the date of this prospectus, we have registered trademarks in relation to our brands in multiple jurisdictions.
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The following table illustrates the trademarks we have registered and their details:
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Registered Trademark |
Jurisdiction |
Expiry Date |
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Malaysia |
October 10, 2030 |
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Indonesia |
July 14, 2032 |
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Singapore |
September 2, 2032 |
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Malaysia |
May 7, 2034 |
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Malaysia |
May 7, 2034 |
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Malaysia |
January 2, 2034 |
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Malaysia |
July 12, 2032 |
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Malaysia |
April 18, 2033 |
Competition
The specialty hotpot industry in Malaysia is highly competitive, with over 800 restaurants operated by both domestic and international industry players and the top five brands account for approximately 41.7% of the market share in terms of revenues. Our competitors mainly include restaurant chain operator in Malaysia and internationally.
We believe that the principal competitive factors in the specialty hotpot market include the following:
• quality of food and services;
• brand awareness;
• value for money;
• location;
• restaurant ambiance;
• innovativeness;
• operational efficiency; and
• well-trained employees.
We believe that we are well-positioned to effectively compete on the basis of the factors listed above. In addition, we leverage a combination of active presence on social media platforms, including Facebook, Instagram and YouTube, and a loyalty program to attract new customers and encourage repeated visits. Overall, our marketing strategies
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have proven effective in building brand awareness, gaining market share, and fostering customer engagement and loyalty. We are confident that our approach surpasses that of our competitors, enabling us to excel in the industry and maintain a strong market position. We believe we are well-positioned to compete effectively against both existing and new competitors. However, our competitors may have longer operating histories, greater brand recognition, more resources, better supplier relationships, and larger customer bases. For discussion of risks relating to competition, see “Risk Factors — Risks Relating to Our Business and Industry — The specialty hotpot restaurant market in Malaysia is highly competitive and any failure to successfully compete with other restaurants may adversely affect our business.”
Employees
We value our employees and maintain a good working relationship with them. As of December 31, 2024, we had a total of 190 full-time employees. All of our full-time employees are based in Malaysia.
The following table sets forth the breakdown of our employees by function as of December 31, 2024.
|
Function |
Number of |
|
|
Operations (including our directors) |
7 |
|
|
Finance, accounting and human resources |
10 |
|
|
Business development |
6 |
|
|
Administration |
9 |
|
|
Restaurant |
144 |
|
|
Warehouse management |
14 |
|
|
Total |
190 |
Facilities
Our principal executive office is located in No. 1, Jalan Perda Jaya, Kawasan Perniagaan Perda Jaya, 14000 Bukit Mertajam, Penang, Malaysia, consisting of approximately 557 square meters of leased office space primarily for corporate administration. Our central kitchen with the warehouse located in Bukit Mertajam, Penang, occupies approximately 1,301 square meters, while the transit warehouse in Kota Damansara, Selangor outside Kuala Lumpur, has an aggregate floor area of approximately 923 square meters. Both our central kitchen facilities and the transit warehouse are leased by us. As of the date of this prospectus, we also lease other properties in eleven cities or towns in Malaysia for a total of approximately 8,369 square meters as premises for our company-owned restaurant outlets.
As of the date of this prospectus, we own four properties located in Bukit Mertajam, Penang, Malaysia and one building in Johor Bahru, Johor, Malaysia, with an aggregate floor area of approximately 3,954 square meters. Currently, all of the properties owned by us are leased out to other third-party businesses.
Insurance
We maintain various insurance policies to safeguard against risks and unexpected events. We have purchased fire, burglary and business insurance, among others, covering our inventory and fixed assets such as equipment and office facilities. We also provide our employees with medical insurance, maternity insurance, workplace injury insurance and unemployment insurance as consistent with customary industry practice in Malaysia.
Legal Proceedings
From time to time, we may be involved in various claims and legal actions that arise in the ordinary course of business. We are currently not a party to, and we are not aware of any threat of, any legal or administrative proceedings that, in the opinion of our management, are likely to have any material and adverse effect on our business, financial condition, cash flow or results of operations.
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This section sets forth a summary of the most significant rules and regulations that affect our business activities in Malaysia or the rights of our shareholders to receive dividends and other distributions from us.
Our operations in Malaysia are subject to various national and local laws and regulations, primarily relating to food safety, public health, land use, labor standards, and building operations. Compliance with these regulatory requirements is essential to our ability to operate restaurants and maintain our licenses and approvals. Set forth below is a summary of the key laws and regulations applicable to our business in Malaysia.
Food Act 1983 (“FA 1983”); Food Regulations 1985 (“FR 1985”) and Food Hygiene Regulations
The FA 1983 and the FR 1985 are laws governing the food safety and quality control, including standards, hygiene and advertisement. The objective is to protect the public from health hazards and fraud in the preparation, sale and use of foods and for other related matters. The legislation, applies to all foods, locally produced or imported which are sold in the country. It covers a broad spectrum from compositional standards to food additives, nutrient supplements, contaminants, packages and containers, food labelling, procedure for taking samples, food irradiation, provision for food not specified in the regulations and penalty.
The Food Hygiene Regulations governs and control the hygiene and safety of food sold in Malaysia. The objectives are to ensure food premises are hygienic and satisfactory in terms of design and building, ensure food handlers maintain personal hygiene and avoid practices that can contaminate food. Under the Food Hygiene Regulations, no person shall use any food premises for the purposes of preparing, packaging, storing, distributing or sale of any food except where the premises is registered under Food Hygiene Regulations. Any person who fails to comply with the above commits an offence and shall, on conviction, be liable to a fine not exceeding RM10,000 or to imprisonment for a term not exceeding 2 years.
Local Government Act 1976 (“LGA 1976”)
Under the LGA 1976, and the by-laws of the respective local councils and authorities, our business operation premises are required to have business signboard/advertising licences which include among others, business premise licences in relation to our retail outlets, signboards and storage. We are also required to display the licences at the business premises, and produce the licences upon request.
Pursuant to the LGA 1976, any person who fails to exhibit or produce his licences on the premises shall be liable to a fine not exceeding RM500 or to imprisonment for a term not exceeding 6 months or both.
National Land Code (“NLC”), Town and Country Planning Act 1976 (“TCPA 1976”), Street, Drainage and Building Act 1974 (“SDBA 1974”)
In the course of our business operations, we are required to ensure that the properties rented by us or properties we may own for our business operations comply with the NLC, TCPA 1976, SDBA 1974 and the relevant by-laws issued pursuant thereto which regulate among others the occupation of buildings and uniformity of local government matters relating to street, drainage and buildings.
NLC
The NLC governs land matters within Peninsular Malaysia, where most of our outlets are situated. Under the NLC, tenancies may be granted for terms not exceeding 3 years. There is no registration requirement for tenancies under the NLC but the interest of a tenant under a tenancy exempt from registration can be protected by way of an endorsement on the document title to the land.
TCPA 1976
The TCPA 1976 governs the proper control and regulation of town and country planning in Peninsular Malaysia and regulates among others modifications to planning permissions and building plan approvals issued by local authorities. Under the TCPA 1976, Section 18 prohibits a person to use or be permitted to use any land or building otherwise than in conformity with the local plan. Section 26 of the TCPA 1976 states that a person who, whether at his own instance or at the instance of another person uses or permits to be used any land or building in contravention of
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Section 18 commits an offence and is liable, on conviction to a fine not exceeding RM500,000 and/or to imprisonment for a term not exceeding 2 years, and be subjected to additional daily fines which may extend to RM5,000 for each day during which the offence continues after the first conviction for the offence. Section 26 also further states that the owner of the land in respect of which any act that constitutes such offence is done shall be deemed to have permitted the doing of that act. Section 27(7) of the TCPA 1976 also grants a local authority the discretion to impose additional planning permission application fees as prescribed by the local authority on a person who carries out any development (including building on land, making of any material change in the use of land or building) without prior planning permission being obtained from the local authority.
SDBA 1974
The SDBA provides uniformity of law and policy with regard to local government matters relating to street, drainage and buildings in Peninsular Malaysia. It provides for the requirement to have a Certificate of Fitness (“CF”) or Certificate of Completion and Compliance (“CCC”) to ensure that the building is safe and fit for occupation.
Pursuant to the SDBA 1974, prior written permission of the local authority is required among others for any partition, compartment, loft, roof, ceiling or other structures built in a building, any deviation from the any plans or specifications approved by the local authorities, or any alteration to a building otherwise than allowed by the local authority or by-laws made under the SDBA 1974. Failure to obtain the local authorities’ prior written permission for the above may subject the person in breach to fines or imprisonment or both, if convicted. Depending on the applicable provisions of the SDBA 1974 in breach, the maximum fines may range from RM25,000 to RM50,000 and additional daily fines for continuing offences after conviction, and the maximum imprisonment term may be up to 3 years. The SDBA 1974 also stipulates that any person who occupies a building or any part of a building without a CF or CCC may be subject to a fine of RM250,000 and/or imprisonment for up to 10 years, if convicted.
Occupational Safety and Health Act 1994 (“OSHA 1994”)
The OSHA 1994 provides provisions for securing the safety, health and welfare of persons at work, protecting others against risk to safety or health in connection with the activities of persons at work. The OSHA 1994 applies to all places of work throughout Malaysia including in the public service and statutory authorities, save for the work specified in the First Schedule of the OSHA 1994.
The OSHA 1994 provides that it is the duty of every employer to ensure the safety, health and welfare at work of all his employees, so far as is practicable, in particular:
(a) the provision and maintenance of plant and systems of work that are safe and without risks to health;
(b) the making of arrangements for ensuring safety and absence of risks to health in connection with the use or operation, handling, storage and transport of plant and substances;
(c) the provision of such information, instruction training and supervision as is necessary to ensure the safety and health at work of his employees;
(d) as regards any place of work under the control of the employer, the maintenance of it in a condition that is safe and without risks to health and the provision and maintenance of the means of access to and egress from it that are safe and without such risks;
(e) the provision and maintenance of a working environment for his employees that is safe, without risks to health, and adequate as regards facilities for their welfare at work; and
(f) the development and implementation of procedures for dealing with emergencies that may arise while his employees are at work.
Non-compliance of the above will result in an offence and on conviction would constitute to a fine not exceeding RM500,000 and/or to imprisonment for a term not exceeding 2 years. We also have a duty to ensure, in so far as is practicable, that other persons, not being our employees, who may be affected, are not exposed to risks to their safety or health.
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Employees’ Minimum Standards of Housing, Accommodations and Amenities Act 1990 (“EMSHA 1990”) and Employees’ Minimum Standards of Housing, Accommodations and Amenities (Accommodation and Centralized Accommodation) Regulations 2020 (“EMSHA Regulations”)
The EMSHA 1990 and the EMSHA Regulations issued under the EMSHA 1990, imposes, among others, the minimum standards on accommodation for employees and the requirement for accommodation provided to employees to be certified with a certificate of accommodation from the Department of Labour Peninsular Malaysia.
An application for the certificate of accommodation may be made by an employer or a centralized accommodation provider to the Department of Labour Peninsular Malaysia. To obtain a certificate of accommodation, an employer or a centralized accommodation provider is required to ensure that every accommodation provided for employees complies with the minimum standards which includes among others, the minimum space requirement for workers’ accommodation, basic facilities, as well as safety and hygiene standards required under the EMSHA 1990 or any regulations made thereunder. Pursuant to the EMSHA 1990, failure to obtain such certification may constitute to a fine not exceeding RM50,000 with respect to each employees’ accommodation without a certificate of accommodation.
Personal Data Protection Act 2010 (“PDPA 2010”)
The PDPA 2010 regulates the processing of personal data in commercial transactions and to provide for matters connected therewith and incidental thereto. The PDPA 2010 applies to (a) any person who processes and (b) any person who has control over or authorizes the processing of any personal data in respect of commercial transactions (“Data User”).
The processing of personal data by a Data User must be in compliance with various personal data protection principles, namely (a) the General Principle; (b) the Notice and Choice Principle; (c) the Disclosure Principle; (d) the Security Principle; (e) the Retention Principle; (f) the Data Integrity Principle; and (g) the Access Principle (collectively, “the Personal Data Protection Principles”). A Data User who contravenes the Personal Data Protection Principles commits an offence and shall, on conviction, be liable to a fine not exceeding RM300,000 and/or to imprisonment for a term not exceeding 2 years.
In the course of our business, we collect the personal data of our employees and members who signed up for our membership program. Although our Group does not fall within the classes of data users identified under the Personal Data Protection (Class of Data Users) Order 2013 which are required to be registered as Data Users under the PDPA 2010, we are nonetheless required to comply with the PDPA 2010.
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Directors and Executive Officers
The following table sets forth the names, ages and positions of our Board, director nominees, and Executive Officers and a description of the business experience of each of them:
|
Name |
Age |
Position |
||
|
Directors and Executive Officers |
||||
|
Goh Kok Foong |
41 |
Chairman and Chief Executive Officer |
||
|
Goh Kok E* |
39 |
Director Nominee, Chief Operation Officer |
||
|
Benjamin Yap Kean Ming |
42 |
Chief Financial Officer |
||
|
Non-Executive Directors |
||||
|
Ng Yah Ling* |
54 |
Independent Director Nominee |
||
|
Wu Wai Kong* |
41 |
Independent Director Nominee |
||
|
Ang Woei Shang* |
38 |
Independent Director Nominee |
____________
Note:
* The individual has accepted our appointment to be a director of our company, effective upon the SEC’s declaration of effectiveness of our registration statement on Form F-1, of which this prospectus is a part.
Goh Kok Foong, aged 41, is our founder, chairman of the board of directors and chief executive officer of the Company. As a visionary entrepreneur and dedicated executive, Mr. Goh Kok Foong has over 15 years of experience driving success in the food, beverage and logistics sectors across Southeast Asia. He co-founded STCH Holding with his brother Mr. Goh Kok E in 2019 and serves on its board of directors. Additionally, Mr. Goh Kok Foong has been the chief executive officer of Hong Woi Tat Trading Sdn. Bhd., a global logistics and shipping firm in Penang, Malaysia, since 2018. From 2009 to 2014, he was the executive director of Kopitan Classic Sdn. Bhd. (“Kopitan Classic”), where he co-founded a modern kopitiam chain that delivered authentic Malaysian cuisine in a family-friendly environment. In recognition of his entrepreneurial excellence and community service, Mr. Goh Kok Foong was conferred the Dato’ (D.I.M.P.) title in 2016 by the Sultan of Pahang.
Goh Kok E, aged 39, is our chief operating officer of the Company and is a director nominee. As an award-winning entrepreneur and strategic leader, Mr. Goh Kok E has over 15 years of experience in conceptualizing, scaling, and managing successful food and beverage brands across Malaysia and Southeast Asia. As a co-founder and chief executive officer of STCH Holding since 2019, Mr. Goh Kok E drives innovation through a diverse restaurant portfolio that blends authentic Asian culinary traditions with modern, scalable business models. From 2009 to 2014, Mr. Goh Kok E held the position of managing director and chief executive officer at Kopitan Classic. He has also been an investor in a rising star restaurant in the modern food and beverage industry known for its traditional noodle dishes, since 2024. Mr. Goh Kok E is dedicated to operational excellence, brand integrity, community impact, and cross-border expansion.
Benjamin Yap Kean Ming, aged 42, has served as the chief financial officer of the Company since March 2025. He has extensive experience in multinational companies across various sectors, including manufacturing, food production, fast-moving consumer goods, wholesale, retail, logistics, property development, and plantation. Mr. Yap began his career at Ernst & Young in 2005, before joining Fujikura Federal Cables Sdn. Bhd. in 2008 as an accountant and internal controller. He then worked at Kerry Ingredients (M) Sdn. Bhd. and Keluarga Group as an accountant from 2013 to 2016 and 2016 to 2019, respectively. In 2020, he joined Aspen Group as a corporate reporting manager, and in 2021, he became the chief financial officer at United Oil Palm Group. During his three years there, Mr. Yap oversaw the group’s accounts and finance functions in preparation for its initial public listing in the U.S. He holds a bachelor’s degree in commerce from the University of Adelaide, Australia, and is a member of Certified Practicing Accountant (CPA) Australia and the Malaysian Institute of Accountants (MIA).
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Independent Director Nominees
Ng Yah Ling, aged 54, is an independent director nominee. Ms. Ng is a chartered accountant and began her career as an account clerk at Hong Leong Management Co. Sdn Bhd in 1992 and then worked at SH Yeoh & Co., an auditing firm, for six years from 1997 to 2003, before joining Chuah Hong Boon & Co. as an audit manager for another three years. Since 2013, Ms. Ng has served as the director of several companies including Premier Accountancy Services Sdn Bhd, Premier Corporate Advisory Sdn Bhd, Premier Vat Consultancy Sdn Bhd and Premier Business Solutions Sdn Bhd, which are Malaysian companies focusing on comprehensive business advisory services. She is a member of the Malaysian Institute of Accountants (MIA) and the Malaysian Association of Company Secretaries.
Wu Wai Kong, aged 41, is an independent director nominee. Mr. Wu had experience working in food manufacturing, food trading, and property management in the early years of his career. Since 2019, he has served as an executive director of Kanger International Berhad, a public company in Malaysia that specializes in property development, construction, and building material trading. He has also served as the chief executive officer of Larq Holding Sdn Bhd, a Malaysian investment holding company focusing on property development, food and beverages, and aquaculture sectors since 2022. Mr. Wu is the recipient of the World Chinese Excellent Young Entrepreneur Achievement award from the 2020 World Chinese Economic Summit. He holds a bachelor’s degree in hospitality from the Swiss Hotel Management School.
Ang Woei Shang, aged 38, is an independent director nominee. He is the founding partner of WS Ang & Associates and has been a lawyer in Malaysia since 2011, specializing primarily in litigation. Mr. Ang’s has a deep understanding of legal risk assessment, dispute resolution, and contract enforcement through his lawyering career. He holds a bachelor’s degree in laws from the University of Malaya and is a member of the Malaysian Bar.
Board of Directors
Our board of directors will consist of five directors upon the SEC’s declaration of effectiveness of our registration statement on Form F-1, of which this prospectus is a part. A director is not required to hold any shares in our company to qualify to serve as a director. A director may vote with respect to any contract, proposed contract or arrangement notwithstanding that he may be interested therein, and if he does so his vote shall be counted and he may be counted in the quorum at any meeting of our directors at which any such contract or proposed contract or arrangement is considered, provided (i) such director, if the director’s interest (whether direct or indirect) in such contract or arrangement is material, has declared the nature of his or her interest at the earliest meeting of the board of directors at which it is practicable for such director to do so, either specifically or by way of a general notice and (ii) if such contract or arrangement is a transaction with a related party, such transaction has been approved by the audit committee. The directors may exercise all the powers of the company to borrow money, to mortgage or charge its undertaking, property and uncalled capital, and to issue debentures or other securities whenever money is borrowed or as security for any debt, liability or obligation of the company or of any third party. None of our non-executive directors has a service contract with us that provides for benefits upon termination of service.
Committees of the Board of Directors
Our board of directors consists of three committees, namely the audit committee, the compensation committee, and the nominating and corporate governance committee. We have adopted a charter for each of the three committees. The members and functions of these committees are described as below:
Audit Committee. Our audit committee will initially consist of three directors, namely Ms. Ng Yah Ling, Mr. Wu Wai Kong and Mr. Ang Woei Shang. Ms. Ng Yah Ling will be the chairperson of our audit committee. Each member on our audit committee satisfies the “independence” requirements under Rule 5605(a)(2) of the Nasdaq Listing Rules and meets the independence standards under Rule 10A-3 under the Exchange Act. We have determined that Ms. Ng Yah Ling qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:
• selecting and appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by such independent auditors;
• reviewing with the independent auditors any audit problems or difficulties and management’s response;
• reviewing and approving all proposed related party transactions;
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• discussing the annual audited financial statements with management and the independent auditors;
• reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures;
• meeting separately and periodically with management and our independent auditors;
• reporting regularly to the full board of directors;
• monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; and
• other matters that are specifically assigned to our audit committee by our board of directors from time to time.
Compensation Committee. Our compensation committee will initially consist of three members, namely Mr. Goh Kok E, Ms. Ng Yah Ling and Mr. Wu Wai Kong. Mr. Wu Wai Kong will be the chairperson of our compensation committee. Each of Ms. Ng Yah Ling and Mr. Wu Wai Kong satisfies the “independence” requirements of Rule 5605(a)(2) of the Nasdaq Listing Rules. Based on the exemption available to foreign private issuers pursuant to Rule 5615(a)(3) of the Nasdaq Listing Rules, we follow our home country practice as a Cayman Islands company to have Mr. Goh Kok E serving as a member of our compensation committee in lieu of following Rule 5605(d)(2) of the Nasdaq Listing Rules which provides that each member of the compensation committee must be an independent director as defined under Rule 5605(a)(2) of the Nasdaq Listing Rules.
Our compensation committee assists the board of directors in reviewing and approving the compensation structure of our directors and executive officers, including all forms of compensation to be provided to our directors and executive officers. Members of the compensation committee are not prohibited from direct involvement in determining their own compensation. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee is responsible for, among other things:
• reviewing and approving to the board of directors with respect to the compensation for our chief executive officer and other executive officers;
• approving and overseeing the total compensation package for our executives other than the most senior executive officers;
• reviewing and recommending to the board of directors with respect to the compensation of our non-employee directors; and
• reviewing periodically and approving any long-term incentive compensation or equity plans, programs or arrangements of similar nature such as annual bonuses, employee pension and welfare benefit plans.
Nominating and Corporate Governance Committee. Our nominating and corporate governance committee will initially consist of three directors, namely Mr. Goh Kok Foong, Mr. Wu Wai Kong and Mr. Ang Woei Shang. Mr. Ang Woei Shang will be the chairperson of our nominating and corporate governance committee. Each of Mr. Wu Wai Kong and Mr. Ang Woei Shang satisfies the “independence” requirements under Rule 5605(a)(2) of the Nasdaq Listing Rules and meets the independence standards under Rule 10A-3 under the Exchange Act. Based on the exemption available to foreign private issuers pursuant to Rule 5615(a)(3) of the Nasdaq Listing Rules, we follow our home country practice as a Cayman Islands company to have Mr. Goh Kok Foong serving as a member of our nominating and corporate governance committee in lieu of following Rule 5605(d)(2) of the Nasdaq Listing Rules which provides that each member of the compensation committee must be an independent director as defined under Rule 5605(a)(2) of the Nasdaq Listing Rules.
Our compensation committee assists the board of directors in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our executive officers may not be present at any committee meeting during which their compensation is deliberated upon. The nominating and corporate governance committee is responsible for, among other things:
• identifying and recommending nominees for election by the shareholders or appointment by the board of directors;
• reviewing annually with the board of directors about its current composition with regards to characteristics such as independence, age, skills, experience, diversity and availability of service to us;
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• advising the board of directors on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and
• advising the board of directors periodically with regards to significant developments in the law and practice of corporate governance as well as monitoring our compliance with applicable laws and regulations, and making recommendations to the board of directors on all matters of corporate governance and on any remedial action to be taken.
Duties of Directors
Under Cayman Islands law, our directors owe fiduciary duties to the company, including a duty of loyalty, a duty to act honestly and a duty to act in what they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose. Our directors also have a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must ensure compliance with our A&R Company Listing Articles, as amended and restated from time to time, and the class rights vested thereunder in the holders of the shares. Our company has the right to seek damages if a duty owed by our directors is breached. A shareholder may in certain limited exceptional circumstances have the right to seek damages in our name if a duty owed by the directors is breached.
Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functions and powers of our board of directors include, among others:
• convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings;
• declaring dividends and distributions;
• appointing officers and determining the term of office and responsibilities of the officers;
• exercising the borrowing powers of our company and mortgaging the property of our company; and
• approving the transfer of shares in our company, including the registration of such shares in our register of members.
Oversight of Cybersecurity Risks
Our board of directors plays an active role in monitoring cybersecurity risks, including in connection with data protection, and is committed to the prevention, timely detection, and mitigation of the effects of any such incidents on our operations. In addition to regular reports from each committee of the board of directors, the board of directors receives regular reports from our management, including our chief operation officer, on material cybersecurity risks and the degree of our exposure to those risks, from cyber-attacks to infrastructure vulnerabilities, including the risk of data breach. While the board of directors oversees our cybersecurity risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing our cybersecurity risks.
Terms of Directors and Officers
Our directors may be appointed by a resolution of our board of directors, or by an ordinary resolution of our shareholders. Our directors are not subject to a term of office and hold office until they are removed from office by ordinary resolution of the shareholders. A director will cease to be a director if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found by our company to be or becomes of unsound mind, (iii) resigns his office by notice in writing to the company, (iv) without special leave of absence from our board, is absent from three consecutive board meetings and our directors resolve that such
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director’s office be vacated; (v) is prohibited by law from being a director, or (vi) is removed from office pursuant to any other provision of our A&R Company Listing Articles. Our officers are elected by and serve at the discretion of the board of directors.
Employment Agreements and Indemnification Agreements
Prior to the completion of this offering, we plan to enter into new employment agreements with our senior executive officers to replace the employment agreements currently in effect. Pursuant to these new agreements, we will be entitled to terminate a senior executive officer’s employment for cause at any time for certain acts of the officer, such as being convicted of any criminal conduct, any act of gross or willful misconduct or any serious, willful, grossly negligent or persistent breach of any employment agreement provision. We may also terminate a senior executive officer’s employment by giving three-month’s prior written notice without cause. A senior executive officer may terminate his or her employment at any time by giving three-month’s prior written notice. In connection with the employment agreement, each senior executive officer will enter into an intellectual property ownership and confidentiality agreement and agreed to hold all information, know-how and records in any way connected with the products or services of our company, in strict confidence perpetually. Each officer will also agree that we shall own all the intellectual property developed by such officer during his or her employment.
We expect to enter into indemnification agreements with our directors and executive officers. Under these agreements, we may agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made due to their being a director or officer of our company.
Compensation of Directors and Executive Officers
For the year ended December 31, 2024, we paid an aggregate of approximately US$0.22 million, in cash to our executive officers and directors. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors. Our Malaysian subsidiaries are required by law to contribute certain percentages of each employee’s salary to statutory funds, including the Employees Provident Fund for retirement savings, the Social Security Organization for employment injury and invalidity protection, the Employment Insurance System for unemployment protection and the Human Resources Development Fund for employee training and skills development.
Code of Business Conduct and Ethics and Incentive Compensation Recovery Policy
We have adopted (i) a written code of business conduct and ethics and (ii) incentive compensation recovery policy that applies to certain covered executives, including our chief executive officer, president, chief financial officer, principal accounting officer or controller, any vice-president of our company in charge of a principal business unit, division, or function, any other officer who performs a policy-making function for our company, any other person who performs similar policy-making functions for our company, and any other employee who may from time to time be deemed subject to the incentive compensation recovery policy by our compensation committee (collectively the “Policies”), effective upon the SEC’s declaration of effectiveness of our registration statement on Form F-1, of which this prospectus is a part. Following the effectiveness of the registration statement of which this prospectus is a part, a current copy of the Policies will be posted on our website. The information on our website is deemed not to be incorporated in this prospectus or to be a part of this prospectus. We intend to disclose any amendments to the Policies, and any waivers of the Policies for our directors, executive officers and senior finance executives, on our website to the extent required by applicable U.S. federal securities laws and the corporate governance rules of the Nasdaq Capital Market.
Equity Incentive Plan
2025 Equity Incentive Plan
Our 2025 Equity Incentive Plan was adopted on August 26, 2025, to attract and retain the best available personnel for positions of substantial responsibility, provide additional incentive to employees, directors and consultants and promote the success of our business. The equity incentive plan provides for the grant of an option, restricted shares, restricted share units and local awards.
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Authorized Shares
The maximum number of ordinary shares may be subject to awards pursuant to the 2025 Equity Incentive Plan is 5,000,000 initially. The aggregate number of ordinary shares available for issuance under the 2025 Equity Incentive Plan will be increased on January 1 of the fiscal year immediately following the fiscal year in which an initial public offering of our shares is consummated, by an amount equal to 1% of the total number of ordinary shares issued and outstanding on December 31 of the immediately preceding fiscal year.
Administration
Our board of directors or a committee of the board of directors or officers to which the board of directors delegates the authority administers the 2025 Equity Incentive Plan. The administrator will determine the participants to receive awards, the type and number of awards to be granted to each participant and the provisions and terms and conditions of each award. In the event that any dividend or other distribution, recapitalization, share division, share consolidation, reorganization or any change in the corporate structure of the Company affecting the shares occurs, the administrator will make adjustment with respect to the number and class of shares that may be delivered under the 2025 Equity Incentive Plan and/or the number, price and class of shares covered by outstanding awards, in order to prevent diminution of the benefits intended to be made available under the 2025 Equity Incentive Plan.
Awards under the Equity Incentive Plan
Share Options. Share options may be granted under the 2025 Equity Incentive Plan. The administrator determines the exercise price for each option award, which is stated in the award agreement and should in no case be lower than the par value of our ordinary shares in no case. One-fourth (1/4) of the shares subject to an option will vest on each of the first, second, third and fourth annual anniversaries of the vesting commencement date, unless otherwise provided in the award agreement.
Restricted Shares. A restricted share award agreement will specify restrictions on the duration of the restricted period and the number of shares granted. Restricted shares may not be sold, transferred or pledged until the end of the restricted period and may be subject to forfeiture upon a termination of employment or service with us. Unless otherwise provided in the award agreement, the holder of restricted shares will be entitled to receive all dividends and other distributions paid with respect to the ordinary shares, subject to the same restrictions on transferability and forfeitability as the underlying shares of restricted shares. One-fourth (1/4) of the restricted shares will vest on each of the first, second, third and fourth annual anniversaries of the vesting commencement date, unless otherwise provided in the award agreement.
Restricted Share Units. Awards of restricted share units may be granted by the administrator. At the time of granting restricted share units, the administrator may impose conditions that must be satisfied, such as continued employment or service or attainment of corporate performance goals, and may place restrictions on the grant and/or vesting of the restricted share units. A restricted share unit award agreement will specify applicable vesting criteria, the number of restricted share units granted and the terms and conditions on time and form of payment. Each restricted share unit, upon fulfilment of applicable conditions, represents a right to receive an amount equal to the fair market value of one ordinary share.
Change in Control
In the event of a change in control, the administrator may provide for termination or acceleration of awards, purchase of awards from holders or replacement of awards.
Term
Unless terminated earlier, the 2025 Equity Incentive Plan will continue in effect for a term of ten years from the date of its adoption.
Amendment and Termination
Subject to applicable shareholders’ approval and certain exceptions, the board of directors may at any time amend or terminate the 2025 Equity Incentive Plan.
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The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of the date of this prospectus by:
• each of our director and executive officer;
• our directors and executive officers as a group; and
• each of our principal shareholders who beneficially owns 5% or more of our total outstanding ordinary shares.
The calculations in the table below are based on 30,000,000 ordinary shares issued and outstanding as of the date of this prospectus, and [ ] ordinary shares issued and outstanding immediately after the completion of this offering. All of our issued and outstanding shares are fully paid.
The following table assumes that the over-allotment option is not being exercised by the underwriter and none of our officers, directors or 5% or greater beneficial owners of our ordinary shares will purchase shares in this offering.
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of ordinary shares beneficially owned by a person and the percentage ownership of that person, we have included ordinary shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.
|
Ordinary Shares |
Ordinary Shares |
||||||||
|
Number of |
Percentage of |
Number of |
Percentage of |
||||||
|
Directors and Executive Officers |
|
||||||||
|
Goh Kok Foong(1) |
16,200,000 |
54 |
% |
[ ] |
[ ] |
||||
|
Goh Kok E |
— |
— |
|
[ ] |
[ ] |
||||
|
Benjamin Yap Kean Ming |
— |
— |
|
[ ] |
[ ] |
||||
|
Independent Director Nominees |
|
||||||||
|
Ng Yah Ling |
— |
— |
|
[ ] |
[ ] |
||||
|
Wu Wai Kong |
— |
— |
|
[ ] |
[ ] |
||||
|
Ang Woei Shang |
— |
— |
|
[ ] |
[ ] |
||||
|
All directors and executive officers as a group |
16,200,000 |
54 |
% |
[ ] |
[ ] |
||||
|
All 5% or Greater Shareholders |
|
||||||||
|
Goh Kok Foong(1) |
16,200,000 |
54 |
% |
[ ] |
[ ] |
||||
|
Lim Soon Huat(2) |
9,300,000 |
31 |
% |
[ ] |
[ ] |
||||
____________
Notes:
* The business address of our directors and executive officers is No. 1, Jalan Perda Jaya, Kawasan Perniagaan Perda Jaya, 14000 Bukit Mertajam, Pulau Pinang, Malaysia
† For each person and group included in this table, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of (i) the number of ordinary shares outstanding as of the date of this prospectus, and (ii) the number of ordinary shares underlying share options held by such person or group that are exercisable within 60 days after the date of this prospectus.
(1) Represents 16,200,000 ordinary shares directly held by Mr. Goh Kok Foong.
(2) Represents 9,300,000 ordinary shares directly held by Mr. Lim Soon Huat.
As of the date of this prospectus, none of our ordinary shares are held by record holders in the United States. None of our existing shareholders will have different voting rights from other shareholders after the completion of this offering. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
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Equity Incentive Plan
See “Management — Equity Incentive Plan.”
Employment Agreements and Indemnification Agreements
See “Management — Employment Agreements and Indemnification Agreements.”
Other Related Party Transactions
Sales of Food Ingredients and Condiments
We sell food ingredients and condiments, mainly consisting of pre-made soup bases, sauces and semi-prepared food ingredients processed by our central kitchen, as well as some raw food materials and condiments sourced from third-party suppliers to a number of related parties who are our licensees, pursuant to the licensing agreement between us and each licensee. For the years ended December 31, 2023 and 2024, the amount of transactions of this type between us and the following related parties are listed as below:
• CCH Tasty Sdn. Bnd. (“CCH Tasty”), an entity significantly influenced by us by virtue of owning 40% of the equity interests in it, US$89,661 and US$108,783, respectively;
• CCH Ipoh Sdn. Bnd. (“CCH Ipoh”), an entity controlled by Mr. Goh Kok E, our chief operating officer and a director nominee of our Company, and Mr. Goh Kok Foong, our chairman of board of directors and chief executive officer, US$232,256 and US$100,417, respectively;
• CCH F&B Sdn. Bnd. (“CCH F&B”), an entity controlled by Mr. Goh Kok E, US$105,840 and US$97,622, respectively;
• CCH Alor Setar Sdn. Bhd. (“CCH Alor Setar”), an entity controlled by Mr. Goh Kok E, US$70,663 and US$95,672, respectively;
• Ban Bu Dian (M) Sdn. Bhd. (“BBDM”), a subsidiary of CCH F&B which is under control of Mr. Goh Kok E, US$127,109 and US$77,379, respectively;
• Kopitan Classic, an entity under control of Mr. Goh Kok E and Mr. Goh Kok Foong, nil and US$47,444, respectively;
• Signature Tasty Claypot House (Arkadia) Sdn. Bhd., an entity controlled by Mr. Goh Kok E, US$57,484 and US$44,541, respectively;
• Grizzly Spirit Sdn. Bhd., a subsidiary of CCH F&B which is under control of Mr. Goh Kok E, US$90,698 and US$25,847, respectively;
• CCH (Sabah) Sdn. Bhd. (“CCH Sabah”), an entity under significant influence of us by virtue of owning 20% of equity interest in it, US$24,956 and US$19,576, respectively;
• CCH KCH Sdn. Bhd. (“CCH KCH”), an entity under significant influence of us by virtue of owning 40% of equity interest in it, US$74,482 and US$17,307, respectively;
• Signature Tasty Claypot House (BL) Sdn. Bhd., an entity controlled by Mr. Goh Kok E, US$35,359 and nil, respectively.
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Franchise Licensing Income from Related Parties
We generate franchise licensing income from related parties who are our licensees, pursuant to the licensing agreement between us and each licensee. For the years ended December 31, 2023 and 2024, the amount of franchise licensing income we received from the following related parties are listed as below:
• Zi Wei Yuan (Shen Zhen) Hotpot Restaurant Co., Ltd (“ZWY Shenzhen”), an entity controlled by Mr. Goh Kok E, US$28,854 and US$303,716, respectively;
• CCH Tasty, US$32,954 and US$42,550, respectively;
• CCH Sabah, US$37,451 and US$37,209, respectively;
• CCH Ipoh, US$55,058 and US$20,009, respectively;
• CCH KCH, US$9,320 and US$19,225, respectively;
• CCH F&B, US$19,563 and US$17,392, respectively;
• CCH Alor Setar, US$12,502 and US$15,854, respectively;
• BBDM, US$22,404 and US$13,513, respectively.
Loans to Related Parties
We have historically provided loans to Mr. Goh Kok Foong and Mr. Goh Kok E for their personal uses, which were due on demand and interest free. As of December 31, 2024, the amounts due from Mr. Goh Kok Foong, current were US$488,920, which has been settled in full in June 2025. As of December 31, 2024, the amounts due from Mr. Goh Kok E, current were US$500,432, which has been settled in full in June 2025.
We historically provided loans to certain of our related parties, which were due on demand and interest free, to support their operations, including the following ones: (i) for the years ended December 31, 2023 and 2024, we provided loans to CCH KCH, a licensee of ours, in an aggregate amount of US$92,366 and US$5,230, respectively; (ii) for the year ended December 31, 2023, we provided loans to CCH Tasty, a licensee of ours, in an aggregate amount of US$41,249; and (iii) for the year ended December 31, 2024, we provided loans to Kopitan Food Sdn. Bhd. (“Kopitan Food”), an entity under control of Mr. Goh Kok E and Mr. Goh Kok Foong, in an aggregate amount of US$21,859.
We agreed to provide an interest-free credit facility to ZWY Shenzhen to support its operations in an amount up to US$492,225 (MYR2,200,000) with maturity date on August 1, 2028, pursuant to a loan agreement between us and ZWY Shenzhen entered into on August 1, 2024. As of December 31, 2024, the outstanding amount under this loan agreement (also the amount due from ZWY Shenzhen, non-current as of the same date) was US$489,274(MYR2,186,809).
We provided an interest-free credit facility to Abang Adek Holdings Sdn. Bhd. (“Abang Adek”), an entity controlled by Mr. Goh Kok E, to support its operations in an amount up to US$238,617(MYR1,066,500) with maturity date on July 16, 2027, pursuant to a loan agreement between us and Abang Adek entered into on May 1, 2022. As of December 31, 2024, the outstanding amount of the credit facility (also the amount due from Abang Adek, non-current as of the same date) was US$238,617(MYR1,066,500).
Capital Injection to Related Parties
For the year ended December 31 2024, we made capital injections to three related parties of ours, including CCH KCH, CCH Sabah and CCH Tasty, in an aggregate amount of US$87,437, US$30,603 and US$17,487, respectively.
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Amounts due from Related Parties
The balance of our amounts due from related parties, current mainly include (i) receivables arising from sales of food ingredients and condiments to related parties; (ii) receivables arising from franchise licensing income from related partes; and (iii) interest-free loans due on demand to related parties. See “— Sales of Food Ingredients and Condiments,” “— Franchise Licensing Income from Related Parties” and “— Loans to Related Parties” for details. As of December 31, 2024, our amounts due from related parties, current are listed as below:
• US$340,772 from ZWY Shenzhen, of which US$147,836 has been settled by collecting receivables arising from sales of food ingredients and condiments to related parties and franchise licensing income, as of the date of this prospectus;
• US$269,021 from CCH Ipoh;
• US$243,235 from CCH Alor Setar;
• US$202,236 from Kopitan Classic;
• US$175,740 from CCH F&B;
• US$140,527 from BBDM;
• US$110,468 from CCH Sabah;
• US$66,083 from CCH KCH; and
• US$160,085 from other related parties.
For our amounts due from Mr. Goh Kok Foong and Mr. Goh Kok E, current as of December 31, 2024, see “— Loans to Related Parties.”
For our amounts due from related parties (including ZWY Shenzhen and Abang Adek), non-current as of December 31, 2024, also see “— Loans to Related Parties.”
Amounts due to Related Parties
Historically, certain related parties have made payments for expenses incurred in our business operations on behalf of us. As of December 31, 2024, our amounts due to Kopitan Food, Mr. Goh Kok Foong and BBDM were US$98,275, US$38,036 and US$32,204, respectively.
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We were incorporated as an exempted company with limited liability in the Cayman Islands on December 2, 2024. Our affairs are currently governed by our memorandum and articles of association, as amended from time to time, the Companies Act and the common law of the Cayman Islands.
As of the date of this prospectus, our authorized share capital is US$50,000 divided into 5,000,000,000 ordinary shares with a par value of US$0.00001 each. As of the date of this prospectus, 30,000,000 ordinary shares are issued and outstanding.
Immediately prior to the completion of this offering, our authorized share capital will be changed into US$[ ] divided into [ ] ordinary shares with a par value of US$[ ] each. [All options, regardless of grant dates, will entitle holders to an equivalent number of ordinary shares once the vesting and exercising conditions are met.]
The following are summaries of material provisions of our A&R Company Listing Articles and the Companies Act insofar as they relate to the material terms of our ordinary shares that we expect will become effective immediately prior to the completion of this offering.
Ordinary Shares
General. Our ordinary shares are issued in registered form and are issued when registered in our register of members (shareholders). We may not issue shares to bearer. Our shareholders who are non-residents of the Cayman Islands may freely hold and transfer their ordinary shares.
Dividends. Subject to the Companies Act, our directors may declare dividends in any currency to be paid to our shareholders. Dividends may be declared and paid out of our profits, realized or unrealized, or from any reserve set aside from profits which our directors determine is no longer needed. Our board of directors may also declare and pay dividends out of the share premium account or any other fund or account that can be authorized for this purpose in accordance with the Companies Act. Except in so far as the rights attaching to, or the terms of issue of, any share otherwise provides, (1) all dividends shall be declared and paid according to the amounts paid up on the shares in respect of which the dividend is paid, but no amount paid up on a share in advance of calls shall be treated for this purpose as paid up on that share and (2) all dividends shall be apportioned and paid pro rata according to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid.
Our directors may also pay interim dividends, whenever our financial position, in the opinion of our directors, justifies such payment.
Our directors may deduct from any dividend or bonus payable to any shareholder all sums of money (if any) presently payable by such shareholder to us on account of calls or otherwise.
No dividend or other money payable by us on or in respect of any share shall bear interest against us. In respect of any dividend proposed to be paid or declared on our share capital, our directors may resolve and direct that (1) such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that our shareholders entitled thereto will be entitled to elect to receive such dividend (or part thereof if our directors so determine) in cash in lieu of such allotment or (2) the shareholders entitled to such dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as our directors may think fit. Our shareholders may, upon the recommendation of our directors, by ordinary resolution resolve in respect of any particular dividend that, notwithstanding the foregoing, a dividend may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to shareholders to elect to receive such dividend in cash in lieu of such allotment.
Any dividend interest or other sum payable in cash to the holder of shares may be paid by check or warrant sent by mail addressed to the holder at his registered address, or addressed to such person and at such addresses as the holder may direct. Every check or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first on the register in respect of such shares, and shall be sent at his or their risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to us.
All dividends unclaimed for one year after having been declared may be invested or otherwise made use of by our board of directors for the benefit of our company until claimed. Any dividend unclaimed after a period of six years from the date of declaration of such dividend shall be forfeited and reverted to us.
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Whenever our directors have resolved that a dividend be paid or declared, our directors may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind, and in particular of paid up shares, debentures or warrants to subscribe for our securities or securities of any other company. Where any difficulty arises with regard to such distribution, our directors may settle it as they think expedient. In particular, our directors may issue fractional certificates, ignore fractions altogether or round the same up or down, fix the value for distribution purposes of any such specific assets, determine that cash payments shall be made to any of our shareholders upon the footing of the value so fixed in order to adjust the rights of the parties, vest any such specific assets in trustees as may seem expedient to our directors, and appoint any person to sign any requisite instruments of transfer and other documents on behalf of the persons entitled to the dividend, which appointment shall be effective and binding on our shareholders.
Voting Rights. On a show of hands each shareholder is entitled to one vote or, on a poll, each shareholder is entitled to one vote for ordinary share, on all matters that require a shareholder’s vote. Voting at any shareholders’ meeting is by show of hands of shareholders who are present in person or by proxy or, in the case of a shareholder being a corporation, by its duly authorized representative, unless a poll is demanded.
A poll may be demanded by the chairman of such meeting or any shareholder holding not less than ten percent (10%) of the votes attaching to the Shares present in person or by proxy.
No shareholder shall be entitled to vote or be reckoned in a quorum, in respect of any share, unless such shareholder is duly registered as our shareholder and all calls or instalments due by such shareholder to us have been paid.
If a clearing house (or its nominee(s)) or a central depositary entity, being a corporation, is our shareholder, it may authorize such person or persons as it thinks fit to act as its representative(s) at any meeting or at any meeting of any class of shareholders, provided that, if more than one person is so authorized, the authorization shall specify the number and class of shares in respect of which each such person is so authorized. A person authorized pursuant to this provision is entitled to exercise the same powers on behalf of the clearing house or central depositary entity (or its nominee(s)) as if such person was the registered holder of our shares held by that clearing house or central depositary entity (or its nominee(s)) including the right to vote individually in a show of hands.
Transfer of Ordinary Shares. Subject to any applicable restrictions set forth in our A&R Company Listing Articles, including, for example, the board of directors’ discretion to refuse to register a transfer of any share (not being a fully paid up share) to a person of whom it does not approve, or any share issued under share incentive plans for employees upon which a restriction on transfer imposed thereby still subsists, or a transfer of any share to more than four joint holders, any of our shareholders may transfer all or any of his or her shares by an instrument of transfer in the usual or common form or in a form prescribed by Nasdaq or in another form that our directors may approve.
Our directors may decline to register any transfer of any share which is not paid up or on which we have a lien. Our directors may also decline to register any transfer of any share unless:
• the instrument of transfer is lodged with us and is accompanied by the certificate for the shares to which it relates and such other evidence as our directors may reasonably require to show the right of the transferor to make the transfer;
• the instrument of transfer is in respect of only one class of share;
• the instrument of transfer is properly stamped (in circumstances where stamping is required);
• fee of such maximum sum as Nasdaq may determine to be payable or such lesser sum as our directors; and
• may from time to time require is paid to us in respect thereof.
Liquidation. Subject to any future shares which are issued with specific rights, (1) if we are wound up and the assets available for distribution among our shareholders are more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed pari passu among those shareholders in proportion to the amount paid up at the commencement of the winding up on the shares held by them, respectively, and (2) if we are wound up and the assets available for distribution among the shareholders as such are insufficient to repay the whole of the paid-up capital, those assets shall be distributed so that, as nearly as may be, the losses shall be borne by the shareholders in proportion to the capital paid up at the commencement of the winding up on the shares held by them, respectively.
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If we are wound up (whether the liquidation is voluntary or by the court), the liquidator may with the sanction of our special resolution and any other sanction required by the Companies Act, divide among our shareholders in specie or kind the whole or any part of our assets (whether or not they shall consist of property of the same kind) and may, for such purpose, set such value as the liquidator deems fair upon any property to be divided and may determine how such division shall be carried out as between the shareholders or different classes of shareholders.
The liquidator may also vest the whole or any part of these assets in trustees upon such trusts for the benefit of the shareholders as the liquidator shall think fit, but so that no shareholder will be compelled to accept any assets, shares or other securities upon which there is a liability.
Calls on Ordinary Shares and Forfeiture of Ordinary Shares. Subject to our A&R Company Listing Articles and to the terms of allotment our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their ordinary shares in a notice served to such shareholders at least 14 clear days prior to the specified time of payment.
The ordinary shares that have been called upon and remain unpaid are subject to forfeiture.
Redemption, Repurchase and Surrender of Ordinary Shares. We are empowered by the Companies Act and our A&R Company Listing Articles to purchase our own shares, subject to certain restrictions.
Our directors may only exercise this power on our behalf, subject to the Companies Act, our A&R Company Listing Articles and to any applicable requirements imposed from time to time by Nasdaq, the SEC, or by any other recognized stock exchange on which our securities are listed.
Under the Companies Act, the redemption or repurchase of any share may be paid out of our company’s profits or out of the proceeds of a fresh issue of shares made for the purpose of such redemption or repurchase, or out of capital (including share premium account and capital redemption reserve) if the company can, immediately following such payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share may be redeemed or repurchased (1) unless it is fully paid up, (2) if such redemption or repurchase would result in there being no shares outstanding, or (3) if the company has commenced liquidation. In addition, our company may accept the surrender of any fully paid share for no consideration.
Variations of Rights of Shares. If at any time, our share capital is divided into different classes of shares, all or any of the special rights attached to any class of shares may, subject to the provisions of the Companies Act, be varied with the consent in writing of the holders of at least two-thirds (2/3) of the issued Shares of that Class or with the sanction of a special resolution passed at a general meeting of the holders of the shares of that class.
The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu with such existing class of shares.
Inspection of Books and Records. Holders of our ordinary shares have no general right under Cayman Islands law to inspect or obtain register of members or our corporate records (other than copies of our memorandum and articles of association, our register of mortgage and charges and any special resolutions passed by our shareholders). Under Cayman Islands law, the names of our current directors can be obtained from a search conducted at the Registrar of Companies. However, we will provide our shareholders with annual audited financial statements. See “Where You Can Find Additional Information.”
Issuance of Additional Shares. Our A&R Company Listing Articles authorizes our board of directors to issue additional ordinary shares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares.
Our A&R Company Listing Articles also authorizes our board of directors to establish from time to time one or more series of preferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that series, including:
• the designation of the series;
• the number of shares of the series;
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• the dividend rights, dividend rates, conversion rights, voting rights; and
• the rights and terms of redemption and liquidation preferences.
Our board of directors may issue preferred shares without action by our shareholders to the extent authorized but unissued. Issuance of these shares may dilute the voting power of holders of ordinary shares.
Anti-Takeover Provisions. Some provisions of our A&R Company Listing Articles may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable, including provisions that:
• authorize our board of directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our shareholders; and
• limit the ability of shareholders to requisition and convene general meetings of shareholders.
However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our A&R Company Listing Articles for a proper purpose and for what they believe in good faith to be in the best interests of our company.
Exempted Company. We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company:
• does not have to file an annual return of its shareholders with the Registrar of Companies;
• is not required to open its register of members for inspection;
• does not have to hold an annual general meeting;
• may issue shares with no par value;
• may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 30 years in the first instance);
• may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
• may register as a limited duration company; and
• may register as a segregated portfolio company.
“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on that shareholder’s shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).
Exclusive Forum. Unless we consent in writing to the selection of an alternative forum, the United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) shall be the exclusive forum within the United States for the resolution of any complaint asserting a cause of action arising out of or relating in any way to the federal securities laws of the United States, including but not limited to claims arising under the Exchange Act or the Securities Act, regardless of whether such legal suit, action, or proceeding also involves parties other than us. Any person or entity purchasing or otherwise acquiring any share or other securities in our company, shall be deemed to have notice of and consented to this exclusive forum provision. Without prejudice to the foregoing, if this exclusive forum provision is held to be illegal, invalid or unenforceable under applicable law, the legality, validity or enforceability of the rest of the articles of association shall not be affected and this exclusive forum provision shall be interpreted and construed to the maximum extent possible to apply in the relevant jurisdiction with whatever modification or deletion may be necessary so as best to give effect to our intention.
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Register of Members
In accordance with Section 48 of the Companies Act, the register of members is prima facie evidence of the registered holder or member of shares of a company. Therefore, a person becomes a registered holder or member of shares of the company only upon entry being made in the register of members. Our directors will maintain one register of members, at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands, which provides us with corporate administrative services. We will perform the procedures necessary to register the shares in the register of members as required in “PART III — Distribution of Capital and Liability of Members of Companies and Associations” of the Companies Act, and will ensure that the entries on the register of members are made without any delay.
In the event we fail to update our register of member, the aggrieved party may apply for an order with the courts of the Cayman Islands for the rectification of the register.
Differences in Corporate Law
The Companies Act is derived, to a large extent, from the older Companies Acts of England but does not follow recent United Kingdom statutory enactments, and accordingly there are significant differences between the Companies Act and the current Companies Act of England.
In addition, the Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to United States corporations and companies incorporated in the State of Delaware.
Mergers and Similar Arrangements. The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (a) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (b) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association. The written plan of merger or consolidation must be filed with the Registrar of Companies of the Cayman Islands together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Dissenting shareholders have the right to be paid the fair value of their shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) if they follow the required procedures, subject to certain exceptions. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.
A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman subsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees otherwise. For this purpose, a company is a “parent” of a subsidiary if it holds issued shares that together represent at least ninety percent (90%) of the votes at a general meeting of the subsidiary.
The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman Islands.
Save in certain limited circumstances, a shareholder of a Cayman constituent company who dissents from the merger or consolidation is entitled to payment of the fair value of his shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting to the merger or consolidation, provide the dissenting shareholder complies strictly with the procedures set out in the Companies Act. The exercise of dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.
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Separate from the statutory provisions relating to mergers and consolidations, the Companies Act also contains statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement, provided that the arrangement is approved by (a) 75% in value of shareholders or class of shareholders, as the case may be; or (b) a majority in number representing 75% in value of creditors or each class of creditors, as the case may be, with whom the arrangement is to be made, that are, in each case, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the Grand Court can be expected to approve the arrangement if it determines that:
• the statutory provisions as to the required majority vote have been met;
• the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class;
• the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and
• the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act.
The Companies Act also contains a statutory power of compulsory acquisition which may facilitate the “squeeze out” of a dissentient minority shareholder upon a tender offer. When a tender offer is made and accepted by holders of 90.0% of the shares affected within four months, the offeror may, within a two-month period commencing on the expiration of such four-month period, require the holders of the remaining shares to transfer such shares to the offeror on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.
If an arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.
Shareholders’ Suits. In principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company, and as a general rule a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands court can be expected (and have had occasion) to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) so that a minority shareholder may be permitted to commence a class action against or derivative actions in the name of our company to challenge actions where:
• a company acts or proposes to act illegally or ultra vires;
• the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and
• those who control the company are perpetrating a “fraud on the minority.”
Indemnification of Directors and Executive Officers and Limitation of Liability. Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our A&R Company Listing Articles permit indemnification of officers and directors for losses, damages, costs and expenses incurred in their capacities as such unless such losses or damages arise from dishonesty or fraud of such directors or officers. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation.
In addition, we have entered into indemnification agreements with our directors and executive officers that provide such persons with additional indemnification beyond that provided in our A&R Company Listing Articles.
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Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Directors’ Fiduciary Duties. Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director acts in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.
As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company — a duty to act bona fide in the best interests of the company, a duty not to make a personal profit based on his or her position as director (unless the company permits him or her to do so), a duty not to put himself or herself in a position where the interests of the company conflict with his or her personal interest or his or her duty to a third party, and a duty to exercise powers for the purpose for which such powers were intended. A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.
Shareholder Action by Written Consent. Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. Under Cayman Islands Law, a company may eliminate the ability of shareholders to approve corporate matters by way of written resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matters at a general meeting without a meeting being held by amending the articles of association. Our A&R Company Listing Articles do not allow shareholders to act by written resolutions.
Shareholder Proposals. Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.
With respect to shareholder proposals, Cayman Islands law is essentially the same as Delaware law. The Companies Act does not provide shareholders with an express right to put forth any proposal before an annual meeting of the shareholders. However, the Companies Act may provide shareholders with limited rights to requisition a general meeting, but such rights must be stipulated in the articles of association of the company.
Any one or more shareholders holding not less than two-thirds of the votes attaching to the total issued and paid up share capital of the Company at the date of deposit of the requisition shall at all times have the right, by written requisition to the board of directors or the secretary of the company, to require an extraordinary general meeting to be called by the board of directors for the transaction of any business specified in such requisition.
Cumulative Voting. Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands, but our A&R Company Listing Articles do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.
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Removal of Directors. Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the issued and outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our A&R Company Listing Articles, directors may be removed with or without cause, by an ordinary resolution of our shareholders. A director shall hold office until the expiration of his or her term or his or her successor shall have been elected and qualified, or until his or her office is otherwise vacated. In addition, a director’s office shall be vacated if the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) is found to be or becomes of unsound mind or dies; (iii) resigns his office by notice in writing to the company; (iv) without special leave of absence from our board of directors, is absent from three consecutive meetings of the board of directors and the board of directors resolves that his office be vacated; (v) is prohibited by law from being a director; or (vi) is removed from office pursuant to any other provisions of our A&R Company Listing Articles.
Transactions with Interested Shareholders. The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting share within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.
Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, the directors of our company are required to comply with fiduciary duties which they owe to our company under Cayman Islands laws, including the duty to ensure that, in their opinion, any such transactions must be entered into bona fide in the best interests of the company, and are entered into for a proper corporate purpose and not with the effect of constituting a fraud on the minority shareholders.
Restructuring. A company may present a petition to the Grand Court of the Cayman Islands for the appointment of a restructuring officer on the grounds that the company:
(a) is or is likely to become unable to pay its debts; and
(b) intends to present a compromise or arrangement to its creditors (or classes thereof) either pursuant to the Companies Act, the law of a foreign country or by way of a consensual restructuring.
The Grand Court may, among other things, make an order appointing a restructuring officer upon hearing of such petition, with such powers and to carry out such functions as the court may order. At any time (i) after the presentation of a petition for the appointment of a restructuring officer but before an order for the appointment of a restructuring officer has been made, and (ii) when an order for the appointment of a restructuring officer is made, until such order has been discharged, no suit, action or other proceedings (other than criminal proceedings) shall be proceeded with or commenced against the company, no resolution to wind up the company shall be passed, and no winding up petition may be presented against the company, except with the leave of the court. However, notwithstanding the presentation of a petition for the appointment of a restructuring officer or the appointment of a restructuring officer, a creditor who has security over the whole or part of the assets of the company is entitled to enforce the security without the leave of the court and without reference to the restructuring officer appointed.
Dissolution; Winding up. Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s issued and outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board of directors.
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Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances, including where it is, in the opinion of the court, just and equitable to do so.
Variation of Rights of Shares. Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the issued and outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under Cayman Islands law and our A&R Company Listing Articles, if our share capital is divided into more than one class of shares, we may vary the rights attached to any class with the consent in writing of the holders of at least two-thirds (2/3) of the issued Shares of that class or with the sanction of a special resolution passed at a general meeting of the holders of the shares of that class.
Amendment of Governing Documents. Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a majority of the issued and outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under the Companies Act and our A&R Company Listing Articles, our memorandum and articles of association may only be amended by a special resolution of our shareholders.
Rights of Nonresident or Foreign Shareholders. There are no limitations imposed by our A&R Company Listing Articles on the rights of nonresident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our A&R Company Listing Articles governing the ownership threshold above which shareholder ownership must be disclosed.
History of Securities Issuance
The following is a summary of our securities issuances in the past three years.
On December 2, 2024, we issued one ordinary share at par value of US$0.00001 each to the initial subscriber and on the same day, such share was transferred to Lim Soon Huat, who was the director of CCH Holdings Ltd at that time.
On May 16, 2025, we issued a total of 29,999,999 ordinary shares to certain individual and entities as described below:
• we issued 9,299,999 ordinary shares to Lim Soon Huat at par value of US$0.00001 each;
• we issued 16,200,000 ordinary shares to Goh Kok Foong, our founder, chairman of board of directors and chief executive officer, at par value;
• we issued 1,200,000 ordinary shares to Yeoh Wooi Leng, a director of STCH GH at that time, at par value;
• we issued 1,200,000 ordinary shares to See Xue Xian, at par value;
• we issued 600,000 ordinary shares to Liew Choon How, at par value;
• we issued 1,200,000 ordinary shares to Capricornos Investment Holdings Limited, an entity wholly owned by Jiang Keru, at par value; and
• we issued 300,000 ordinary shares to Max Strategic Group Limited, an entity wholly owned by Gui Hongwen, at par value.
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our ordinary shares. We intend to apply to list our ordinary shares on Nasdaq. Upon completion of this offering, assuming no exercise of the underwriter’s over-allotment option, we will have outstanding ordinary shares held by public shareholders, representing approximately [ ]% of our ordinary shares in issue. All of the ordinary shares sold in this offering will be freely transferable by persons other than our “affiliates” (as that term is defined in Rule 144 under the Securities Act) without restriction or further registration under the Securities Act. Sales of substantial amounts of our ordinary shares in the public market could materially adversely affect prevailing market prices of our ordinary shares.
Lock-Up Agreements
We have agreed that we will not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, or enter into any transaction or device that is designed to, or could be expected to, result in the disposition, directly or indirectly, our ordinary shares or securities convertible into or exchangeable or exercisable for our ordinary shares, enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our ordinary shares or securities convertible into or exercisable or exchangeable for our ordinary shares, whether any of these transactions is to be settled by delivery of our ordinary shares or other securities, in cash or otherwise, make any demand for or exercise any right or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of our ordinary shares or securities convertible into or exercisable or exchangeable for our ordinary shares or any other securities of us, or publicly disclose the intention to do any of the foregoing, without the prior written consent of the Representative of the underwriters for a period of [six months] after the date of closing of this offering, subject to certain exceptions and applicable notice requirements.
[Our directors and executive officers, our shareholders holding more than 5.0% of our ordinary shares] have agreed that they will not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, or enter into any transaction or device that is designed to, or could be expected to, result in the disposition, directly or indirectly, of our ordinary shares or securities convertible into or exchangeable or exercisable for our ordinary shares, or enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our ordinary shares or securities convertible into or exercisable or exchangeable for our ordinary shares, whether any of these transactions is to be settled by delivery of our ordinary shares or other securities, in cash or otherwise, make any demand for or exercise any right or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of our ordinary shares or securities convertible into or exercisable or exchangeable for our ordinary shares or any other securities of us, or publicly disclose the intention to do any of the foregoing, without the prior written consent of the underwriter for a period of [six months] after the date of closing of this offering, subject to certain exceptions and applicable notice requirements.
Rule 144
All of our ordinary shares that will be outstanding upon the completion of this offering, other than those sold in this offering, are “restricted securities” as that term is defined in Rule 144 under the Securities Act and may be sold publicly in the United States only if they are subject to an effective registration statement under the Securities Act or pursuant to an exemption from the registration requirement such as those provided by Rule 144 and Rule 701 promulgated under the Securities Act.
In general, beginning 90 days after the date of this prospectus, a person (or persons whose shares are aggregated) who at the time of a sale is not, and has not been during the three months preceding the sale, an affiliate of ours and has beneficially owned our restricted securities for at least six months will be entitled to sell the restricted securities without registration under the Securities Act, subject only to the availability of current public information about us, and will be entitled to sell restricted securities beneficially owned for at least one year without restriction. Persons who are our affiliates and have beneficially owned our restricted securities for at least six months may sell a number of restricted securities within any three-month period that does not exceed the greater of the following:
• 1% of the then outstanding ordinary shares, which will equal approximately [ ] ordinary shares immediately after this offering [(or [ ] ordinary shares if the underwriters exercise their option to purchase additional ordinary shares in full)]; or
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• the average weekly trading volume of our ordinary shares on Nasdaq during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC.
Affiliates who sell restricted securities under Rule 144 may not solicit orders or arrange for the solicitation of orders, and they are also subject to certain requirements relating to manner of sale, notice and the availability of current public information about us.
Persons who are not our affiliates are only subject to one of these additional restrictions, the requirement of the availability of current public information about us, and this additional restriction does not apply if they have beneficially owned our restricted shares for more than one year.
Rule 701
In general, under Rule 701 of the Securities Act as currently in effect, each of our employees, consultants or advisors who purchases our ordinary shares from us in connection with a compensatory stock plan or other written agreement executed prior to the completion of this offering is eligible to resell those ordinary shares in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144. However, the Rule 701 shares would remain subject to lock-up arrangements and would only become eligible for sale when the lock-up period expires.
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The following summary of material Cayman Islands, Malaysia, and United States federal income tax consequences of an investment in our ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in our ordinary shares, such as the tax consequences under state, local and other tax laws.
Cayman Islands Taxation
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.
Payments of dividends and capital in respect of the shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our ordinary shares, nor will gains derived from the disposal of our ordinary shares be subject to Cayman Islands income or corporate tax.
Malaysian Enterprise Taxation
The following brief description of Malaysian enterprise income taxation is designed to highlight the enterprise-level taxation on our earnings, which will affect the amount of dividends, if any, we are ultimately able to pay to our shareholders. See “Dividend Policy.”
Income Tax in Malaysia
The principal legislation that governs a person’s income tax in Malaysia is the Income Tax Act 1967 (“ITA 1967”). The regulatory body implementing and enforcing the ITA 1967 is the Inland Revenue Board (“IRB”). Pursuant to Section 3 of the ITA 1967, income tax shall be charged for each year of assessment (“YA”) upon the income of any person accruing in or derived from Malaysia or received in Malaysia from outside Malaysia.
Pursuant to Section 8 of the ITA 1967, a company is a tax resident in Malaysia if its management and control are exercised in Malaysia. Management and control are normally considered to be exercised at the place where the directors’ meetings concerning management and control of the company are held. The income tax rate payable by a resident company differs depending on the amount of the company’s paid-up capital and its annual sale in relation to the particular YA. The corporate income tax rates for resident company are as illustrated below:
|
Types of Company |
Chargeable income |
Tax rate YA 2024 |
||
|
Resident company (other than company described below) |
24% |
|||
|
Resident company: |
||||
|
• with paid-up capital of RM 2.5 million (MYR) or less, and gross income from business of not more than MYR 50 million |
On the first |
15% |
||
|
• that does not control, directly or indirectly, another company that has paid-up capital of more than RM 2.5 million |
On the next |
17% |
||
|
• is not controlled, directly or indirectly, by another company that has paid-up capital of more than RM 2.5 million, and |
In excess of |
24% |
||
|
• with no more than 20% of its paid-up capital being owned, directly or indirectly, by a foreign company or non-Malaysian citizen (with effect from year of assessment 2024) |
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Pursuant to the ITA 1967, a non-resident company — namely, a company whose management and control are not exercised in Malaysia and thus does not fall under the purview of Section 8 of the ITA 1967 — is subject to the following tax rates:
|
Types of Income |
Rate (%) |
|
|
Business income |
24 |
|
|
Royalties derived from Malaysia |
10 |
|
|
Rental of moveable properties |
10 |
|
|
Advice, assistance, or services rendered in Malaysia |
10 |
|
|
Interest |
15* |
|
|
Dividends |
Exempt |
|
|
Other income |
10 |
Note: Where the recipient is resident in a country that has a double tax agreement with Malaysia, the tax rates for the specific sources of income may be reduced.
____________
* Interest paid to a non-resident by a bank or a finance company in Malaysia is exempt from tax.
Foreign-Sourced Income
Malaysia adopts a territorial principle of taxation, under which only income accruing in or derived from or received in Malaysia from outside Malaysia is subject to income tax in Malaysia pursuant to Section 3 of the ITA 1967. Previously, “income received in Malaysia from outside Malaysia” or “foreign-sourced income” (“FSI”) received by Malaysian taxpayers is not taxable due to the availability of tax exemption under Paragraph 28, Schedule 6 of the ITA 1967 (“Para 28”). This exemption is applicable to any person other than a resident company carrying on the business of banking, insurance, or sea or air transport, in respect of income derived from sources outside Malaysia and received in Malaysia, pursuant to Para 28. On October 29, 2021, however, the Malaysian government announced via the Budget 2022 that the exemption under Para 28 will no longer be applicable to tax residents, effective from January 1, 2022. Therefore, income tax will be imposed on resident persons in Malaysia on income derived from foreign sources and received in Malaysia with effect from January 1, 2022. Such income will be treated equally vis-à-vis income accruing in or derived from Malaysia and taxable under Section 3 of the ITA 1967.
In summary, the tax treatments for the income of a person in Malaysia are depicted as follows:
|
Income Derived From |
Income Received In |
Prior to |
Effective from |
|||
|
Malaysia |
Malaysia |
Taxable |
Taxable |
|||
|
Malaysia |
Malaysia from outside Malaysia |
Taxable |
Taxable |
|||
|
Overseas |
Malaysia from outside Malaysia |
Tax Exempted |
Taxable |
|||
|
Overseas |
Overseas |
Tax Exempted |
Tax Exempted |
On November 16, 2021, the IRB announced the Special Income Remittance Program (“SIRP”) for Malaysian tax residents whose income is derived from foreign sources and received in Malaysia. The implementation of taxation on FSI is staggered into the following two timelines, depending on the timing of remittance of FSI into Malaysia: (i) during the period from January 1 to June 30, 2022 (six months) (the “SIRP Period”), FSI remitted shall be taxed at a fixed rate of 3% on the gross amount of income remitted; and (ii) on or after July 1, 2022, FSI remitted shall be taxed at the prevailing tax rate applicable to tax residents on the statutory income, namely, gross FSI less expenses attributable to the FSI. FSI remitted under the SIRP will be accepted in good faith by the IRB as the IRB will not conduct an audit or investigation on the taxpayer. In addition, the IRB will not impose any penalty on FSI remitted during the SIRP Period.
Notwithstanding the implementation of taxation on FSI, the Malaysian Ministry of Finance announced on December 30, 2021 that exemption from income tax would be available for a period of five years on certain categories of FSI received by Malaysian tax residents, when certain qualifying conditions are met. Specifically, (i) for individuals excluding those carrying on business in Malaysia through a partnership, all categories of FSI are exempted; and (ii) for companies and limited liability partnerships, foreign-sourced dividend income is exempted. To legislate the above, the following Orders were gazetted on July 19, 2022 and are effective from January 1, 2022 to December 31, 2026.
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Profit Distribution and Withholding Tax
We are a holding company incorporated in the Cayman Islands and we gain substantial income by way of dividends to be paid to us from our direct subsidiaries in Malaysia.
Malaysia is under the single-tier tax system, under which income tax imposed on a company’s chargeable income is a final tax, and dividends distributed are generally exempted from tax in the hands of the shareholders pursuant to Section 108 of the ITA 1967. As such, companies are not required to deduct tax from dividends paid to shareholders, and no tax credits will be available to offset against the recipient’s tax liability. Corporate shareholders receiving exempt single-tier dividends can, in turn, distribute such dividends to their own shareholders, who are also exempt on such receipts. In addition, while Malaysia imposes withholding tax on certain payments, such as interest, royalties, contract payments, and special classes of income, Malaysia does not do so on dividends in addition to tax on the profits out of which the dividends are declared. Such position aligns with the double taxation agreements (“DTAs”) concluded by Malaysia with an extensive number of countries, including the United States. Pursuant to the DTAs, no withholding tax will be imposed on dividends paid by Malaysian companies to non-residents.
In view of the above, we believe that dividends which will be paid to us from our direct subsidiary in Malaysia will not be subject to any withholding tax.
United States Federal Income Taxation
The following discussion is a summary of the material U.S. federal income tax consequences generally applicable to the ownership and disposition of our ordinary shares by U.S. Holders (as defined below). This discussion applies to U.S. Holders that purchase our ordinary shares pursuant to this offering and hold such ordinary shares as capital assets (generally, property held for investment) under the U.S. Internal Revenue Code of 1986, as amended (the “Code”). This discussion is based upon existing U.S. federal income tax law, which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the U.S. Internal Revenue Service (the “IRS”), with respect to any U.S. federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary position. This discussion, moreover, does not address the U.S. federal estate, gift, Medicare, and alternative minimum tax consequences, any withholding or information reporting requirements, or any state, local and non-U.S. tax consequences relating to the ownership or disposition of our ordinary shares. The following summary does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or to persons in special tax situations such as:
• banks and other financial institutions;
• insurance companies;
• pension plans;
• cooperatives;
• regulated investment companies;
• real estate investment trusts;
• broker-dealers;
• traders that elect to use a market-to-market method of accounting;
• certain former U.S. citizens or long-term residents;
• governments or agencies or instrumentalities thereof;
• tax-exempt entities, including private foundations, an “individual retirement account” or “Roth IRA”;
• holders who acquired our ordinary shares pursuant to the exercise of any employee share option or otherwise as compensation;
• investors that hold our ordinary shares as part of a straddle, hedging, conversion or other integrated transaction for U.S. federal income tax purposes;
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• persons holding their ordinary shares in connection with a trade or business outside the United States;
• persons that actually or constructively own 10% or more of our voting power or value (including by reason of owning our ordinary shares);
• investors required to accelerate the recognition of any item of gross income with respect to their ordinary shares as a result of such income being recognized on an applicable financial statement;
• investors that have a functional currency other than the U.S. dollar;
• partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding ordinary shares through such entities, all of whom may be subject to tax rules that differ significantly from those discussed below.
The discussion set forth below is addressed only to U.S. Holders that purchase ordinary shares in this offering. Prospective purchasers are urged to consult their own tax advisors about the application of the U.S. federal income tax rules to their particular circumstances as well as the state, local, non-U.S. and other tax consequences to them of the purchase, ownership and disposition of our ordinary shares.
General
As used in this discussion, the term “U.S. Holder” means a beneficial owner of our ordinary shares who is, for U.S. federal income tax purposes:
• an individual who is a citizen or resident of the United States;
• a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;
• an estate the income of which is subject to U.S. federal income tax regardless of its source; or
• a trust that (i) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all of its substantial decisions or (ii) has a valid election under applicable U.S. Treasury regulations to be treated as a U.S. person for federal income tax purposes.
If a partnership (or other entity treated as a partnership) for U.S. federal income tax purposes holds our ordinary shares, the U.S. federal income tax consequences relating to an investment in such ordinary shares will depend in part upon the status and activities of such entity and the particular partner. Partnerships and partners in partnerships should consult their own tax advisor regarding the U.S. federal income tax consequences applicable to them of the purchase, ownership and disposition of our ordinary shares.
This discussion is for informational purposes only and is not tax advice. Each person considering the acquisition of our ordinary shares is strongly urged to consult its own tax advisor regarding the specific U.S. federal, state, local and non-U.S. income and other tax consequences of the acquisition, ownership and disposition of our ordinary shares.
Passive Foreign Investment Company (“PFIC”)
In general, a non-U.S. corporation will be treated as a PFIC for any taxable year in which either:
• at least 75% of its gross income for such taxable is passive income (the “PFIC income test”); or
• at least 50% of the gross value of its assets (determined on an average of the quarterly gross values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the “PFIC asset test”).
Passive income for this purpose generally includes, among other things, dividends, interest, royalties, rents, and gains from the sale or exchange of property that gives rise to passive income. Assets that produce or are held for the production of passive income generally include cash, even if held as working capital or raised in a public offering, marketable securities, and other assets that may produce passive income. Generally, in determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.
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In determining the value and composition of our assets for purposes of the PFIC asset test, (i) the cash we raise in this offering will generally be considered to be held for the production of passive income and (ii) the value of our assets must be determined based on the market value of our ordinary shares from time to time, which could cause the value of our non-passive assets to be less than 50% of the value of all of our assets (including the cash raised in this offering) on any particular quarterly testing date for purposes of the asset test.
Although PFIC status is determined on an annual basis and generally cannot be determined until the end of a taxable year, [based on the nature of our current and expected income and the current and expected value and composition of our assets, we do not presently expect to be a PFIC for our current taxable year or the foreseeable future.] However, there can be no assurance given in this regard because the determination of whether we are or will become a PFIC is a fact-intensive inquiry made on an annual basis that depends, in part, upon the composition of our income and assets. In addition, there can be no assurance that the IRS will agree with our conclusion or that the IRS would not successfully challenge our position.
If we are a PFIC in any taxable year during which a U.S. Holder owns our ordinary shares, the U.S. Holder could be liable for additional taxes and interest charges under the “PFIC excess distribution regime” if (i) a distribution paid during a taxable year is greater than 125% of the average annual distributions paid in the three preceding taxable years, or, if shorter, the U.S. Holder’s holding period for our ordinary shares, or (ii) gain is recognized on a sale, exchange or other disposition, including a pledge, of our ordinary shares, whether or not we continue to be a PFIC. Under the PFIC excess distribution regime, the tax on such distribution or gain would be determined by allocating the distribution or gain ratably over the U.S. Holder’s holding period for our ordinary shares. The amount allocated to the current taxable year (i.e., the year in which the distribution occurs or the gain is recognized) and any year prior to the first taxable year in which we are a PFIC would be taxed as ordinary income earned in the current taxable year. The amount allocated to other taxable years would be taxed at the highest marginal rates in effect for individuals or corporations, as applicable, to ordinary income for each such taxable year, and an interest charge, generally applicable to underpayments of tax, will be added to the tax.
If we are a PFIC for any year during which a U.S. Holder holds our ordinary shares, we must generally continue to be treated as a PFIC by that holder for all succeeding years during which the U.S. Holder holds such ordinary shares, unless we cease to meet the requirements for PFIC status and the U.S. Holder makes a “deemed sale” election with respect to our ordinary shares. If the election is made, the U.S. Holder will be deemed to sell our ordinary shares it holds at their fair market value on the last day of the last taxable year in which we qualified as a PFIC, and any gain recognized from such deemed sale would be taxed under the PFIC excess distribution regime. After the deemed sale election, the U.S. Holder’s ordinary shares would not be treated as shares of a PFIC unless we subsequently again become a PFIC.
If we are a PFIC for any taxable year during which a U.S. Holder holds our ordinary shares and one of our non-United States subsidiaries is also a PFIC (i.e., a lower-tier PFIC), such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC and would be taxed under the PFIC excess distribution regime on distributions by the lower-tier PFIC and on gain from the disposition of shares of the lower-tier PFIC even though such U.S. Holder would not receive the proceeds of those distributions or dispositions. Any of our non-United States subsidiaries that have elected to be disregarded as entities separate from us or as partnerships for U.S. federal income tax purposes would not be corporations under U.S. federal income tax law and accordingly, would not be classified as lower-tier PFICs. However, non-United States subsidiaries that have not made the election may be classified as a lower-tier PFIC if we are a PFIC during a U.S. Holder’s holding period and the subsidiary meets the PFIC income test or PFIC asset test. Each U.S. Holder is advised to consult its tax advisors regarding the application of the PFIC rules to any of our non-United States subsidiaries.
If we are a PFIC, a U.S. Holder would not be subject to tax under the PFIC excess distribution regime on distributions or gain recognized on our ordinary shares if a valid “mark-to-market” election is made by the U.S. Holder for our ordinary shares in the year in which such shares are acquired. An electing U.S. Holder generally would take into account as ordinary income each year, the excess of the fair market value of our ordinary shares held at the end of such taxable year over the adjusted tax basis of such ordinary shares. The U.S. Holder would also take into account, as an ordinary loss each year, the excess of the adjusted tax basis of such ordinary shares over their fair market value at the end of the taxable year, but only to the extent of the excess of amounts previously included in income over ordinary losses deducted as a result of the mark-to-market election. The U.S. Holder’s tax basis in our ordinary shares would be adjusted to reflect any income or loss recognized as a result of the mark-to-market election. In addition, any gain from a sale, exchange or other disposition of our ordinary shares in any taxable year in which we are a PFIC would be
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treated as ordinary income and any loss from such sale, exchange or other disposition would be treated first as ordinary loss (to the extent of any net mark-to-market gains previously included in income) and thereafter as capital loss. If, after having been a PFIC for a taxable year, we cease to be classified as a PFIC because we no longer meet either the PFIC income or PFIC asset test, the U.S. Holder would not be required to take into account any latent gain or loss in the manner described above and any gain or loss recognized on the sale or exchange of the ordinary shares would be classified as a capital gain or loss.
A mark-to-market election is available to a U.S. Holder only for “marketable stock.” Generally, stock will be considered marketable stock if it is “regularly traded” on a “qualified exchange” within the meaning of applicable U.S. Treasury regulations. A class of stock is regularly traded during any calendar year during which such class of stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter.
Our ordinary shares will be marketable stock as long as they remain listed on the Nasdaq Capital Market and are regularly traded. A mark-to-market election will not apply to the ordinary shares for any taxable year during which we are not a PFIC, but will remain in effect with respect to any subsequent taxable year in which we become a PFIC. Such election will not apply to any of our non-U.S. subsidiaries. Accordingly, a U.S. Holder may continue to be subject to tax under the PFIC excess distribution regime with respect to any lower-tier PFICs notwithstanding the U.S. Holder’s mark-to-market election for the ordinary shares.
The tax consequences that would apply if we are a PFIC would also be different from those described above if a U.S. Holder were able to make a valid qualified electing fund election (“QEF election”). As we do not expect to provide U.S. Holders with the information necessary for a U.S. Holder to make a QEF election, prospective investors should assume that a QEF election will not be available.
The U.S. federal income tax rules relating to PFICs are very complex. Prospective U.S. investors are strongly urged to consult their own tax advisors with respect to the impact of PFIC status on the purchase, ownership and disposition of our ordinary shares, the consequences to them of an investment in a PFIC, any elections available with respect to the ordinary shares and the IRS information reporting obligations with respect to the purchase, ownership and disposition of ordinary shares of a PFIC.
Distributions
Subject to the discussion above under “— Passive Foreign Investment Company (“PFIC”),” a U.S. Holder that receives a distribution with respect to our ordinary shares generally will be required to include the gross amount of such distribution in gross income as a dividend when actually or constructively received to the extent of the U.S. Holder’s pro rata share of our current and/or accumulated earnings and profits (as determined under U.S. federal income tax principles). To the extent a distribution received by a U.S. Holder is not a dividend because it exceeds the U.S. Holder’s pro rata share of our current and accumulated earnings and profits, it will be treated first as a tax-free return of capital and reduce (but not below zero) the adjusted tax basis of the U.S. Holder’s ordinary shares. To the extent the distribution exceeds the adjusted tax basis of the U.S. Holder’s ordinary shares, the remainder will be taxed as capital gain. Because we do not expect to account for our earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should expect all distributions to be reported to them as dividends.
Distributions on our ordinary shares that are treated as dividends generally will constitute income from sources outside the United States for foreign tax credit purposes and generally will constitute passive category income. Such dividends will not be eligible for the “dividends received” deduction generally allowed to corporate shareholders with respect to dividends received from U.S. corporations. Dividends paid by a “qualified foreign corporation” to certain non-corporate U.S. Holders may be eligible for taxation at a reduced capital gains rate rather than the marginal tax rates generally applicable to ordinary income provided that a holding period requirement (more than 60 days of ownership, without protection from the risk of loss, during the 121-day period beginning 60 days before the ex-dividend date) and certain other requirements are met. Each U.S. Holder is advised to consult its tax advisors regarding the availability of the reduced tax rate on dividends to its particular circumstances. However, if we are a PFIC for the taxable year in which the dividend is paid or the preceding taxable year (see discussion above under “— Passive Foreign Investment Company (“PFIC”)”), we will not be treated as a qualified foreign corporation, and therefore the reduced capital gains tax rate described above will not apply. A non-U.S. corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) generally will be considered to be a qualified foreign corporation with respect to any dividend it pays on ordinary shares that are readily tradable on an established securities market in the United States.
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Sale, Exchange or Other Disposition of Our Ordinary Shares
Subject to the discussion above under “— Passive Foreign Investment Company (“PFIC”),” a U.S. Holder generally will recognize capital gain or loss for U.S. federal income tax purposes upon the sale, exchange or other taxable disposition of our ordinary shares in an amount equal to the difference, if any, between the amount realized (i.e., the amount of cash plus the fair market value of any property received) on the sale, exchange or other disposition and such U.S. Holder’s adjusted tax basis in the ordinary shares. Such capital gain or loss generally will be long-term capital gain taxable at a reduced rate for non-corporate U.S. Holders or long-term capital loss if, on the date of sale, exchange or other taxable disposition, the ordinary shares were held by the U.S. Holder for more than one year. Any capital gain of a non-corporate U.S. Holder that is not long-term capital gain is taxed at ordinary income rates. The deductibility of capital losses is subject to limitations. Any gain or loss recognized from the sale or other disposition of our ordinary shares by a U.S. Holder will generally be gain or loss from sources within the United States for U.S. foreign tax credit purposes.
Information Reporting and Backup Withholding
Certain U.S. Holders may be required to file certain U.S. information reporting returns with the IRS with respect to an investment in our ordinary shares, including, among others, IRS Form 8938 (Statement of Specified Foreign Financial Assets) and IRS Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation). In addition, each U.S. Holder who holds owns our ordinary shares during any taxable year that we are treated as a PFIC generally must file IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund). Substantial penalties may be imposed upon a U.S. Holder that fails to comply with required information reporting.
Dividends on and proceeds from the sale, exchange or other disposition of our ordinary shares may be reported to the IRS unless the U.S. Holder establishes a basis for exemption. U.S. Holders who are required to establish their exempt status generally must provide such certification on IRS Form W-9 or by otherwise establishing an exemption. Backup withholding may apply to amounts subject to reporting if the holder (i) fails to provide an accurate U.S. taxpayer identification number or otherwise establish a basis for exemption, or (ii) is described in certain other categories of persons. U.S. Holders that are corporations generally are excluded from these information reporting and backup withholding tax rules.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against a U.S. Holder’s U.S. federal income tax liability if the required information is furnished by the U.S. Holder on a timely basis to the IRS.
U.S. Holders are strongly urged to consult their own tax advisors regarding the backup withholding tax and information reporting rules.
THE PRECEDING DISCUSSION OF MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT A SUBSTITUTE FOR CAREFUL TAX PLANNING AND ADVICE. EACH PROSPECTIVE INVESTOR IS STRONGLY URGED TO CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF OUR ORDINARY SHARES, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS OR UNDER ANY APPLICABLE TAX TREATY.
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In connection with this offering, we will enter into an underwriting agreement with the underwriters named below, for which Cathay Securities, Inc. is acting as representative of the underwriters (the “Representative”) in this offering. The Representative may retain other brokers or dealers to act as sub-agents or selected dealers on their behalf in connection with this offering. The underwriters have agreed to purchase from us, on a firm commitment basis, the number of ordinary shares set forth opposite its name below, at the offering price less the underwriting discounts set forth on the cover page of this prospectus:
|
Name of Underwriters |
Number of |
|
|
Cathay Securities, Inc. |
[ ] |
|
|
Total |
[ ] |
The underwriters are committed to purchase all the ordinary shares offered by this prospectus if they purchase any ordinary shares. The underwriters are not obligated to purchase the ordinary shares covered by the underwriter’s over-allotment option described below. The underwriters are offering the ordinary shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, and other conditions contained in the underwriting agreement, such as the receipt by the underwriters of officer’s certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
Pricing of this Offering
Prior to this offering, there has been no public market for our ordinary shares. The initial public offering price for our ordinary shares was determined through negotiations between us and the Representative. Among the factors considered in these negotiations were prevailing market conditions, our financial information, market valuations of other companies that we and the Representative believe to be comparable to us, estimate of our business potential and earning prospects, the present state of our development and other factors deemed relevant. The initial public offering price of our ordinary shares in this offering does not necessarily bear any direct relationship to the assets, operations, book value or other established criteria of value of our company.
Over-Allotment Option
[We have granted to the underwriters an over-allotment option, exercisable for not later than 45 days after the date of closing of this offering, to purchase up to 15% of the total number of ordinary shares offered by us at the initial public offering price listed on the cover page of this prospectus, less underwriting discounts. The underwriters may exercise this option solely for the purpose of cover over-allotments, if any, made in connection with the offering contemplated by this prospectus. To the extent this option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase, and we will be obligated to sell the additional shares in about the same percentage of the additional ordinary shares as the number listed next to such underwriter’s name in the preceding table bears to the total number of ordinary shares listed next to the name of each underwriter in the preceding table.]
Underwriting Discounts, Commissions, and Expenses
The underwriters will offer the ordinary shares to the public at the initial public offering price set forth on the cover of this prospectus. [The underwriting discounts for the shares and the over-allotment shares are equal to 7.0% of the initial public offering price.]
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The following table shows the price per share and total initial public offering price, underwriting discounts, and proceeds before expenses to us. The total amounts are shown assuming both no exercise and full exercise of the over-allotment option.
|
Total |
|||||||||
|
Per Share |
No Exercise of |
Full Exercise of |
|||||||
|
Initial public offering price |
$ |
$ |
$ |
||||||
|
Underwriting discounts(1) |
$ |
$ |
$ |
||||||
|
Proceeds to us, before expenses(2) |
$ |
$ |
$ |
||||||
____________
(1) Represents underwriting discounts equal to 7% (or $[ ] per ordinary share). This does not include a non-accountable expense allowance equal to 1% of the total gross proceeds received by us from the sale of the ordinary shares offered by the issuer in this offering payable to the underwriters.
(2) Excludes fees and expenses payable to the underwriters.
[We have agreed to pay to the Representative by deduction from the net proceeds of the offering contemplated herein, a non-accountable expense allowance equal to 1.0% of the gross proceeds received by us from the sale of the shares, including any shares issued pursuant to the exercise of the Representative’s over-allotment option.]
[We have also agreed to reimburse the Representative, promptly when invoiced, up to a maximum of $250,000, which include $130,000 advanced expense, for all of its reasonable, out-of-pocket accountable expenses (including, but not limited to, due diligence expenses, reasonable fees and expenses of its legal counsel and background checks on the Company’s principals) in connection with the performance of its services in connection with this offering, regardless of whether this offering closes. Upon the termination of the engagement of the Representative or the closing of this offering, whichever is earlier, we agree to pay promptly in cash any unreimbursed expenses that have been accrued as of such date. Whether or not this offering is successfully completed, the Company shall be responsible for reasonable, necessary and accountable out-of-pocket expenses relating to this offering including but not limited to: (a) the costs of preparing, printing and filing the registration statement with the SEC, including amendments and supplements, and post-effective amendments, as well as filing with the Financial Industry Regulatory Authority (“FINRA”), and payment of all necessary fees in connection with and the printing of a sufficient quantity of preliminary and final prospectuses as the Representative and underwriters may reasonably request; (b) the costs of preparing, printing and delivering exhibits thereto in such quantities as the Representative and underwriters may reasonably request; (c) all fees, expenses and disbursements related to the registration, qualification or exemption of securities offered under the securities laws of foreign jurisdictions designated by the Representative and underwriters; (d) the fees of counsel(s) and accountants for the Company, including fees associated with any blue sky filing where applicable; (e) fees associated with the Company’s transfer agent; (f) fees, if necessary, associated with translation services; (g) expenses related to road shows; and (h) the costs of any pre-approved due diligence work in legal, finance and business.]
[We have agreed to pay an advanced expense to the Representative in connection with the offering in the amount of $130,000 payable as follows: (i) sixty thousand dollars ($60,000) has already been paid to the Representative, (ii) thirty thousand dollars ($30,000) was due upon receiving a FINRA No-Objection Letter, and (iii) the remaining forty thousand dollars ($40,000) is due upon first public filing to the SEC; any advance will be returned to us to the extent the Representative’s out-of-pocket accountable expenses are not actually incurred in accordance with FINRA Rule 5110(g)(4)(A).]
We estimate that the total expenses of the offering payable by us, excluding the underwriting discounts and non-accountable expense allowance, will be approximately US$[ ].
The underwriters intend to offer our ordinary shares to their retail customers only in states in which we are permitted to offer our ordinary shares. We have relied on an exemption to the blue-sky registration requirements afforded to “covered securities.” Securities listed on a National Securities Exchange are “covered securities.” If we were unable to meet National Securities Exchange listing standards, then we would be unable to rely on the covered securities exemption to blue sky registration requirements and we would need to register the offering in each state in which we planned to sell shares. Consequently, we will not complete this offering unless we meet a National Securities Exchange’s listing requirements and our application to list on the exchange is approved.
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The foregoing does not purport to be a complete statement of the terms and conditions of the underwriting agreement. A form of the underwriting agreement is included as an exhibit to the registration statement of which this prospectus forms a part.
Lock-Up Agreements
[The Company’s directors, officers and holders of more than five percent (5%) of the Company’s outstanding ordinary shares, as of the effective date of the registration statement of which this prospectus forms a part, have entered into customary “lock-up” agreements in favor of the Representative for a period of six (6) months from the date of closing of this offering.]
Right of First Refusal
Subject to our right to terminate the underwriting agreement for cause pursuant to FINRA rule 5110(g)(5)(B), we have agreed to grant to the Representative, provided that this offering is completed, for a period of 12 months from the closing of the offering, the right, on an exclusive basis, to provide investment banking services in the matters below for which investment banking services are sought (such right, the “Right of First Refusal”), which right is exercisable in the Representative’s sole discretion. For these purposes, investment banking services shall include, (a) acting as lead manager for any underwritten public offering; and (b) acting as placement agent or initial purchaser in connection with any private offering of securities of the Company. The Right of First Refusal granted hereunder may be terminated by the Company for “cause,” which shall mean a material breach by the Underwriter of the terms of its engagement letter with the Company or a material failure by the underwriters to provide the services as contemplated by such engagement letter.
No Sales of Similar Securities
Each of the Company and any successors of the Company has agreed not to (A) offer, sell, or otherwise transfer or dispose of, directly or indirectly, any shares of our capital stock or any securities convertible into or exercisable or exchangeable for shares of our capital stock; or (B) file or caused to be filed any registration statement with the SEC relating to the offering of any shares of our capital stock or any securities convertible into or exercisable or exchangeable for shares of our capital stock, for a period of six (6) months from the closing of this offering.
Foreign Regulatory Restrictions on Purchase of our Ordinary Shares
We have not taken any action to permit a public offering of our ordinary shares outside the United States or to permit the possession or distribution of this prospectus outside the United States. People outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to this offering of our ordinary shares and the distribution of this prospectus outside the United States.
Indemnification
We have agreed to indemnify the underwriters against liabilities relating to the offering arising under the Securities Act and the Exchange Act and to contribute to payments that the underwriters may be required to make for these liabilities.
Nasdaq Listing
We plan to apply to list our ordinary shares on the Nasdaq Capital Market under the symbol “CCHH.” We make no representation that our ordinary shares will continue to trade on such market either now or at any time in the future; notwithstanding the foregoing, we will not close this offering unless such ordinary shares remain so listed at completion of this offering
Electronic Offer, Sale and Distribution
A prospectus in electronic format may be made available on websites or through other online services maintained by the underwriters or selling group members, if any, or by their affiliates, and the underwriters may distribute prospectus electronically. The underwriters may agree to allocate a number of ordinary shares to selling group members for sale to their online brokerage account holders. The ordinary shares to be sold pursuant to Internet
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distributions will be allocated on the same basis as other allocations. Other than the prospectus in electronic format, the information on, or that can be accessed through, these websites and any information contained in any other website maintained by these entities is not part of, and is not incorporated by reference into, this prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or the underwriters, and should not be relied upon by investors.
In connection with this offering, certain of the underwriters or securities dealers may distribute prospectuses by electronic means, such as e-mail.
Passive Market Making
Any underwriter who is a qualified market maker on Nasdaq may engage in passive market making transactions on Nasdaq, in accordance with Rule 103 of Regulation M under the Exchange Act, during a period before the commencement of offers or sales of the shares and extending through the completion of the distribution. Passive market makers must comply with applicable volume and price limitations and must be identified as a passive market maker. In general, a passive market maker must display its bid at a price not in excess of the highest independent bid for such security. If all independent bids are lowered below the passive market maker’s bid, however, the passive market maker’s bid must then be lowered when certain purchase limits are exceeded.
Potential Conflicts of Interest
The underwriters and their affiliates may, from time to time, engage in transactions with and perform services for us in the ordinary course of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own accounts and for the accounts of their customers and such investment and securities activities may involve securities and/or instruments of our Company. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to customers that they acquire, long and/or short positions in such securities and instruments.
Price Stabilization, Short Positions and Penalty Bids
Until the distribution of the ordinary shares offered by this prospectus is completed, rules of the SEC may limit the ability of the underwriters to bid for and to purchase our ordinary shares. As an exception to these rules, the underwriters may engage in transactions effected in accordance with Regulation M under the Exchange Act that are intended to stabilize, maintain or otherwise affect the price of our ordinary shares. The underwriters may engage in over-allotment sales, syndicate covering transactions, stabilizing transactions and penalty bids in accordance with Regulation M.
• Stabilizing transactions consist of bids or purchases made by the managing underwriter for the purpose of preventing or slowing a decline in the market price of our securities while this offering is in progress.
• Short sales and over-allotments occur when the managing underwriter, on behalf of the underwriting syndicate, sells more of our shares than they purchase from us in this offering. In order to cover the resulting short position, the managing underwriter may exercise the over-allotment option described above and/or may engage in syndicate covering transactions. There is no contractual limit on the size of any syndicate covering transaction. The underwriters will deliver a prospectus in connection with any such short sales. Purchasers of shares sold short by the underwriters are entitled to the same remedies under the federal securities laws as any other purchaser of units covered by the registration statement.
• Syndicate covering transactions are bids for or purchases of our securities on the open market by the managing underwriter on behalf of the underwriters in order to reduce a short position incurred by the managing underwriter on behalf of the underwriters.
• A penalty bid is an arrangement permitting the managing underwriter to reclaim the selling concession that would otherwise accrue to an underwriter if the ordinary shares originally sold by the underwriter were later repurchased by the managing underwriter and therefore were not effectively sold to the public by such underwriter.
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Stabilization, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our ordinary shares or preventing or delaying a decline in the market price of our ordinary shares. As a result, the price of our ordinary shares may be higher than the price that might otherwise exist in the open market.
Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the prices of our ordinary shares. These transactions may occur on Nasdaq or on any trading market. If any of these transactions are commenced, they may be discontinued without notice at any time.
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EXPENSES RELATED TO THIS OFFERING
Set forth below is an itemization of the total expenses, excluding underwriting discounts and commissions and non-accountable expense allowance, that we expect to incur in connection with this offering. With the exception of the SEC registration fee, the Nasdaq Stock Market listing fee, the Financial Industry Regulatory Authority, or FINRA, filing fee, all amounts are estimates.
|
SEC Registration Fee |
US$ |
||
|
FINRA Filing Fee |
|
||
|
Nasdaq Stock Market Listing Fee |
|
||
|
Printing and Engraving Expenses |
|
||
|
Legal Fees and Expenses |
|
||
|
Accounting Fees and Expenses |
|
||
|
Investor Relation Expense |
|
||
|
Accountable Underwriter’s Expenses |
|
||
|
Miscellaneous |
|
|
|
|
Total |
US$ |
|
110
Hogan Lovells is representing us with respect to certain legal matters as to the United States federal and New York State law. The validity of the ordinary shares offered in this offering and certain other legal matters as to Cayman Islands law will be passed upon for us by Maples and Calder (Hong Kong) LLP. Teh & Lee will pass upon certain legal matters as to Malaysian law for us. Lucosky Brookman LLP is representing the underwriters in connection with this offering with respect to certain legal matters as to the United States federal and New York State law. Hogan Lovells and Lucosky Brookman LLP may rely upon Maples and Calder (Hong Kong) LLP with respect to matters governed by Cayman Islands law and Teh & Lee with respect to matters governed by the Malaysian law.
The consolidated financial statements of CCH Holdings Ltd as of December 31, 2023 and 2024, and for each of the two years ended December 31, 2023 and 2024 included in this prospectus and registration statement have been audited by ST & Partners PLT, an independent registered public accounting firm, as set forth in its report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
The offices of ST & Partners PLT are located at 24A, Jalan SS 21/35, Damansara Utama, 47400 Petaling Jaya, Selangor Darul Ehsan, Malaysia.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed a registration statement on Form F-1, including relevant exhibits, with the SEC under the Securities Act with respect to the ordinary shares to be sold in this offering. This prospectus, which constitutes a part of the registration statement on Form F-1, does not contain all of the information contained in the registration statement. You should read our registration statements and their exhibits and schedules for further information with respect to us and our ordinary shares.
We are subject to periodic reporting and other information requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we are required to file reports, including annual reports on Form 20-F, and other information with the SEC. All information filed with the SEC can be obtained over the internet at the SEC’s website at www.sec.gov or inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of documents, upon payment of a duplicating fee, by writing to the SEC.
As a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.
111
CCH HOLDINGS LTD
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of
CCH Holdings Ltd
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of CCH Holdings Ltd and its subsidiaries (the “Company”) as of December 31, 2023 and 2024, the related consolidated statements of operations and comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years ended December 31, 2023 and 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2024, and the results of its operations and its cash flows for the years ended December 31, 2023 and 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ ST & Partners PLT
ST & Partners PLT
We have served as the Company’s auditor since 2025.
Selangor Darul Ehsan, Malaysia
June 26, 2025
F-2
CONSOLIDATED BALANCE SHEETS
(In U.S. Dollar, except for share data, or otherwise noted)
|
As of December 31, |
||||||||
|
2023 |
2024 |
|||||||
|
ASSETS |
|
|
|
|
||||
|
Current assets: |
|
|
|
|
||||
|
Cash and cash equivalents |
$ |
1,094,705 |
|
$ |
545,472 |
|
||
|
Accounts receivable, net |
|
44,832 |
|
|
582,640 |
|
||
|
Inventories |
|
331,312 |
|
|
311,425 |
|
||
|
Amount due from related parties, current |
|
1,798,928 |
|
|
2,697,519 |
|
||
|
Prepaid expenses and other current assets |
|
880,304 |
|
|
1,259,867 |
|
||
|
Total current assets |
|
4,150,081 |
|
|
5,396,923 |
|
||
|
|
|
|
|
|||||
|
Non-current assets: |
|
|
|
|
||||
|
Property and equipment, net |
|
3,830,973 |
|
|
3,665,754 |
|
||
|
Operating lease right-of-use assets, net |
|
1,495,367 |
|
|
746,200 |
|
||
|
Finance lease right-of-use assets, net |
|
207,120 |
|
|
185,718 |
|
||
|
Intangible assets, net |
|
191,459 |
|
|
198,794 |
|
||
|
Long-term investments |
|
172,576 |
|
|
186,322 |
|
||
|
Amounts due from related parties, non-current |
|
128,205 |
|
|
727,891 |
|
||
|
Other non-current assets |
|
172,108 |
|
|
57,275 |
|
||
|
Total non-current assets |
|
6,197,808 |
|
|
5,767,954 |
|
||
|
TOTAL ASSETS |
$ |
10,347,889 |
|
$ |
11,164,877 |
|
||
|
|
|
|
|
|||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
||||
|
Current liabilities |
|
|
|
|
||||
|
Bank overdrafts |
|
523,083 |
|
|
458,275 |
|
||
|
Deferred revenue |
|
58,969 |
|
|
36,952 |
|
||
|
Accounts payable |
|
302,751 |
|
|
562,304 |
|
||
|
Notes payable |
|
90,440 |
|
|
48,075 |
|
||
|
Income tax payable |
|
47,866 |
|
|
18,133 |
|
||
|
Current portion of long-term bank loans |
|
64,552 |
|
|
72,579 |
|
||
|
Amounts due to related parties, current |
|
349,793 |
|
|
177,075 |
|
||
|
Operating lease liabilities, current |
|
829,420 |
|
|
656,536 |
|
||
|
Finance lease liabilities, current |
|
33,280 |
|
|
35,265 |
|
||
|
Accrued expenses and other current liabilities |
|
1,070,540 |
|
|
713,130 |
|
||
|
Total current liabilities |
|
3,370,694 |
|
|
2,778,324 |
|
||
|
|
|
|
|
|||||
|
Non-current liabilities |
|
|
|
|
||||
|
Long-term bank loans |
|
1,833,795 |
|
|
1,812,131 |
|
||
|
Operating lease liabilities, non-current |
|
820,641 |
|
|
186,286 |
|
||
|
Finance lease liabilities, non-current |
|
124,108 |
|
|
92,197 |
|
||
|
Deferred tax liabilities |
|
73,759 |
|
|
90,279 |
|
||
|
Total non-current liabilities |
|
2,852,303 |
|
|
2,180,893 |
|
||
|
TOTAL LIABILITIES |
|
6,222,997 |
|
|
4,959,217 |
|
||
|
|
|
|
|
|||||
|
Equity |
|
|
|
|
||||
|
Ordinary shares (par value of $0.00001 per share; 5,000,000,000 shares authorized, 30,000,000 issued and outstanding, as of December 31, 2023 and 2024, respectively)* |
|
300 |
|
|
300 |
|
||
|
Additional paid-in capital |
|
3,723,121 |
|
|
4,669,382 |
|
||
|
Subscription receivables |
|
(300 |
) |
|
(300 |
) |
||
|
Retained earnings |
|
734,743 |
|
|
1,648,144 |
|
||
|
Accumulated other comprehensive loss |
|
(332,972 |
) |
|
(111,866 |
) |
||
|
Total shareholders’ equity |
|
4,124,892 |
|
|
6,205,660 |
|
||
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
10,347,889 |
|
$ |
11,164,877 |
|
||
____________
* The share and per share information are presented on a retrospective basis to reflect the Reorganization completed on June 5, 2025. (Note 16)
The accompanying notes are an integral part of these consolidated financial statements.
F-3
CCH HOLDINGS LTD
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In U.S. Dollar, except for share data, or otherwise noted)
|
For the Years Ended |
||||||||
|
2023 |
2024 |
|||||||
|
Revenues |
$ |
9,775,038 |
|
$ |
8,915,344 |
|
||
|
– Revenues from third parties |
|
8,584,748 |
|
|
7,724,976 |
|
||
|
– Revenues from related parties |
|
1,190,290 |
|
|
1,190,368 |
|
||
|
Cost of revenues |
|
(7,565,559 |
) |
|
(6,509,083 |
) |
||
|
Gross profit |
|
2,209,479 |
|
|
2,406,261 |
|
||
|
|
|
|
|
|||||
|
Operating expenses |
|
|
|
|
||||
|
Selling and marketing expenses |
|
(493,101 |
) |
|
(263,871 |
) |
||
|
General and administrative expenses |
|
(979,973 |
) |
|
(816,122 |
) |
||
|
Gain from equity method investments |
|
28,747 |
|
|
8,873 |
|
||
|
Total operating expenses |
|
(1,444,327 |
) |
|
(1,071,120 |
) |
||
|
Income from operations |
|
765,152 |
|
|
1,335,141 |
|
||
|
|
|
|
|
|||||
|
Other income/(expenses) |
|
|
|
|
||||
|
Other income, net |
|
37,572 |
|
|
77,735 |
|
||
|
Financial expenses, net |
|
(118,256 |
) |
|
(131,683 |
) |
||
|
Total other expenses, net |
|
(80,684 |
) |
|
(53,948 |
) |
||
|
|
|
|
|
|||||
|
Income before income tax expense |
|
684,468 |
|
|
1,281,193 |
|
||
|
Income tax expense |
|
(315,854 |
) |
|
(367,792 |
) |
||
|
Net income |
$ |
368,614 |
|
$ |
913,401 |
|
||
|
|
|
|
|
|||||
|
Other comprehensive income/(loss): |
|
|
|
|
||||
|
Foreign currency translation adjustment |
|
43,828 |
|
|
(221,106 |
) |
||
|
Total comprehensive income |
|
412,442 |
|
|
692,295 |
|
||
|
|
|
|
|
|||||
|
Earnings per ordinary share attributable to ordinary shareholders of CCH Holdings Ltd |
|
|
|
|
||||
|
Basic and diluted |
$ |
0.01 |
|
$ |
0.03 |
|
||
|
|
|
|
|
|||||
|
Weighted average number of shares outstanding used in calculating net income per ordinary share |
|
|
|
|
||||
|
Basic and diluted* |
|
30,000,000 |
|
|
30,000,000 |
|
||
____________
* The share and per share information are presented on a retrospective basis to reflect the Reorganization completed on June 5, 2025. (Note 16)
The accompanying notes are an integral part of these consolidated financial statements.
F-4
CCH HOLDINGS LTD
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In U.S. Dollar, except for share data, or otherwise noted)
|
|
Additional |
Subscription |
Retained |
Accumulated |
Total |
||||||||||||||||||
|
Share* |
Amount |
||||||||||||||||||||||
|
Balance as of December 31, 2022 |
30,000,000 |
$ |
300 |
$ |
3,605,792 |
$ |
(300 |
) |
$ |
366,129 |
$ |
(289,144 |
) |
$ |
3,682,777 |
|
|||||||
|
Net income |
— |
|
— |
|
— |
|
— |
|
|
368,614 |
|
— |
|
|
368,614 |
|
|||||||
|
Contribution from shareholders |
— |
|
— |
|
117,329 |
|
— |
|
|
— |
|
— |
|
|
117,329 |
|
|||||||
|
Foreign currency translation adjustment |
— |
|
— |
|
— |
|
— |
|
|
— |
|
(43,828 |
) |
|
(43,828 |
) |
|||||||
|
Balance as of December 31, 2023 |
30,000,000 |
$ |
300 |
$ |
3,723,121 |
$ |
(300 |
) |
$ |
734,743 |
$ |
(332,972 |
) |
$ |
4,124,892 |
|
|||||||
|
Net income |
— |
|
— |
|
— |
|
— |
|
|
913,401 |
|
— |
|
|
913,401 |
|
|||||||
|
Contribution from shareholders |
— |
|
— |
|
946,261 |
|
— |
|
|
— |
|
— |
|
|
946,261 |
|
|||||||
|
Foreign currency translation adjustment |
— |
|
— |
|
— |
|
— |
|
|
— |
|
221,106 |
|
|
221,106 |
|
|||||||
|
Balance as of December 31, 2024 |
30,000,000 |
$ |
300 |
$ |
4,669,382 |
$ |
(300 |
) |
$ |
1,648,144 |
$ |
(111,866 |
) |
$ |
6,205,660 |
|
|||||||
____________
* The share and per share information are presented on a retrospective basis to reflect the Reorganization completed on June 5, 2025. (Note 16)
The accompanying notes are an integral part of these consolidated financial statements.
F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollar, except for share data, or otherwise noted)
|
For the Years Ended |
||||||||
|
2023 |
2024 |
|||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
||||
|
Net income |
$ |
368,614 |
|
$ |
913,401 |
|
||
|
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
||||
|
Provision for expected credit losses |
|
58,188 |
|
|
83,669 |
|
||
|
Depreciation and amortization expenses |
|
325,518 |
|
|
269,346 |
|
||
|
Amortization of operating right-of-use assets |
|
914,198 |
|
|
878,872 |
|
||
|
Amortization of finance right-of-use assets |
|
24,312 |
|
|
26,379 |
|
||
|
Interest accretion for finance leases |
|
4,854 |
|
|
4,366 |
|
||
|
Earnings in equity method investment |
|
(28,747 |
) |
|
(8,873 |
) |
||
|
Loss/(Gain) from disposal of property and other equipment |
|
194 |
|
|
(66,042 |
) |
||
|
Deferred taxes |
|
43,964 |
|
|
14,193 |
) |
||
|
Changes in operating assets and liabilities: |
|
|
|
|
||||
|
Accounts receivable |
|
(69,964 |
) |
|
(607,925 |
) |
||
|
Inventories |
|
(68,586 |
) |
|
28,179 |
|
||
|
Prepaid expenses and other current assets |
|
(190,802 |
) |
|
(101,396 |
) |
||
|
Amount due from related parties |
|
(241,177 |
) |
|
(520,457 |
) |
||
|
Other non-current assets |
|
24,284 |
|
|
116,737 |
|
||
|
Accounts payable |
|
(5,849 |
) |
|
245,591 |
|
||
|
Accrued expenses and other current liabilities |
|
(279,056 |
) |
|
(358,933 |
) |
||
|
Income tax payable |
|
(24,599 |
) |
|
(30,314 |
) |
||
|
Notes payable |
|
756 |
|
|
(43,779 |
) |
||
|
Amount due to related parties |
|
64,506 |
|
|
(177,982 |
) |
||
|
Advances from customers |
|
59,336 |
|
|
(23,068 |
) |
||
|
Operating lease liabilities |
|
(952,516 |
) |
|
(939,694 |
) |
||
|
Net cash provided by/(used in) operating activities |
$ |
27,428 |
|
$ |
(297,730 |
) |
||
|
|
|
|
|
|||||
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
||||
|
Interest-free loans to related parties |
|
(389,120 |
) |
|
(1,379,441 |
) |
||
|
Collection of interest-free loans to related parties |
|
470,127 |
|
|
623,751 |
|
||
|
Interest-free loans to third parties |
|
(225,772 |
) |
|
(246,355 |
) |
||
|
Collection of interest-free loans to third parties |
|
4,222 |
|
|
1,207 |
|
||
|
Purchases of property, equipment and software |
|
(761,306 |
) |
|
(80,669 |
) |
||
|
Purchase of long-term investment |
|
(87,851 |
) |
|
— |
|
||
|
Net cash used in investing activities |
$ |
(989,700 |
) |
$ |
(1,081,507 |
) |
||
|
|
|
|
|
|||||
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
||||
|
Proceeds from bank overdrafts |
|
1,094,464 |
|
|
919,034 |
|
||
|
Repayments of bank overdrafts |
|
(748,563 |
) |
|
(996,165 |
) |
||
|
Proceeds from long-term bank loans |
|
371,161 |
|
|
— |
|
||
|
Repayments of long-term bank loans |
|
(67,531 |
) |
|
(63,451 |
) |
||
|
Capital injection from shareholders |
|
117,329 |
|
|
946,261 |
|
||
|
Install payments of finance leases |
|
(41,242 |
) |
|
(37,760 |
) |
||
|
Loan from third parties |
|
63,629 |
|
|
— |
|
||
|
Net cash provided by financing activities |
$ |
789,247 |
|
$ |
767,919 |
|
||
|
|
|
|
|
|||||
|
Effect of exchange rate changes |
$ |
63,498 |
|
$ |
62,085 |
|
||
|
Net change in cash |
|
(109,527 |
) |
|
(549,233 |
) |
||
|
|
|
|
|
|||||
|
Cash beginning of the year |
|
1,204,232 |
|
|
1,094,705 |
|
||
|
Cash end of the year |
$ |
1,094,705 |
|
$ |
545,472 |
|
||
|
|
|
|
|
|||||
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
|
|
|
|
||||
|
Income tax paid |
$ |
321,899 |
|
$ |
450,571 |
|
||
|
Interest expense paid |
$ |
111,134 |
|
$ |
127,063 |
|
||
|
|
|
|
|
|||||
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES |
|
|
|
|
||||
|
Additions of operating lease right-of-use assets in exchange of operating lease liabilities |
$ |
174,110 |
|
$ |
107,446 |
|
||
|
Additions of finance lease right-of-use assets in exchange of finance lease liabilities |
$ |
64,943 |
|
$ |
— |
|
||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
(a) Principal activities
CCH Holdings Ltd (the “Company” or “CCH”) was incorporated under the laws of the Cayman Islands on December 2, 2024 as an exempted company with limited liability. The Company and its operating subsidiaries (collectively referred to as the “Group”) operate a hotpot restaurant chain in Malaysia, specializing in chicken hotpot and fish head hotpot, mainly under two brand, namely “Chicken Claypot House” and “Zi Wei Yuan”, owned by the wholly owned subsidiaries of the Company, Signature Tasty Claypot House Holding Sdn. Bhd. (“STCH Holding”) and Zi Wei Yuan (Raja Uda) Sdn. Bhd. (“ZWY Raja Uda”), respectively. The Company conducts its operations through its wholly owned subsidiaries in Malaysia and is primarily engaged as a restaurant operator, licensor and loyalty owner, and general trader. Currently, the Group has developed a restaurant chain including 15 company-owned restaurant outlets, 13 franchised restaurant outlets in Malaysia, and 4 franchised restaurant outlets outside Malaysia.
(b) Reorganization
In preparation for listing in a stock market of the United States, the Company undertook a reorganization (“Reorganization”) through the following steps:
• The Company, incorporated on December 2, 2024 under the laws of the Cayman Islands, is an investment holding company of the Group.
• As of May 16, 2025, the Company issued 30,000,000 ordinary shares in total, with a par value of US$0.00001 each, to seven shareholders of STCH Holding.
• On June 5, 2025, 100% equity interest of STCH Holding were transferred from the seven shareholders to the Company, and the Company ultimately obtained control in STCH Holding and its subsidiaries (referred to as “Operating Subsidiaries”).
The equity interest of the Company was ultimately held as to 54% by Mr. Goh Kok Foong, and the remaining 46% by other six shareholders. The shareholders and their respective equity interests in the Operating Subsidiaries remain similar immediately before and after the reorganization, with Mr. Goh Kok Foong being the controlling shareholder, who is also the founder and Chief Executive Officer (“CEO”) of the Group.
The Company, together with its wholly-owned subsidiaries, resulting from the reorganization have always been under common control of the same controlling shareholder (i.e. Mr. Goh Kok Foong) before and after the reorganization, which was accounted for as a recapitalization. The consolidation of the Group has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements. Results of operations for the periods presented comprise those of the previously separate entities combined from the beginning of the period to the end of the period, eliminating the effects of intercompany transactions. All share data and per share information are presented on a retrospective basis pursuant to ASC 260.
F-7
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
1. ORGANIZATION AND PRINCIPAL ACTIVITIES (cont.)
The details of the Company’s primary subsidiaries are as follows:
|
Name |
Controlled |
Date of |
Percentage |
Principal Activities |
||||
|
Signature Tasty Claypot House Holding Sdn. Bhd. (“STCH Holding”) |
The Company |
May 8, 2019 |
100% |
Restaurant operation with a central kitchen, licensor and loyalty owner, and general trader |
||||
|
Signature Tasty Claypot House (GH) Sdn. Bhd. (“STCH GH”) |
STCH Holding |
October 1, 2019 |
100% |
Restaurant operation |
||||
|
Zi Wei Yuan (Raja Uda) Sdn. Bhd. (“ZWY Raja Uda”) |
STCH Holding |
April 11, 2022 |
100% |
Restaurant operation |
||||
|
CHH KL Group Sdn. Bhd. (“CHH KL”) |
STCH Holding |
March 9, 2021 |
100% |
Restaurant operation |
||||
|
CCH Tropika Sdn. Bhd. (“CCH Tropika”) |
STCH Holding |
October 21, 2022 |
100% |
Restaurant operation |
||||
|
GTL F&B Sdn. Bhd. (“GTL F&B”) |
STCH Holding |
November 11, 2021 |
100% |
Restaurant operation |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation
The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”).
(b) Basis of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.
(c) Use of estimates
The preparation of the consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenues and expenses during the reported periods in the consolidated financial statements and accompanying notes. Significant accounting estimates include, but not limited to provision of allowance for expected credit losses, estimates for inventory write-downs and valuation allowance for deferred tax assets. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements.
(d) Foreign currency
The Group’s reporting currency is United States dollars (“US$” or “$”). The Group’s subsidiaries incorporated in Malaysia generally use their local currencies as their functional currencies, i.e. Malaysian Ringgit (“MYR”). The determination of the respective functional currency is based on the criteria of Accounting Standard Codification (“ASC”) Topic 830, Foreign Currency Matters.
In preparing the financial statements of each individual group entity, transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates quoted by authoritative banks prevailing at the dates of the transactions. At the end of the reporting period, monetary items denominated in
F-8
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange gains and losses resulting from the settlement of monetary items, and the retranslation of monetary items, are recorded as foreign currency exchange gain or loss included in “Financial expenses, net” in the consolidated financial statements of operations and comprehensive income.
The Group entities with functional currencies other than the US$, translate their operating results and financial position into US$, the Group’s reporting currency. Assets and liabilities in foreign currencies are translated into US$ using the applicable exchange rates at the balance sheet date. Equity accounts other than earnings generated in current period are translated into US$ at the appropriate historical rates. Revenues, expenses, gains and losses are translated into US$ using the periodic average exchange rates. The resulting foreign currency translation adjustments are recorded in accumulated other comprehensive income as a component of shareholders’ equity. The rates are obtained from H.10 statistical release of the U.S. Federal Reserve Board.
|
December 31, 2023 |
December 31, 2024 |
|||||||
|
Year-end |
Average |
Year-end |
Average |
|||||
|
US$ against MYR |
4.5903 |
4.5577 |
4.4695 |
4.5747 |
||||
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and deposits which can be withdrawn by the Group on demand and are subject to an insignificant risk of changes in their fair value. As of December 31, 2023 and 2024, substantially all of the Group’s cash and cash equivalents were hold in reputable financial institutions located in Malaysia, which are unrestricted as to withdraw and use. The Group has not experienced any losses in its deposit balances and believes it is not exposed to any significant credit risks on its cash and cash equivalents.
(f) Expected credit losses
The Group’s accounts receivable, amounts due from related parties, deposits and other receivables in prepaid expenses and other current assets are within the scope of ASU No. 2016-13. The Group has identified the relevant risk characteristics of its customers and the related receivables and deposits in prepaid expenses and other current assets, which include size, types of the services or the products the Group provides, or a combination of these characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Group considers the historical credit loss experience, and current economic conditions in assessing the lifetime expected credit losses. Additionally, external data and macroeconomic factors are also considered. The Group also provides specific provisions for allowance when facts and circumstances indicate that the receivable is unlikely to be collected. The Group adjusts the allowance percentage periodically when there are significant differences between estimated credit losses and actual bad debts. If there is strong evidence indicating that these financial assets are likely to be unrecoverable, the Group also makes specific allowance in the period in which a loss is determined to be probable. The balance of these financial assets is written off after all collection efforts have been exhausted. For the years ended December 31, 2023 and 2024, the Group recognized expected credit loss of US$58,188 and US$83,669, respectively.
(g) Accounts receivable
Accounts receivable represents the amounts that the Group has an unconditional right to consideration. Accounts receivable that are ultimately deemed to be uncollectible, and for which collection efforts have been exhausted, are written off against the provision for credit losses. As of December 31, 2023 and 2024, the allowance for credit losses for the Group’s accounts receivable was US$52,430 and US$138,327, respectively.
F-9
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(h) Inventories
Inventories, consisting of foods, consumables and beverage, are stated at the lower of cost or net realizable value, with net realized value represented by estimated selling prices in the ordinary course of business, less reasonably predictable costs of disposal and transportation. Cost of inventories are computed using first-in, first-out method. Inventories are written down to estimated net realizable value, which could be impacted by certain factors including historical usage, expected demand, anticipated sales price, product shelf life, product obsolescence, and other factors. The Group periodically reviews its inventories for excess or slow-moving items and makes provisions as necessary to properly reflect inventory value. No inventory write-downs of were recorded for years ended December 31, 2023 and 2024, respectively.
(i) Property and equipment, net
Property and equipment are stated at cost less accumulated depreciation and impairment, if any, and depreciated on a straight-line basis over the estimated useful lives of the assets. Freehold land is not depreciated but is subject to impairment test if there is an indication of impairment. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its intended use. Residual value rate is determined to be 0% based on the economic value of the property and equipment at the end of the estimated useful lives as a percentage of the original cost. Estimated useful lives are as follows:
|
Category |
Estimated useful lives |
|
|
Freehold building |
50 years |
|
|
Leasehold improvements |
Shorter of the lease terms or the estimated useful lives of the assets |
|
|
Equipment |
10 years |
|
|
Furniture and fixtures |
10 years |
|
|
Computers |
3 years |
Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of operations and comprehensive income in operating expenses.
(j) Intangible assets, net
Intangible assets consist of software and brand name.
Intangible assets with finite lives
Intangible assets with finite lives are software, which are carried at acquisition cost less accumulated amortization and impairment, if any. Finite-lived intangible assets are tested for impairment when impairment indicators arise. Amortization of intangible assets with finite lives are computed using the straight-line method over the estimated useful lives as below:
|
Category |
Estimated useful lives |
|
|
Software |
3 years |
The estimated useful lives of intangible assets with finite lives are reassessed if circumstances occur that indicate the original estimated useful lives may have changed.
F-10
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Intangible assets with indefinite useful lives
Indefinite-lived intangible asset is intellectual property rights related to the brand name of “Zi Wei Yuan” (“ZWY”), including trademarks, trade names, copyrights, know-how expertise, and all other proprietary rights, which were acquired separately in an asset purchase transaction. No useful life was determined in the contract terms when the Group acquired the brand name. The Group expects that such intangible asset is unlikely to be terminated, is not subject to any renewal restrictions, and will continue to contribute revenue in the future. Therefore, the Group considers the useful life of such intangible assets to be indefinite. Such intangible asset is not amortized. The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
The Group evaluates indefinite-lived intangible asset annually as of each balance sheet date to determine whether events and circumstances continue to support indefinite useful lives. The value of indefinite-lived intangible asset is not amortized, but tested for impairment annually or whenever events or changes in circumstances indicate that it is more likely than not that the asset is impaired in accordance with ASC 350. The Group first performs a qualitative assessment to assess all relevant events and circumstances that could affect the significant inputs used to determine the fair value of the indefinite-lived intangible asset. If after performing the qualitative assessment, the Group determines that it is more likely than not that the indefinite-lived intangible asset is impaired, the Group calculates the fair value of the intangible asset and performs the quantitative impairment test by comparing the fair value of the asset with its carrying amount. If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, the Group recognizes an impairment loss in an amount equal to that excess. In consideration of the growing catering industry in Southeast Asia, the stable macroeconomic conditions in Malaysia, the Group’s improving profitability performance, and the Group’s future development plans, the Group determined that it is not likely that the brand name of “Zi Wei Yuan” was impaired as of December 31, 2023 and 2024, respectively. As such, no impairment of indefinite-lived intangible assets was recognized for the years ended December 31, 2023 and 2024.
(k) Impairment of long-lived assets
Long-lived assets deployed at company-owned restaurants include (i) property and equipment, (ii) operating lease right-of-use asset, net of the related operating lease liabilities, (iii) finance lease right-of-use asset, net of the related finance lease liabilities, and (iv) intangible assets with finite lives.
The Group reviews its long-lived assets for impairment periodically whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, an evaluation for impairment is performed at the lowest level of identifiable cash flows that are expected to generate from the use of the assets and their eventual disposition, which is at the individual restaurant level. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Group would recognize an impairment loss, which is the excess of carrying amount over the fair value of the assets, which is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. For the years ended December 31, 2023 and 2024, no impairment of long-lived assets was recognized.
(l) Long-term investments
Long-term investments are the Group’s equity investments in privately held companies accounted for equity method.
F-11
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Equity method investments
Equity investments are comprised of investments in privately held companies. The Group uses the equity method to account for an equity investment over which it has the ability to exert significant influence but does not otherwise have control. The Group records equity method investments at the cost of acquisition, plus the Group’s share in undistributed earnings and losses since acquisition.
The Group assesses its equity investment and loans to equity investees for impairment on a periodic basis by considering factors including, but not limited to, current economic and market conditions, the operating performance of the investees including current earnings trends, the technological feasibility of the investee’s products and technologies, the general market conditions in the investee’s industry or geographic area, factors related to the investee’s ability to remain in business, such as the investee’s liquidity, debt ratios, cash bur rate, and other company-specific information including recent financing rounds. If it has been determined that the equity investment is less than its related fair value and that is decline is other-than-temporary, the carrying value of the investment and loan to equity investee is adjusted downward to reflect these declines in value.
(m) Fair value measurement
Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.
Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs are:
• Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets;
• Level 2 — Include other inputs other than quoted prices in active market; and
• Level 3 — Unobservable inputs which are supported by little or no market activity that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
The fair value guidance describes three main approaches to measure the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.
When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group will measure fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates and currency rates.
Financial instruments of the Group primarily consist of cash and cash equivalents, accounts receivable, amounts due from related parties, interest-free loan to third parties and deposits included in prepaid expenses and other current assets, bank overdrafts, accounts payable, amounts due to related parties, notes payable, accrued expenses and other
F-12
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
payables, long-term bank loans, operating lease liabilities, and finance lease liabilities. As of December 31, 2023 and 2024, the carrying amounts of these financial instruments are measured at amortized cost, which is approximated to their fair values.
The Group’s non-financial assets, such as property and equipment, intangible assets and right-of-use assets, would be measured at fair value only if they were determined to be impaired.
(n) Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange of a consideration. To assess whether a contract is or contains a lease, the Group assesses whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all of the economic benefits from the use of the asset and whether it has the right to control the use of the asset.
The Group classifies a lease as a financing lease at lease commencement when the lease meets any one of the criteria:
a) The lease transfers ownership of the underlying asset to the lessee by the end of the lease term.
b) The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.
c) The lease term is for a major part of the remaining economic life of the underlying asset.
d) The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset.
e) The underlying asset is of such a specialized nature that it is expected to have no alternative use to the Group at the end of the lease term.
f) When none of the criteria are met, the Group classifies a lease as an operating lease.
Operating leases
Group as a lessee
When the Group acts as a lessee, leases with an initial term of 12 months or less are short-term lease and not recognized as operating lease right-of-use (“ROU”) assets and operating lease liabilities on the consolidated balance sheet. The Group recognizes lease expense for short-term leases on a straight-line basis over the lease term.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and less any lease incentive received.
Lease term includes rent holidays and options to extend or terminate the lease when the Group is reasonably certain that the Group will exercise that option. The lease assets for operating leases consist of the amount of the measurement of the lease liabilities and any prepaid lease payments. Operating lease expense is recognized on a straight-line basis over the lease term by adding interest expense determined using the effective interest method to the amortization of the operating lease right-of-use assets. Interest expense is determined using the effective interest method. The Group’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
F-13
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Group as a lessor
When the Group acts as a lessor, it classifies at lease inception (or when there is a lease modification) each of its leases as either an operating lease or a finance lease.
Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income is recognized over the non-cancellable lease term on a straight-line basis and is included in revenue in the consolidated statement of operations and comprehensive income due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis on the rental income. The Group does not have any sales-type or direct financing leases for the years ended December 31, 2023 and 2024.
Finance leases
The lease term includes rental holidays and options to extend or terminate the lease when the Group is reasonably certain that it will exercise that option, if any. The Group does not recognize finance lease assets or lease liabilities for renewal periods unless it is determined that it is reasonably certain of renewing the lease at inception or when a triggering event occurs. The lease assets for finance leases consist of the amount of the measurement of the lease liabilities and any prepaid lease payments. The finance lease expense, including interest and amortization expense of finance lease are presented separately. Interest expense is determined using the effective interest method. Amortization expense is recorded on a straight-line basis of the finance lease assets. The lease agreements do not contain any material residual value guarantees or material restrictive covenants.
(o) Revenue recognition
The Group’s revenues are derived principally from (i) restaurant operations, which further include revenues from company-owned restaurant operations, sales of food ingredients and condiments, and franchise licensing, and (ii) others.
The Group recognizes revenues pursuant to ASC 606, Revenues from Contracts with Customers (“ASC 606”). In accordance with ASC 606, revenues from contracts with customers are recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Group expects to be entitled to in exchange for those goods or services. Revenues are recorded net of any service tax and surcharges.
Restaurant operations
Company-owned restaurants operations
Revenues from restaurants operated by the Group are recognized when customers take possession of the food and tender payment, which is when the obligation performance is satisfied. Revenues from restaurant operations are presented net of service tax and discounts, if any.
The Group also offers food delivery service to customers who want to order takeaway food through third-party aggregators’ platforms or from certain of the Group’s restaurants. When control of the takeaway food has transferred, being at the point the customers receive the takeaway food delivered by the delivery staff of third-party aggregators or the Group’s own riders, the Group recognizes revenues, excluding delivery fees and platform charges if the food is delivered by the third-party aggregators.
Proceeds from the sales of prepaid cards are recognized as contract liabilities and recognized as revenues when consumed by the customer. These prepaid cards have no expiration and can be utilized in the future consumption in restaurants at customers’ discretion.
F-14
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
From time to time, the Group offers discounts to customers, especially customers with prepaid value-stored cards, in the form of issuing coupons that can be applied in future purchases. For the years ended December 31, 2023 and 2024, the amount of the coupons issued are not material.
Sales of food ingredients and condiments
The Group recognizes revenues from sales of food ingredients and condiments to local distributors or licensees who operate franchised restaurants, at the transaction price as stipulated in the purchase order or agreement, when the goods are delivered to the place designated by the buyer, and all significant risks and rewards of ownership of the goods are transferred to the buyer.
Franchise licensing
Pursuant to the standard licensing agreement that sets out the terms of the Group’s arrangement with the licensee, licensees in Malaysia are required to a fixed amount of administrative fee and settle applicable costs expenses, for pre-opening and ongoing support services and the authorization to operate a franchised restaurant using the trademarks, trade names, logos, and other proprietary marks associated with the brands of Chicken Claypot House and/or Zi Wei Yuan. Administrative fees are generally settled on a monthly basis. Applicable costs and expenses are charged as occurred. For licensees outside of Malaysia, they are required to pay a master license fee as in a fixed upfront payment for pre-opening and ongoing support services, the authorization of the access to the proprietary marks associated with the brand of Chicken Claypot House and/or Zi Wei Yuan, and the right to operate a fixed number of restaurants under the authorized brands. Additionally, for each restaurant such master licensee opens above the fixed number agreed or sub-franchises to other third-parties, a fixed outlet license fee shall also be paid. Master license fee is higher than outlet license fee, since master license is granted with the overarching right to operate the business within a specified territory, including the power to grant outlet license within the territory. Renewal license fee is also required for extension of the license term.
During the effective license term, licensees are also required to share a certain percentage of the applicable restaurant outlet’s gross revenues with the Group as royalties, which represents the majority of the consideration the Group receives under the licensing agreement. Royalty rates are generally between 5% to 7.5% for each restaurant outlet, and royalties are typically billed and settled on a monthly basis.
Only one performance obligation is identified in the licensing agreement with licensees, since the Group has determined that the pre-opening and ongoing support services are highly interrelated with the franchise right and are therefore not distinct from providing the continuous access to the franchise license.
Accordingly, revenues from administrative fees and license fees are recognized on a straight-line basis over the applicable term as stated in each agreement, which is consistent with the licensee’s right to access and benefit from the proprietary marks during the period. Continuing payments from royalties are recognized as revenue when the related sales occur.
From time to time, the Group provides additional support services to the licensees for which the Group charges direct reimbursements to cover the costs and expenses incurred, which are recognized as revenues from franchise licensing as occurred.
F-15
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Others
The Group also generates revenues from leasing out buildings.
The Group recognizes revenues from leasing out buildings in the gross amount of contractual rent over the lease term on a straight-line basis. Leasing revenue is recognized in accordance with ASC 842 (Note 2(n)).
The following table disaggregates the Group’s total revenues by revenue streams:
|
For the years ended |
||||||
|
2023 |
2024 |
|||||
|
By revenue type: |
|
|
||||
|
Restaurant operations |
$ |
9,521,142 |
$ |
8,548,395 |
||
|
Company-owned restaurant operations |
|
8,209,810 |
|
6,640,706 |
||
|
Sales of food ingredients and condiments |
|
1,006,081 |
|
1,239,966 |
||
|
Franchise licensing |
|
305,251 |
|
667,723 |
||
|
Others |
|
253,896 |
|
366,949 |
||
|
Total |
$ |
9,775,038 |
$ |
8,915,344 |
||
The following table summarizes the Group’s revenues recognized at a point in time or over time:
|
For the years ended |
||||||
|
2023 |
2024 |
|||||
|
Timing of revenue recognition |
|
|
||||
|
At a point in time |
$ |
9,215,891 |
$ |
7,880,672 |
||
|
Over time |
|
559,147 |
|
1,034,672 |
||
|
Total |
$ |
9,775,038 |
$ |
8,915,344 |
||
Contract balances
When either party to a revenue contract has performed, the Group presents the contract in the consolidated balance sheets as a contract asset or a contract liability, depending on the relationship between the Group’s performance and the customer’s payment. Accounts receivable represent revenue recognized for the amounts invoiced and/or prior to invoicing when the Group has satisfied its performance obligation and has unconditional right to the payment. Contract assets represent the Group’s right to consideration in exchange for goods or services that the Group has transferred to a customer. Other than accounts receivable, the Group had no other material contract assets recorded on its consolidated balance sheets as of December 31, 2023 and 2024, respectively.
The contract liabilities consist of advances from customers, which represent the cash received for goods and services in advance of revenue recognition and is recognized as revenue when the Group fulfills its performance obligation. The Group’s advances from customers amounted to US$58,969 and US$36,952 as of December 31, 2023 and 2024, respectively. During the years ended December 31, 2023 and 2024, the Group recognized US$55 and US$50,062 revenue that was included in advances from customers balance at January 1, 2023 and 2024, respectively.
(p) Cost of revenues
Cost of revenues consists of costs directly related to revenue generating activities, which primarily includes material costs, payroll costs including salaries and related social insurance costs for operations personnel, and other operating costs directly linked to the revenues including rental costs, utilities costs, depreciation of property and equipment, repair and maintenance costs, and other miscellaneous costs.
F-16
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(q) Selling and marketing expenses
Selling and marketing expenses primarily consist of (i) advertising and promotion expenses incurred to promote our brand image and awareness, (ii) payroll expenses including salaries and related social insurance expenses for marketing personnel, and (iii) others.
(r) General and administrative expenses
General and administrative expenses primarily consist of (i) payroll expenses including salaries and related social insurance expenses for management and administrative personnel, (ii) office and utilities expenses, (iii) rental expenses for office space, (iv) professional service expenses, (v) travelling expenses, (vi) depreciation and amortization expenses for property and equipment and software used for office purpose, (vii) insurance expenses, and (viii) other miscellaneous administrative expenses.
(s) Employee benefit
The Group recognizes a liability in exchange for employee benefits to be paid in the future and expense when the Group consumes the economic benefits arising from service provided by an employee in exchange for employee benefits.
Short-term employee benefits
Salaries are usually accrued and paid on a monthly basis and are recognized as an expense.
Bonus payments are recognized when, and only when, the Group has a present legal or constructive obligation to make such payments as a result of past events and reliable estimate of the obligation can be made.
Defined Contribution plan
A defined contribution plan is a post-employment benefit plan under which the Group makes fixed statutory contributions to approved provident funds and contributions are recognized as an employee benefit expense in the consolidated statement of operations and comprehensive income in the period to which they relate. When the contributions have been paid, the Group has no further payment obligations.
(t) Service taxes
Service tax is a consumption tax levied by Malaysian tax authorities and is charged on any taxable service income (including digital services) provided in Malaysia by a registered company in carrying on their business. The rate of service tax is 6% ad valorem for majority of products and services provided unless stated otherwise. A taxable entity is a company that is registered or liable to be registered for service taxes. A company is liable to be registered if the total value of its taxable services for a 12-month period exceeds or is expected to exceed the prescribed registration threshold of MYR1,500,000 (US$335,608). Service taxes amounted to US$411,742, and US$346,585 for the fiscal years ended December 31, 2023 and 2024, respectively and were recorded as a deduction against the Group’s gross revenue.
(u) Income taxes
The Group accounts for income taxes under ASC 740, “Income Taxes”. The charge for taxation is based on the results for the fiscal year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Provision for income taxes consists of taxes currently due plus deferred taxes. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
F-17
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures.
The Group did not accrue any liability, interest or penalties related to uncertain tax positions in its provision for income taxes line of its consolidated statements of operations and comprehensive income for the years ended December 31, 2023 and 2024, respectively. The Group does not expect that its assessment regarding unrecognized tax positions will materially change over the next 12 months. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred.
(v) Related party transaction
The Group accounts for related party transactions in accordance with ASC 850, “Related Party Disclosures”.
Parties, which can be an entity or individual, are considered to be related if they have the ability, directly or indirectly, to control the Group or exercise significant influence over the Group in making financial and operational decisions. Entities are also considered to be related if they are subject to common control or common significant influence.
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
(w) Comprehensive income
The Group applies ASC 220, Comprehensive Income, with respect to reporting and presentation of comprehensive income in a full set of financial statements. Comprehensive income is defined to include all changes in equity of the Group during a period arising from transactions and other events and circumstances except those resulting from investments by shareholders and distributions to shareholders. For the years presented, the Group’s comprehensive income includes net income and other comprehensive income or loss, which primarily consists of the foreign currency translation adjustment that has been excluded from the determination of net income.
(x) Earnings per share
Basic earnings per share is computed by dividing net income attributable to ordinary shareholders, taking into consideration the deemed dividends to preferred shareholders (if any), by the weighted average number of ordinary shares outstanding during the year using the two-class method. Under the two-class method, net income is allocated between ordinary shares and other participating securities based on their participating rights. Shares issuable for little to no consideration upon the satisfaction of certain conditions are considered as outstanding shares and included in the computation of basic earnings per share as of the date that all necessary conditions have been satisfied. Net income is not allocated to other participating securities if based on their contractual terms they are not obligated to share the income.
F-18
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Diluted earnings per share is calculated by dividing net income attributable to ordinary shareholders, as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the year. Ordinary equivalent shares are not included in the denominator of the diluted earnings per share calculation when inclusion of such share would be anti-dilutive.
(y) Segment reporting
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The Group’s CODM is the Chief Executive Officer.
CODM regularly reviews entity-wide operating results, especially consolidated revenues and pretax income, when making decisions about allocating resources and assessing performance of the segment, and hence, the Group has only one principal reportable segment. The single reportable segment is restaurant operations, among which revenues from company-owned restaurants are considered as the primary revenue source, while sales of food ingredients and condiments, franchise licensing are diversified revenue contributions dependent upon the Group’s brand influence.
The primary measure of segment revenue and profitability for the Group’s operating segment is considered to be consolidated revenue and pretax income. Significant segment expenses reviewed by the CODM on a regular basis included within net income include cost of sales, selling and marketing expenses, general and administrative expenses which are separately presented on the Group’s consolidated statements of operations and comprehensive income. Other segment items within pretax income include financial expenses, net, other income or loss, net. The CODM uses these primary measurements in the process of preparing annual budget and forecast for the segment, and conducting competitive analysis by benchmarking to the Group’s competitors at the same development stage. Budget-to-actual variances in all these two measurements are considered when making decisions and adjustments on the allocation of resources including personnel, property, and capital. The CODM also uses pretax income to assess return on marketing activities and monitor overall spending in employee compensation, general support and financing costs.
The Group does not distinguish between markets or segments for the purpose of internal reporting. As the Group’s long-lived assets are all located in Malaysia, and the Group’s revenues are all derived from Malaysia, no geographical segment information is presented. The CODM does not review any information regarding total assets on a reportable segment basis.
For operating results of segment provided to and reviewed by CODM, please refer to the consolidated statements of operations and comprehensive income.
(z) Commitments and contingencies
In the normal course of business, the Group is subject to commitments and contingencies, including operating lease commitments, legal proceedings and claims arising out of its business that relate to a wide range of matters, such as government investigations and tax matters. The Group recognizes liability for any such contingencies if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Group may consider many factors in making these assessments on liability for contingencies, including historical and the specific facts and circumstances of each matter.
(aa) Recently issued accounting pronouncements
The Group expects to be an emerging growth company (“EGC”) as defined by the Jumpstart Our Business Startups Act (“JOBS Act”). The JOBS Act provides that an EGC can take advantage of extended transition periods for complying with new or revised accounting standards. This allows an EGC to delay adoption of certain accounting standards until those standards would otherwise apply to private companies. The Group elected to take advantage of the extended transition periods. However, this election will not apply should the Group cease to be classified as an EGC.
F-19
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Recently issued accounting pronouncements adopted
In March 2023, the FASB issued ASU No. 2023-01, “Leases (Topic 842): Common Control Arrangements”, which amends certain provisions of ASC 842 that apply to arrangements between related parties under common control. In addition, the ASU amends the accounting for leasehold improvements in common-control arrangements for all entities. ASU 2023-01 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted in any annual or interim period as of the beginning of the related fiscal year. The Group has adopted ASU 2023-01 from January 1, 2024. The Group evaluates that the impact of adoption of this ASU is immaterial to consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, which is an update to Topic 280, Segment Reporting. The amendments in this update improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this update: (1) require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”), (2) Require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss, (3) Require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods, and (4) Clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements. In other words, in addition to the measure that is most consistent with the measurement principles under generally accepted accounting principles (GAAP), a public entity is not precluded from reporting additional measures of a segment’s profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources, (5) Require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources, and (6) Require that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this Update and all existing segment disclosures in Topic 280. The amendments in this Update also do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments in this Update retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Group has adopted ASU 2023-07 for the fiscal year of 2024. The Group evaluates that the impact of adoption of this ASU and has amended disclosure to segment reporting for single reportable segment in the consolidated financial statements.
Recently issued accounting pronouncements issued but not yet adopted
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements — codification amendments in response to SEC’s disclosure update and simplification initiative which amend the disclosure or presentation requirements of codification subtopic 230-10 Statement of Cash Flows — Overall, 250-10 Accounting Changes and Error Corrections — Overall, 260-10 Earnings Per Share — Overall, 270-10 Interim Reporting — Overall, 440-10
F-20
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Commitments — Overall, 470-10 Debt — Overall, 505-10 Equity — Overall, 815-10 Derivatives and Hedging — Overall, 860-30 Transfers and Servicing — Secured Borrowing and Collateral, 932-235 Extractive Activities — Oil and Gas — Notes to Financial Statements, 946-20 Financial Services — Investment Companies — Investment Company Activities, and 974-10 Real Estate — Real Estate Investment Trusts — Overall. Many of the amendments allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the SEC’s requirements. Also, the amendments align the requirements in the Codification with the SEC’s regulations. For entities subject to existing SEC disclosure requirements or those that must provide financial statements to the SEC for securities purposes without contractual transfer restrictions, the effective date aligns with the date when the SEC removes the related disclosure from Regulation S-X or Regulation S-K. Early adoption is not allowed. For all other entities, the amendments will be effective two years later from the date of the SEC’s removal. Entities shall apply the amendments in this update beginning after effective date on a prospective basis. The Group is in the process of evaluating the effect of the adoption of this ASU.
In December 2023, the FASB issued ASU 2023-09, Improvement to Income Tax Disclosure. This standard requires more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This standard also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for public business entities, for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025. Early adoption is also permitted, and entities may apply the amendments in this update prospectively or retrospectively to all prior periods presented in the financial statements. The Group is in the process of evaluation the impact of adopting this new guidance on its consolidated financial statements.
In November 4, 2024, the FASB has released ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures. The purpose of this update is to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, selling expenses, general and administrative expenses, and research and development expenses). ASU 2024-04 is effective for all public business entities, for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Any entity qualified as public business (“PBEs”) entity shall apply ASU 2024-04 prospectively to financial statements issued for current period and all comparative periods. PBEs shall apply the amendments in this update either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. Early adoption is permitted. The Group is in the process of evaluation the impact of adopting this new guidance on its consolidated financial statements.
Recently issued ASUs by the FASB, except for the ones mentioned above, are not expected to have a significant impact on the Group’s consolidated results of operations or financial position. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Group does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows, or disclosures.
F-21
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
3. ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consisted of the following:
|
As of December 31, |
||||||||
|
2023 |
2024 |
|||||||
|
Accounts receivable |
$ |
97,262 |
|
$ |
720,966 |
|
||
|
Provision of allowance for expected credit losses |
|
(52,430 |
) |
|
(138,326 |
) |
||
|
Total accounts receivable |
$ |
44,832 |
|
$ |
582,640 |
|
||
The movement of the provision of allowance for expected credit losses is as follows:
|
For the years ended |
|||||||
|
2023 |
2024 |
||||||
|
Balance at the beginning of the year |
$ |
— |
|
$ |
52,430 |
||
|
Additions |
|
52,805 |
|
|
82,537 |
||
|
Reversal |
|
— |
|
|
— |
||
|
Foreign currency translation |
|
(375 |
) |
|
3,359 |
||
|
Balance at the end of the year |
$ |
52,430 |
|
$ |
138,326 |
||
4. INVENTORIES
Inventories consisted of the following:
|
As of December 31, |
||||||
|
2023 |
2024 |
|||||
|
Foods |
$ |
127,235 |
$ |
159,379 |
||
|
Consumables |
|
171,415 |
|
124,777 |
||
|
Beverage |
|
32,662 |
|
27,269 |
||
|
Total inventories |
$ |
331,312 |
$ |
311,425 |
||
5. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets, net consisted of the following:
|
As of December 31, |
||||||
|
2023 |
2024 |
|||||
|
Interest-free loan to third parties |
$ |
293,554 |
$ |
531,715 |
||
|
Deposits |
|
260,859 |
|
349,870 |
||
|
Tax prepayment |
|
142,014 |
|
257,964 |
||
|
Prepaid expenses |
|
84,842 |
|
89,803 |
||
|
Advances to suppliers |
|
90,655 |
|
1,314 |
||
|
Others |
|
8,380 |
|
29,201 |
||
|
Total prepaid expenses and other current assets |
$ |
880,304 |
$ |
1,259,867 |
||
For the years ended December 31, 2023 and 2024, the Group recorded provision for expected credit losses for the Group’s prepaid expenses and other current assets of US$5,383 and nil, respectively, which was written-off in the corresponding period. Considering the recoverability, the Group recorded no credit loss allowance on prepaid expenses and other current assets for the years ended December 31, 2023 and 2024.
F-22
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
6. PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consisted of the following:
|
As of December 31, |
||||||||
|
2023 |
2024 |
|||||||
|
Freehold buildings |
$ |
2,324,882 |
|
$ |
2,387,718 |
|
||
|
Freehold land |
|
835,083 |
|
|
857,653 |
|
||
|
Leasehold improvements |
|
666,403 |
|
|
619,912 |
|
||
|
Equipment |
|
364,225 |
|
|
375,838 |
|
||
|
Furniture and fixtures |
|
201,082 |
|
|
208,511 |
|
||
|
Computers |
|
12,906 |
|
|
12,106 |
|
||
|
Total |
|
4,404,581 |
|
|
4,461,738 |
|
||
|
Less: accumulated depreciation |
|
(573,608 |
) |
|
(795,984 |
) |
||
|
Total property and equipment, net |
$ |
3,830,973 |
|
$ |
3,665,754 |
|
||
The Group recorded depreciation expenses of property and equipment of US$311,459 and US$248,627 for the years ended December 31, 2023 and 2024, respectively.
For the years ended December 31, 2023 and 2024, the Group recorded a gain from disposal of property and other equipment of US$4,094 and US$33,875, respectively, mainly due to the transfer of an outlet to a related party for the year ended December 31, 2024.
7. INTANGIBLE ASSETS, NET
Intangible assets, net, consisted of the following:
|
As of December 31, |
||||||||
|
2023 |
2024 |
|||||||
|
Finite-lived intangible assets |
|
|
|
|
||||
|
Software |
$ |
43,387 |
|
$ |
67,925 |
|
||
|
Less: accumulated amortization |
|
(15,316 |
) |
|
(36,935 |
) |
||
|
Subtotal |
|
28,071 |
|
|
30,990 |
|
||
|
|
|
|
|
|||||
|
Indefinite-lived intangible assets |
|
|
|
|
||||
|
Trademark and trade name |
|
163,388 |
|
|
167,804 |
|
||
|
Subtotal |
|
163,388 |
|
|
167,804 |
|
||
|
Total intangible assets, net |
$ |
191,459 |
|
$ |
198,794 |
|
||
The Group recorded amortization expenses of finite-lived intangible assets of US$14,059 and US$20,719 for the years ended December 31, 2023 and 2024, respectively.
Based on the result of the Group’s annual impairment assessment on indefinite-lived intangible asset performed as of December 31, 2023 and 2024, the Group did not identify any events or changes in circumstances indicate that it is more likely than not that the asset is impaired. In consideration of the growing catering industry in Southeast Asia, the stable macroeconomic conditions in Malaysia, the Group’s improving profitability performance, and the Group’s future development plans, the Group determined that it is not likely that the brand name of “Zi Wei Yuan” was impaired as of December 31, 2023 and 2024, respectively. As such, no impairment of indefinite-lived intangible assets was recognized for the years ended December 31, 2023 and 2024.
F-23
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
8. LONG-TERM INVESTMENTS
Long-term investments, consisted of the following:
|
As of December 31, |
||||||
|
2023 |
2024 |
|||||
|
Equity method investments: |
|
|
||||
|
Investment in CCH Tasty Sdn. Bhd. |
$ |
61,661 |
$ |
89,896 |
||
|
Investment in CCH KCH Sdn. Bhd. |
|
89,253 |
|
79,018 |
||
|
Investment in CCH (Sabah) Sdn. Bhd. |
|
21,662 |
|
17,408 |
||
|
Total long-term investments |
$ |
172,576 |
$ |
186,322 |
||
Long-term investments are the Group’s equity investments in privately held companies, over which the Group has the ability to exert significant influence but does not otherwise have control, which were all subsequently accounted for using the equity method.
On July 8, 2020, the Group acquired 60% equity interest in CCH Tasty Sdn. Bhd. (“CCH Tasty”), a restaurant operator, for a cash consideration of US$19,090 (MYR80,040). On August 11, 2020, the Group disposed 20% equity interest at nominal consideration and remained 40% equity interest in CCH Tasty ever since.
On May 27, 2022, the Group acquired 20% equity interest in CCH (Sabah) Sdn. Bhd., a restaurant operator, for a cash consideration of US$31,986 (MYR140,020).
On June 22, 2023, the Group acquired 40% equity interest in CCH KCH Sdn. Bhd., a restaurant operator, for a cash consideration of US$87,851 (MYR400,400).
The following table sets forth the changes in the Group’s long-term investments:
|
Amount |
||||
|
Balance at December 31, 2022 |
$ |
59,260 |
|
|
|
Investments made |
|
87,851 |
|
|
|
Share of income from equity method investments |
|
28,747 |
|
|
|
Exchange difference |
|
(3,282 |
) |
|
|
Balance at December 31, 2023 |
|
172,576 |
|
|
|
Investments made |
|
— |
|
|
|
Share of income from equity method investments |
|
8,873 |
|
|
|
Exchange difference |
|
4,873 |
|
|
|
Balance at December 31, 2024 |
$ |
186,322 |
|
|
9. BORROWINGS
The Group had the below borrowings for working capital purpose:
Bank overdrafts(i)
|
As of December 31, |
||||||
|
2023 |
2024 |
|||||
|
Alliance Islamic Bank Berhad(ii) |
$ |
309,667 |
$ |
309,843 |
||
|
RHB Bank Berhad(iii) |
|
92,566 |
|
77,367 |
||
|
Malayan Banking Berhad(iv) |
|
120,850 |
|
71,065 |
||
|
Total short-term borrowings |
$ |
523,083 |
$ |
458,275 |
||
____________
(i) All bank overdrafts are due on demand. Interest charged for the Group for the years ended December 31, 2023 and 2024 both ranged from 5.00% to 8.65% per annum.
F-24
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
9. BORROWINGS (cont.)
(ii) Bank overdrafts from Alliance Islamic Bank Berhad are joint guaranteed by Mr. Goh Kok E and Mrs. Tan Yee Wei and legal charges over the land and building properties of the Group. As of December 31, 2024, there are US$25,765 unutilized amount in the line of credit under bank overdraft facilities from Alliance Islamic Bank Berhad
(iii) Bank overdrafts from RHB Bank Berhad are joint guaranteed by Mr. Goh Kok E and Mrs. Tan Yee Wei and pledged by 2 shop lots buildings and lands of the Group. As of December 31, 2024, there are US$34,503 unutilized amount in the line of credit under bank overdraft facilities from RHB Bank Berhad.
(iv) Bank overdrafts from Malayan Banking Berhad are guaranteed from Syarikat Jaminan Pembiayaan Berhad (SJPP) under working capital guarantee scheme (WCGS), joint guaranteed by Mr. Goh Kok E and Mrs. Tan Yee Wei, and 1% commitment fee per annum based on unutilized portion. As of December 31, 2024, there are US$18,430 unutilized amount in the line of credit under bank overdraft facilities from Malayan Banking Berhad.
The weighted average interest rate of bank overdrafts was 6.86% and 7.61% for the years ended December 31, 2023 and 2024, respectively.
Long-term bank loans
|
As of December 31, |
||||||||||||||
|
Annual Interest Rate |
Maturity |
2023 |
2024 |
|||||||||||
|
Long-term |
Long-term |
Long-term |
Long-term |
|||||||||||
|
Long-term borrowings: |
|
|
||||||||||||
|
Alliance Islamic Bank Berhad(i) |
BFR* – 2.20% per annum (Current BFR 5.42% per annum, Min rate 3.2% per annum, Ceiling rate 15% per annum) |
September 1, 2047 |
$ |
1,512,864 |
39,483 |
$ |
1,512,002 |
43,069 |
||||||
|
Malayan Banking Berhad(ii) |
1~5 years: Fixed rate of 4.75% per annum on monthly rest; thereafter: BLR**+2.5% per annum on monthly rest. |
December 1, 2026 |
|
40,028 |
19,175 |
|
20,422 |
20,683 |
||||||
|
RHB Bank Berhad(iii) |
3.55% |
June 5, 2047 |
|
280,903 |
5,894 |
|
279,707 |
8,827 |
||||||
|
Total Long-term borrowings |
$ |
1,833,795 |
64,552 |
$ |
1,812,131 |
72,579 |
||||||||
____________
* BFR is base financing rate which is presently 5.42% per annum.
** BLR is the rate from time to time stipulated by the Bank as its Base Lending Rate. Currently, the BLR is 5.40% per annum.
As of December 31, 2023 and 2024, the current portion of the long-term borrowings is US$64,552 (MYR296,311) and US$72,579 (MYR324,391) respectively.
The weighted average interest rate of long-term borrowings was 4.07% and 3.96% for the years ended December 31, 2023 and 2024, respectively.
(i) On July 12, 2022, the Group entered into a loan agreement to borrow funds of MYR7,360,000 (US$1,646,717) with Alliance Islamic Bank Berhad during the period from July 2022 to September 2047 for the purchase of two buildings and freehold lands. The Group repays MYR38,524 (US$8,421) every month after July 2022, until the loan maturity date. This borrowing was joint guaranteed by Mr. Goh Kok E and Mrs. Tan Yee Wei and legal charges over the lands and building properties purchased by this loan.
(ii) On September 7, 2021, the Group entered into a loan agreement to borrow funds of MYR440,000 (US$98,445) with Malayan Banking Berhad during the period from September 2021 to December 2026. The Group repays MYR8,254 (US$1,804) every month after September 2021, until the loan maturity date. This borrowing was joint guaranteed by Mr. Goh Kok E and Mrs. Tan Yee Wei and Credit Guarantee Corporation (M) Berhad (CGC) Guarantee under Flexi Guarantee Scheme (FGS).
F-25
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
9. BORROWINGS (cont.)
(iii) On January 26, 2022, the Group entered into a loan agreement to borrow funds of MYR1,350,000 (US$302,047) with RHB Bank Berhad during the period from January 2022 to June 2047 for the purchase of two shop lots which are both rent out. The Group repays MYR6,795 (US$1,485) every month after January 2022, until the loan maturity date. This borrowing was joint guaranteed by Mr. Goh Kok E and Mrs. Tan Yee Wei and legal charges over two shop lot buildings and lands purchased by this loan.
10. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of the following:
|
As of December 31, |
||||||
|
2023 |
2024 |
|||||
|
Accrued Payroll and Welfare |
$ |
544,225 |
$ |
234,804 |
||
|
Accrued utility expense |
|
54,331 |
|
101,873 |
||
|
Deposits Payable |
|
75,771 |
|
99,999 |
||
|
Accrued service expense |
|
88,035 |
|
97,986 |
||
|
Tax payable |
|
84,587 |
|
86,542 |
||
|
Loan payable |
|
96,018 |
|
44,916 |
||
|
Accrued maintenance expenses |
|
74,382 |
|
13,025 |
||
|
Others |
|
53,191 |
|
33,985 |
||
|
Total accrued expenses and other current liabilities |
$ |
1,070,540 |
$ |
713,130 |
||
11. OPERATING LEASES
The Group entered into operating leases for use of office, central kitchen and restaurant premises in Malaysia.
The Group’s operating lease right-of-use assets and lease liabilities recognized in the consolidated balances sheets consisted of the following:
|
As of December 31, |
||||||||
|
2023 |
2024 |
|||||||
|
Operating lease right-of-use assets |
$ |
3,288,831 |
|
$ |
3,487,694 |
|
||
|
Amortization of operating lease right-of-use assets |
|
(1,793,464 |
) |
|
(2,741,494 |
) |
||
|
Operating lease right-of-use assets, net |
$ |
1,495,367 |
|
$ |
746,200 |
|
||
|
|
|
|
|
|||||
|
Operating lease liabilities, current |
$ |
829,420 |
|
$ |
656,536 |
|
||
|
Operating lease liabilities, non-current |
|
820,641 |
|
|
186,286 |
|
||
|
Total operating lease liabilities |
$ |
1,650,061 |
|
$ |
842,822 |
|
||
|
|
|
|
|
|||||
|
Weighted average remaining lease term |
|
1.88 |
|
|
1.36 |
|
||
|
Weighted average discount rate |
|
7.40 |
% |
|
7.40 |
% |
||
|
Operating right-of-use assets obtained in exchange for operating lease liabilities |
|
174,110 |
|
|
107,446 |
|
||
|
Cash paid for operating leases |
|
952,516 |
|
|
939,694 |
|
||
F-26
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
11. OPERATING LEASES (cont.)
A summary of lease cost recognized in the Group’s consolidated statements of operations and comprehensive income was as follows:
|
For the years ended |
||||||
|
2023 |
2024 |
|||||
|
Operating leases expense excluding short-term lease expense |
$ |
1,191,571 |
$ |
1,046,708 |
||
|
Short-term lease cost |
|
4,581 |
|
1,275 |
||
|
Total |
$ |
1,196,152 |
$ |
1,047,983 |
||
The following is a schedule of future minimum payments under the current existing operating leases as of December 31, 2024:
|
For the years ending December 31, |
Amount |
|||
|
2025 |
$ |
691,696 |
|
|
|
2026 |
|
134,027 |
|
|
|
2027 |
|
58,799 |
|
|
|
2028 |
|
4,564 |
|
|
|
Total lease payments |
|
889,086 |
|
|
|
Imputed interest |
|
(46,264 |
) |
|
|
Total |
$ |
842,822 |
|
|
12. FINANCE LEASES
The Group entered into finance leases with two banks for use of motor vehicles.
The Group’s finance lease right-of-use assets and lease liabilities recognized in the consolidated balances sheets consisted of the following:
|
As of December 31, |
||||||||
|
2023 |
2024 |
|||||||
|
Finance lease right-of-use assets |
$ |
262,893 |
|
$ |
269,998 |
|
||
|
Amortization of finance lease right-of-use assets |
|
(55,773 |
) |
|
(84,280 |
) |
||
|
Finance lease right-of-use assets, net |
$ |
207,120 |
|
$ |
185,718 |
|
||
|
|
|
|
|
|||||
|
Finance lease liabilities, current |
|
33,280 |
|
|
35,265 |
|
||
|
Finance lease liabilities, non-current |
|
124,108 |
|
|
92,197 |
|
||
|
Total finance lease liabilities |
$ |
157,388 |
|
$ |
127,462 |
|
||
|
|
|
|
|
|||||
|
Weighted average remaining lease term |
|
4.42 |
|
|
3.42 |
|
||
|
Weighted average discount rate |
|
3.13 |
% |
|
3.13 |
% |
||
|
Finance right-of-use assets obtained in exchange for finance lease liabilities |
|
64,943 |
|
|
— |
|
||
|
Cash paid for finance leases |
|
41,242 |
|
|
37,760 |
|
||
For the years ended December 31, 2023 and 2024, the Group incurred finance lease expenses of US$24,313 and US$26,379, respectively.
F-27
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
12. FINANCE LEASES (cont.)
The following is a schedule of future minimum payments under the current existing finance leases as of December 31, 2024:
|
For the years ending December 31, |
Amount |
|||
|
2025 |
$ |
38,649 |
|
|
|
2026 |
|
38,649 |
|
|
|
2027 |
|
38,649 |
|
|
|
2028 |
|
14,901 |
|
|
|
Total lease payments |
|
130,848 |
|
|
|
Imputed interest |
|
(3,386 |
) |
|
|
Total |
$ |
127,462 |
|
|
13. COST OF REVENUES
Cost of revenues consists of cost directly related to revenue generating activities. The following table shows disaggregated cost of revenues by major categories for the years ended December 31, 2023 and 2024:
|
For the years ended |
||||||
|
2023 |
2024 |
|||||
|
Material costs |
$ |
3,197,559 |
$ |
2,905,793 |
||
|
Payroll costs |
|
2,410,704 |
|
1,979,175 |
||
|
Rental costs |
|
988,395 |
|
924,000 |
||
|
Utilities costs |
|
354,023 |
|
349,228 |
||
|
Depreciation of property and equipment |
|
290,492 |
|
227,412 |
||
|
Repairs and maintenance costs |
|
306,416 |
|
104,198 |
||
|
Others |
|
17,970 |
|
19,277 |
||
|
Total cost of revenues |
$ |
7,565,559 |
$ |
6,509,083 |
||
14. TAXATION
Cayman Islands
The Company incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Act (As Revised) of the Cayman Islands and accordingly, are exempted from Cayman Islands income and corporate tax. As such, the Company is not subject to tax on either income or capital gain. In addition, no withholding tax is imposed upon any payments of dividends by subsidiaries to the Company.
Malaysia
The Group’s subsidiaries including STCH Holding, STCH GH, ZWY Raja Uda, CHH KL, CCH Tropika and GTL F&B are governed by the income tax laws of Malaysia. The income tax provision in respect of operations in Malaysia is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations, and practices. Under the Income Tax Act of Malaysia, enterprises incorporated in Malaysia are usually subject to a unified 24% enterprise income tax rate while preferential tax rates, tax holidays, and tax exemptions may be granted on a case-by-case basis. The tax rate for small and medium sized companies (generally companies incorporated in Malaysia with paid-in capital of MYR2,500,000 or less, and gross income of not more than MYR50 million) is 15% for the first MYR150,000 (approximately US$37,500) taxable income, and 17% for taxable income between MYR150,000 (approximately US$37,500) to MYR600,000 (approximately US$150,000), with the remaining balance of taxable income being taxed at the 24% rate.
F-28
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
14. TAXATION (cont.)
For the years ended December 31, 2023 and 2024, the details of income tax expense are set forth below:
|
For the years ended |
||||||
|
2023 |
2024 |
|||||
|
Current income tax |
$ |
271,890 |
$ |
353,599 |
||
|
Deferred income tax |
|
43,964 |
|
14,193 |
||
|
Total income tax expense |
$ |
315,854 |
$ |
367,792 |
||
Reconciliation of the differences between the income tax computed based on the Malaysia unified statutory income tax rate and the Group’s actual income tax provision for the years ended December 31, 2023 and 2024, respectively, were as follows:
|
For the years ended |
||||||||
|
2023 |
2024 |
|||||||
|
Income before income tax expense |
$ |
684,468 |
|
$ |
1,281,193 |
|
||
|
Income tax expense computed based on Malaysia unified income tax statutory rate |
|
164,272 |
|
|
307,486 |
|
||
|
Non-deductible expenses |
|
220,072 |
|
|
131,334 |
|
||
|
Non-taxable income |
|
(6,927 |
) |
|
(6,920 |
) |
||
|
Claim for other expenditure and incentives |
|
(8,767 |
) |
|
(9,879 |
) |
||
|
Capital allowance |
|
(47,113 |
) |
|
(20,921 |
) |
||
|
Effect of preferential tax rate |
|
(34,650 |
) |
|
(35,868 |
) |
||
|
Change in valuation allowance |
|
28,967 |
|
|
2,560 |
|
||
|
Total income tax expenses |
$ |
315,854 |
|
$ |
367,792 |
|
||
As of December 31, 2023 and 2024, the significant components of the deferred tax assets and liabilities are summarized below:
|
As of December 31, |
||||||||
|
2023 |
2024 |
|||||||
|
Deferred tax assets: |
|
|
|
|
||||
|
Net operating loss carried forward |
$ |
28,761 |
|
$ |
32,159 |
|
||
|
Allowance for expected credit losses |
|
13,866 |
|
|
34,794 |
|
||
|
Lease liabilities |
|
1,337 |
|
|
2,303 |
|
||
|
Total deferred tax assets |
|
43,964 |
|
|
69,256 |
|
||
|
Less: valuation allowance |
|
(28,761 |
) |
|
(32,159 |
) |
||
|
Total deferred tax assets, net of valuation allowance |
$ |
15,203 |
|
$ |
37,097 |
|
||
|
|
|
|
|
|||||
|
Defer tax liabilities: |
|
|
|
|
||||
|
Right-of-use assets |
|
13,346 |
|
|
31,300 |
|
||
|
Depreciation allowances under tax in excess of the related depreciation under accounting |
|
75,616 |
|
|
96,076 |
|
||
|
Total deferred tax liabilities |
|
88,962 |
|
|
127,376 |
|
||
|
Total deferred tax assets, net |
$ |
73,759 |
|
$ |
90,279 |
|
||
F-29
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
14. TAXATION (cont.)
Changes in valuation allowance are as follows:
|
As of December 31, |
|||||||
|
2023 |
2024 |
||||||
|
Balance at the beginning of the year |
$ |
— |
|
$ |
28,761 |
||
|
Additions |
|
28,967 |
|
|
2,560 |
||
|
Exchange difference |
|
(206 |
) |
|
838 |
||
|
Balance at end of the year |
$ |
28,761 |
|
$ |
32,159 |
||
As of December 31, 2023 and 2024, the Group had net operating loss carryforwards of approximately US$119,837 and US$133,996, respectively. Each company’s net operating loss carryforwards is subject to tax authorities’ review. As of December 31, 2023 and 2024, deferred tax assets from the net operating loss carryforwards amounted to US$28,761 and US$32,159, respectively. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Recovery of substantially all of the Group’s deferred tax assets is dependent upon the generation of future income, exclusive of reversing taxable temporary differences. The valuation allowance is considered on an individual entity basis. Accordingly, US$28,761 and US$32,159 valuation allowance has been established as of December 31, 2023 and 2024, respectively.
As of December 31, 2024, net operating loss carryforwards will expire, if unused, in the following amounts:
|
For the years ending December 31, |
Amount |
||
|
2033 |
$ |
119,837 |
|
|
2034 |
|
14,159 |
|
|
Total |
$ |
133,996 |
|
Uncertain tax positions
The Group is required to submit the final corporate income tax returns in Malaysia within seven months after each taxable period ends. As of December 31, 2024, in Malaysia tax jurisdiction, corporate income tax returns for the tax years ended May 31, 2020 through 2024 are subject to examination by the tax authorities.
Under applicable tax laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the tax authorities in different tax jurisdictions. The Group could face material and adverse tax consequences if the tax authorities determine that the contractual arrangements in relation to the Group were not entered into on an arm’s length basis in such a way as to result in an impermissible reduction in taxes under applicable tax laws, rules and regulations, and adjust the taxable income of the Group in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction of expense deductions recorded for tax purposes, which could in turn increase its tax liabilities without reducing the tax expenses of subsidiaries subject to more favorable tax rate. In addition, the tax authorities may impose late payment fees and other penalties on the Group for the adjusted but unpaid taxes according to the applicable regulations. The Group evaluates each uncertain tax position based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2023 and 2024, the Group did not have any unrecognized uncertain tax positions and the Group does not believe that its unrecognized tax benefits will change over the next twelve months.
F-30
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
15. RELATED PARTY TRANSACTIONS
Related Parties
The table below sets forth the major related parties and their relationships with the Group:
|
No. |
Name of Related Parties |
Relationship |
||
|
1 |
Mr. Goh Kok Foong |
Chairman of the Board and CEO of the Company |
||
|
2 |
Mr. Goh Kok E |
Director and COO of the Company |
||
|
3 |
Mrs. Tan Yee Wei |
Direct relative of Mr. Goh Kok Foong |
||
|
4 |
Zi Wei Yuan (Shen Zhen) Hotpot Restaurant Co., Ltd |
An entity controlled by Mr. Goh Kok E |
||
|
5 |
CCH Ipoh Sdn. Bhd. |
An entity controlled by Mr. Goh Kok E |
||
|
6 |
CCH Alor Setar Sdn. Bhd. |
An entity controlled by Mr. Goh Kok E |
||
|
7 |
CCH F&B Sdn. Bhd. |
An entity controlled by Mr. Goh Kok E |
||
|
8 |
Signature Tasty Claypot House (Arkadia) Sdn. Bhd. |
An entity controlled by Mr. Goh Kok E |
||
|
9 |
Signature Tasty Claypot House (BL) Sdn. Bhd. |
An entity controlled by Mr. Goh Kok E |
||
|
10 |
Abang Adek Holdings Sdn. Bhd. |
An entity controlled by Mr. Goh Kok E |
||
|
11 |
CCH (Sabah) Sdn. Bhd. |
An entity significantly influenced by the Group |
||
|
12 |
CCH KCH Sdn. Bhd. |
An entity significantly influenced by the Group |
||
|
13 |
CCH Tasty Sdn. Bhd. |
An entity significantly influenced by the Group |
||
|
14 |
Kopitan Classic Sdn. Bhd. |
An entity under control by Mr. Goh Kok E and Mr. Goh Kok Foong |
||
|
15 |
Kopitan Food Sdn. Bhd. |
An entity under control by Mr. Goh Kok E and Mr. Goh Kok Foong |
||
|
16 |
Ban Bu Dian (M) Sdn. Bhd. |
Subsidiary of CCH F&B Sdn. Bhd., which is under control of Mr. Goh Kok E |
||
|
17 |
Grizzly Spirit Sdn. Bhd. |
Subsidiary of CCH F&B Sdn. Bhd., which is under control of Mr. Goh Kok E |
Amounts due from/to related parties
Amounts due from/to related parties consisted of the following for the periods indicated:
|
As of December 31, |
||||||
|
2023 |
2024 |
|||||
|
Amounts due from related parties, current |
|
|
||||
|
Mr. Goh Kok E |
$ |
370,327 |
$ |
500,432 |
||
|
Mr. Goh Kok Foong |
|
432,224 |
|
488,920 |
||
|
Zi Wei Yuan (Shen Zhen) Hotpot Restaurant Co., Ltd |
|
52,137 |
|
340,772 |
||
|
CCH Ipoh Sdn. Bhd. |
|
181,099 |
|
269,021 |
||
|
CCH Alor Setar Sdn. Bhd. |
|
213,320 |
|
243,235 |
||
|
Kopitan Classic Sdn. Bhd. |
|
436 |
|
202,236 |
||
|
CCH F&B Sdn. Bhd. |
|
124,337 |
|
175,740 |
||
|
Ban Bu Dian (M) Sdn. Bhd. |
|
11,016 |
|
140,527 |
||
|
CCH (Sabah) Sdn. Bhd. |
|
104,647 |
|
110,468 |
||
|
CCH KCH Sdn. Bhd. |
|
145,509 |
|
66,083 |
||
|
Others |
|
163,876 |
|
160,085 |
||
|
Total amounts due from related parties, current(1) |
$ |
1,798,928 |
$ |
2,697,519 |
||
|
|
|
|||||
F-31
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
15. RELATED PARTY TRANSACTIONS (cont.)
|
As of December 31, |
||||||
|
2023 |
2024 |
|||||
|
Amounts due from related parties, non-current |
|
|
||||
|
Zi Wei Yuan (Shen Zhen) Hotpot Restaurant Co., Ltd(2) |
$ |
— |
$ |
489,274 |
||
|
Abang Adek Holdings Sdn. Bhd.(3) |
|
128,205 |
|
238,617 |
||
|
Total amounts due from related parties, non-current |
$ |
128,205 |
$ |
727,891 |
||
|
|
|
|||||
|
Amounts due to related parties, current |
|
|
||||
|
Kopitan Food Sdn. Bhd. |
$ |
127,803 |
|
98,275 |
||
|
Mr. Goh Kok Foong |
|
37,035 |
|
38,036 |
||
|
Ban Bu Dian (M) Sdn. Bhd. |
|
— |
|
32,204 |
||
|
Mrs. Tan Yee Wei |
|
4,405 |
|
4,524 |
||
|
CCH KCH Sdn. Bhd. |
|
87,140 |
|
— |
||
|
Others |
|
93,410 |
|
4,036 |
||
|
Total amounts due to related parties, current |
$ |
349,793 |
$ |
177,075 |
||
Material related party transactions
|
For the years ended |
||||||
|
2023 |
2024 |
|||||
|
Sales of food ingredients and condiments |
|
|
||||
|
CCH Tasty Sdn. Bhd. |
$ |
89,661 |
$ |
108,783 |
||
|
CCH Ipoh Sdn. Bhd. |
|
232,256 |
|
100,417 |
||
|
CCH F&B Sdn. Bhd. |
|
105,840 |
|
97,622 |
||
|
CCH Alor Setar Sdn. Bhd. |
|
70,663 |
|
95,672 |
||
|
Ban Bu Dian (M) Sdn. Bhd. |
|
127,109 |
|
77,379 |
||
|
Kopitan Classic Sdn. Bhd. |
|
— |
|
47,444 |
||
|
Signature Tasty Claypot House (Arkadia) Sdn. Bhd. |
|
57,484 |
|
44,541 |
||
|
Grizzly Spirit Sdn. Bhd. |
|
90,698 |
|
25,847 |
||
|
CCH (Sabah) Sdn. Bhd. |
|
24,956 |
|
19,576 |
||
|
CCH KCH Sdn. Bhd. |
|
74,482 |
|
17,307 |
||
|
Signature Tasty Claypot House (BL) Sdn. Bhd. |
|
35,359 |
|
— |
||
|
|
|
|||||
|
Franchise licensing income from related parties |
|
|
||||
|
Zi Wei Yuan (Shen Zhen) Hotpot Restaurant Co., Ltd |
$ |
28,854 |
$ |
303,716 |
||
|
CCH Tasty Sdn. Bhd. |
|
32,954 |
|
42,550 |
||
|
CCH (Sabah) Sdn. Bhd. |
|
37,451 |
|
37,209 |
||
|
CCH Ipoh Sdn. Bhd. |
|
55,058 |
|
20,009 |
||
|
CCH KCH Sdn. Bhd. |
|
9,320 |
|
19,225 |
||
|
CCH F&B Sdn. Bhd. |
|
19,563 |
|
17,392 |
||
|
CCH Alor Setar Sdn. Bhd. |
|
12,502 |
|
15,854 |
||
|
Ban Bu Dian (M) Sdn. Bhd. |
|
22,404 |
|
13,513 |
||
|
|
|
|||||
F-32
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
15. RELATED PARTY TRANSACTIONS (cont.)
|
For the years ended |
||||||
|
2023 |
2024 |
|||||
|
Interest-free loans to related parties |
|
|
||||
|
Mr. Goh Kok Foong |
$ |
— |
$ |
633,921 |
||
|
Mr. Goh Kok E |
|
149,026 |
|
102,907 |
||
|
Kopitan Food Sdn. Bhd. |
|
— |
|
21,859 |
||
|
CCH KCH Sdn. Bhd. |
|
92,366 |
|
5,230 |
||
|
CCH Tasty Sdn. Bhd. |
|
41,249 |
|
— |
||
|
|
|
|||||
|
Collection of interest-loans to related parties |
|
|
||||
|
Mr. Goh Kok Foong |
$ |
470,127 |
$ |
570,463 |
||
|
Mr. Goh Kok E |
|
— |
|
55,408 |
||
|
|
|
|||||
|
Capital injection to related parties |
|
|
||||
|
CCH KCH Sdn. Bhd. |
$ |
— |
$ |
87,437 |
||
|
CCH (Sabah) Sdn. Bhd. |
|
— |
|
30,603 |
||
|
CCH Tasty Sdn. Bhd. |
|
— |
|
17,487 |
||
|
|
|
|||||
|
Long-term interest-free loans to related parties |
|
|
||||
|
Zi Wei Yuan (Shen Zhen) Hotpot Restaurant Co., Ltd |
$ |
— |
$ |
478,022 |
||
|
Abang Adek Holdings Sdn. Bhd. |
|
53,975 |
|
104,488 |
||
____________
(1) The balance of amounts due from related parties, current mainly includes interest-free loans which is due on demand and receivables arising from sales transactions with related parties. As of the issuance date of the consolidated financial statements, the balance of amounts due from Mr. Goh Kok Foong and Mr. Goh Kok E as of December 31, 2024 was all related to loans provided for their personal uses, which has been collected and settled fully; US$147,836 of the balance of amount due from Zi Wei Yuan (Shen Zhen) Hotpot Restaurant Co., Ltd, current as of December 31, 2024 has been settled, which is collection of sales receivables.
(2) The Group provided an interest-free credit facility to Zi Wei Yuan (Shen Zhen) Hotpot Restaurant Co., Ltd (“Zi Wei Yuan (Shen Zhen)”) of US$492,225 (RM2,200,000) to support its operations, and the maturity date of this interest-free credit facility is August 1, 2028. As of December 31, 2024, the outstanding amount of the credit facility was US$489,274 (RM2,186,809).
(3) The Group provided an interest-free credit facility to Abang Adek Holdings Sdn. Bhd. (“Abang Adek”) of US$238,617 (RM1,066,500) to support its operations, and the maturity date of this interest-free credit facility is July 16, 2027. As of December 31, 2024, the outstanding amount of the credit facility was US$238,617 (RM1,066,500).
16. ORDINARY SHARES
Upon completion of reorganization, the Company issued 30,000,000 ordinary shares with a par value of $0.00001 to its shareholders, of which the share and per share information are presented on a retrospective basis to reflect the Reorganization completed on June 5, 2025.
The share subscription receivable represented the receivable for the issuance of ordinary shares of the Company and is reported as a deduction of equity and presented on a retrospective basis before the incorporation of the Company. Subscription receivable has no payment terms nor any interest receivable accrual.
17. SIGNIFICANT RISKS AND UNCERTAINTIES
(a) Interest rate risk
Fluctuations in market interest rates may negatively affect the Group’s financial condition and results of operations. The Group is exposed to interest rate risk arising from cash in bank and bank loans. The Group expected no material risks from changes in market interest rates, and has not used any derivative financial instruments to manage the interest risk exposure.
F-33
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
17. SIGNIFICANT RISKS AND UNCERTAINTIES (cont.)
(b) Foreign exchange risk
The reporting currency of the Group’s operations was in USD and the Group’s subsidiaries generally use their local currencies as their functional currencies, i.e. Malaysian Ringgit (“MYR”). The Group is mainly exposed to foreign exchange risk in respect of operating activities when purchase of goods and services in geographic areas is using transaction currencies other than MYR.
(c) Concentration of credit risk
Assets that potentially subject the Group to significant concentrations of credit risk primarily consist of cash, accounts receivable, amounts due from related parties and interest-free loan to third parties, deposits within prepaid expenses and other current assets. The maximum exposure of such assets to credit risk is their carrying amounts as of the balance sheet dates. All of the Group’s cash are held with financial institutions that Group’s management believes to be high credit quality. Based on the Group’s historical experiences in collection of prepaid expenses and other current assets and amounts due from related parties, the Group consider the credit risk of these receivables to be relatively low. Management regularly conducts assessment on expected credit losses arising from non-performance by these counterparties.
(d) Concentration of customers and suppliers
There are no sales to a particular customer more than 10% of the Group’s total revenues for the years ended December 31, 2023 and 2024.
The following customers represent more than 10% of the Group’s total accounts receivable as of December 31, 2023 and 2024:
|
As of December 31, |
||||||
|
2023 |
2024 |
|||||
|
Percentage of the Group’s accounts receivable from |
|
|
||||
|
Customer A |
* |
|
65.2 |
% |
||
|
Customer B |
* |
|
15.9 |
% |
||
|
Customer C |
53.9 |
% |
11.9 |
% |
||
____________
* Represents percentage less than 10%
The following customers represent more than 10% of the Group’s total advances from customers as of December 31, 2023 and 2024:
|
As of December 31, |
|||||
|
2023 |
2024 |
||||
|
Percentage of the Group’s advances from |
|
||||
|
Customer D |
* |
70.6 |
% |
||
____________
* Represents percentage less than 10%
There are no purchases from a particular supplier more than 10% of the Group’s total purchase for the years ended December 31, 2023 and 2024.
F-34
CCH HOLDINGS LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2024
(In U.S. Dollar, except for share data)
17. SIGNIFICANT RISKS AND UNCERTAINTIES (cont.)
The following suppliers represent more than 10% of the Group’s accounts payable as of December 31, 2023 and 2024:
|
As of December 31, |
||||||
|
2023 |
2024 |
|||||
|
Percentage of the Group’s accounts payable to |
|
|
||||
|
Supplier A |
* |
|
55.5 |
% |
||
|
Supplier B |
12.8 |
% |
* |
|
||
____________
* Represents percentage less than 10%
The following suppliers represent more than 10% of the Group’s advance to suppliers as of December 31, 2023 and 2024:
|
As of December 31, |
||||||
|
2023 |
2024 |
|||||
|
Percentage of the Group’s advances to |
|
|
||||
|
Supplier C |
* |
|
93.5 |
% |
||
|
Supplier A |
99.9 |
% |
* |
|
||
____________
* Represents percentage less than 10%
18. COMMITMENTS AND CONTINGENCIES
Commitments
As of December 31, 2023 and 2024, the Group had neither significant financial nor capital commitment.
Contingencies
In the ordinary course of business, the Group may be subject to legal proceedings regarding contractual and employment relationships and a variety of other matters. The Group records contingent liabilities resulting from such claims, when a loss is assessed to be probable and the amount of the loss is reasonably estimable. In the opinion of management, there were no pending or threatened claims and litigation as of December 31, 2024, and through the issuance date of these consolidated financial statements.
19. SUBSEQUENT EVENTS
The Group has evaluated the impact of events that have occurred subsequent to December 31, 2024, through June 26, 2025, the issuance date of the consolidated financial statements, and concluded that no other subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the notes to the consolidated financial statements.
F-35
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Cayman Islands law does not limit the extent to which a company’s articles of association may provide indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to the public interest, such as providing indemnification against civil fraud or the consequences of committing a crime. Our A&R Company Listing Articles provide that we shall indemnify our directors and officers (each an indemnified person) against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such indemnified person, other than by reason of such person’s own dishonesty, wilful default or fraud, in or about the conduct of our company’s business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such indemnified person in defending (whether successfully or otherwise) any civil proceedings concerning our company or its affairs in any court whether in the Cayman Islands or elsewhere.
Under the form of indemnification agreements filed as Exhibit 10.1 to this registration statement, we will agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being such a director or executive officer.
The form of underwriting agreement to be filed as Exhibit 1.1 to this registration statement will also provide for indemnification of us and our officers and directors.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
ITEM 7. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, we have issued the following securities. We believe that each of the following issuances was exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act regarding transactions not involving a public offering or in reliance on Regulation S under the Securities Act regarding sales by an issuer in offshore transactions. No underwriters were involved in these issuances of securities.
|
Securities/Purchaser |
Date of |
Number of |
Consideration |
||||
|
Ordinary Shares |
|
||||||
|
Mapcal Limited |
December 2, 2024 |
1 |
US$ |
0.00001 |
|||
|
Lim Soon Huat |
May 16, 2025 |
9,299,999 |
US$ |
92.99999 |
|||
|
Goh Kok Foong |
May 16, 2025 |
16,200,000 |
US$ |
162 |
|||
|
Yeoh Wooi Leng |
May 16, 2025 |
1,200,000 |
US$ |
12 |
|||
|
See Xue Xian |
May 16, 2025 |
1,200,000 |
US$ |
12 |
|||
|
Liew Choon How |
May 16, 2025 |
600,000 |
US$ |
6 |
|||
|
Capricornos Investment Holdings Limited |
May 16, 2025 |
1,200,000 |
US$ |
12 |
|||
|
Max Strategic Group Limited |
May 16, 2025 |
300,000 |
US$ |
3 |
|||
ITEM 8. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
See Exhibit Index for a complete list of all exhibits filed as part of this registration, which Exhibit Index is incorporated herein by reference.
(b) Financial Statement Schedules
Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements and the notes thereto.
II-1
ITEM 9. UNDERTAKINGS.
The undersigned hereby undertakes:
(a) The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
II-2
CCH Holdings Ltd
EXHIBIT INDEX
|
Exhibit |
|
|
|
1.1* |
Form of Underwriting Agreement |
|
|
3.1 |
Memorandum and Articles of Association of the Registrant, as currently in effect |
|
|
3.2 |
||
|
4.1* |
Registrant’s Specimen Certificate for Ordinary Shares |
|
|
5.1 |
||
|
8.1 |
||
|
8.2 |
Opinion of Teh & Lee in Malaysian tax matters (included in Exhibit 99.2) |
|
|
10.1 |
Form of Indemnification Agreement between the Registrant and its directors and executive officers |
|
|
10.2 |
Form of Employment Agreement, between the Registrant and its executive officers |
|
|
10.3 |
||
|
10.4 |
||
|
10.5 |
||
|
21.1 |
||
|
23.1 |
Consent of ST & Partners PLT, Independent Registered Public Accounting Firm |
|
|
23.2 |
Consent of Maples and Calder (Hong Kong) LLP (included in Exhibit 5.1) |
|
|
23.3 |
||
|
24.1 |
||
|
99.1 |
||
|
99.2 |
Opinion of Teh & Lee regarding certain Malaysian law matters |
|
|
99.3 |
||
|
99.4 |
||
|
99.5 |
Consent of Ng Yah Ling to be named as an Independent Director |
|
|
99.6 |
Consent of Wu Wai Kong to be named as an Independent Director |
|
|
99.7 |
Consent of Ang Woei Shang to be named as an Independent Director |
|
|
107 |
____________
* To be filed by amendment
II-3
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Seberang Perai, Malaysia, on August 27, 2025.
|
CCH Holdings Ltd |
||||
|
By: |
/s/ Goh Kok Foong |
|||
|
Name: Goh Kok Foong |
||||
|
Title: Chairman and Chief Executive Officer |
||||
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Goh Kok Foong as the attorney-in-fact with full power of substitution, for him in any and all capacities, to do any and all acts and all things and to execute any and all instruments which said attorney and agent may deem necessary or desirable to enable the registrant to comply with the Securities Act of 1933, as amended (the “Securities Act”), and any rules, regulations and requirements of the Securities and Exchange Commission thereunder, in connection with the registration under the Securities Act of ordinary shares of the registrant (the “Shares”), including, without limitation, the power and authority to sign the name of each of the undersigned in the capacities indicated below to the Registration Statement on Form F-1 (the “Registration Statement”) to be filed with the Securities and Exchange Commission with respect to such Shares, to any and all amendments or supplements to such Registration Statement, whether such amendments or supplements are filed before or after the effective date of such Registration Statement, to any related Registration Statement filed pursuant to Rule 462(b) under the Securities Act, and to any and all instruments or documents filed as part of or in connection with such Registration Statement or any and all amendments thereto, whether such amendments are filed before or after the effective date of such Registration Statement; and each of the undersigned hereby ratifies and confirms all that such attorney and agent shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
|
Signature |
Title |
Date |
||
|
/s/ Goh Kok Foong |
Chairman and Chief Executive Officer |
|||
|
Name: Goh Kok Foong |
(principal executive officer) |
August 27, 2025 |
||
|
/s/ Benjamin Yap Kean Ming |
Chief Financial Officer |
|||
|
Name: Benjamin Yap Kean Ming |
(principal financial officer) |
August 27, 2025 |
II-4
SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES
Pursuant to the Securities Act of 1933, as amended, the undersigned, the duly authorized representative in the United States of CCH Holdings Ltd, has signed this registration statement or amendment thereto in New York, United States on August 27, 2025.
|
Authorized U.S. Representative |
||||
|
By: |
/s/ Colleen A. De Vries |
|||
|
Name: Colleen A. De Vries |
||||
|
Title: Senior Vice President for and on behalf of Cogency Global Inc. |
||||
II-5
Exhibit 3.1
THE COMPANIES ACT (AS REVISED)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
MEMORANDUM AND ARTICLES OF ASSOCIATION
OF
CCH HOLDINGS LTD
Auth Code: E08419583716 |
![]() |
THE COMPANIES ACT (AS REVISED)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
OF
CCH HOLDINGS LTD
| 1 | The name of the Company is CCH Holdings Ltd. |
| 2 | The Registered Office of the Company shall be at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands, or at such other place within the Cayman Islands as the Directors may decide. |
| 3 | The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the laws of the Cayman Islands. |
| 4 | The liability of each Member is limited to the amount unpaid on such Member’s shares. |
| 5 | The share capital of the Company is US$50,000 divided into 5,000,000,000 shares of a par value of US$0.00001 each. |
| 6 | The Company has power to register by way of continuation as a body corporate limited by shares under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands. |
| 7 | Capitalised terms that are not defined in this Memorandum of Association bear the respective meanings given to them in the Articles of Association of the Company. |
Auth Code: E08419583716 |
![]() |
WE, the subscriber to this Memorandum of Association, wish to form a company pursuant to this Memorandum of Association, and we agree to take the number of shares shown opposite our name.
Dated this 2nd day of December 2024.
| Signature and Address of Subscriber | Number of Shares Taken | |
| Mapcal Limited | One | |
| of PO Box 309, Ugland House | ||
| Grand Cayman | ||
| KY1-1104 | ||
| Cayman Islands | ||
| acting by: | ||
| /s/ Anadra McLaughlin | ||
| Anadra McLaughlin | ||
| /s/ Michelle Daykin | ||
| Michelle Daykin | ||
| Witness to the above signature |
| 2 | |
Auth Code: E08419583716 |
| ![]() |
THE COMPANIES ACT (AS REVISED)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
CCH HOLDINGS LTD
| 1 | Interpretation |
| 1.1 | In the Articles Table A in the First Schedule to the Statute does not apply and, unless there is something in the subject or context inconsistent therewith: |
| “Articles” | means these articles of association of the Company. | |
| “Auditor” | means the person for the time being performing the duties of auditor of the Company (if any). | |
| “Company” | means the above named company. | |
| “Directors” | means the directors for the time being of the Company. | |
| “Dividend” | means any dividend (whether interim or final) resolved to be paid on Shares pursuant to the Articles. | |
| “Electronic Record” | has the same meaning as in the Electronic Transactions Act. | |
| “Electronic Transactions Act” | means the Electronic Transactions Act (As Revised) of the Cayman Islands. | |
| “Member” | has the same meaning as in the Statute. | |
| “Memorandum” | means the memorandum of association of the Company. | |
| “Ordinary Resolution” | means a resolution passed by a simple majority of the Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting, and includes a unanimous written resolution. In computing the majority when a poll is demanded regard shall be had to the number of votes to which each Member is entitled by the Articles. |
Auth Code: B19388789867 |
![]() |
| “Register of Members” | means the register of Members maintained in accordance with the Statute and includes (except where otherwise stated) any branch or duplicate register of Members. | |
| “Registered Office” | means the registered office for the time being of the Company. | |
| “Seal” | means the common seal of the Company and includes every duplicate seal. | |
| “Share” | means a share in the Company and includes a fraction of a share in the Company. | |
| “Special Resolution” | has the same meaning as in the Statute, and includes a unanimous written resolution. | |
| “Statute” | means the Companies Act (As Revised) of the Cayman Islands. | |
| “Subscriber” | means the subscriber to the Memorandum. | |
| “Treasury Share” | means a Share held in the name of the Company as a treasury share in accordance with the Statute. |
| 1.2 | In the Articles: |
| (a) | words importing the singular number include the plural number and vice versa; |
| (b) | words importing the masculine gender include the feminine gender; |
| (c) | words importing persons include corporations as well as any other legal or natural person; |
| (d) | “written” and “in writing” include all modes of representing or reproducing words in visible form, including in the form of an Electronic Record; |
| (e) | “shall” shall be construed as imperative and “may” shall be construed as permissive; |
| (f) | references to provisions of any law or regulation shall be construed as references to those provisions as amended, modified, re-enacted or replaced; |
| (g) | any phrase introduced by the terms “including”, “include”, “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms; |
| 2 | |
Auth Code: B19388789867 |
![]() |
| (h) | the term “and/or” is used to mean both “and” as well as “or.” The use of “and/or” in certain contexts in no respects qualifies or modifies the use of the terms “and” or “or” in others. The term “or” shall not be interpreted to be exclusive and the term “and” shall not be interpreted to require the conjunctive (in each case, unless the context otherwise requires); |
| (i) | headings are inserted for reference only and shall be ignored in construing the Articles; |
| (j) | any requirements as to delivery under the Articles include delivery in the form of an Electronic Record; |
| (k) | any requirements as to execution or signature under the Articles including the execution of the Articles themselves can be satisfied in the form of an electronic signature as defined in the Electronic Transactions Act; |
| (l) | sections 8 and 19(3) of the Electronic Transactions Act shall not apply; |
| (m) | the term “clear days” in relation to the period of a notice means that period excluding the day when the notice is received or deemed to be received and the day for which it is given or on which it is to take effect; and |
| (n) | the term “holder” in relation to a Share means a person whose name is entered in the Register of Members as the holder of such Share. |
| 2 | Commencement of Business |
| 2.1 | The business of the Company may be commenced as soon after incorporation of the Company as the Directors shall see fit. |
| 2.2 | The Directors may pay, out of the capital or any other monies of the Company, all expenses incurred in or about the formation and establishment of the Company, including the expenses of registration. |
| 3 | Issue of Shares |
| 3.1 | Subject to the provisions, if any, in the Memorandum (and to any direction that may be given by the Company in general meeting) and without prejudice to any rights attached to any existing Shares, the Directors may allot, issue, grant options over or otherwise dispose of Shares (including fractions of a Share) with or without preferred, deferred or other rights or restrictions, whether in regard to Dividend or other distribution, voting, return of capital or otherwise and to such persons, at such times and on such other terms as they think proper, and may also (subject to the Statute and the Articles) vary such rights. Notwithstanding the foregoing, the Subscriber shall have the power to: |
| (a) | issue one Share to itself; |
| 3 | |
Auth Code: B19388789867 |
![]() |
| (b) | transfer that Share by an instrument of transfer to any person; and |
| (c) | update the Register of Members in respect of the issue and transfer of that Share. |
| 3.2 | The Company shall not issue Shares to bearer. |
| 4 | Register of Members |
| 4.1 | The Company shall maintain or cause to be maintained the Register of Members in accordance with the Statute. |
| 4.2 | The Directors may determine that the Company shall maintain one or more branch registers of Members in accordance with the Statute. The Directors may also determine which register of Members shall constitute the principal register and which shall constitute the branch register or registers, and to vary such determination from time to time. |
| 5 | Closing Register of Members or Fixing Record Date |
| 5.1 | For the purpose of determining Members entitled to notice of, or to vote at any meeting of Members or any adjournment thereof, or Members entitled to receive payment of any Dividend or other distribution, or in order to make a determination of Members for any other purpose, the Directors may provide that the Register of Members shall be closed for transfers for a stated period which shall not in any case exceed forty days. |
| 5.2 | In lieu of, or apart from, closing the Register of Members, the Directors may fix in advance or arrears a date as the record date for any such determination of Members entitled to notice of, or to vote at any meeting of the Members or any adjournment thereof, or for the purpose of determining the Members entitled to receive payment of any Dividend or other distribution, or in order to make a determination of Members for any other purpose. |
| 5.3 | If the Register of Members is not so closed and no record date is fixed for the determination of Members entitled to notice of, or to vote at, a meeting of Members or Members entitled to receive payment of a Dividend or other distribution, the date on which notice of the meeting is sent or the date on which the resolution of the Directors resolving to pay such Dividend or other distribution is passed, as the case may be, shall be the record date for such determination of Members. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this Article, such determination shall apply to any adjournment thereof. |
| 6 | Certificates for Shares |
| 6.1 | A Member shall only be entitled to a share certificate if the Directors resolve that share certificates shall be issued. Share certificates representing Shares, if any, shall be in such form as the Directors may determine. Share certificates shall be signed by one or more Directors or other person authorised by the Directors. The Directors may authorise certificates to be issued with the authorised signature(s) affixed by mechanical process. All certificates for Shares shall be consecutively numbered or otherwise identified and shall specify the Shares to which they relate. All certificates surrendered to the Company for transfer shall be cancelled and subject to the Articles no new certificate shall be issued until the former certificate representing a like number of relevant Shares shall have been surrendered and cancelled. |
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| 6.2 | The Company shall not be bound to issue more than one certificate for Shares held jointly by more than one person and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them. |
| 6.3 | If a share certificate is defaced, worn out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and on the payment of such expenses reasonably incurred by the Company in investigating evidence, as the Directors may prescribe, and (in the case of defacement or wearing out) upon delivery of the old certificate. |
| 6.4 | Every share certificate sent in accordance with the Articles will be sent at the risk of the Member or other person entitled to the certificate. The Company will not be responsible for any share certificate lost or delayed in the course of delivery. |
| 7 | Transfer of Shares |
| 7.1 | Subject to Article 3.1, Shares are transferable subject to the approval of the Directors by resolution who may, in their absolute discretion, decline to register any transfer of Shares without giving any reason. If the Directors refuse to register a transfer they shall notify the transferee within two months of such refusal. |
| 7.2 | The instrument of transfer of any Share shall be in writing and shall be executed by or on behalf of the transferor (and if the Directors so require, signed by or on behalf of the transferee). The transferor shall be deemed to remain the holder of a Share until the name of the transferee is entered in the Register of Members. |
| 8 | Redemption, Repurchase and Surrender of Shares |
| 8.1 | Subject to the provisions of the Statute the Company may issue Shares that are to be redeemed or are liable to be redeemed at the option of the Member or the Company. The redemption of such Shares shall be effected in such manner and upon such other terms as the Directors, or the Company, by Ordinary Resolution, may determine before the issue of the Shares. |
| 8.2 | Subject to the provisions of the Statute, the Company may purchase its own Shares (including any redeemable Shares) in such manner and on such other terms as the Directors may agree with the relevant Member. |
| 8.3 | The Company may make a payment in respect of the redemption or purchase of its own Shares in any manner permitted by the Statute, including out of capital. |
| 8.4 | The Directors may accept the surrender for no consideration of any fully paid Share. |
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| 9 | Treasury Shares |
| 9.1 | The Directors may, prior to the purchase, redemption or surrender of any Share, determine that such Share shall be held as a Treasury Share. |
| 9.2 | The Directors may determine to cancel a Treasury Share or transfer a Treasury Share on such terms as they think proper (including, without limitation, for nil consideration). |
| 10 | Variation of Rights of Shares |
| 10.1 | If at any time the share capital of the Company is divided into different classes of Shares, all or any of the rights attached to any class (unless otherwise provided by the terms of issue of the Shares of that class) may, whether or not the Company is being wound up, be varied without the consent of the holders of the issued Shares of that class where such variation is considered by the Directors not to have a material adverse effect upon such rights; otherwise, any such variation shall be made only with the consent in writing of the holders of not less than two thirds of the issued Shares of that class, or with the approval of a resolution passed by a majority of not less than two thirds of the votes cast at a separate meeting of the holders of the Shares of that class. For the avoidance of doubt, the Directors reserve the right, notwithstanding that any such variation may not have a material adverse effect, to obtain consent from the holders of Shares of the relevant class. To any such meeting all the provisions of the Articles relating to general meetings shall apply mutatis mutandis, except that the necessary quorum shall be one person holding or representing by proxy at least one third of the issued Shares of the class and that any holder of Shares of the class present in person or by proxy may demand a poll. |
| 10.2 | For the purposes of a separate class meeting, the Directors may treat two or more or all the classes of Shares as forming one class of Shares if the Directors consider that such class of Shares would be affected in the same way by the proposals under consideration, but in any other case shall treat them as separate classes of Shares. |
| 10.3 | The rights conferred upon the holders of the Shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Shares ranking pari passu therewith. |
| 11 | Commission on Sale of Shares |
The Company may, in so far as the Statute permits, pay a commission to any person in consideration of that person subscribing or agreeing to subscribe (whether absolutely or conditionally) or procuring or agreeing to procure subscriptions (whether absolutely or conditionally) for any Shares. Such commissions may be satisfied by the payment of cash and/or the issue of fully or partly paid-up Shares. The Company may also on any issue of Shares pay such brokerage as may be lawful.
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| 12 | Non Recognition of Trusts |
The Company shall not be bound by or compelled to recognise in any way (even when notified) any equitable, contingent, future or partial interest in any Share, or (except only as is otherwise provided by the Articles or the Statute) any other rights in respect of any Share other than an absolute right to the entirety thereof in the holder.
| 13 | Lien on Shares |
| 13.1 | The Company shall have a first and paramount lien on all Shares (whether fully paid-up or not) registered in the name of a Member (whether solely or jointly with others) for all debts, liabilities or engagements to or with the Company (whether presently payable or not) by such Member or their estate, either alone or jointly with any other person, whether a Member or not, but the Directors may at any time declare any Share to be wholly or in part exempt from the provisions of this Article. The registration of a transfer of any such Share shall operate as a waiver of the Company’s lien thereon. The Company’s lien on a Share shall also extend to any amount payable in respect of that Share. |
| 13.2 | The Company may sell, in such manner as the Directors think fit, any Shares on which the Company has a lien, if a sum in respect of which the lien exists is presently payable, and is not paid within 14 clear days after notice has been received or deemed to have been received by the holder of the Shares, or to the person entitled to it in consequence of the death or bankruptcy of the holder, demanding payment and stating that if the notice is not complied with the Shares may be sold. |
| 13.3 | To give effect to any such sale the Directors may authorise any person to execute an instrument of transfer of the Shares sold to, or in accordance with the directions of, the purchaser. The purchaser or their nominee shall be registered as the holder of the Shares comprised in any such transfer, and they shall not be bound to see to the application of the purchase money, nor shall their title to the Shares be affected by any irregularity or invalidity in the sale or the exercise of the Company’s power of sale under the Articles. |
| 13.4 | The net proceeds of such sale after payment of costs, shall be applied in payment of such part of the amount in respect of which the lien exists as is presently payable and any balance shall (subject to a like lien for sums not presently payable as existed upon the Shares before the sale) be paid to the person entitled to the Shares at the date of the sale. |
| 14 | Call on Shares |
| 14.1 | Subject to the terms of the allotment and issue of any Shares, the Directors may make calls upon the Members in respect of any monies unpaid on their Shares (whether in respect of par value or premium), and each Member shall (subject to receiving at least 14 clear days’ notice specifying the time or times of payment) pay to the Company at the time or times so specified the amount called on the Shares. A call may be revoked or postponed, in whole or in part, as the Directors may determine. A call may be required to be paid by instalments. A person upon whom a call is made shall remain liable for calls made upon them notwithstanding the subsequent transfer of the Shares in respect of which the call was made. |
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| 14.2 | A call shall be deemed to have been made at the time when the resolution of the Directors authorising such call was passed. |
| 14.3 | The joint holders of a Share shall be jointly and severally liable to pay all calls in respect thereof. |
| 14.4 | If a call remains unpaid after it has become due and payable, the person from whom it is due shall pay interest on the amount unpaid from the day it became due and payable until it is paid at such rate as the Directors may determine (and in addition all expenses that have been incurred by the Company by reason of such non-payment), but the Directors may waive payment of the interest or expenses wholly or in part. |
| 14.5 | An amount payable in respect of a Share on issue or allotment or at any fixed date, whether on account of the par value of the Share or premium or otherwise, shall be deemed to be a call and if it is not paid all the provisions of the Articles shall apply as if that amount had become due and payable by virtue of a call. |
| 14.6 | The Directors may issue Shares with different terms as to the amount and times of payment of calls, or the interest to be paid. |
| 14.7 | The Directors may, if they think fit, receive an amount from any Member willing to advance all or any part of the monies uncalled and unpaid upon any Shares held by that Member, and may (until the amount would otherwise become payable) pay interest at such rate as may be agreed upon between the Directors and the Member paying such amount in advance. |
| 14.8 | No such amount paid in advance of calls shall entitle the Member paying such amount to any portion of a Dividend or other distribution payable in respect of any period prior to the date upon which such amount would, but for such payment, become payable. |
| 15 | Forfeiture of Shares |
| 15.1 | If a call or instalment of a call remains unpaid after it has become due and payable the Directors may give to the person from whom it is due not less than 14 clear days’ notice requiring payment of the amount unpaid together with any interest which may have accrued and any expenses incurred by the Company by reason of such non-payment. The notice shall specify where payment is to be made and shall state that if the notice is not complied with the Shares in respect of which the call was made will be liable to be forfeited. |
| 15.2 | If the notice is not complied with, any Share in respect of which it was given may, before the payment required by the notice has been made, be forfeited by a resolution of the Directors. Such forfeiture shall include all Dividends, other distributions or other monies payable in respect of the forfeited Share and not paid before the forfeiture. |
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| 15.3 | A forfeited Share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the Directors think fit and at any time before a sale, re-allotment or disposition the forfeiture may be cancelled on such terms as the Directors think fit. Where for the purposes of its disposal a forfeited Share is to be transferred to any person the Directors may authorise some person to execute an instrument of transfer of the Share in favour of that person. |
| 15.4 | A person any of whose Shares have been forfeited shall cease to be a Member in respect of them and shall surrender to the Company for cancellation the certificate for the Shares forfeited and shall remain liable to pay to the Company all monies which at the date of forfeiture were payable by that person to the Company in respect of those Shares together with interest at such rate as the Directors may determine, but that person’s liability shall cease if and when the Company shall have received payment in full of all monies due and payable by them in respect of those Shares. |
| 15.5 | A certificate in writing under the hand of one Director or officer of the Company that a Share has been forfeited on a specified date shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the Share. The certificate shall (subject to the execution of an instrument of transfer) constitute a good title to the Share and the person to whom the Share is sold or otherwise disposed of shall not be bound to see to the application of the purchase money, if any, nor shall their title to the Share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the Share. |
| 15.6 | The provisions of the Articles as to forfeiture shall apply in the case of non payment of any sum which, by the terms of issue of a Share, becomes payable at a fixed time, whether on account of the par value of the Share or by way of premium as if it had been payable by virtue of a call duly made and notified. |
| 16 | Transmission of Shares |
| 16.1 | If a Member dies the survivor or survivors (where they were a joint holder) or their legal personal representatives (where they were a sole holder), shall be the only persons recognised by the Company as having any title to the deceased Member’s Shares. The estate of a deceased Member is not thereby released from any liability in respect of any Share, for which the Member was a joint or sole holder. |
| 16.2 | Any person becoming entitled to a Share in consequence of the death or bankruptcy or liquidation or dissolution of a Member (or in any other way than by transfer) may, upon such evidence being produced as may be required by the Directors, elect, by a notice in writing sent by that person to the Company, either to become the holder of such Share or to have some person nominated by them registered as the holder of such Share. If they elect to have another person registered as the holder of such Share they shall sign an instrument of transfer of that Share to that person. The Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the relevant Member before their death or bankruptcy or liquidation or dissolution, as the case may be. |
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| 16.3 | A person becoming entitled to a Share by reason of the death or bankruptcy or liquidation or dissolution of a Member (or in any other case than by transfer) shall be entitled to the same Dividends, other distributions and other advantages to which they would be entitled if they were the holder of such Share. However, they shall not, before becoming a Member in respect of a Share, be entitled in respect of it to exercise any right conferred by membership in relation to general meetings of the Company and the Directors may at any time give notice requiring any such person to elect either to be registered or to have some person nominated by them registered as the holder of the Share (but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the relevant Member before their death or bankruptcy or liquidation or dissolution or any other case than by transfer, as the case may be). If the notice is not complied with within 90 days of being received or deemed to be received (as determined pursuant to the Articles) the Directors may thereafter withhold payment of all Dividends, other distributions, bonuses or other monies payable in respect of the Share until the requirements of the notice have been complied with. |
| 17 | Amendments of Memorandum and Articles of Association and Alteration of Capital |
| 17.1 | The Company may by Ordinary Resolution: |
| (a) | increase its share capital by such sum as the Ordinary Resolution shall prescribe and with such rights, priorities and privileges annexed thereto, as the Company in general meeting may determine; |
| (b) | consolidate and divide all or any of its share capital into Shares of larger amount than its existing Shares; |
| (c) | convert all or any of its paid-up Shares into stock, and reconvert that stock into paid-up Shares of any denomination; |
| (d) | by subdivision of its existing Shares or any of them divide the whole or any part of its share capital into Shares of smaller amount than is fixed by the Memorandum or into Shares without par value; and |
| (e) | cancel any Shares that at the date of the passing of the Ordinary Resolution have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the Shares so cancelled. |
| 17.2 | All new Shares created in accordance with the provisions of the preceding Article shall be subject to the same provisions of the Articles with reference to the payment of calls, liens, transfer, transmission, forfeiture and otherwise as the Shares in the original share capital. |
| 17.3 | Subject to the provisions of the Statute and the provisions of the Articles as regards the matters to be dealt with by Ordinary Resolution, the Company may by Special Resolution: |
| (a) | change its name; |
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| (b) | alter or add to the Articles; |
| (c) | alter or add to the Memorandum with respect to any objects, powers or other matters specified therein; and |
| (d) | reduce its share capital or any capital redemption reserve fund. |
| 18 | Offices and Places of Business |
Subject to the provisions of the Statute, the Company may by resolution of the Directors change the location of its Registered Office. The Company may, in addition to its Registered Office, maintain such other offices or places of business as the Directors determine.
| 19 | General Meetings |
| 19.1 | All general meetings other than annual general meetings shall be called extraordinary general meetings. |
| 19.2 | The Company may, but shall not (unless required by the Statute) be obliged to, in each year hold a general meeting as its annual general meeting, and shall specify the meeting as such in the notices calling it. Any annual general meeting shall be held at such time and place as the Directors shall appoint and if no other time and place is prescribed by them, it shall be held at the Registered Office on the second Wednesday in December of each year at ten o’clock in the morning. At these meetings the report of the Directors (if any) shall be presented. |
| 19.3 | The Directors may call general meetings, and they shall on a Members’ requisition forthwith proceed to convene an extraordinary general meeting of the Company. |
| 19.4 | A Members’ requisition is a requisition of Members holding at the date of deposit of the requisition not less than 10% in par value of the issued Shares which as at that date carry the right to vote at general meetings of the Company. |
| 19.5 | The Members’ requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the Registered Office, and may consist of several documents in like form each signed by one or more requisitionists. |
| 19.6 | If there are no Directors as at the date of the deposit of the Members’ requisition or if the Directors do not within 21 days from the date of the deposit of the Members’ requisition duly proceed to convene a general meeting to be held within a further 21 days, the requisitionists, or any of them representing more than one-half of the total voting rights of all of the requisitionists, may themselves convene a general meeting, but any meeting so convened shall be held no later than the day which falls three months after the expiration of the said 21 day period. |
| 19.7 | A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as nearly as possible as that in which general meetings are to be convened by Directors. |
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| 20 | Notice of General Meetings |
| 20.1 | At least five clear days’ notice shall be given of any general meeting. Every notice shall specify the place, the day and the hour of the meeting and the general nature of the business to be conducted at the general meeting and shall be given in the manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company, provided that a general meeting of the Company shall, whether or not the notice specified in this Article has been given and whether or not the provisions of the Articles regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed: |
| (a) | in the case of an annual general meeting, by all of the Members entitled to attend and vote at the meeting; and |
| (b) | in the case of an extraordinary general meeting, by a majority in number of the Members having a right to attend and vote at the meeting, together holding not less than 95% in par value of the Shares giving that right. |
| 20.2 | The accidental omission to give notice of a general meeting to, or the non receipt of notice of a general meeting by, any person entitled to receive such notice shall not invalidate the proceedings of that general meeting. |
| 21 | Proceedings at General Meetings |
| 21.1 | No business shall be transacted at any general meeting unless a quorum is present. Two Members being individuals present in person or by proxy or if a corporation or other non-natural person by its duly authorised representative or proxy shall be a quorum unless the Company has only one Member entitled to vote at such general meeting in which case the quorum shall be that one Member present in person or by proxy or (in the case of a corporation or other non-natural person) by its duly authorised representative or proxy. |
| 21.2 | A person may participate at a general meeting by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other. Participation by a person in a general meeting in this manner is treated as presence in person at that meeting. |
| 21.3 | A resolution (including a Special Resolution) in writing (in one or more counterparts) signed by or on behalf of all of the Members for the time being entitled to receive notice of and to attend and vote at general meetings (or, being corporations or other non-natural persons, signed by their duly authorised representatives) shall be as valid and effective as if the resolution had been passed at a general meeting of the Company duly convened and held. |
| 21.4 | If a quorum is not present within half an hour from the time appointed for the meeting to commence or if during such a meeting a quorum ceases to be present, the meeting, if convened upon a Members’ requisition, shall be dissolved and in any other case it shall stand adjourned to the same day in the next week at the same time and/or place or to such other day, time and/or place as the Directors may determine, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting to commence, the Members present shall be a quorum. |
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| 21.5 | The Directors may, at any time prior to the time appointed for the meeting to commence, appoint any person to act as chairperson of a general meeting of the Company or, if the Directors do not make any such appointment, the chairperson, if any, of the board of Directors shall preside as chairperson at such general meeting. If there is no such chairperson, or if the chairperson shall not be present within 15 minutes after the time appointed for the meeting to commence, or is unwilling to act, the Directors present shall elect one of their number to be chairperson of the meeting. |
| 21.6 | If no Director is willing to act as chairperson or if no Director is present within 15 minutes after the time appointed for the meeting to commence, the Members present shall choose one of their number to be chairperson of the meeting. |
| 21.7 | The chairperson may, with the consent of a meeting at which a quorum is present (and shall if so directed by the meeting) adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. |
| 21.8 | When a general meeting is adjourned for 30 days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Otherwise it shall not be necessary to give any such notice of an adjourned meeting. |
| 21.9 | A resolution put to the vote of the meeting shall be decided on a show of hands unless before, or on the declaration of the result of, the show of hands, the chairperson demands a poll, or any other Member or Members collectively present in person or by proxy (or in the case of a corporation or other non-natural person, by its duly authorised representative or proxy) and holding at least 10% in par value of the Shares giving a right to attend and vote at the meeting demand a poll. |
| 21.10 | Unless a poll is duly demanded and the demand is not withdrawn a declaration by the chairperson that a resolution has been carried or carried unanimously, or by a particular majority, or lost or not carried by a particular majority, an entry to that effect in the minutes of the proceedings of the meeting shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favour of or against such resolution. |
| 21.11 | The demand for a poll may be withdrawn. |
| 21.12 | Except on a poll demanded on the election of a chairperson or on a question of adjournment, a poll shall be taken as the chairperson directs, and the result of the poll shall be deemed to be the resolution of the general meeting at which the poll was demanded. |
| 21.13 | A poll demanded on the election of a chairperson or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such date, time and place as the chairperson of the general meeting directs, and any business other than that upon which a poll has been demanded or is contingent thereon may proceed pending the taking of the poll. |
| 21.14 | In the case of an equality of votes, whether on a show of hands or on a poll, the chairperson shall be entitled to a second or casting vote. |
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| 22 | Votes of Members |
| 22.1 | Subject to any rights or restrictions attached to any Shares, on a show of hands every Member who (being an individual) is present in person or by proxy or, if a corporation or other non-natural person is present by its duly authorised representative or by proxy, shall have one vote and on a poll every Member present in any such manner shall have one vote for every Share of which they are the holder. |
| 22.2 | In the case of joint holders the vote of the senior holder who tenders a vote, whether in person or by proxy (or, in the case of a corporation or other non-natural person, by its duly authorised representative or proxy), shall be accepted to the exclusion of the votes of the other joint holders, and seniority shall be determined by the order in which the names of the holders stand in the Register of Members. |
| 22.3 | A Member of unsound mind, or in respect of whom an order has been made by any court, having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by their committee, receiver, curator bonis, or other person on such Member’s behalf appointed by that court, and any such committee, receiver, curator bonis or other person may vote by proxy. |
| 22.4 | No person shall be entitled to vote at any general meeting unless they are registered as a Member on the record date for such meeting nor unless all calls or other monies then payable by them in respect of Shares have been paid. |
| 22.5 | No objection shall be raised as to the qualification of any voter except at the general meeting or adjourned general meeting at which the vote objected to is given or tendered and every vote not disallowed at the meeting shall be valid. Any objection made in due time in accordance with this Article shall be referred to the chairperson whose decision shall be final and conclusive. |
| 22.6 | On a poll or on a show of hands votes may be cast either personally or by proxy (or in the case of a corporation or other non-natural person by its duly authorised representative or proxy). A Member may appoint more than one proxy or the same proxy under one or more instruments to attend and vote at a meeting. Where a Member appoints more than one proxy the instrument of proxy shall state which proxy is entitled to vote on a show of hands and shall specify the number of Shares in respect of which each proxy is entitled to exercise the related votes. |
| 22.7 | On a poll, a Member holding more than one Share need not cast the votes in respect of their Shares in the same way on any resolution and therefore may vote a Share or some or all such Shares either for or against a resolution and/or abstain from voting a Share or some or all of the Shares and, subject to the terms of the instrument appointing the proxy, a proxy appointed under one or more instruments may vote a Share or some or all of the Shares in respect of which they are appointed either for or against a resolution and/or abstain from voting a Share or some or all of the Shares in respect of which they are appointed. |
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| 23 | Proxies |
| 23.1 | The instrument appointing a proxy shall be in writing and shall be executed under the hand of the appointor or of their attorney duly authorised in writing, or, if the appointor is a corporation or other non natural person, under the hand of its duly authorised representative. A proxy need not be a Member. |
| 23.2 | The Directors may, in the notice convening any meeting or adjourned meeting, or in an instrument of proxy sent out by the Company, specify the manner by which the instrument appointing a proxy shall be deposited and the place and the time (being not later than the time appointed for the commencement of the meeting or adjourned meeting to which the proxy relates) at which the instrument appointing a proxy shall be deposited. In the absence of any such direction from the Directors in the notice convening any meeting or adjourned meeting or in an instrument of proxy sent out by the Company, the instrument appointing a proxy shall be deposited physically at the Registered Office not less than 48 hours before the time appointed for the meeting or adjourned meeting to commence at which the person named in the instrument proposes to vote. |
| 23.3 | The chairperson may in any event at their discretion declare that an instrument of proxy shall be deemed to have been duly deposited. An instrument of proxy that is not deposited in the manner permitted, or which has not been declared to have been duly deposited by the chairperson, shall be invalid. |
| 23.4 | The instrument appointing a proxy may be in any usual or common form (or such other form as the Directors may approve) and may be expressed to be for a particular meeting or any adjournment thereof or generally until revoked. An instrument appointing a proxy shall be deemed to include the power to demand or join or concur in demanding a poll. |
| 23.5 | Votes given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the Share in respect of which the proxy is given unless notice in writing of such death, insanity, revocation or transfer was received by the Company at the Registered Office before the commencement of the general meeting, or adjourned meeting at which it is sought to use the proxy. |
| 24 | Corporate Members |
Any corporation or other non-natural person which is a Member may in accordance with its constitutional documents, or in the absence of such provision by resolution of its directors or other governing body, authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of Members, and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation which they represent as the corporation could exercise if it were an individual Member.
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| 25 | Shares that May Not be Voted |
Shares in the Company that are beneficially owned by the Company shall not be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding Shares at any given time.
| 26 | Directors |
There shall be a board of Directors consisting of not less than one person (exclusive of alternate Directors) provided however that the Company may by Ordinary Resolution increase or reduce the limits in the number of Directors. The first Directors of the Company may be determined in writing by, or appointed by a resolution of, the Subscriber.
| 27 | Powers of Directors |
| 27.1 | Subject to the provisions of the Statute, the Memorandum and the Articles and to any directions given by Special Resolution, the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. No alteration of the Memorandum or Articles and no such direction shall invalidate any prior act of the Directors which would have been valid if that alteration had not been made or that direction had not been given. A duly convened meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors. |
| 27.2 | All cheques, promissory notes, drafts, bills of exchange and other negotiable or transferable instruments and all receipts for monies paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed as the case may be in such manner as the Directors shall determine by resolution. |
| 27.3 | The Directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any Director who has held any other salaried office or place of profit with the Company or to their surviving spouse, civil partner or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance. |
| 27.4 | The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital or any part thereof and to issue debentures, debenture stock, mortgages, bonds and other such securities whether outright or as security for any debt, liability or obligation of the Company or of any third party. |
| 28 | Appointment and Removal of Directors |
| 28.1 | The Company may by Ordinary Resolution appoint any person to be a Director or may by Ordinary Resolution remove any Director. |
| 28.2 | The Directors may appoint any person to be a Director, either to fill a vacancy or as an additional Director provided that the appointment does not cause the number of Directors to exceed any number fixed by or in accordance with the Articles as the maximum number of Directors. |
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| 29 | Vacation of Office of Director |
The office of a Director shall be vacated if:
| (a) | the Director gives notice in writing to the Company that they resign the office of Director; or |
| (b) | the Director is absent (for the avoidance of doubt, without being represented by proxy or an alternate Director appointed by them) from three consecutive meetings of the board of Directors without special leave of absence from the Directors, and the Directors pass a resolution that they have by reason of such absence vacated office; or |
| (c) | the Director dies, becomes bankrupt or makes any arrangement or composition with their creditors generally; or |
| (d) | the Director is found to be or becomes of unsound mind; or |
| (e) | all of the other Directors (being not less than two in number) determine that the Director should be removed as a Director, either by a resolution passed by all of the other Directors at a meeting of the Directors duly convened and held in accordance with the Articles or by a resolution in writing signed by all of the other Directors. |
| 30 | Proceedings of Directors |
| 30.1 | The quorum for the transaction of the business of the Directors may be fixed by the Directors, and unless so fixed shall be two if there are two or more Directors, and shall be one if there is only one Director. A person who holds office as an alternate Director shall, if their appointor is not present, be counted in the quorum. A Director who also acts as an alternate Director shall, if their appointor is not present, count twice towards the quorum. |
| 30.2 | Subject to the provisions of the Articles, the Directors may regulate their proceedings as they think fit. Questions arising at any meeting shall be decided by a majority of votes. In the case of an equality of votes, the chairperson shall have a second or casting vote. A Director who is also an alternate Director shall be entitled in the absence of their appointor to a separate vote on behalf of their appointor in addition to their own vote. |
| 30.3 | A person may participate in a meeting of the Directors or any committee of Directors by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other at the same time. Participation by a person in a meeting in this manner is treated as presence in person at that meeting. Unless otherwise determined by the Directors the meeting shall be deemed to be held at the place where the chairperson is located at the start of the meeting. |
| 30.4 | A resolution in writing (in one or more counterparts) signed by all the Directors or all the members of a committee of the Directors or, in the case of a resolution in writing relating to the removal of any Director or the vacation of office by any Director, all of the Directors other than the Director who is the subject of such resolution (an alternate Director being entitled to sign such a resolution on behalf of their appointor and if such alternate Director is also a Director, being entitled to sign such resolution both on behalf of their appointor and in their capacity as a Director) shall be as valid and effectual as if it had been passed at a meeting of the Directors, or committee of Directors as the case may be, duly convened and held. |
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| 30.5 | A Director or alternate Director may, or other officer of the Company on the direction of a Director or alternate Director shall, call a meeting of the Directors by at least two days’ notice in writing to every Director and alternate Director which notice shall set forth the general nature of the business to be considered unless notice is waived by all the Directors (or their alternates) either at, before or after the meeting is held. To any such notice of a meeting of the Directors all the provisions of the Articles relating to the giving of notices by the Company to the Members shall apply mutatis mutandis. |
| 30.6 | The continuing Directors (or a sole continuing Director, as the case may be) may act notwithstanding any vacancy in their body, but if and so long as their number is reduced below the number fixed by or pursuant to the Articles as the necessary quorum of Directors the continuing Directors or Director may act for the purpose of increasing the number of Directors to be equal to such fixed number, or of summoning a general meeting of the Company, but for no other purpose. |
| 30.7 | The Directors may elect a chairperson of their board and determine the period for which they are to hold office; but if no such chairperson is elected, or if at any meeting the chairperson is not present within five minutes after the time appointed for the meeting to commence, the Directors present may choose one of their number to be chairperson of the meeting. |
| 30.8 | All acts done by any meeting of the Directors or of a committee of the Directors (including any person acting as an alternate Director) shall, notwithstanding that it is afterwards discovered that there was some defect in the appointment of any Director or alternate Director, and/or that they or any of them were disqualified, and/or had vacated their office and/or were not entitled to vote, be as valid as if every such person had been duly appointed and/or not disqualified to be a Director or alternate Director and/or had not vacated their office and/or had been entitled to vote, as the case may be. |
| 30.9 | A Director but not an alternate Director may be represented at any meetings of the board of Directors by a proxy appointed in writing by that Director. The proxy shall count towards the quorum and the vote of the proxy shall for all purposes be deemed to be that of the appointing Director. |
| 31 | Presumption of Assent |
A Director or alternate Director who is present at a meeting of the board of Directors at which action on any Company matter is taken shall be presumed to have assented to the action taken unless their dissent shall be entered in the minutes of the meeting or unless they shall file their written dissent from such action with the person acting as the chairperson or secretary of the meeting before the adjournment thereof or shall forward such dissent by registered post to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director or alternate Director who voted in favour of such action.
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| 32 | Directors’ Interests |
| 32.1 | A Director or alternate Director may hold any other office or place of profit under the Company (other than the office of Auditor) in conjunction with their office of Director for such period and on such terms as to remuneration and otherwise as the Directors may determine. |
| 32.2 | A Director or alternate Director may act on their own or by, through or on behalf of their firm in a professional capacity for the Company and they or their firm shall be entitled to remuneration for professional services as if they were not a Director or alternate Director. |
| 32.3 | A Director or alternate Director may be or become a director or other officer of or otherwise interested in any company promoted by the Company or in which the Company may be interested as a shareholder, a contracting party or otherwise, and no such Director or alternate Director shall be accountable to the Company for any remuneration or other benefits received by them as a director or officer of, or from their interest in, such other company. |
| 32.4 | No person shall be disqualified from the office of Director or alternate Director or prevented by such office from contracting with the Company, either as vendor, purchaser or otherwise, nor shall any such contract or any contract or transaction entered into by or on behalf of the Company in which any Director or alternate Director shall be in any way interested be or be liable to be avoided, nor shall any Director or alternate Director so contracting or being so interested be liable to account to the Company for any profit realised by or arising in connection with any such contract or transaction by reason of such Director or alternate Director holding office or of the fiduciary relationship thereby established. A Director (or their alternate Director in their absence) shall be at liberty to vote in respect of any contract or transaction in which they are interested provided that the nature of the interest of any Director or alternate Director in any such contract or transaction shall be disclosed by them at or prior to its consideration and any vote thereon. |
| 32.5 | A general notice that a Director or alternate Director is a shareholder, director, officer or employee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company shall be sufficient disclosure for the purposes of voting on a resolution in respect of a contract or transaction in which they have an interest, and after such general notice it shall not be necessary to give special notice relating to any particular transaction. |
| 33 | Minutes |
The Directors shall cause minutes to be made in books kept for the purpose of recording all appointments of officers made by the Directors, all proceedings at meetings of the Company or the holders of any class of Shares and of the Directors, and of committees of the Directors, including the names of the Directors or alternate Directors present at each meeting.
| 34 | Delegation of Directors’ Powers |
| 34.1 | The Directors may delegate any of their powers, authorities and discretions, including the power to sub-delegate, to any committee consisting of one or more Directors. They may also delegate to any managing director or any Director holding any other executive office such of their powers, authorities and discretions as they consider desirable to be exercised by that Director provided that an alternate Director may not act as managing director and the appointment of a managing director shall be revoked forthwith if they cease to be a Director. Any such delegation may be made subject to any conditions the Directors may impose and either collaterally with or to the exclusion of their own powers and any such delegation may be revoked or altered by the Directors. Subject to any such conditions, the proceedings of a committee of Directors shall be governed by the Articles regulating the proceedings of Directors, so far as they are capable of applying. |
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| 34.2 | The Directors may establish any committees, local boards or agencies or appoint any person to be a manager or agent for managing the affairs of the Company and may appoint any person to be a member of such committees, local boards or agencies. Any such appointment may be made subject to any conditions the Directors may impose, and either collaterally with or to the exclusion of their own powers and any such appointment may be revoked or altered by the Directors. Subject to any such conditions, the proceedings of any such committee, local board or agency shall be governed by the Articles regulating the proceedings of Directors, so far as they are capable of applying. |
| 34.3 | The Directors may by power of attorney or otherwise appoint any person to be the agent of the Company on such conditions as the Directors may determine, provided that the delegation is not to the exclusion of their own powers and may be revoked by the Directors at any time. |
| 34.4 | The Directors may by power of attorney or otherwise appoint any company, firm, person or body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or authorised signatory of the Company for such purpose and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under the Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney or other appointment may contain such provisions for the protection and convenience of persons dealing with any such attorneys or authorised signatories as the Directors may think fit and may also authorise any such attorney or authorised signatory to delegate all or any of the powers, authorities and discretions vested in them. |
| 34.5 | The Directors may appoint such officers of the Company (including, for the avoidance of doubt and without limitation, any secretary) as they consider necessary on such terms, at such remuneration and to perform such duties, and subject to such provisions as to disqualification and removal as the Directors may think fit. Unless otherwise specified in the terms of their appointment an officer of the Company may be removed by resolution of the Directors or Members. An officer of the Company may vacate their office at any time if they give notice in writing to the Company that they resign their office. |
| 35 | Alternate Directors |
| 35.1 | Any Director (but not an alternate Director) may by writing appoint any other Director, or any other person willing to act, to be an alternate Director and by writing may remove from office an alternate Director so appointed by them. |
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| 35.2 | An alternate Director shall be entitled to receive notice of all meetings of Directors and of all meetings of committees of Directors of which their appointor is a member, to attend and vote at every such meeting at which the Director appointing them is not personally present, to sign any written resolution of the Directors, and generally to perform all the functions of their appointor as a Director in their absence. |
| 35.3 | An alternate Director shall cease to be an alternate Director if their appointor ceases to be a Director. |
| 35.4 | Any appointment or removal of an alternate Director shall be by notice to the Company signed by the Director making or revoking the appointment or in any other manner approved by the Directors. |
| 35.5 | Subject to the provisions of the Articles, an alternate Director shall be deemed for all purposes to be a Director and shall alone be responsible for their own acts and defaults and shall not be deemed to be the agent of the Director appointing them. |
| 36 | No Minimum Shareholding |
The Company in general meeting may fix a minimum shareholding required to be held by a Director, but unless and until such a shareholding qualification is fixed a Director is not required to hold Shares.
| 37 | Remuneration of Directors |
| 37.1 | The remuneration to be paid to the Directors, if any, shall be such remuneration as the Directors shall determine. The Directors shall also be entitled to be paid all travelling, hotel and other expenses properly incurred by them in connection with their attendance at meetings of Directors or committees of Directors, or general meetings of the Company, or separate meetings of the holders of any class of Shares or debentures of the Company, or otherwise in connection with the business of the Company or the discharge of their duties as a Director, or to receive a fixed allowance in respect thereof as may be determined by the Directors, or a combination partly of one such method and partly the other. |
| 37.2 | The Directors may by resolution approve additional remuneration to any Director for any services which in the opinion of the Directors go beyond that Director’s ordinary routine work as a Director. Any fees paid to a Director who is also counsel, attorney or solicitor to the Company, or otherwise serves it in a professional capacity shall be in addition to their remuneration as a Director. |
| 38 | Seal |
| 38.1 | The Company may, if the Directors so determine, have a Seal. The Seal shall only be used by the authority of the Directors or of a committee of the Directors authorised by the Directors. Every instrument to which the Seal has been affixed shall be signed by at least one person who shall be either a Director or some officer of the Company or other person appointed by the Directors for the purpose. |
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| 38.2 | The Company may have for use in any place or places outside the Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of the common Seal of the Company and, if the Directors so determine, with the addition on its face of the name of every place where it is to be used. |
| 38.3 | A Director or officer, representative or attorney of the Company may without further authority of the Directors affix the Seal over their signature alone to any document of the Company required to be authenticated by them under seal or to be filed with the Registrar of Companies in the Cayman Islands or elsewhere wheresoever. |
| 39 | Dividends, Distributions and Reserve |
| 39.1 | Subject to the Statute and this Article and except as otherwise provided by the rights attached to any Shares, the Directors may resolve to pay Dividends and other distributions on Shares in issue and authorise payment of the Dividends or other distributions out of the funds of the Company lawfully available therefor. A Dividend shall be deemed to be an interim Dividend unless the terms of the resolution pursuant to which the Directors resolve to pay such Dividend specifically state that such Dividend shall be a final Dividend. No Dividend or other distribution shall be paid except out of the realised or unrealised profits of the Company, out of the share premium account or as otherwise permitted by law. |
| 39.2 | Except as otherwise provided by the rights attached to any Shares, all Dividends and other distributions shall be paid according to the par value of the Shares that a Member holds. If any Share is issued on terms providing that it shall rank for Dividend as from a particular date, that Share shall rank for Dividend accordingly. |
| 39.3 | The Directors may deduct from any Dividend or other distribution payable to any Member all sums of money (if any) then payable by the Member to the Company on account of calls or otherwise. |
| 39.4 | The Directors may resolve that any Dividend or other distribution be paid wholly or partly by the distribution of specific assets and in particular (but without limitation) by the distribution of shares, debentures, or securities of any other company or in any one or more of such ways and where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional Shares and may fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon the basis of the value so fixed in order to adjust the rights of all Members and may vest any such specific assets in trustees in such manner as may seem expedient to the Directors. |
| 39.5 | Except as otherwise provided by the rights attached to any Shares, Dividends and other distributions may be paid in any currency. The Directors may determine the basis of conversion for any currency conversions that may be required and how any costs involved are to be met. |
| 39.6 | The Directors may, before resolving to pay any Dividend or other distribution, set aside such sums as they think proper as a reserve or reserves which shall, at the discretion of the Directors, be applicable for any purpose of the Company and pending such application may, at the discretion of the Directors, be employed in the business of the Company. |
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| 39.7 | Any Dividend, other distribution, interest or other monies payable in cash in respect of Shares may be paid by wire transfer to the holder or by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of the holder who is first named on the Register of Members or to such person and to such address as such holder or joint holders may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. Any one of two or more joint holders may give effectual receipts for any Dividends, other distributions, bonuses, or other monies payable in respect of the Share held by them as joint holders. |
| 39.8 | No Dividend or other distribution shall bear interest against the Company. |
| 39.9 | Any Dividend or other distribution which cannot be paid to a Member and/or which remains unclaimed after six months from the date on which such Dividend or other distribution becomes payable may, in the discretion of the Directors, be paid into a separate account in the Company’s name, provided that the Company shall not be constituted as a trustee in respect of that account and the Dividend or other distribution shall remain as a debt due to the Member. Any Dividend or other distribution which remains unclaimed after a period of six years from the date on which such Dividend or other distribution becomes payable shall be forfeited and shall revert to the Company. |
| 40 | Capitalisation |
The Directors may at any time capitalise any sum standing to the credit of any of the Company’s reserve accounts or funds (including the share premium account and capital redemption reserve fund) or any sum standing to the credit of the profit and loss account or otherwise available for distribution; appropriate such sum to Members in the proportions in which such sum would have been divisible amongst such Members had the same been a distribution of profits by way of Dividend or other distribution; and apply such sum on their behalf in paying up in full unissued Shares for allotment and distribution credited as fully paid-up to and amongst them in the proportion aforesaid. In such event the Directors shall do all acts and things required to give effect to such capitalisation, with full power given to the Directors to make such provisions as they think fit in the case of Shares becoming distributable in fractions (including provisions whereby the benefit of fractional entitlements accrue to the Company rather than to the Members concerned). The Directors may authorise any person to enter on behalf of all of the Members interested into an agreement with the Company providing for such capitalisation and matters incidental or relating thereto and any agreement made under such authority shall be effective and binding on all such Members and the Company.
| 41 | Books of Account |
| 41.1 | The Directors shall cause proper books of account (including, where applicable, material underlying documentation including contracts and invoices) to be kept with respect to all sums of money received and expended by the Company and the matters in respect of which the receipt or expenditure takes place, all sales and purchases of goods by the Company and the assets and liabilities of the Company. Such books of account must be retained for a minimum period of five years from the date on which they are prepared. Proper books shall not be deemed to be kept if there are not kept such books of account as are necessary to give a true and fair view of the state of the Company’s affairs and to explain its transactions. |
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| 41.2 | The Directors shall determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors and no Member (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by Statute or authorised by the Directors or by the Company in general meeting. |
| 41.3 | The Directors may cause to be prepared and to be laid before the Company in general meeting profit and loss accounts, balance sheets, group accounts (if any) and such other reports and accounts as may be required by law. |
| 42 | Audit |
| 42.1 | The Directors may appoint an Auditor of the Company who shall hold office on such terms as the Directors determine. |
| 42.2 | Every Auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company and shall be entitled to require from the Directors and officers of the Company such information and explanation as may be necessary for the performance of the duties of the Auditor. |
| 42.3 | Auditors shall, if so required by the Directors, make a report on the accounts of the Company during their tenure of office at the next annual general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an ordinary company, and at the next extraordinary general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an exempted company, and at any other time during their term of office, upon request of the Directors or any general meeting of the Members. |
| 43 | Notices |
| 43.1 | Notices shall be in writing and may be given by the Company to any Member either personally or by sending it by courier, post, telex, fax or email to such Member or to such Member’s address as shown in the Register of Members (or where the notice is given by email by sending it to the email address provided by such Member). Any notice, if posted from one country to another, is to be sent by airmail. |
| 43.2 | Where a notice is sent by courier, service of the notice shall be deemed to be effected by delivery of the notice to a courier company, and shall be deemed to have been received on the third day (not including Saturdays or Sundays or public holidays) following the day on which the notice was delivered to the courier. Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, pre paying and posting a letter containing the notice, and shall be deemed to have been received on the fifth day (not including Saturdays or Sundays or public holidays in the Cayman Islands) following the day on which the notice was posted. Where a notice is sent by telex or fax, service of the notice shall be deemed to be effected by properly addressing and sending such notice and shall be deemed to have been received on the same day that it was transmitted. Where a notice is given by email service shall be deemed to be effected by transmitting the email to the email address provided by the intended recipient and shall be deemed to have been received on the same day that it was sent, and it shall not be necessary for the receipt of the email to be acknowledged by the recipient. |
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| 43.3 | A notice may be given by the Company to the person or persons which the Company has been advised are entitled to a Share or Shares in consequence of the death or bankruptcy of a Member in the same manner as other notices which are required to be given under the Articles and shall be addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt, or by any like description at the address supplied for that purpose by the persons claiming to be so entitled, or at the option of the Company by giving the notice in any manner in which the same might have been given if the death or bankruptcy had not occurred. |
| 43.4 | Notice of every general meeting shall be given in any manner authorised by the Articles to every holder of Shares carrying an entitlement to receive such notice on the record date for such meeting except that in the case of joint holders the notice shall be sufficient if given to the joint holder first named in the Register of Members and every person upon whom the ownership of a Share devolves because they are a legal personal representative or a trustee in bankruptcy of a Member where the Member but for their death or bankruptcy would be entitled to receive notice of the meeting, and no other person shall be entitled to receive notices of general meetings. |
| 44 | Winding Up |
| 44.1 | If the Company shall be wound up the liquidator shall apply the assets of the Company in satisfaction of creditors’ claims in such manner and order as such liquidator thinks fit. Subject to the rights attaching to any Shares, in a winding up: |
| (a) | if the assets available for distribution amongst the Members shall be insufficient to repay the whole of the Company’s issued share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the par value of the Shares held by them; or |
| (b) | if the assets available for distribution amongst the Members shall be more than sufficient to repay the whole of the Company’s issued share capital at the commencement of the winding up, the surplus shall be distributed amongst the Members in proportion to the par value of the Shares held by them at the commencement of the winding up subject to a deduction from those Shares in respect of which there are monies due, of all monies payable to the Company for unpaid calls or otherwise. |
| 44.2 | If the Company shall be wound up the liquidator may, subject to the rights attaching to any Shares and with the approval of a Special Resolution of the Company and any other approval required by the Statute, divide amongst the Members in kind the whole or any part of the assets of the Company (whether such assets shall consist of property of the same kind or not) and may for that purpose value any assets and determine how the division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like approval, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Members as the liquidator, with the like approval, shall think fit, but so that no Member shall be compelled to accept any asset upon which there is a liability. |
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| 45 | Indemnity and Insurance |
| 45.1 | Every Director and officer of the Company (which for the avoidance of doubt, shall not include auditors of the Company), together with every former Director and former officer of the Company (each an “Indemnified Person”) shall be indemnified out of the assets of the Company against any liability, action, proceeding, claim, demand, costs, damages or expenses, including legal expenses, whatsoever which they or any of them may incur as a result of any act or failure to act in carrying out their functions other than such liability (if any) that they may incur by reason of their own actual fraud or wilful default. No Indemnified Person shall be liable to the Company for any loss or damage incurred by the Company as a result (whether direct or indirect) of the carrying out of their functions unless that liability arises through the actual fraud or wilful default of such Indemnified Person. No person shall be found to have committed actual fraud or wilful default under this Article unless or until a court of competent jurisdiction shall have made a finding to that effect. |
| 45.2 | The Company shall advance to each Indemnified Person reasonable attorneys’ fees and other costs and expenses incurred in connection with the defence of any action, suit, proceeding or investigation involving such Indemnified Person for which indemnity will or could be sought. In connection with any advance of any expenses hereunder, the Indemnified Person shall execute an undertaking to repay the advanced amount to the Company if it shall be determined by final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification pursuant to this Article. If it shall be determined by a final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification with respect to such judgment, costs or expenses, then such party shall not be indemnified with respect to such judgment, costs or expenses and any advancement shall be returned to the Company (without interest) by the Indemnified Person. |
| 45.3 | The Directors, on behalf of the Company, may purchase and maintain insurance for the benefit of any Director or other officer of the Company against any liability which, by virtue of any rule of law, would otherwise attach to such person in respect of any negligence, default, breach of duty or breach of trust of which such person may be guilty in relation to the Company. |
| 46 | Financial Year |
Unless the Directors otherwise prescribe, the financial year of the Company shall end on 31st December in each year and, following the year of incorporation, shall begin on 1st January in each year.
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| 47 | Transfer by Way of Continuation |
If the Company is exempted as defined in the Statute, it shall, subject to the provisions of the Statute and with the approval of a Special Resolution, have the power to register by way of continuation as a body corporate under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.
| 48 | Mergers and Consolidations |
The Company shall have the power to merge or consolidate with one or more other constituent companies (as defined in the Statute) upon such terms as the Directors may determine and (to the extent required by the Statute) with the approval of a Special Resolution.
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| Dated this 2nd day of December 2024. | |
| Mapcal Limited | |
| of PO Box 309, Ugland House | |
| Grand Cayman | |
| KY1-1104 | |
| Cayman Islands | |
| acting by: | |
| /s/ Anadra McLaughlin | |
| Anadra McLaughlin | |
| /s/ Michelle Daykin | |
| Michelle Daykin | |
| Witness to the above signature |
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Auth Code: B19388789867 |
Exhibit 3.2
THE COMPANIES ACT (AS REVISED) OF THE CAYMAN ISLANDS
AMENDED AND RESTATED MEMORANDUM OF ASSOCIATION OF
CCH Holdings Ltd
An Exempted Company Limited By Shares
(adopted by a Special Resolution passed on [●], 2025 and effective immediately prior to the completion of the listing of the Company’s Ordinary Shares)
| 1. | The name of the Company is CCH Holdings Ltd. |
| 2. | The Registered Office of the Company is at the offices of Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands, or at such other place within the Cayman Islands as the Directors may decide. |
| 3. | The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the Companies Act or any other law of the Cayman Islands. |
| 4. | The Company shall have and be capable of exercising all the functions of a natural person of full capacity irrespective of any question of corporate benefit as provided by the Companies Act. |
| 5. | The Company will not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the Company carried on outside the Cayman Islands; provided that nothing in this section shall be construed as to prevent the Company effecting and concluding contracts in the Cayman Islands, and exercising in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands. |
| 6. | The liability of each Shareholder is limited to the amount, if any, unpaid on the Shares held by such Shareholder. |
| 7. |
The authorized share capital of the Company is US$50,000 divided into 5,000,000,000 shares of a par value of US$0.00001 each, comprising (i) 4,000,000,000 shares are designated as Ordinary Shares of a par value of US$0.00001 each, and (ii) 1,000,000,000 shares of a par value of US$0.00001 each of such class or classes (however designated) as the board of directors may determine in accordance with the Articles.
Subject to the Companies Act and the Articles, the Company shall have power to redeem or purchase any of its Shares and to increase or reduce its authorized share capital and to sub-divide or consolidate the said Shares or any of them and to issue all or any part of its capital whether original, redeemed, increased or reduced with or without any preference, priority, special privilege or other rights or subject to any postponement of rights or to any conditions or restrictions whatsoever and so that unless the conditions of issue shall otherwise expressly provide every issue of shares whether stated to be ordinary, preference or otherwise shall be subject to the powers on the part of the Company hereinbefore provided. |
| 8. | The Company has the power contained in the Companies Act to deregister in the Cayman Islands and be registered by way of continuation in some other jurisdiction. |
| 9. | Capitalized terms that are not defined in this Amended and Restated Memorandum of Association bear the same meanings as those given in the Amended and Restated Articles of Association of the Company. |
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THE COMPANIES ACT (AS REVISED) OF THE CAYMAN ISLANDS
AMENDED AND RESTATED ARTICLES OF ASSOCIATION OF
CCH Holdings Ltd
An Exempted Company Limited By Shares
(adopted
by a Special Resolution passed on [●], 2025 and effective immediately prior to the
completion of the listing of the Company’s
Ordinary Shares)
TABLE A
The regulations contained or incorporated in Table ‘A’ in the First Schedule of the Companies Act shall not apply to the Company and the following Articles shall comprise the Articles of Association of the Company.
INTERPRETATION
| 1. | In these Articles the following defined terms will have the meanings ascribed to them, if not inconsistent with the subject or context: | ||
| “Affiliate” | means in respect of a Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person, and (i) in the case of a natural person, shall include, without limitation, such person’s spouse, parents, children, siblings, mother-in-law, father-in-law, brothers-in-law and sisters-in-law, a trust for the benefit of any of the foregoing, and a corporation, partnership or any other entity wholly or jointly owned by any of the foregoing, and (ii) in the case of an entity, shall include a partnership, a corporation or any other entity or any natural person which directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such entity. The term “control” shall mean the ownership, directly or indirectly, of shares possessing more than fifty percent (50%) of the voting power of the corporation, partnership or other entity (other than, in the case of a corporation, securities having such power only by reason of the happening of a contingency), or having the power to control the management or elect a majority of members to the board of directors or equivalent decision-making body of such corporation, partnership or other entity; | ||
| “Articles” | means these articles of association of the Company, as amended or substituted from time to time; | ||
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| “Board” and “Board of Directors” and “Directors” | means the directors of the Company for the time being, or as the case may be, the directors assembled as a board or as a committee thereof; | ||
| “Chairman” | means the chairman of the Board of Directors; | ||
| “Class” or “Classes” | means any class or classes of Shares as may from time to time be issued by the Company; | ||
| “Commission” | means the Securities and Exchange Commission of the United States of America or any other federal agency for the time being administering the Securities Act; | ||
| “Communication Facilities” | means technology (including without limitation video, video-conferencing, internet or online conferencing applications, telephone or tele-conferencing and/or any other video-communications, internet or online conferencing application or telecommunications facilities) by means of which all natural persons participating in a meeting are capable of hearing and being heard by each other; | ||
| “Company” | means CCH Holdings Ltd, a Cayman Islands exempted company limited by shares; | ||
| “Companies Act” | means the Companies Act (As Revised) of the Cayman Islands and any statutory amendment or re-enactment thereof; | ||
| “Company’s Website” | means the main corporate/investor relations website of the Company, the address or domain name of which has been disclosed in any registration statement filed by the Company with the Commission in connection with its listing of any Shares, or which has otherwise been notified to Shareholders; | ||
| “Designated Stock Exchange” | means the stock exchange in the United States on which any Shares are listed for trading; | ||
| “Designated Stock Exchange Rules” | means the relevant code, rules and regulations, as amended, from time to time, applicable as a result of the original and continued listing of any Shares on the Designated Stock Exchange; | ||
| “electronic” | has the meaning given to it in the Electronic Transactions Act and any amendment thereto or re-enactments thereof for the time being in force and includes every other law incorporated therewith or substituted therefor; |
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| “electronic communication” | means electronic posting to the Company’s Website, transmission to any number, address or internet website or other electronic delivery methods as otherwise decided and approved by not less than two-thirds of the vote of the Board; | ||
| “Electronic Transactions Act” | means the Electronic Transactions Act (As Revised) of the Cayman Islands and any statutory amendment or re-enactment thereof; | ||
| “electronic record” | has the meaning given to it in the Electronic Transactions Act and any amendment thereto or re-enactments thereof for the time being in force and includes every other law incorporated therewith or substituted therefor; | ||
| “Memorandum of Association” | means the memorandum of association of the Company, as amended or substituted from time to time; | ||
| “Ordinary Resolution” | means a resolution: | ||
(a) passed by a simple majority of the votes cast by such Shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy or, in the case of corporations, by their duly authorized representatives, at a general meeting of the Company held in accordance with these Articles; or
(b) approved in writing by all of the Shareholders entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Shareholders and the effective date of the resolution so adopted shall be the date on which the instrument, or the last of such instruments, if more than one, is executed; | |||
| “Ordinary Share” | means an ordinary share of the Company, at a par value of US$0.00001 each; | ||
| “paid up” | means paid up as to the par value in respect of the issue of any Shares and includes credited as paid up; | ||
| “Person” | means any natural person, firm, company, joint venture, partnership, corporation, association or other entity (whether or not having a separate legal personality) or any of them as the context so requires; | ||
| “Present” | means in respect of any Person, such Person’s presence at a general meeting of Shareholders (or any meeting of the holders of any Class of Shares), which may be satisfied by means of such Person or, if a corporation or other non-natural Person, its duly authorized representative (or, in the case of any Shareholder, a proxy which has been validly appointed by such Shareholder in accordance with these Articles), being: (a) physically present at the venue specified in the notice convening the meeting; or (b) in the case of any meeting at which Communication Facilities are permitted in accordance with these Articles, including any Virtual Meeting, connected by means of the use of such Communication Facilities in accordance with procedures specified in the notice convening such general meeting; and “Presence” shall be construed accordingly; |
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| “Register” | means the register of Members of the Company maintained in accordance with the Companies Act; | ||
| “Registered Office” | means the registered office of the Company as required by the Companies Act; | ||
| “Seal” | means the common seal of the Company (if adopted) including any facsimile thereof; | ||
| “Secretary” | means any Person appointed by the Directors to perform any of the duties of the secretary of the Company; | ||
| “Securities Act” | means the Securities Act of 1933 of the United States of America, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time; | ||
| “Share” | means a share in the share capital of the Company. All references to “Shares” herein shall be deemed to be Shares of any or all Classes as the context may require. For the avoidance of doubt in these Articles the expression “Share” shall include a fraction of a Share; | ||
| “Shareholder” or “Member” | means a Person who is registered as the holder of one or more Shares in the Register; | ||
| “Share Premium Account” | means the share premium account established in accordance with these Articles and the Companies Act; | ||
| “signed” | means bearing a signature or representation of a signature affixed by mechanical means or an electronic symbol or process attached to or logically associated with an electronic communication and executed or adopted by a Person with the intent to sign the electronic communication; |
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| “Special Resolution” | means a special resolution of the Company passed in accordance with the Companies Act, being a resolution: | ||
(a) passed by not less than two-thirds of the votes cast by such Shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy or, in the case of corporations, by their duly authorized representatives, at a general meeting of the Company of which notice specifying the intention to propose the resolution as a special resolution has been duly given; or | |||
| (b) approved in writing by all of the Shareholders entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Shareholders and the effective date of the special resolution so adopted shall be the date on which the instrument or the last of such instruments, if more than one, is executed; | |||
| “Treasury Share” | means a Share held in the name of the Company as a treasury share in accordance with the Companies Act; | ||
| “United States” | means the United States of America, its territories, its possessions and all areas subject to its jurisdiction; and | ||
| “Virtual Meeting” | means any general meeting of the Shareholders (or any meeting of the holders of any Class of Shares) at which the Shareholders (and any other permitted participants of such meeting, including without limitation the chairman of the meeting and any Directors) are permitted to be Present solely by means of Communication Facilities. |
| 2. | In these Articles, save where the context requires otherwise: |
| (a) | words importing the singular number shall include the plural number and vice versa; |
| (b) | words importing the masculine gender only shall include the feminine gender and any Person as the context may require; |
| (c) | the word “may” shall be construed as permissive and the word “shall” shall be construed as imperative; |
| (d) | reference to a dollar or dollars (or US$) and to a cent or cents is reference to dollars and cents of the United States; |
| (e) | reference to a statutory enactment shall include reference to any amendment or re-enactment thereof for the time being in force; |
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| (f) | reference to any determination by the Directors shall be construed as a determination by the Directors in their sole and absolute discretion and shall be applicable either generally or in any particular case; |
| (g) | reference to “in writing” shall be construed as written or represented by any means reproducible in writing, including any form of print, lithograph, email, facsimile, photograph or telex or represented by any other substitute or format for storage or transmission for writing including in the form of an electronic record or partly one and partly another; |
| (h) | any requirements as to delivery under the Articles include delivery in the form of an electronic record or an electronic communication; |
| (i) | any requirements as to execution or signature under the Articles, including the execution of the Articles themselves, can be satisfied in the form of an electronic signature as defined in the Electronic Transactions Act; and |
| (j) | Sections 8 and 19(3) of the Electronic Transactions Act shall not apply. |
| 3. | Subject to the last two preceding Articles, any words defined in the Companies Act shall, if not inconsistent with the subject or context, bear the same meaning in these Articles. |
PRELIMINARY
| 4. | The business of the Company may be conducted as the Directors see fit. |
| 5. | The Registered Office shall be at such address in the Cayman Islands as the Directors may from time to time determine. The Company may in addition establish and maintain such other offices and places of business and agencies in such places as the Directors may from time to time determine. |
| 6. | The expenses incurred in the formation of the Company and in connection with the offer for subscription and issue of Shares shall be paid by the Company. Such expenses may be amortized over such period as the Directors may determine and the amount so paid shall be charged against income and/or capital in the accounts of the Company as the Directors shall determine. |
| 7. | The Directors shall keep, or cause to be kept, the Register at such place as the Directors may from time to time determine and, in the absence of any such determination, the Register shall be kept at the Registered Office. |
SHARES
| 8. | Subject to these Articles, all Shares for the time being unissued shall be under the control of the Directors who may, in their absolute discretion and without the approval of the Members, cause the Company to: |
| (a) | issue, allot and dispose of Shares (including, without limitation, preferred shares) (whether in certificated form or non-certificated form) to such Persons, in such manner, on such terms and having such rights and being subject to such restrictions as they may from time to time determine; |
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| (b) | grant rights over Shares or other securities to be issued in one or more classes or series as they deem necessary or appropriate and determine the designations, powers, preferences, privileges and other rights attaching to such Shares or securities, including dividend rights, voting rights, conversion rights, terms of redemption and liquidation preferences, any or all of which may be greater than the powers, preferences, privileges and rights associated with the then issued and outstanding Shares, at such times and on such other terms as they think proper; and |
| (c) | grant options with respect to Shares and issue warrants or similar instruments with respect thereto. |
| 9. | The Directors may authorize the division of Shares into any number of Classes and the different Classes shall be authorized, established and designated (or re-designated as the case may be) and the variations in the relative rights (including, without limitation, voting, dividend and redemption rights), restrictions, preferences, privileges and payment obligations as between the different Classes (if any) may be fixed and determined by the Directors or by an Ordinary Resolution. The Directors may issue Shares with such preferred or other rights, all or any of which may be greater than the rights of Ordinary Shares, at such time and on such terms as they may think appropriate. Notwithstanding Article 13, the Directors may issue from time to time, out of the authorized share capital of the Company (other than the authorized but unissued Ordinary Shares), series of preferred shares in their absolute discretion and without approval of the Members; provided, however, before any preferred shares of any such series are issued, the Directors shall by resolution of Directors determine, with respect to any series of preferred shares, the terms and rights of that series, including: |
| (a) | the designation of such series, the number of preferred shares to constitute such series and the subscription price thereof if different from the par value thereof; |
| (b) | whether the preferred shares of such series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights, which may be general or limited; |
| (c) | the dividends, if any, payable on such series, whether any such dividends shall be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, and the preference or relation which such dividends shall bear to the dividends payable on any shares of any other class or any other series of shares; |
| (d) | whether the preferred shares of such series shall be subject to redemption by the Company, and, if so, the times, prices and other conditions of such redemption; |
| (e) | whether the preferred shares of such series shall have any rights to receive any part of the assets available for distribution amongst the Members upon the liquidation of the Company, and, if so, the terms of such liquidation preference, and the relation which such liquidation preference shall bear to the entitlements of the holders of shares of any other class or any other series of shares; |
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| (f) | whether the preferred shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the preferred shares of such series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof; |
| (g) | whether the preferred shares of such series shall be convertible into, or exchangeable for, shares of any other class or any other series of preferred shares or any other securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchange; |
| (h) | the limitations and restrictions, if any, to be effective while any preferred shares of such series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Company of, the existing shares or shares of any other class of shares or any other series of preferred shares; |
| (i) | the conditions or restrictions, if any, upon the creation of indebtedness of the Company or upon the issue of any additional shares, including additional shares of such series or of any other class of shares or any other series of preferred shares; and |
| (j) | any other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations and restrictions thereof; |
and, for such purposes, the Directors may reserve an appropriate number of Shares for the time being unissued. The Company shall not issue Shares to bearer.
| 10. | The Company may insofar as may be permitted by law, pay a commission to any Person in consideration of his or her subscribing or agreeing to subscribe whether absolutely or conditionally for any Shares. Such commissions may be satisfied by the payment of cash or the lodgment of fully or partly paid-up Shares or partly in one way and partly in the other. The Company may also pay such brokerage as may be lawful on any issue of Shares. |
| 11. | The Directors may refuse to accept any application for Shares, and may accept any application in whole or in part, for any reason or for no reason. |
ORDINARY SHARES
| 12. | Holders of Ordinary Shares and shares of any other class or classes designated by the Directors shall at all times vote together as one class on all resolutions submitted to a vote by the Members. Each Ordinary Share shall entitle the holder thereof to one (1) vote on all matters subject to vote at general meetings of the Company. |
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MODIFICATION OF RIGHTS
| 13. | Whenever the capital of the Company is divided into different Classes the rights attached to any such Class may, subject to any rights or restrictions for the time being attached to any Class, only be materially adversely varied with the consent in writing of the holders of at least two-thirds (2/3) of the issued Shares of that Class or with the sanction of a Special Resolution passed at a separate meeting of the holders of the Shares of that Class. To every such separate meeting all the provisions of these Articles relating to general meetings of the Company or to the proceedings thereat shall, mutatis mutandis, apply, except that the necessary quorum shall be one or more Persons holding or representing by proxy at least one-fourth (1/4) in nominal or par value amount of the issued Shares of the relevant Class (but so that if at any adjourned meeting of such holders a quorum as above defined is not Present, those Shareholders who are Present shall form a quorum) and that, subject to any rights or restrictions for the time being attached to the Shares of that Class, every Shareholder of the Class shall on a poll have one vote for each Share of the Class held by him. For the purposes of this Article the Directors may treat all the Classes or any two or more Classes as forming one Class if they consider that all such Classes would be affected in the same way by the proposals under consideration, but in any other case shall treat them as separate Classes. |
| 14. | The rights conferred upon the holders of the Shares of any Class issued with preferred or other rights shall not, subject to any rights or restrictions for the time being attached to the Shares of that Class, be deemed to be materially adversely varied by, inter alia, the creation, allotment or issue of further Shares ranking pari passu with or subsequent to them or the redemption or purchase of any Shares of any Class by the Company. The rights of the holders of Shares shall not be deemed to be materially adversely varied by the creation or issue of Shares with preferred or other rights including, without limitation, the creation of Shares with enhanced or weighted voting rights. |
CERTIFICATES
| 15. | Every Person whose name is entered as a Member in the Register may, without payment and upon its written request, request a certificate within two calendar months after allotment or lodgment of transfer (or within such other period as the conditions of issue shall provide) in the form determined by the Directors. All certificates shall specify the Share or Shares held by that Person, provided that in respect of a Share or Shares held jointly by several Persons the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a Share to one of several joint holders shall be sufficient delivery to all. All certificates for Shares shall be delivered personally or sent through the post addressed to the Member entitled thereto at the Member’s registered address as appearing in the Register. |
| 16. | Every share certificate of the Company shall bear legends required under the applicable laws, including the Securities Act. |
| 17. | Any two or more certificates representing Shares of any one Class held by any Member may at the Member’s request be cancelled and a single new certificate for such Shares issued in lieu on payment (if the Directors shall so require) of one dollar (US$1.00) or such smaller sum as the Directors shall determine. |
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| 18. | If a share certificate shall be damaged or defaced or alleged to have been lost, stolen or destroyed, a new certificate representing the same Shares may be issued to the relevant Member upon request, subject to delivery up of the old certificate or (if alleged to have been lost, stolen or destroyed) compliance with such conditions as to evidence and indemnity and the payment of out-of-pocket expenses of the Company in connection with the request as the Directors may think fit. |
| 19. | In the event that Shares are held jointly by several Persons, any request may be made by any one of the joint holders and if so made shall be binding on all of the joint holders. |
FRACTIONAL SHARES
| 20. | The Directors may issue fractions of a Share and, if so issued, a fraction of a Share shall be subject to and carry the corresponding fraction of liabilities (whether with respect to nominal or par value, premium, contributions, calls or otherwise), limitations, preferences, privileges, qualifications, restrictions, rights (including, without prejudice to the generality of the foregoing, voting and participation rights) and other attributes of a whole Share. If more than one fraction of a Share of the same Class is issued to or acquired by the same Shareholder such fractions shall be accumulated. |
LIEN
| 21. | The Company has a first and paramount lien on every Share (whether or not fully paid) for all amounts (whether presently payable or not) payable at a fixed time or called in respect of that Share. The Company also has a first and paramount lien on every Share registered in the name of a Person indebted or under liability to the Company (whether he/she is the sole registered holder of a Share or one of two or more joint holders) for all amounts owing by him/her or his/her estate to the Company (whether or not presently payable). The Directors may at any time declare a Share to be wholly or in part exempt from the provisions of this Article. The Company’s lien on a Share extends to any amount payable in respect of it, including but not limited to dividends. |
| 22. | The Company may sell, in such manner as the Directors in their absolute discretion think fit, any Share on which the Company has a lien, but no sale shall be made unless an amount in respect of which the lien exists is presently payable nor until the expiration of fourteen (14) calendar days after a notice in writing, demanding payment of such part of the amount in respect of which the lien exists as is presently payable, has been given to the registered holder for the time being of the Share, or the Persons entitled thereto by reason of his or her death or bankruptcy. |
| 23. | For giving effect to any such sale the Directors may authorize a Person to transfer the Shares sold to the purchaser thereof. The purchaser shall be registered as the holder of the Shares comprised in any such transfer and he shall not be bound to see to the application of the purchase money, nor shall his or her title to the Shares be affected by any irregularity or invalidity in the proceedings in reference to the sale. |
| 24. | The proceeds of the sale after deduction of expenses, fees and commission incurred by the Company shall be received by the Company and applied in payment of such part of the amount in respect of which the lien exists as is presently payable, and the residue shall (subject to a like lien for sums not presently payable as existed upon the Shares prior to the sale) be paid to the Person entitled to the Shares immediately prior to the sale. |
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CALLS ON SHARES
| 25. | Subject to the terms of the allotment, the Directors may from time to time make calls upon the Shareholders in respect of any moneys unpaid on their Shares, and each Shareholder shall (subject to receiving at least fourteen (14) calendar days’ notice specifying the time or times of payment) pay to the Company at the time or times so specified the amount called on such Shares. A call shall be deemed to have been made at the time when the resolution of the Directors authorizing such call was passed. |
| 26. | The joint holders of a Share shall be jointly and severally liable to pay calls in respect thereof. |
| 27. | If a sum called in respect of a Share is not paid before or on the day appointed for payment thereof, the Person from whom the sum is due shall pay interest upon the sum at the rate of eight percent (8%) per annum from the day appointed for the payment thereof to the time of the actual payment, but the Directors shall be at liberty to waive payment of that interest wholly or in part. |
| 28. | The provisions of these Articles as to the liability of joint holders and as to payment of interest shall apply in the case of non-payment of any sum which, by the terms of issue of a Share, becomes payable at a fixed time, whether on account of the amount of the Share, or by way of premium, as if the same had become payable by virtue of a call duly made and notified. |
| 29. | The Directors may make arrangements with respect to the issue of partly paid Shares for a difference between the Shareholders, or the particular Shares, in the amount of calls to be paid and in the times of payment. |
| 30. | The Directors may, if they think fit, receive from any Shareholder willing to advance the same all or any part of the moneys uncalled and unpaid upon any partly paid Shares held by him, and upon all or any of the moneys so advanced may (until the same would, but for such advance, become presently payable) pay interest at such rate (not exceeding without the sanction of an Ordinary Resolution, eight percent (8%) per annum) as may be agreed upon between the Shareholder paying the sum in advance and the Directors. No such sum paid in advance of calls shall entitle the Member paying such sum to any portion of a dividend declared in respect of any period prior to the date upon which such sum would, but for such payment, become presently payable. |
FORFEITURE OF SHARES
| 31. | If a Shareholder fails to pay any call or instalment of a call in respect of partly paid Shares on the day appointed for payment, the Directors may, at any time thereafter during such time as any part of such call or instalment remains unpaid, serve a notice on such Shareholder requiring payment of so much of the call or instalment as is unpaid, together with any interest which may have accrued. |
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| 32. | The notice shall name a further day (not earlier than the expiration of fourteen (14) calendar days from the date of the notice) on or before which the payment required by the notice is to be made, and shall state that in the event of non-payment at or before the time appointed, the Shares in respect of which the call was made will be liable to be forfeited. |
| 33. | If the requirements of any such notice as aforesaid are not complied with, any Share in respect of which the notice has been given may at any time thereafter, before the payment required by the notice has been made, be forfeited by a resolution of the Directors to that effect. |
| 34. | A forfeited Share may be sold or otherwise disposed of on such terms and in such manner as the Directors think fit, and at any time before a sale or disposition the forfeiture may be cancelled on such terms as the Directors think fit. |
| 35. | A Person whose Shares have been forfeited shall cease to be a Shareholder in respect of the forfeited Shares, but shall, notwithstanding, remain liable to pay to the Company all moneys which at the date of forfeiture were payable by him or her to the Company in respect of the Shares forfeited, but his or her liability shall cease if and when the Company receives payment in full of the amount unpaid on the Shares forfeited. |
| 36. | A certificate in writing under the hand of a Director that a Share has been duly forfeited on a date stated in the certificate shall be conclusive evidence of the facts in the declaration as against all Persons claiming to be entitled to the Share. |
| 37. | The Company may receive the consideration, if any, given for a Share on any sale or disposition thereof pursuant to the provisions of these Articles as to forfeiture and may execute a transfer of the Share in favor of the Person to whom the Share is sold or disposed of and that Person shall be registered as the holder of the Share and shall not be bound to see to the application of the purchase money, if any, nor shall his or her title to the Shares be affected by any irregularity or invalidity in the proceedings in reference to the disposition or sale. |
| 38. | The provisions of these Articles as to forfeiture shall apply in the case of non-payment of any sum which by the terms of issue of a Share becomes due and payable, whether on account of the amount of the Share, or by way of premium, as if the same had been payable by virtue of a call duly made and notified. |
TRANSFER OF SHARES
| 39. | The instrument of transfer of any Share shall be in writing and in any usual or common form or such other form as the Directors may, in their absolute discretion, approve and be executed by or on behalf of the transferor and if in respect of a nil or partly paid up Share, or if so required by the Directors, shall also be executed on behalf of the transferee and shall be accompanied by the certificate (if any) of the Shares to which it relates and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer. The transferor shall be deemed to remain a Shareholder until the name of the transferee is entered in the Register in respect of the relevant Shares. |
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| 40. | (a) |
The Directors may in their absolute discretion decline to register any transfer of Shares which is not fully paid up or on which the Company has a lien.
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| (b) | The Directors may also decline to register any transfer of any Share unless: |
| (i) | the instrument of transfer is lodged with the Company, accompanied by the certificate for the Shares to which it relates and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer; |
| (ii) | the instrument of transfer is in respect of only one Class of Shares; |
| (iii) | the instrument of transfer is properly stamped, if required; |
| (iv) | in the case of a transfer to joint holders, the number of joint holders to whom the Share is to be transferred does not exceed four; and |
| (v) | a fee of such maximum sum as the Designated Stock Exchange may determine to be payable, or such lesser sum as the Board of Directors may from time to time require, is paid to the Company in respect thereof. |
| 41. | The registration of transfers may, on ten (10) calendar days’ notice being given by advertisement in such one or more newspapers, by electronic means or by any other means in accordance with the Designated Stock Exchange Rules, be suspended and the Register closed at such times and for such periods as the Directors may, in their absolute discretion, from time to time determine, provided always that such registration of transfer shall not be suspended nor the Register closed for more than thirty (30) calendar days in any calendar year. |
| 42. | All instruments of transfer that are registered shall be retained by the Company. If the Directors refuse to register a transfer of any Shares, they shall within three calendar months after the date on which the transfer was lodged with the Company send notice of the refusal to each of the transferor and the transferee. |
TRANSMISSION OF SHARES
| 43. | The legal personal representative of a deceased sole holder of a Share shall be the only Person recognized by the Company as having any title to the Share. In the case of a Share registered in the name of two or more holders, the survivors or survivor, or the legal personal representatives of the deceased survivor, shall be the only Person recognized by the Company as having any title to the Share. |
| 44. | Any Person becoming entitled to a Share in consequence of the death or bankruptcy of a Shareholder shall, upon such evidence being produced as may from time to time be required by the Directors, have the right either to be registered as a Shareholder in respect of the Share or, instead of being registered himself or herself, to make such transfer of the Share as the deceased or bankrupt Person could have made; but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the deceased or bankrupt Person before the death or bankruptcy. |
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| 45. | A Person becoming entitled to a Share by reason of the death or bankruptcy of a Shareholder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered Shareholder, except that he shall not, before being registered as a Shareholder in respect of the Share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company, provided however, that the Directors may at any time give notice requiring any such Person to elect either to be registered himself or herself or to transfer the Share, and if the notice is not complied with within ninety (90) calendar days, the Directors may thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the Share until the requirements of the notice have been complied with. |
REGISTRATION OF EMPOWERING INSTRUMENTS
| 46. | The Company shall be entitled to charge a fee not exceeding one U.S. dollar (US$1.00) on the registration of every probate, letters of administration, certificate of death or marriage, power of attorney, notice in lieu of destrings, or other instrument. |
ALTERATION OF SHARE CAPITAL
| 47. | The Company may from time to time by Ordinary Resolution increase the share capital by such sum, to be divided into Shares of such Classes and amount, as the resolution shall prescribe. |
| 48. | The Company may by Ordinary Resolution: |
| (a) | increase its share capital by new Shares of such amount as it thinks expedient; |
| (b) | consolidate and divide all or any of its share capital into Shares of a larger amount than its existing Shares; |
| (c) | subdivide its Shares, or any of them, into Shares of an amount smaller than that fixed by the Memorandum, provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced Share shall be the same as it was in case of the Share from which the reduced Share is derived; and |
| (d) | cancel any Shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any Person and diminish the amount of its share capital by the amount of the Shares so cancelled. |
| 49. | The Company may by Special Resolution reduce its share capital and any capital redemption reserve in any manner authorized by the Companies Act. |
REDEMPTION, PURCHASE AND SURRENDER OF SHARES
| 50. | Subject to the provisions of the Companies Act and these Articles, the Company may: |
| (a) | issue Shares that are to be redeemed or are liable to be redeemed at the option of the Shareholder or the Company. The redemption of Shares shall be effected in such manner and upon such terms as may be determined, before the issue of such Shares, by either the Board or by the Shareholders by Ordinary Resolution; |
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| (b) | purchase its own Shares (including any redeemable Shares) on such terms and in such manner and terms as have been approved by the Board or by the Members by Ordinary Resolution, or are otherwise authorized by these Articles; and |
| (c) | make a payment in respect of the redemption or purchase of its own Shares in any manner permitted by the Companies Act, including out of capital. |
| 51. | The purchase of any Share shall not oblige the Company to purchase any other Share other than as may be required pursuant to applicable law and any other contractual obligations of the Company. |
| 52. | The holder of the Shares being purchased shall be bound to deliver up to the Company the certificate(s) (if any) thereof for cancellation and thereupon the Company shall pay to him the purchase or redemption monies or consideration in respect thereof. |
| 53. | The Directors may accept the surrender for no consideration of any fully paid Share. |
TREASURY SHARES
| 54. | The Directors may, prior to the purchase, redemption or surrender of any Share, determine that such Share shall be held as a Treasury Share. |
| 55. | The Directors may determine to cancel a Treasury Share or transfer a Treasury Share on such terms as they think proper (including, without limitation, for nil consideration). |
GENERAL MEETINGS
| 56. | All general meetings other than annual general meetings shall be called extraordinary general meetings. |
| 57. | (a) |
The Company may (but shall not be obliged to) in each calendar year hold a general meeting as its annual general meeting and shall specify the meeting as such in the notices calling it. The annual general meeting shall be held at such time and place as may be determined by the Directors. |
| (b) | At these meetings the report of the Directors (if any) shall be presented. |
| 58. | (a) |
Chairman or a majority of the Directors may call general meetings, and they shall on a Shareholders’ requisition forthwith proceed to convene an extraordinary general meeting of the Company. |
| (b) | A Shareholders’ requisition is a requisition of Members holding at the date of deposit of the requisition Shares which carry in aggregate not less than one-third (1/3) of all votes attaching to all issued and outstanding Shares of the Company that as at the date of the deposit carry the right to vote at general meetings of the Company. |
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| (c) | The requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the Registered Office, and may consist of several documents in like form each signed by one or more requisitionists. |
| (d) | If there are no Directors as at the date of the deposit of the Shareholders’ requisition, or if the Directors do not within twenty-one (21) calendar days from the date of the deposit of the requisition duly proceed to convene a general meeting to be held within a further forty-five (45) calendar days, the requisitionists, or any of them representing more than one-half (1/2) of the total voting rights of all of them, may themselves convene a general meeting, but any meeting so convened shall not be held after the expiration of three calendar months after the expiration of the said forty-five (45) calendar days. |
| (e) | A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as nearly as possible as that in which general meetings are to be convened by Directors. |
NOTICE OF GENERAL MEETINGS
| 59. | At least seven (7) calendar days’ notice shall be given for any general meeting. Every notice shall be exclusive of the day on which it is given or deemed to be given and of the day for which it is given and shall specify the place (except in the case of a Virtual Meeting), the day and the hour of the meeting and the general nature of the business and shall be given in the manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company, provided that a general meeting of the Company shall, whether or not the notice specified in this Article has been given and whether or not the provisions of these Articles regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed: |
| (a) | in the case of an annual general meeting, by all the Shareholders (or their proxies) entitled to attend and vote thereat; and |
| (b) | in the case of an extraordinary general meeting, by two-thirds (2/3) of the Shareholders having a right to attend and vote at the meeting and Present at the meeting. |
| 60. | The accidental omission to give notice of a meeting to or the non-receipt of a notice of a meeting by any Shareholder shall not invalidate the proceedings at any meeting. |
PROCEEDINGS AT GENERAL MEETINGS
| 61. | No business except for the appointment of a chairman for the meeting shall be transacted at any general meeting unless a quorum of Shareholders is Present at the time when the meeting proceeds to business. One or more Shareholders holding Shares which carry in aggregate (or representing by proxy) not less than one-fourth (1/4) of all votes attaching to all Shares in issue and entitled to vote at such general meeting Present shall be a quorum for all purposes. |
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| 62. | If within half an hour from the time appointed for the meeting a quorum is not Present, the meeting shall be dissolved. |
| 63. | If the Directors wish to make this facility available for a specific general meeting or all general meetings of the Company, Presence at the relevant general meeting of the Company may be by means of Communication Facilities. Without limiting the generality of the foregoing, the Directors may determine that any general meeting may be held as a Virtual Meeting. The notice of any general meeting at which Communication Facilities may be utilized (including any Virtual Meeting) must disclose the Communication Facilities that will be used, including the procedures to be followed by any Shareholder or other participant of the meeting who wishes to utilize such Communication Facilities for the purposes of attending and participating in such meeting, including attending and casting any vote thereat. |
| 64. | The Chairman, if any, shall preside as chairman at every general meeting of the Company. If there is no such Chairman, or if at any general meeting he is not Present within fifteen minutes after the time appointed for holding the meeting or is unwilling to act as chairman of the meeting, any Director or Person nominated by the Directors Present at the meeting shall preside as chairman of that meeting, failing which the Shareholders Present shall choose any Person Present to be chairman of that meeting. |
| 65. | The chairman of any general meeting (including any Virtual Meeting) shall be entitled to attend and participate at any such general meeting by means of Communication Facilities, and to act as the chairman of such general meeting, in which event the following provisions shall apply: |
| (a) | The chairman of the meeting shall be deemed to be Present at the meeting; and |
| (b) | If the Communication Facilities are interrupted or fail for any reason to enable the chairman of the meeting to hear and be heard by all other Persons participating in the meeting, then the other Directors Present at the meeting shall choose another Director Present to act as chairman of the meeting for the remainder of the meeting; provided that if no other Director is Present at the meeting, or if all the Directors Present decline to take the chair, then the meeting shall be automatically adjourned to the same day in the next week and at such time and place as shall be decided by the Board of Directors. |
| 66. | The chairman of the meeting may with the consent of any general meeting at which a quorum is Present (and shall if so directed by the meeting) adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a meeting, or adjourned meeting, is adjourned for fourteen (14) calendar days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Save as aforesaid it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting. |
| 67. | The Directors may cancel or postpone any duly convened general meeting at any time prior to such meeting, except for general meetings requisitioned by the Shareholders in accordance with these Articles, for any reason or for no reason, upon notice in writing to Shareholders. A postponement may be for a stated period of any length or indefinitely as the Directors may determine. |
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| 68. | At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by the chairman of the meeting or any Shareholder holding not less than ten percent (10%) of the votes attaching to the Shares Present, and unless a poll is so demanded, a declaration by the chairman of the meeting that a resolution has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book of the proceedings of the Company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favor of, or against, that resolution. |
| 69. | If a poll is duly demanded it shall be taken in such manner as the chairman of the meeting directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. |
| 70. | All questions submitted to a meeting shall be decided by an Ordinary Resolution except where a greater majority is required by these Articles or by the Companies Act. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded, shall be entitled to a second or casting vote. |
| 71. | A poll demanded on the election of a chairman of the meeting or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time as the chairman of the meeting directs. |
VOTES OF SHAREHOLDERS
| 72. | Subject to any rights and restrictions for the time being attached to any Share, on a show of hands every Shareholder Present at the meeting shall, at a general meeting of the Company, each have one vote and on a poll every Shareholder Present at the meeting shall have one (1) vote for each Ordinary Share. |
| 73. | In the case of joint holders the vote of the senior who tenders a vote whether in person or by proxy (or, if a corporation or other non-natural person, by its duly authorized representative or proxy) shall be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register. |
| 74. | Shares carrying the right to vote that are held by a Shareholder of unsound mind, or in respect of whom an order has been made by any court having jurisdiction in lunacy, may be voted, whether on a show of hands or on a poll, by his or her committee, or other Person in the nature of a committee appointed by that court, and any such committee or other Person may vote in respect of such Shares by proxy. |
| 75. | No Shareholder shall be entitled to vote at any general meeting of the Company unless all calls, if any, or other sums presently payable by him in respect of Shares carrying the right to vote held by him have been paid. |
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| 76. | On a poll votes may be given either personally or by proxy. |
| 77. | Each Shareholder, other than a recognized clearing house (or its nominee(s)) or depositary (or its nominee(s)), may only appoint one proxy on a show of hand. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his or her attorney duly authorized in writing or, if the appointor is a corporation, either under Seal or under the hand of an officer or attorney duly authorized. A proxy need not be a Shareholder. |
| 78. | An instrument appointing a proxy may be in any usual or common form or such other form as the Directors may approve. |
| 79. | The instrument appointing a proxy shall be deposited at the Registered Office or at such other place as is specified for that purpose in the notice convening the meeting, or in any instrument of proxy sent out by the Company: |
| (a) | not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote; or |
| (b) | in the case of a poll taken more than 48 hours after it is demanded, be deposited as aforesaid after the poll has been demanded and not less than 24 hours before the time appointed for the taking of the poll; or |
| (c) | where the poll is not taken forthwith but is taken not more than 48 hours after it was demanded be delivered at the meeting at which the poll was demanded to the chairman of the meeting or to the secretary or to any Director; |
provided that the Directors may in the notice convening the meeting, or in an instrument of proxy sent out by the Company, direct that the instrument appointing a proxy may be deposited at such other time (no later than the time for holding the meeting or adjourned meeting) at the Registered Office or at such other place as is specified for that purpose in the notice convening the meeting, or in any instrument of proxy sent out by the Company. The chairman of the meeting may in any event at his or her discretion direct that an instrument of proxy shall be deemed to have been duly deposited. An instrument of proxy that is not deposited in the manner permitted shall be invalid.
| 80. | The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll. |
| 81. | A resolution in writing signed by all the Shareholders for the time being entitled to receive notice of and to attend and vote at general meetings of the Company (or being corporations by their duly authorized representatives) shall be as valid and effective as if the same had been passed at a general meeting of the Company duly convened and held. |
CORPORATIONS ACTING BY REPRESENTATIVES AT MEETINGS
| 82. | Any corporation which is a Shareholder or a Director may by resolution of its directors or other governing body authorize such Person as it thinks fit to act as its representative at any meeting of the Company or of any meeting of holders of a Class or of the Directors or of a committee of Directors, and the Person so authorized shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual Shareholder or Director. |
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DEPOSITARY AND CLEARING HOUSES
| 83. |
If a recognized clearing house (or its nominee(s)) or depositary (or its nominee(s)) is a Member of the Company it may, by resolution of its directors or other governing body or by power of attorney, authorize such Person(s) as it thinks fit to act as its representative(s) at any general meeting of the Company or of any Class of Shareholders provided that, if more than one Person is so authorized, the authorization shall specify the number and Class of Shares in respect of which each such Person is so authorized. A Person so authorized pursuant to this Article shall be entitled to exercise the same powers on behalf of the recognized clearing house (or its nominee(s)) or depositary (or its nominee(s)) which he represents as that recognized clearing house (or its nominee(s)) or depositary (or its nominee(s)) could exercise if it were an individual Member holding the number and Class of Shares specified in such authorization, including the right to vote individually on a show of hands. |
DIRECTORS
| 84. | (a) |
Unless otherwise determined by the Company in general meeting, the number of Directors shall not be less than three (3) Directors, the exact number of Directors to be determined from time to time by the Board of Directors. |
| (b) | The Board of Directors shall elect and appoint a Chairman by a majority of the Directors then in office, and the period for which the Chairman will hold office will also be determined by a majority of all of the Directors then in office. The Chairman shall preside as chairman at every meeting of the Board of Directors. To the extent the Chairman is not present at a meeting of the Board of Directors within fifteen minutes after the time appointed for holding the same, the attending Directors may choose one of their number to be the chairman of the meeting. |
| (c) | The Board may, by the affirmative vote of a simple majority of the Directors present and voting at a Board meeting, or the Company may by Ordinary Resolution appoint any person to be a Director. |
| (d) | The Board may, by the affirmative vote of a simple majority of the remaining Directors present and voting at a Board meeting, appoint any person as a Director, to fill a casual vacancy on the Board or as an addition to the existing Board. |
| (e) | A Director shall hold office until the expiration of his or her term or his or her successor shall have been elected and qualified, or until his or her office is otherwise vacated. |
| 85. | A Director may be removed from office by Ordinary Resolution (except with regard to the removal of the Chairman, who may only be removed from office by Special Resolution) of the Company, notwithstanding anything in these Articles or in any agreement between the Company and such Director (but without prejudice to any claim for damages under such agreement). The notice of any meeting at which a resolution to remove a Director shall be proposed or voted upon must contain a statement of the intention to remove that Director and such notice must be served on that Director not less than ten (10) calendar days before the meeting. Such Director is entitled to attend the meeting and be heard on the motion for his or her removal. A vacancy on the Board created by the removal of a Director under the previous sentence may be filled by Ordinary Resolution or by the affirmative vote of a simple majority of the remaining Directors present and voting at a Board meeting. |
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| 86. | The Board may, from time to time, and except as required by applicable law or Designated Stock Exchange Rules, adopt, institute, amend, modify or revoke the corporate governance policies or initiatives of the Company and determine on various corporate governance related matters of the Company as the Board shall determine by resolution of Directors from time to time. |
| 87. | A Director shall not be required to hold any Shares in the Company by way of qualification. A Director who is not a Member of the Company shall nevertheless be entitled to attend and speak at general meetings. |
| 88. | The remuneration of the Directors may be determined by the Directors or by Ordinary Resolution. |
| 89. | The Directors shall be entitled to be paid for their travelling, hotel and other expenses properly incurred by them in going to, attending and returning from meetings of the Directors, or any committee of the Directors, or general meetings of the Company, or otherwise in connection with the business of the Company, or to receive such fixed allowance in respect thereof as may be determined by the Directors from time to time, or a combination partly of one such method and partly the other. |
ALTERNATE DIRECTOR OR PROXY
| 90. | Any Director may in writing appoint another Person to be his or her alternate and, save to the extent provided otherwise in the form of appointment, such alternate shall have authority to sign written resolutions on behalf of the appointing Director, but shall not be required to sign such written resolutions where they have been signed by the appointing director, and to act in such Director’s place at any meeting of the Directors at which the appointing Director is unable to be present. Every such alternate shall be entitled to attend and vote at meetings of the Directors as a Director when the Director appointing him or her is not personally present and where he or she is a Director to have a separate vote on behalf of the Director he or she is representing in addition to his or her own vote. A Director may at any time in writing revoke the appointment of an alternate appointed by him or her. Such alternate shall be deemed for all purposes to be a Director and shall not be deemed to be the agent of the Director appointing him or her. The remuneration of such alternate shall be payable out of the remuneration of the Director appointing him or her and the proportion thereof shall be agreed between them. |
| 91. | Any Director may appoint any Person, whether or not a Director, to be the proxy of that Director to attend and vote on his or her behalf, in accordance with instructions given by that Director, or in the absence of such instructions at the discretion of the proxy, at a meeting or meetings of the Directors which that Director is unable to attend personally. The instrument appointing the proxy shall be in writing under the hand of the appointing Director and shall be in any usual or common form or such other form as the Directors may approve, and must be lodged with the chairman of the meeting of the Directors at which such proxy is to be used, or first used, prior to the commencement of the meeting. |
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POWERS AND DUTIES OF DIRECTORS
| 92. | Subject to the Companies Act, these Articles and any resolutions passed in a general meeting, the business of the Company shall be managed by the Directors, who may pay all expenses incurred in setting up and registering the Company and may exercise all powers of the Company. No resolution passed by the Company in general meeting shall invalidate any prior act of the Directors that would have been valid if that resolution had not been passed. |
| 93. | Subject to these Articles, the Directors may from time to time appoint any natural person or corporation, whether or not a Director to hold such office in the Company as the Directors may think necessary for the administration of the Company, including but not limited to, chief executive officer, one or more other executive officers, president, one or more vice-presidents, treasurer, assistant treasurer, manager or controller, and for such term and at such remuneration (whether by way of salary or commission or participation in profits or partly in one way and partly in another), and with such powers and duties as the Directors may think fit. Any natural person or corporation so appointed by the Directors may be removed by the Directors. The Directors may also appoint one or more of their members to the office of managing director upon like terms, but any such appointment shall ipso facto terminate if any managing director ceases for any cause to be a Director, or if the Company by Ordinary Resolution resolves that his or her tenure of office be terminated. |
| 94. | The Directors may appoint any natural person or corporation to be a Secretary (and if need be an assistant Secretary or assistant Secretaries) who shall hold office for such term, at such remuneration and upon such conditions and with such powers as they think fit. Any Secretary or assistant Secretary so appointed by the Directors may be removed by the Directors or by the Company by Ordinary Resolution. |
| 95. | The Directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on it by the Directors. |
| 96. | The Directors may from time to time and at any time by power of attorney (whether under Seal or under hand) or otherwise appoint any company, firm or Person or body of Persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys or authorized signatory (any such Person being an “Attorney” or “Authorized Signatory”, respectively) of the Company for such purposes and with such powers, authorities and discretion (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such power of attorney or other appointment may contain such provisions for the protection and convenience of Persons dealing with any such Attorney or Authorized Signatory as the Directors may think fit, and may also authorize any such Attorney or Authorized Signatory to delegate all or any of the powers, authorities and discretion vested in him or her. |
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| 97. | The Directors may from time to time provide for the management of the affairs of the Company in such manner as they shall think fit and the provisions contained in the three next following Articles shall not limit the general powers conferred by this Article. |
| 98. | The Directors from time to time and at any time may establish any committees, local boards or agencies for managing any of the affairs of the Company and may appoint any natural person or corporation to be a member of such committees or local boards and may appoint any managers or agents of the Company and may fix the remuneration of any such natural person or corporation. |
| 99. | The Directors from time to time and at any time may delegate to any such committee, local board, manager or agent any of the powers, authorities and discretions for the time being vested in the Directors and may authorize the members for the time being of any such local board, or any of them to fill any vacancies therein and to act notwithstanding vacancies and any such appointment or delegation may be made on such terms and subject to such conditions as the Directors may think fit and the Directors may at any time remove any natural person or corporation so appointed and may annul or vary any such delegation, but no Person dealing in good faith and without notice of any such annulment or variation shall be affected thereby. |
| 100. |
Any such delegates as aforesaid may be authorized by the Directors to sub-delegate all or any of the powers, authorities, and discretion for the time being vested in them. |
BORROWING POWERS OF DIRECTORS
| 101. | The Directors may from time to time at their discretion exercise all the powers of the Company to raise or borrow money and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital or any part thereof, to issue debentures, debenture stock, bonds and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party. |
THE SEAL
| 102. | The Seal shall not be affixed to any instrument except by the authority of a resolution of the Directors provided always that such authority may be given prior to or after the affixing of the Seal and if given after may be in general form confirming a number of affixings of the Seal. The Seal shall be affixed in the presence of a Director or a Secretary (or an assistant Secretary) or in the presence of any one or more Persons as the Directors may appoint for the purpose and every Person as aforesaid shall sign every instrument to which the Seal is so affixed in their presence. |
| 103. | The Company may maintain a facsimile of the Seal in such countries or places as the Directors may appoint and such facsimile Seal shall not be affixed to any instrument except by the authority of a resolution of the Directors provided always that such authority may be given prior to or after the affixing of such facsimile Seal and if given after may be in general form confirming a number of affixings of such facsimile Seal. The facsimile Seal shall be affixed in the presence of such Person or Persons as the Directors shall for this purpose appoint and such Person or Persons as aforesaid shall sign every instrument to which the facsimile Seal is so affixed in their presence and such affixing of the facsimile Seal and signing as aforesaid shall have the same meaning and effect as if the Seal had been affixed in the presence of and the instrument signed by a Director or a Secretary (or an assistant Secretary) or in the presence of any one or more Persons as the Directors may appoint for the purpose. |
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| 104. | Notwithstanding the foregoing, a Secretary or any assistant Secretary shall have the authority to affix the Seal, or the facsimile Seal, to any instrument for the purposes of attesting authenticity of the matter contained therein but which does not create any obligation binding on the Company. |
DISQUALIFICATION OF DIRECTORS
| 105. | The office of Director shall be vacated, if the Director: |
| (a) | becomes bankrupt or makes any arrangement or composition with his or her creditors; |
| (b) | dies or is found to be or becomes of unsound mind; |
| (c) | resigns his or her office by notice in writing to the Company; |
| (d) | without special leave of absence from the Board, is absent from meetings of the Board for three (3) consecutive meetings and the Board resolves that his or her office be vacated; or |
| (e) | is removed from office pursuant to any other provision of these Articles. |
PROCEEDINGS OF DIRECTORS
| 106. | The Directors may meet together (either within or outside the Cayman Islands) for the dispatch of business, adjourn, and otherwise regulate their meetings and proceedings as they think fit. Questions arising at any meeting shall be decided by a majority of votes. At any meeting of the Directors, each Director present in person or represented by his or her proxy or alternate shall be entitled to one vote. In case of an equality of votes the Chairman shall have a second or casting vote. A Director may, and a Secretary or assistant Secretary on the requisition of a Director shall, at any time summon a meeting of the Directors. |
| 107. | A Director may participate in any meeting of the Directors, or of any committee appointed by the Directors of which such Director is a member, by means of telephone or similar communication equipment by way of which all Persons participating in such meeting can communicate with each other and such participation shall be deemed to constitute presence in person at the meeting. |
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| 108. | The quorum necessary for the transaction of the business of the Board may be fixed by the Directors, and unless so fixed, the quorum shall be a majority of Directors then in office, including the Chairman; provided, however, a quorum shall nevertheless exist at a meeting at which a quorum would exist but for the fact that the Chairman is voluntarily absent from the meeting and notifies the Board of his or her decision to be absent from that meeting, before or at the meeting. A Director represented by proxy or by an alternate Director at any meeting shall be deemed to be present for the purposes of determining whether or not a quorum is present. |
| 109. | A Director who is in any way, whether directly or indirectly, interested in a contract or transaction or proposed contract or transaction with the Company shall declare the nature of his or her interest at a meeting of the Directors. A general notice given to the Directors by any Director to the effect that he or she is a member of any specified company or firm and is to be regarded as interested in any contract or transaction which may thereafter be made with that company or firm shall be deemed a sufficient declaration of interest in regard to any contract so made or transaction so consummated. Subject to the Designated Stock Exchange Rules and disqualification by the chairman of the relevant Board meeting, a Director may vote in respect of any contract or transaction or proposed contract or transaction notwithstanding that he or she may be interested therein and if he does so his or her vote shall be counted and he or she may be counted in the quorum at any meeting of the Directors at which any such contract or transaction or proposed contract or transaction shall come before the meeting for consideration. |
| 110. | A Director may hold any other office or place of profit under the Company (other than the office of auditor) in conjunction with his or her office of Director for such period and on such terms (as to remuneration and otherwise) as the Directors may determine and no Director or intending Director shall be disqualified by his or her office from contracting with the Company either with regard to his or her tenure of any such other office or place of profit or as vendor, purchaser, business partner or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any Director is in any way interested be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realized by any such contract or arrangement by reason of such Director holding that office or of the fiduciary relation thereby established. A Director, notwithstanding his or her interest, may be counted in the quorum present at any meeting of the Directors whereat he or she or any other Director is appointed to hold any such office or place of profit under the Company or whereat the terms of any such appointment are arranged and he or she may vote on any such appointment or arrangement. |
| 111. | Any Director may act by himself or herself or through his or her firm in a professional capacity for the Company, and he/she or his/her firm shall be entitled to remuneration for professional services as if he or she were not a Director; provided that nothing herein contained shall authorize a Director or his or her firm to act as auditor to the Company. |
| 112. | The Directors shall cause minutes to be made for the purpose of recording: |
| (a) | all appointments of officers made by the Directors; |
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| (b) | the names of the Directors present at each meeting of the Directors and of any committee of the Directors; and |
| (c) | all resolutions and proceedings at all meetings of the Company, and of the Directors and of committees of Directors. |
| 113. | When the chairman of a meeting of the Directors signs the minutes of such meeting the same shall be deemed to have been duly held notwithstanding that all the Directors have not actually come together or that there may have been a technical defect in the proceedings. |
| 114. | A resolution in writing signed by all the Directors or all the members of a committee of Directors entitled to receive notice of a meeting of Directors or committee of Directors, as the case may be (an alternate Director, subject as provided otherwise in the terms of appointment of the alternate Director, being entitled to sign such a resolution on behalf of his or her appointer), shall be as valid and effectual as if it had been passed at a duly called and constituted meeting of Directors or committee of Directors, as the case may be. When signed a resolution may consist of several documents each signed by one or more of the Directors or his or her duly appointed alternate. |
| 115. | The continuing Directors may act notwithstanding any vacancy in their body but if and for so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of Directors, the continuing Directors may act for the purpose of increasing the number, or of summoning a general meeting of the Company, but for no other purpose. |
| 116. | Subject to any regulations imposed on it by the Directors, a committee appointed by the Directors may elect a chairman of its meetings. If no such chairman is elected, or if at any meeting the chairman is not present within fifteen minutes after the time appointed for holding the meeting, the committee members present may choose one of their members to be chairman of the meeting. |
| 117. | A committee appointed by the Directors may meet and adjourn as it thinks proper. Subject to any regulations imposed on it by the Directors, questions arising at any meeting shall be determined by a majority of votes of the committee members present and in case of an equality of votes the chairman shall have a second or casting vote. |
| 118. | All acts done by any meeting of the Directors or of a committee of Directors, or by any Person acting as a Director, shall notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such Director or Person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such Person had been duly appointed and was qualified to be a Director. |
PRESUMPTION OF ASSENT
| 119. | A Director who is present at a meeting of the Board of Directors at which an action on any Company matter is taken shall be presumed to have assented to the action taken unless his or her dissent shall be entered in the minutes of the meeting or unless he or she shall file his or her written dissent from such action with the person acting as the chairman or secretary of the meeting before the adjournment thereof or shall forward such dissent by registered post to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. |
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DIVIDENDS
| 120. | Subject to any rights and restrictions for the time being attached to any Shares, the Directors may from time to time declare dividends (including interim dividends) and other distributions on Shares in issue and authorize payment of the same out of the funds of the Company lawfully available therefor. |
| 121. | Subject to any rights and restrictions for the time being attached to any Shares, the Company by Ordinary Resolution may declare dividends, but no dividend shall exceed the amount recommended by the Directors. |
| 122. | The Directors may, before recommending or declaring any dividend, set aside out of the funds legally available for distribution such sums as they think proper as a reserve or reserves which shall, in the absolute discretion of the Directors, be applicable for meeting contingencies or for equalizing dividends or for any other purpose to which those funds may be properly applied, and pending such application may in the absolute discretion of the Directors, either be employed in the business of the Company or be invested in such investments (other than Shares of the Company) as the Directors may from time to time think fit. |
| 123. | Any dividend payable in cash to the holder of Shares may be paid in any manner determined by the Directors. If paid by cheque it will be sent by mail addressed to the holder at his or her address in the Register, or addressed to such person and at such addresses as the holder may direct. Every such cheque or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first on the Register in respect of such Shares, and shall be sent at his or her or their risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to the Company. |
| 124. | The Directors may determine that a dividend shall be paid wholly or partly by the distribution of specific assets (which may consist of the shares or securities of any other company) and may settle all questions concerning such distribution. Without limiting the generality of the foregoing, the Directors may fix the value of such specific assets, may determine that cash payment shall be made to some Shareholders in lieu of specific assets and may vest any such specific assets in trustees on such terms as the Directors think fit. |
| 125. | Subject to any rights and restrictions for the time being attached to any Shares, all dividends shall be declared and paid according to the amounts paid up on the Shares, but if and for so long as nothing is paid up on any of the Shares, dividends may be declared and paid according to the par value of the Shares. No amount paid on a Share in advance of calls shall, while carrying interest, be treated for the purposes of this Article as paid on the Share. |
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| 126. | If several Persons are registered as joint holders of any Share, any of them may give effective receipts for any dividend or other moneys payable on or in respect of the Share. |
| 127. | No dividend shall bear interest against the Company. |
| 128. | Any dividend unclaimed after a period of six calendar years from the date of declaration of such dividend may be forfeited by the Board of Directors and, if so forfeited, shall revert to the Company. |
ACCOUNTS, AUDIT AND ANNUAL RETURN AND DECLARATION
| 129. | The books of account relating to the Company’s affairs shall be kept in such manner as may be determined from time to time by the Directors. |
| 130. | The books of account shall be kept at the Registered Office, or at such other place or places as the Directors think fit, and shall always be open to the inspection of the Directors. |
| 131. | The Directors may from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Shareholders not being Directors, and no Shareholder (not being a Director) shall have any right to inspect any account or book or document of the Company except as conferred by law or authorized by the Directors or by Ordinary Resolution. |
| 132. | The accounts relating to the Company’s affairs shall be audited in such manner and with such financial year end as may be determined from time to time by the Directors or failing any determination as aforesaid shall not be audited. |
| 133. | The Directors may appoint an auditor of the Company who shall hold office until removed from office by a resolution of the Directors and may fix their remuneration. |
| 134. | Every auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company and shall be entitled to require from the Directors and officers of the Company such information and explanation as may be necessary for the performance of the duties of the auditors. |
| 135. | The auditors shall, if so required by the Directors, make a report on the accounts of the Company during their tenure of office at the next annual general meeting following their appointment, and at any time during their term of office, upon request of the Directors or any general meeting of the Members. |
| 136. | The Directors in each calendar year shall prepare, or cause to be prepared, an annual return and declaration setting forth the particulars required by the Companies Act and deliver a copy thereof to the Registrar of Companies in the Cayman Islands. |
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CAPITALIZATION OF RESERVES
| 137. | Subject to the Companies Act, the Directors may: |
| (a) | resolve to capitalize an amount standing to the credit of reserves (including a Share Premium Account, capital redemption reserve and profit and loss account), which is available for distribution; |
| (b) | appropriate the sum resolved to be capitalized to the Shareholders in proportion to the nominal amount of Shares (whether or not fully paid) held by them respectively and apply that sum on their behalf in or towards: |
| (i) | paying up the amounts (if any) for the time being unpaid on Shares held by them respectively, or |
| (ii) | paying up in full unissued Shares or debentures of a nominal amount equal to that sum, |
and allot the Shares or debentures, credited as fully paid, to the Shareholders (or as they may direct) in those proportions, or partly in one way and partly in the other, but the Share Premium Account, the capital redemption reserve and profits which are not available for distribution may, for the purposes of this Article, only be applied in paying up unissued Shares to be allotted to Shareholders credited as fully paid;
| (c) | make any arrangements they think fit to resolve a difficulty arising in the distribution of a capitalized reserve and in particular, without limitation, where Shares or debentures become distributable in fractions the Directors may deal with the fractions as they think fit; |
| (d) | authorize a Person to enter (on behalf of all the Shareholders concerned) into an agreement with the Company providing for either: |
| (i) | the allotment to the Shareholders respectively, credited as fully paid, of Shares or debentures to which they may be entitled on the capitalization, or |
| (ii) | the payment by the Company on behalf of the Shareholders (by the application of their respective proportions of the reserves resolved to be capitalized) of the amounts or part of the amounts remaining unpaid on their existing Shares, |
and any such agreement made under this authority being effective and binding on all those Shareholders; and
| (e) | generally do all acts and things required to give effect to the resolution. |
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| 137. | Notwithstanding any provisions in these Articles and subject to the Companies Act, the Directors may resolve to capitalize an amount standing to the credit of reserves (including the share premium account, capital redemption reserve and profit and loss account) or otherwise available for distribution by applying such sum in paying up in full unissued Shares to be allotted and issued to: |
| (a) | employees (including Directors) or service providers of the Company or its Affiliates upon exercise or vesting of any options or awards granted under any share incentive scheme or employee benefit scheme or other arrangement which relates to such persons that has been adopted or approved by the Directors or the Members; |
| (b) | any trustee of any trust or administrator of any share incentive scheme or employee benefit scheme to whom shares are to be allotted and issued by the Company in connection with the operation of any share incentive scheme or employee benefit scheme or other arrangement which relates to such persons that has been adopted or approved by the Directors or Members; or |
| (c) | any service providers of the Company or its Affiliates upon exercise or vesting of any options or awards granted under any share incentive scheme or employee benefit scheme or other arrangement which relates to such persons that has been adopted or approved by the Directors or the Members. |
SHARE PREMIUM ACCOUNT
| 139. | The Directors shall in accordance with the Companies Act establish a Share Premium Account and shall carry to the credit of such account from time to time a sum equal to the amount or value of the premium paid on the issue of any Share. |
| 140. | There shall be debited to any Share Premium Account on the redemption or purchase of a Share the difference between the nominal value of such Share and the redemption or purchase price provided always that at the discretion of the Directors such sum may be paid out of the profits of the Company or, if permitted by the Companies Act, out of capital. |
NOTICES
| 141. | Except as otherwise provided in these Articles, any notice or document may be served by the Company or by the Person entitled to give notice to any Shareholder either personally, or by posting it by airmail or a recognized courier service in a prepaid letter addressed to such Shareholder at his or her address as appearing in the Register, or by electronic mail to any electronic mail address such Shareholder may have specified in writing for the purpose of such service of notices, or by facsimile to any facsimile number such Shareholder may have specified in writing for the purpose of such service of notices, or by placing it on the Company’s Website should the Directors deem it appropriate. In the case of joint holders of a Share, all notices shall be given to that one of the joint holders whose name stands first in the Register in respect of the joint holding, and notice so given shall be sufficient notice to all the joint holders. |
| 142. | Notices sent from one country to another shall be sent or forwarded by prepaid airmail or a recognized courier service. |
| 143. | Any Shareholder Present, either personally or by proxy, at any meeting of the Company shall for all purposes be deemed to have received due notice of such meeting and, where requisite, of the purposes for which such meeting was convened. |
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| 144. | Any notice or other document, if served by: |
| (a) | post, shall be deemed to have been served five (5) calendar days after the time when the letter containing the same is posted; |
| (b) | facsimile, shall be deemed to have been served upon production by the transmitting facsimile machine of a report confirming transmission of the facsimile in full to the facsimile number of the recipient; |
| (c) | recognized courier service, shall be deemed to have been served 48 hours after the time when the letter containing the same is delivered to the courier service; or |
| (d) | electronic means, shall be deemed to have been served immediately (i) upon the time of the transmission to the electronic mail address supplied by the Shareholder to the Company or (ii) upon the time of its placement on the Company’s Website. |
In proving service by post or courier service it shall be sufficient to prove that the letter containing the notice or documents was properly addressed and duly posted or delivered to the courier service.
| 145. | Any notice or document delivered or sent by post to or left at the registered address of any Shareholder in accordance with the terms of these Articles shall notwithstanding that such Shareholder be then dead or bankrupt, and whether or not the Company has notice of his or her death or bankruptcy, be deemed to have been duly served in respect of any Share registered in the name of such Shareholder as sole or joint holder, unless his or her name shall at the time of the service of the notice or document have been removed from the Register as the holder of the Share, and such service shall for all purposes be deemed a sufficient service of such notice or document on all Persons interested (whether jointly with or as claiming through or under him) in the Share. |
| 146. | Notice of every general meeting of the Company shall be given to: |
| (a) | all Shareholders holding Shares with the right to receive notice and who have supplied to the Company an address for the giving of notices to them; and |
| (b) | every Person entitled to a Share in consequence of the death or bankruptcy of a Shareholder, who but for his or her death or bankruptcy would be entitled to receive notice of the meeting. |
No other Person shall be entitled to receive notices of general meetings.
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INFORMATION
| 147. | Subject to the relevant laws, rules and regulations applicable to the Company, no Member shall be entitled to require discovery of any information in respect of any detail of the Company’s trading or any information which is or may be in the nature of a trade secret or secret process which may relate to the conduct of the business of the Company and which in the opinion of the Board would not be in the interests of the Members of the Company to communicate to the public. |
| 148. | Subject to due compliance with the relevant laws, rules and regulations applicable to the Company, the Board shall be entitled to release or disclose any information in its possession, custody or control regarding the Company or its affairs to any of its Members including, without limitation, information contained in the Register and transfer books of the Company. |
INDEMNITY
| 149. | Every Director (including for the purposes of this Article any alternate Director appointed pursuant to the provisions of these Articles), Secretary, assistant Secretary, or other officer for the time being and from time to time of the Company (but not including the Company’s auditors) and the personal representatives of the same (each an “Indemnified Person”) shall be indemnified and secured harmless against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such Indemnified Person, other than by reason of such Indemnified Person’s own dishonesty, willful default or fraud, in or about the conduct of the Company’s business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his or her duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such Indemnified Person in defending (whether successfully or otherwise) any civil proceedings concerning the Company or its affairs in any court whether in the Cayman Islands or elsewhere. |
| 150. | No Indemnified Person shall be liable: |
| (a) | for the acts, receipts, neglects, defaults or omissions of any other Director or officer or agent of the Company; or |
| (b) | for any loss on account of defect of title to any property of the Company; or |
| (c) | on account of the insufficiency of any security in or upon which any money of the Company shall be invested; or |
| (d) | for any loss incurred through any bank, broker or other similar Person; or |
| (e) | for any loss occasioned by any negligence, default, breach of duty, breach of trust, error of judgement or oversight on such Indemnified Person’s part; or |
| (f) | for any loss, damage or misfortune whatsoever which may happen in or arise from the execution or discharge of the duties, powers, authorities, or discretions of such Indemnified Person’s office or in relation thereto; |
unless the same shall happen through such Indemnified Person’s own dishonesty, willful default or fraud.
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FINANCIAL YEAR
| 151. | Unless the Directors otherwise prescribe, the financial year of the Company shall end on December 31st in each calendar year and shall begin on January 1st in each calendar year. |
NON-RECOGNITION OF TRUSTS
| 152. | No Person shall be recognized by the Company as holding any Share upon any trust and the Company shall not, unless required by law, be bound by or be compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any Share or (except only as otherwise provided by these Articles or as the Companies Act requires) any other right in respect of any Share except an absolute right to the entirety thereof in each Shareholder registered in the Register. |
WINDING UP
| 153. | If the Company shall be wound up the liquidator may, with the sanction of a Special Resolution of the Company and any other sanction required by the Companies Act, divide amongst the Members in species or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for that purpose value any assets and determine how the division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Members as the liquidator, with the like sanction, shall think fit, but so that no Member shall be compelled to accept any asset upon which there is a liability. |
| 154. | If the Company shall be wound up, and the assets available for distribution amongst the Members shall be insufficient to repay the whole of the share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the par value of the Shares held by them. If in a winding up the assets available for distribution amongst the Members shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst the Members in proportion to the par value of the Shares held by them at the commencement of the winding up subject to a deduction from those Shares in respect of which there are monies due, of all monies payable to the Company for unpaid calls or otherwise. This Article is without prejudice to the rights of the holders of Shares issued upon special terms and conditions. |
AMENDMENT OF ARTICLES OF ASSOCIATION
| 155. | Subject to the Companies Act, the Company may at any time and from time to time by Special Resolution alter or amend these Articles in whole or in part. |
CLOSING OF REGISTER OR FIXING RECORD DATE
| 156. | For the purpose of determining those Shareholders that are entitled to receive notice of, attend or vote at any meeting of Shareholders or any adjournment thereof, or those Shareholders that are entitled to receive payment of any dividend, or in order to make a determination as to who is a Shareholder for any other purpose, the Directors may provide that the Register shall be closed for transfers for a stated period which shall not exceed in any case thirty (30) calendar days in any calendar year. |
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| 157. | In lieu of or apart from closing the Register, the Directors may fix in advance a date as the record date for any such determination of those Shareholders that are entitled to receive notice of, attend or vote at a meeting of the Shareholders and for the purpose of determining those Shareholders that are entitled to receive payment of any dividend the Directors may, at or within ninety (90) calendar days prior to the date of declaration of such dividend, fix a subsequent date as the record date for such determination. |
| 158. | If the Register is not so closed and no record date is fixed for the determination of those Shareholders entitled to receive notice of, attend or vote at a meeting of Shareholders or those Shareholders that are entitled to receive payment of a dividend, the date on which notice of the meeting is posted or the date on which the resolution of the Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Shareholders. When a determination of those Shareholders that are entitled to receive notice of, attend or vote at a meeting of Shareholders has been made as provided in this Article, such determination shall apply to any adjournment thereof. |
REGISTRATION BY WAY OF CONTINUATION
| 159. | The Company may by Special Resolution resolve to be registered by way of continuation in a jurisdiction outside the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing. In furtherance of a resolution adopted pursuant to this Article, the Directors may cause an application to be made to the Registrar of Companies to deregister the Company in the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing and may cause all such further steps as they consider appropriate to be taken to effect the transfer by way of continuation of the Company. |
DISCLOSURE
| 160. |
The Directors, or any service providers (including the officers, the Secretary and the registered office provider of the Company) specifically authorized by the Directors, shall be entitled to disclose to any regulatory or judicial authority or to any stock exchange on which securities of the Company may from time to time be listed any information regarding the affairs of the Company including without limitation information contained in the Register and books of the Company. |
MERGERS AND CONSOLIDATIONS
| 161. | The Company shall have the power to merge or consolidate with one or more other constituent companies (as defined in the Statute) upon such terms as the Directors may determine and (to the extent required by the Statute) with the approval of a Special Resolution. |
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EXCLUSIVE FORUM
| 162. | For the avoidance of doubt and without limiting the jurisdiction of the Cayman Courts to hear, settle and/or determine disputes related to the Company, the courts of the Cayman Islands shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any Director, officer, or other employee of the Company to the Company or the Members, (iii) any action asserting a claim arising pursuant to any provision of the Companies Act or these Articles including but not limited to any purchase or acquisition of Shares, security, or guarantee provided in consideration thereof, or (iv) any action asserting a claim against the Company which if brought in the United States would be a claim arising under the internal affairs doctrine (as such concept is recognized under the laws of the United States from time to time). |
| 163. |
Unless the Company consents in writing to the selection of an alternative forum, the United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) shall be the exclusive forum within the United States for the resolution of any complaint asserting a cause of action arising out of or relating in any way to the federal securities laws of the United States, regardless of whether such legal suit, action, or proceeding also involves parties other than the Company. Any person or entity purchasing or otherwise acquiring any Share or other securities in the Company shall be deemed to have notice of and consented to the provisions of this Article. Without prejudice to the foregoing, if the provision in this Article is held to be illegal, invalid or unenforceable under applicable law, the legality, validity or enforceability of the rest of these Articles shall not be affected and this Article shall be interpreted and construed to the maximum extent possible to apply in the relevant jurisdiction with whatever modification or deletion may be necessary so as best to give effect to the intention of the Company. Any person or entity purchasing or otherwise acquiring any share in or of the Company or other security of the Company whether by transfer, sale, operation of law or otherwise, shall be deemed to have notice of and have irrevocably agreed and consented to the provisions of this Article. |
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Exhibit 5.1

Our ref JVZ/846453-000002/33090326v1
CCH Holdings Ltd
No. 1, Jalan Perda Jaya
Kawasan Perniagaan Perda Jaya, 14000
Bukit Mertajam, Pulau Pinang
Malaysia
27 August 2025
Dear Sirs and/or Madams
CCH Holdings Ltd
We have acted as Cayman Islands legal advisers to CCH Holdings Ltd (the “Company”) in connection with the Company’s registration statement on Form F-1, including all amendments or supplements thereto (the “Registration Statement”), filed with the Securities and Exchange Commission (the “Commission”) under the U.S. Securities Act of 1933, as amended to date, relating to the initial public offering of certain ordinary shares of par value US$0.00001 each (the “Shares”).
We are furnishing this opinion as Exhibits 5.1, 8.1 and 23.2 to the Registration Statement.
| 1 | Documents Reviewed |
For the purposes of this opinion, we have reviewed only originals, copies or final drafts of the following documents:
| 1.1 | The certificate of incorporation of the Company dated 2 December 2024 issued by the Registrar of Companies in the Cayman Islands. |
| 1.2 | The Memorandum and Articles of Association of the Company registered an filed on 2 December 2024 (the “Pre-IPO Memorandum and Articles”). |
| 1.3 | The Amended and Restated Memorandum and Articles of Association of the Company adopted by a special resolution passed on 26 August 2025 and effective immediately prior to the completion of the Company’s initial public offering of the Shares (the “IPO Memorandum and Articles”). |
| 1.4 | The written resolutions of the board of directors of the Company dated 26 August 2025 (the “Board Resolutions”). |

| 1.5 | The written resolutions of the shareholders of the Company dated 26 August 2025 (the “Shareholders’ Resolutions”). |
| 1.6 | A certificate from a director of the Company, a copy of which is attached hereto (the “Director’s Certificate”). |
| 1.7 | A certificate of good standing dated 25 August 2025, issued by the Registrar of Companies in the Cayman Islands (the “Certificate of Good Standing”). |
| 1.8 | The Registration Statement. |
| 2 | Assumptions |
The following opinions are given only as to, and based on, circumstances and matters of fact existing and known to us on the date of this opinion letter. These opinions only relate to the laws of the Cayman Islands which are in force on the date of this opinion letter. In giving these opinions we have relied (without further verification) upon the completeness and accuracy, as of the date of this opinion letter, of the Director’s Certificate and the Certificate of Good Standing. We have also relied upon the following assumptions, which we have not independently verified:
| 2.1 | Copies of documents, conformed copies or drafts of documents provided to us are true and complete copies of, or in the final forms of, the originals. |
| 2.2 | All signatures, initials and seals are genuine. |
| 2.3 | There is nothing under any law (other than the law of the Cayman Islands), which would or might affect the opinions set out below. |
| 3 | Opinion |
Based upon the foregoing and subject to the qualifications set out below and having regard to such legal considerations as we deem relevant, we are of the opinion that:
| 3.1 | The Company has been duly incorporated as an exempted company with limited liability and is validly existing and in good standing with the Registrar of Companies under the laws of the Cayman Islands. |
| 3.2 | The authorised share capital of the Company is, and immediately prior to the completion of the Company’s initial public offering of the Shares, will be US$50,000 divided into 5,000,000,000 ordinary shares with a par value of US$0.00001 each. |
| 3.3 | The issue and allotment of the Shares have been duly authorised and when allotted, issued and paid for as contemplated in the Registration Statement, the Shares will be legally issued and allotted, fully paid and non-assessable. As a matter of Cayman law, a share is only issued when it has been entered in the register of members (shareholders). |
| 3.4 | The statements under the caption “Taxation” in the prospectus forming part of the Registration Statement, to the extent that they constitute statements of Cayman Islands law, are accurate in all material respects and that such statements constitute our opinion. |
2
| 4 | Qualifications |
In this opinion the phrase “non-assessable” means, with respect to shares in the Company, that a shareholder shall not, solely by virtue of its status as a shareholder, be liable for additional assessments or calls on shares by the Company or its creditors (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).
Except as specifically stated herein, we make no comment with respect to any representations and warranties which may be made by or with respect to the Company in any of the documents or instruments cited in this opinion or otherwise with respect to the commercial terms of the transactions, which are the subject of this opinion.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our name under the headings “Enforceability of Civil Liabilities”, “Taxation” and “Legal Matters” and elsewhere in the prospectus included in the Registration Statement. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the U.S. Securities Act of 1933, as amended, or the Rules and Regulations of the Commission thereunder.
Yours faithfully
/s/ Maples and Calder (Hong Kong) LLP
Maples and Calder (Hong Kong) LLP
3
Director’s Certificate
27 August 2025
| To: | Maples and Calder (Hong Kong) LLP |
| 26th Floor, Central Plaza | |
| 18 Harbour Road | |
| Wanchai, Hong Kong |
Dear Sirs
CCH Holdings Ltd (the “Company”)
I, the undersigned, being the sole director of the Company, am aware that you are being asked to provide a legal opinion (the “Opinion”) in relation to certain aspects of Cayman Islands law. Capitalised terms used in this certificate have the meaning given to them in the Opinion. I hereby certify that:
| 1 | The Pre-IPO Memorandum and Articles remain in full force and effect and, except as amended by the resolutions as set out in the Shareholders’ Resolutions adopting the IPO Memorandum and Articles, are otherwise unamended. |
| 2 | The Board Resolutions were duly passed in the manner prescribed in the Pre-IPO Memorandum and Articles (including, without limitation, with respect to the disclosure of interests (if any) by director of the Company) and have not been amended, varied or revoked in any respect. |
| 3 | The Shareholders’ Resolutions were duly passed in the manner prescribed in the Pre-IPO Memorandum and Articles (including, without limitation, with respect to the disclosure of interests (if any) by director of the Company) and have not been amended, varied or revoked in any respect. |
| 4 | The shareholders of the Company have not restricted or limited the powers of the director in any way and there is no contractual or other prohibition (other than as arising under Cayman Islands law) binding on the Company prohibiting it from issuing and allotting the Shares or otherwise performing its obligations under the Registration Statement. |
| 5 | The sole director of the Company at the date of the Board Resolutions and this certificate is: Goh Kok Foong |
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| 6 | The director of the Company considers the transactions contemplated by the Registration Statement to be of commercial benefit to the Company and has acted bona fide in the best interests of the Company, and for a proper purpose of the Company in relation to the transactions which are the subject of the Opinion. |
| 7 | No interest in the Company constituting shares, voting rights or ultimate effective control over management in the Company is currently subject to a restrictions notice issued under the Beneficial Ownership Transparency Act (As Revised). |
| 8 | To the best of my knowledge and belief, having made due inquiry, the Company is not the subject of legal, arbitral, administrative or other proceedings in any jurisdiction and neither the director nor shareholders have taken any steps to have the Company struck off or placed in liquidation. Further, no steps have been taken to wind up the Company or to appoint restructuring officers or interim restructuring officers, and no receiver has been appointed in relation to any of the Company’s property or assets. |
| 9 | The Company is not a central bank, monetary authority or other sovereign entity of any state and is not a subsidiary, direct or indirect, of any sovereign entity or state. |
| 10 | The Company has no employees. |
I confirm that you may continue to rely on this Certificate as being true and correct on the day that you issue the Opinion unless I shall have previously notified you personally to the contrary.
[signature page follows]
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| Signature: | /s/ Goh Kok Foong | |
| Name: | Goh Kok Foong | |
| Title: | Director |
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Exhibit 10.1
CCH HOLDINGS LTD
FORM OF INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this “Agreement”), dated as of _____, 20__, is executed by and between CCH Holdings Ltd, an exempted company incorporated and existing under the laws of the Cayman Islands (the “Company”) and_________, a director of the Company (the “Indemnitee”).
WHEREAS, in order to induce and encourage highly experienced and capable persons such as the Indemnitee to render valuable services to the Company, the board of directors of the Company (the “Board”) has determined that this Agreement is not only reasonable and prudent, but necessary to promote and ensure the best interests of the Company and its shareholders;
WHEREAS, the Company’s governing documents require it to indemnify its directors and officers to the fullest extent permitted by law and permit it to make other indemnification arrangements and agreements; and
WHEREAS, the Company desires to provide the Indemnitee with specific contractual assurance of the Indemnitee’s rights to full indemnification against litigation risks and expenses (regardless of any amendment to or revocation of the Company’s governing documents or any change in the ownership of the Company or the composition of the Board).
NOW, THEREFORE, in consideration of the promises and the covenants contained herein, the Company and the Indemnitee do hereby covenant and agree as follows:
Article
I
Indemnification
Section 1.01 Indemnification of Expenses.
(a) Third-Party Claims. Subject to Article II below, the Company shall indemnify and hold harmless the Indemnitee to the fullest extent permitted by law if the Indemnitee was or is or becomes a party to or witness in, or is threatened to be made a party to or witness in, any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, or any hearing, inquiry or investigation that such Indemnitee reasonably believes might lead to the institution of any such action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, administrative, investigative or other (hereinafter a “Claim”) (other than an action by right of the Company) by reason of the fact that the Indemnitee is or was a director or officer of the Company, or any subsidiary or affiliated entity of the Company, or is or was serving at the request of the Company as a director or officer of another corporation, partnership, limited liability company, joint venture, trust or other enterprise, or by reason of any action or inaction on the part of the Indemnitee while serving in such capacity (hereinafter, an “Agent”) or as a direct or indirect result of any Claim made by any shareholder of the Company against the Indemnitee and arising out of or related to any round of financing of the Company (including but not limited to Claims regarding non-participation, or non-pro rata participation, in such round by such shareholder), or made by a third party against the Indemnitee based on any misstatement or omission of a material fact by the Company in violation of any duty of disclosure imposed on the Company by securities or common laws (hereinafter an “Indemnification Event”) against any and all expenses (including attorneys’ fees and all other costs, expenses and obligations), judgments, fines, penalties and amounts paid in settlement (if, and only if, such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) (the “Expenses”) actually and reasonably incurred by the Indemnitee in connection with investigating, attempting to amicably resolve, preparing for, defending or participating in (including on appeal) such Claim if the Indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.
(b) Derivative Actions. If the Indemnitee is a person who was or is a party or is threatened to be made a party to any Claim by or in the right of the Company to procure a judgment in its favor by reason of the fact that he or she is or was an Agent of the Company, or by reason of anything done or not done by him or her in any such capacity, the Company shall indemnify the Indemnitee against any amounts paid in settlement of any such Claim and all Expenses actually and reasonably incurred by him or her in connection with investigating, attempting to amicably resolve, preparing for, defending, settling or appealing such Claim if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Company; except that no indemnification under this subsection shall be made in respect of any claim, issue or matter as to which such person shall have been finally adjudged to be liable to the Company by a court of competent jurisdiction due to willful misconduct or gross negligence in the performance of his or her duty to the Company, unless and only to the extent that the court in which such proceeding was brought shall determine upon application that, despite the adjudication of liability and in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such amounts the court may deem proper.
Section 1.02 Partial Indemnification. If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for any portion of Expenses incurred in connection with any Claim, but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify the Indemnitee for the portion of such Expenses to which the Indemnitee is entitled.
Section 1.03 Contribution. If the indemnification provided for in Section 1.01 above is, for any reason other than the statutory limitations of applicable law or as provided in Article II below, held by a court of competent jurisdiction to be unavailable to the Indemnitee in respect of any losses, claims, damages, expenses or liabilities in which the Company is jointly liable with the Indemnitee, as the case may be (or would be jointly liable if joined), then the Company, in lieu of indemnifying the Indemnitee thereunder, shall contribute to the amount actually and reasonably incurred and paid or payable by the Indemnitee as a result of such losses, claims, damages, expenses or liabilities in such proportion as is appropriate to reflect (a) the relative benefits received by the Company and the Indemnitee, and (b) the relative fault of the Company and the Indemnitee in connection with the action or inaction that resulted in such losses, claims, damages, expenses or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company and the Indemnitee shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Indemnitee and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent the circumstances resulting in such losses, claims, damages, expenses or liabilities.
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The Company and the Indemnitee agree that it would not be just and equitable if contribution pursuant to this Section 1.03 were determined by pro rata or per capita allocation or by any other method of allocation which does not take into account the equitable considerations referred to in the immediately preceding paragraph. No person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the U.S. Securities Act of 1933, as amended (the “Securities Act”)) shall be entitled to contribution from any person who was not found guilty of such fraudulent misrepresentation.
Section 1.04 Mandatory Payment of Expenses. Notwithstanding any other provision of this Agreement, to the extent the Indemnitee has been successful on the merits or otherwise, in the defense of any Claim referred to in Section 1.01 hereof or in the defense of any claim, issue or matter therein, the Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee in connection herewith.
Article
II
Exceptions
Section 2.01 Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:
(a) Claims Under Section 16(b). To indemnify the Indemnitee for expenses and the payment of profits or an accounting thereof arising from the purchase and sale by the Indemnitee of securities in violation of the provisions of Section 16(b) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any similar provisions of any international, federal, state or local statutory law;
(b) Unauthorized Settlements. To indemnify the Indemnitee for any amounts paid in settlement of a proceeding unless the Company consents in advance in writing to such settlement, which consent shall not be unreasonably withheld;
(c) Claims against the Company. To indemnify the Indemnitee for any Expenses incurred in connection with any Claim initiated by the Indemnitee against the Company, any director or officer of the Company or any other party, and not by way of defense, unless (i) the Company has joined in or the Reviewing Party (as defined in Section 5.01(e) hereof) has consented to the initiation of such Claim; or (ii) the Claim is one to enforce indemnification rights under this Agreement or any applicable law;
(d) Unlawful Indemnification. To indemnify the Indemnitee if a final decision by a court having jurisdiction in the matter shall determine that such indemnification is not lawful. In this respect, the Company and the Indemnitee have been advised that the U.S. Securities and Exchange Commission takes the position that indemnification for liabilities arising under securities laws is against public policy and is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for adjudication;
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(e) Fraud; Misconduct. To indemnify the Indemnitee if a final decision by a court having jurisdiction in the matter shall determine that the Indemnitee has committed dishonesty or fraud on the Company, or has constituted willful misconduct, including, without limitation, breach of the duty of loyalty;
(f) Insurance. To indemnify the Indemnitee for which payment is actually made to the Indemnitee under a valid and collectible insurance policy;
(g) Duplication of Payment. To indemnify the Indemnitee for which payments is actually received by the Indemnitee from the Company otherwise than pursuant to this Agreement;
(h) Company Contracts. To indemnify the Indemnitee with respect to any Claim related to any dispute or breach arising under any contract or similar obligation between the Company and the Indemnitee; or
(i) Tax Matters. To indemnify the Indemnitee in connection with Indemnitee’s personal tax matter.
Article
III
Expenses and Indemnification Procedure
Section 3.01 Notice/Cooperation by Indemnitee. The Indemnitee shall give the Company notice in writing promptly after receipt of notice of commencement of any Claim, or the threat of the commencement of any Claim, made against the Indemnitee for which indemnification will or could be sought under this Agreement. Notice to the Company shall be given in accordance with Section 6.08 below. In addition, the Indemnitee shall give the Company such information and cooperation as the Company may reasonably request.
Section 3.02 Advancement of Expenses. Subject to Article II hereof and except as prohibited by applicable law, the Company shall advance all Expenses incurred by the Indemnitee in connection with investigating, attempting to amicably resolve, preparing for, defending, settling or appealing any Claim to which the Indemnitee is a party or is threatened to be made a party by reason of the fact that the Indemnitee is or was an Agent of the Company or by reason of anything done or not done by him or her in any such capacity. The Indemnitee hereby undertakes to promptly repay such amounts advanced only if, and to the extent that, it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Company under the provisions of this Agreement, the M&A (as defined below), applicable law or otherwise. The advances to be made hereunder shall be paid by the Company to the Indemnitee as soon as practicable but in any event no later than thirty (30) days after written demand by the Indemnitee therefor to the Company.
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Section 3.03 Determination by the Reviewing Party. Notwithstanding the foregoing, (a) the obligations of the Company under Section 1.01 hereof shall be subject to the condition that the Reviewing Party shall not have determined that the Indemnitee would not be permitted to be indemnified under applicable law or pursuant to Article II hereof, and (b) the Indemnitee acknowledges and agrees that the obligation of the Company to make an advance payment of Expenses to the Indemnitee pursuant to above Section 3.02 (an “Expense Advance”) shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that the Indemnitee would not be permitted to be so indemnified under applicable law or Article II hereof, the Company shall be entitled to be reimbursed by the Indemnitee (who hereby agrees to promptly reimburse the Company) for all such amounts theretofore paid; provided, however, that if the Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that the Indemnitee should be indemnified under applicable law or Article II hereof, any determination made by the Reviewing Party that the Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and the Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). The Indemnitee’s obligation to reimburse the Company for any Expense Advance shall be unsecured and no interest shall be charged thereon. If there has not been a Change in Control (as defined in Section 5.01(a) hereof), the Reviewing Party shall be selected by a majority of the Board (excluding the Indemnitee who is a director), and if there has been such a Change in Control (other than a Change in Control which has been approved by a majority of the Company’s Board (other than the Indemnitee who is a director) who were directors immediately prior to such Change in Control), the Reviewing Party shall be the Independent Legal Counsel (as defined in Section 5.01(c) hereof) referred to in Section 3.04 below.
If there has been no determination by the Reviewing Party or if the Reviewing Party determines that the Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law or Article II hereof, the Indemnitee shall have the right to commence litigation seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, including the legal or factual bases therefor, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and the Indemnitee.
Section 3.04 Change in Control. The Company agrees that if there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Board (other than the Indemnitee who is a director) who were directors immediately prior to such Change in Control) then, with respect to all matters thereafter arising concerning the rights of Indemnitee to payments of Expenses under this Agreement, any other agreement or under the Company’s Memorandum and Articles of Association, as amended (the “M&A”), the Independent Legal Counsel shall be selected by the Indemnitee and approved by the Company (which approval shall not be unreasonably withheld). The Company agrees to abide by the determination of the Independent Legal Counsel and to pay the reasonable fees of the Independent Legal Counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys’ fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.
Section 3.05 Defense to Indemnification; No Presumptions; Burden of Proof. It shall be a defense to any action brought by Indemnitee against the Company to enforce this Agreement that it is not permissible under this Agreement or applicable law for the Company to indemnify the Indemnitee for the amount claimed. For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that the Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. In addition, neither the failure of the Reviewing Party to have made a determination as to whether the Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by the Reviewing Party that Indemnitee had not met such standard of conduct or did not have such belief, prior to the commencement of legal proceedings by the Indemnitee to secure a judicial determination that the Indemnitee should be indemnified under applicable law, shall be a defense to the Indemnitee’s claim or create a presumption that the Indemnitee had not met any particular standard of conduct or did not have any particular belief. In connection with any determination by the Reviewing Party or otherwise as to whether the Indemnitee is entitled to be indemnified hereunder, the burden of proof shall be on the Company to establish that the Indemnitee is not so entitled.
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Section 3.06 Notice to Insurers. If, at the time of the receipt by the Company of a notice of a Claim pursuant to Section 3.01 hereof, the Company has liability insurance in effect which may cover such Claim, the Company shall give prompt written notice of the commencement of such Claim to the insurers in accordance with the procedures set forth in each of the policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such action, suit, proceeding, inquiry or investigation in accordance with the terms of such policies.
Section 3.07 Company Participation. Subject to Section 1.03 hereof, the Company shall not be liable to indemnify the Indemnitee under this Agreement with regard to any judicial action if the Company was not given a reasonable and timely opportunity, at its expense, to participate in the defense, conduct and/or settlement of such action.
Section 3.08 Assumption of Defense; Selection of Counsel. In the event the Company shall be obligated hereunder to pay the Expenses of any Claim, the Company shall be entitled to assume the defense of such Claim, with legal counsel reasonably approved by the Indemnitee, upon the delivery to the Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such legal counsel by the Indemnitee and the retention of such legal counsel by the Company, the Company will not be liable to the Indemnitee under this Agreement for any fees of counsel subsequently incurred by the Indemnitee with respect to the same Claim; provided that, (a) the Indemnitee shall have the right to employ the Indemnitee’s legal counsel in any such Claim at the Indemnitee’s expense; (b) the Indemnitee shall have the right to employ its own legal counsel in connection with any such proceeding, at the expense of the Company, if such legal counsel serves in a review, observer, advice and counseling capacity and does not otherwise materially control or participate in the defense of such proceeding; and (c) if (i) the employment of legal counsel by the Indemnitee has been previously authorized by the Company, (ii) the Indemnitee shall have reasonably concluded that there is a conflict of interest between the Company and the Indemnitee in the conduct of any such defense, or (iii) the Company shall not in fact continue to retain such legal counsel to defend such Claim, then the fees and expenses of the Indemnitee’s legal counsel shall be at the expense of the Company.
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Article
IV
Additional Indemnification Rights and Non-Exclusivity
Section 4.01 Scope. The Company hereby agrees to indemnify the Indemnitee to the fullest extent permitted by law (except as provided in Article II hereof) with respect to Claims for Indemnification Events, even if such indemnification is not specifically authorized by the other provisions of this Agreement or any other agreement, the M&A, or by statute. In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a Cayman Islands company to indemnify a member of its Board or an officer, it is the intent of the parties hereto that the Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change. In the event of any change in any applicable law, statute or rule which narrows the right of a Cayman Islands company to indemnify a member of its Board or an officer, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties’ rights and obligations hereunder except as set forth in Article II hereof.
Section 4.02 Non-Exclusivity. Notwithstanding anything in this Agreement, the indemnification provided by this Agreement shall be in addition to any rights to which the Indemnitee may be entitled under the M&A, any agreement, any vote of shareholders or disinterested directors, the laws of the Cayman Islands, or otherwise.
Article
V
Construction of Certain Phrases
Section 5.01 Construction of Certain Phrases. For purposes of this Agreement:
(a) “Change in Control” shall be deemed to have occurred if (i) any “person” (as such term is used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then outstanding Voting Securities (as defined in Section 5.01(f) below), (ii) during any period of two (2) consecutive years, individuals who at the beginning of such period constitute the Board and any new director whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of transactions) all or substantially all of the Company’s assets; provided that, in no event shall a Change in Control be deemed to include (A) a merger, consolidation or reorganization of the Company for the purpose of changing the Company’s state of incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction, or (B) the Company’s firm commitment underwritten public offering of any of its securities to the general public pursuant to (x) a registration statement filed under the Securities Act, or (y) the securities laws applicable to an offering of securities in another jurisdiction pursuant to which such securities will be listed on an internationally recognized securities exchange.
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(b) “Company” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors and officers, so that if the Indemnitee is or was or may be deemed a director or officer of such constituent corporation, or is or was or may be deemed to be serving at the request of such constituent corporation as a director or officer of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, the Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as the Indemnitee would have with respect to such constituent corporation if its separate existence had continued.
(c) “Independent Legal Counsel” shall mean an attorney or firm of attorneys, selected in accordance with the provisions of Section 3.04 hereof, who shall not have otherwise performed services for the Company or the Indemnitee within the last two (2) years (other than with respect to matters concerning the right of the Indemnitee under this Agreement).
(d) “other enterprise” shall include any employee benefit plan; references to “fines” shall include any excise taxes assessed on the Indemnitee with respect to an employee benefit plan; and references to “serving at the request of the Company” shall include any service as a director or officer of the Company which imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or its beneficiaries; and if the Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, the Indemnitee shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.
(e) “Reviewing Party” shall mean any appropriate person or body consisting of a member or members of the Board (other than the Indemnitee who is a director) or any other person or body appointed by the Board who is not a named party to the particular Claim for which the Indemnitee is seeking indemnification, or Independent Legal Counsel.
(f) “Voting Securities” shall mean any securities of the Company that vote generally in the election of directors.
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Article
VI
MISCELLANEOUS
Section 6.01 Mutual Acknowledgement. The Company and the Indemnitee acknowledge that in certain instances, applicable law or public policy may prohibit the Company from indemnifying its directors, officers, employees, controlling persons, agents or fiduciaries under this Agreement or otherwise. Such instances include, but are not limited to, the U.S. Securities and Exchange Commission’s prohibition on indemnification for liabilities arising under certain U.S. federal securities laws. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the U.S. Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify the Indemnitee.
Section 6.02 Liability Insurance. To the extent the Company maintains liability insurance applicable to directors and officers, the Company shall use commercially reasonable efforts to provide that the Indemnitee shall be covered by such policies in such a manner as to provide the Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s directors and officers.
Section 6.03 Duration of Agreement. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer and/or a director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any Claim by reason of his or her former or current capacity at the Company or any other enterprise (including service with respect to employee benefit plans) at the Company’s request, whether or not he or she is acting or serving in any such capacity at the time any Expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall continue in effect regardless of whether the Indemnitee continues to serve as an officer and/or a director of the Company or any other enterprise at the Company’s request.
Section 6.04 Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against the Indemnitee, the Indemnitee’s estate, spouse, heirs, executors or personal or legal representatives after the expiration of two (2) years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two (2) year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern.
Section 6.05 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original.
Section 6.06 Assignment; Binding Effect. Neither this Agreement nor any of the rights or obligations hereunder may be assigned by either party hereto without the prior written consent of the other party; except that the Company may, without such consent, assign all such rights and obligations to a successor in interest to the Company which assumes all obligations of the Company under this Agreement in a written agreement in form and substance satisfactory to Indemnitee. Notwithstanding the foregoing, this Agreement shall be binding upon and inure to the benefit of and be enforceable by and against the parties hereto and the Company’s successors (including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Company) and assigns, as well as the Indemnitee’s spouses, heirs, and personal and legal representatives.
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Section 6.07 Attorneys’ Fees. Subject to Article II hereof and except as prohibited by applicable law, in the event that any action is instituted by the Indemnitee under this Agreement or under any liability insurance policies maintained by the Company to enforce or interpret any of the terms hereof or thereof, the Indemnitee shall be entitled to be paid all Expenses actually and reasonably incurred by the Indemnitee with respect to such action if the Indemnitee is ultimately successful in such action. In the event of an action instituted by or in the name of the Company under this Agreement to enforce or interpret any of the terms of this Agreement, the Indemnitee shall be entitled to be paid Expenses actually and reasonably incurred by the Indemnitee in defense of such action (including costs and expenses incurred with respect to the Indemnitee counterclaims and cross-claims made in such action), and shall be entitled to the advancement of Expenses with respect to such action, in each case only to the extent that the Indemnitee is ultimately successful in such action.
Section 6.08 Notice. All notices, demands, and other communications required or permitted under this Agreement shall be made in writing and shall be deemed to have been duly given if delivered by hand, against receipt, on the date of delivery, or mailed, on the third business day after mailing, postage prepaid, certified or registered mail, return receipt requested, and addressed to the Company at:
CCH Holdings Ltd
No. 1, Jalan Perda Jaya
Kawasan Perniagaan Perda Jaya, 14000
Bukit Mertajam, Pulau Pinang, Malaysia
Attention: Goh Kok Foong
and to Indemnitee at:
[Name]
[Address]
Section 6.09 Severability and Construction. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company’s inability, pursuant to a court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. In addition, if any portion of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by applicable law. The parties hereto acknowledge that they each have opportunities to have their respective counsels review this Agreement. Accordingly, this Agreement shall be deemed to be the product of both of the parties hereto, and no ambiguity shall be construed in favor of or against either of the parties hereto.
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Section 6.10 Choice of Law. This Agreement shall be governed by and its provisions construed and enforced in accordance with the laws of the State of New York without regard to the conflict of laws principles thereof.
Section 6.11 Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.
Section 6.12 Amendment. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement shall operate as a waiver of any other provisions (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided in this Agreement, no failure to exercise or any delay in exercising any right or remedy shall constitute a waiver.
Section 6.13 No Construction as Employment Agreement. Nothing contained in this Agreement shall be construed as giving the Indemnitee any right to be retained in the employment or service of the Company or any of its subsidiaries or affiliated entities.
Section 6.14 Entire Agreement. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
| CCH Holdings Ltd | ||
| By: | ||
| Name: | ||
| Title: | ||
| Indemnitee | ||
| Name: | ||
[Signature Page to Director Indemnification Agreement]
Exhibit 10.2
CCH HOLDINGS LTD
FORM OF EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement, dated as of _______, 20___ (this “Agreement”), is executed by and between CCH Holdings Ltd, an exempted company incorporated and existing under the laws of the Cayman Islands (the “Company”) and________, an individual with passport/ID number__________ (the “Executive”).
WHEREAS, the Company desires to employ the Executive and to assure itself of the services of the Executive during the term of Employment (as defined below) and under the terms and conditions of this Agreement;
WHEREAS, the Executive desires to be employed by the Company during the term of Employment and under the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the Company and the Executive agree as follows:
Article
I
EMPLOYMENT
Section 1.01 Employment. The Company hereby agrees to employ the Executive and the Executive hereby accepts such employment, on the terms and conditions hereinafter set forth (the “Employment”).
Section 1.02 Term of Employment. Subject to the terms and conditions of this Agreement, the term of the Employment shall be_____ years, commencing on____, 20__ and ending on_______, _____ (the “Term”), unless terminated earlier pursuant to the terms of this Agreement.
Section 1.03 Position, Duties and Responsibilities.
(a) During the Term, the Executive shall serve as______ of the Company or in such other position or positions with a level of duties and responsibilities consistent with the foregoing with the Company and/or its subsidiaries and affiliated entities as the board of directors of the Company (the “Board”) may specify from time to time and shall have the duties, responsibilities and obligations customarily assigned to individuals serving in the position or positions in which the Executive serves hereunder and as assigned by the Board, or with the Board’s authorization, by the Company’s Chief Executive Officer. The Executive will be based in______, _______or any other location as requested by the Company during the Term.
(b) The Executive agrees to serve without additional compensation, if elected or appointed thereto, as a director of the Company or any subsidiaries or affiliated entities of the Company (collectively, the “Group”) and as a member of any committees of the board of directors of any such entity; provided that the Executive is indemnified for serving in any and all such capacities on a basis no less favorable than is currently provided to any other director of any member of the Group.
(c) The Executive agrees to devote all of his/her working time and efforts to the performance of his/her duties for the Company and to faithfully and diligently serve the Company in accordance with this Agreement and the guidelines, policies and procedures of the Company approved from time to time by the Board.
(d) Except with the prior written approval of the Company, the Executive shall not render commercial or professional services of any nature to any person or organization, whether or not for compensation; and the Executive will not directly or indirectly engage, participate, invest, finance or otherwise assist in any business activity that is potentially competitive in any manner with the business of the Company or any affiliated entities or any business activity that may cause the Executive to be in conflict of interest with the Company or any affiliated entities, whether or not for profit.
Article
II
COMPENSATION AND BENEFITS
Section 2.01 Base Salary. The Company shall pay base salaries to the Executive in the amount and by the means as set forth in Part I of Schedule A hereto, subject to annual review and adjustment by the Board or any committee designated by the Board.
Section 2.02 Bonus. The Executive may be entitled to the performance-based bonus as set forth in Part II of Schedule A hereto, subject to annual review and adjustment by the Board or any committee designated by the Board.
Section 2.03 Equity Incentives. During the Term, the Executive shall be eligible to participate, at a level comparable to similarly situated executives of the Company, in such long-term compensation arrangements as may be authorized from time to time by the Board, including any share incentive plan the Company may adopt from time to time in its sole discretion.
Section 2.04 Benefits. During the Term, the Executive shall be entitled to participate in all of the employee benefit plans and arrangements made available by the Company to its similarly situated executives, including, but not limited to, any retirement plan, medical insurance plan and travel/holiday policy, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements.
Article
III
COVENANTs
Section 3.01 Confidentiality and Non-Disclosure.
(a) The Executive acknowledges and agrees that the Executive holds a position of trust and confidence with the Company and that his/her employment by the Company will require that the Executive have access to and knowledge of proprietary, confidential or secret information in connection with the Company, the business of the Group, customers or business partners of the Company or their respective businesses (the “Confidential Information”). Such Confidential Information shall include, without limitation, trade secrets, manuals, hardware, customers’ personal information, terms of business agreements and contracts, research materials, business strategies, personnel information, market information, technical materials, forecasts, promotion, financial and other business information of the Group, no matter such information is directly or indirectly disclosed to the Executive in writing, orally, in the form of image or object or otherwise. The Executive acknowledges and agrees that he/she direct and indirect disclosure of any such Confidential Information would place the Company at a competitive disadvantage and would do damage, monetary or otherwise, to the Company’s business.
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(b) During the Term and at all times thereafter, the Executive shall not, directly or indirectly, whether individually, as a director, shareholder, owner, partner, employee, consultant, principal or agent of any business, or in any other capacity, publish or make known, disclose, furnish, reproduce, make available, or utilize any of the Confidential Information without the prior express written approval of the Company, other than in the proper performance of the duties contemplated herein, unless and until such Confidential Information is or shall become general public knowledge through no fault of the Executive.
(c) In the event that the Executive is required by law to disclose any Confidential Information, the Executive agrees to give the Company prompt advance written notice thereof and to provide the Company with reasonable assistance in obtaining an order to protect the Confidential Information from public disclosure.
(d) The failure to mark any Confidential Information as confidential shall not affect its status as Confidential Information under this Agreement.
Section 3.02 Third Party Information in the Executive’s Possession. The Executive agrees that he/she shall not, during the Term, (a) improperly use or disclose any proprietary information or trade secrets of any former employer or other person or entity with which the Executive has an agreement or duty to keep in confidence information acquired by Executive, if any, or (b) bring into the premises of Company any document or confidential or proprietary information belonging to such former employer, person or entity unless consented to in writing by such former employer, person or entity.
Section 3.03 Third Party Information in the Company’s Possession. The Executive recognizes that the Company may have received, and in the future may receive, from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Executive agrees that the Executive owes the Company and such third parties, during the Term and thereafter, a duty to hold all such confidential or proprietary information in strict confidence and not to disclose such information to any person or firm, or otherwise use such information, in a manner inconsistent with the limited purposes permitted by the Company’s agreement with such third party.
Section 3.04 Non-Competition. In consideration of the compensation provided to the Executive by the Company hereunder, the adequacy of which is hereby acknowledged by the parties hereto, the Executive agrees that during the Term and for a period of one year following the termination of the Employment for whatever reason (the “Restrictive Period”), the Executive shall not, directly or indirectly, engage in any manner in any business that may compete with the business of the Company anywhere in the world, and without the prior written consent of the Company, the Executive shall not, directly or indirectly, anywhere in the world, own an interest in, manage, operate, join, control, lend money or render financial or other assistance to or participate in or be connected with, as an officer, employee, partner, shareholder, principal, licensor, consultant or otherwise, any person that competes with the Company. During the Restrictive Period, the Executive shall not approach borrowers, institutional funding partners or other persons or entities introduced to the Executive in his/her capacity as a representative of the Company for the purpose of doing business with such persons or entities that will harm the Company’s business relationships with these persons or entities.
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Section 3.05 Non-Solicitation; Non-Interference. During the Restrictive Period, the Executive agrees that he/she will not, directly or indirectly, for the Executive’s benefit or for the benefit of any other person or entity, do any of the following:
(a) solicit or seek to solicit from any partner doing business with the Group during the Term business of the same or of a similar nature to the business of the Group;
(b) solicit or seek to solicit from any known potential partner of the Group business of the same or of a similar nature to that which, whether or not has been the subject of a known written or oral bid, offer or proposal by the Group, or of substantial preparation with a view to making such a bid, proposal or offer;
(c) solicit or seek to solicit the employment or services of, or hire or engage, any person who is employed or engaged by the Group;
(d) assume employment with or provide services to any competitors of the Group, or engage, whether as principal, partner, consultant or otherwise, any of the Group’s competitors, without the Group’s prior written consent; or
(e) otherwise interfere with the business or accounts of the Group, including, but not limited to, with respect to any relationship or agreement between the Group and any of its partners.
Section 3.06 No-Conflict. The Executive represents and warrants that the execution by the Executive of this Agreement, the employment with the Company, and the performance by the Executive of his/her duties and responsibilities pursuant to this Agreement will not breach any of his/her legal or contractual obligation to any prior employer of the Executive or any other parties, including, without limitation, any obligation in respect of proprietary or confidential information or intellectual property rights of such party.
Section 3.07 Enforceability. Each covenant contained in this Article III constitutes an independent covenant, and if any covenant in unenforceable, other covenants shall continue to be valid and binding. In the event the term of any restriction or the territorial restriction contained in this Article III is finally determined by a competent court to have exceeded the maximum extent deemed reasonable and enforceable by such court, then this Agreement shall be amended as such to adopt the longest term or largest territory deemed by such court to be enforceable. Any lawsuit or claim brought by the Executive against the Company (whether by virtue of this Agreement or any other agreement) shall not constitute a defense against the enforcement of this Article III by the Company.
Section 3.08 Injunctive Relief. The Executive agrees that any breach or threatened breach of any covenants contained in this Article III would result in irreparable injury and damage to the Company for which an award of money to the Company would not be an adequate remedy. The Executive therefore also agrees that in the event of said breach or any reasonable threat of breach, the Company shall be entitled to seek an immediate injunction and restraining order to prevent such breach and/or threatened breach and/or continued breach by the Executive and/or any and all persons and/or entities acting for and/or with the Executive. The terms of this paragraph shall not prevent the Company from pursuing any other available remedies for any breach or threatened breach hereof, including, but not limited to, remedies available under this Agreement and the recovery of damages. The Executive and the Company further agree that the provisions of this Article III are reasonable.
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Section 3.09 Indemnity of Company. The Executive agrees to indemnify the Company and hold it harmless from and against all claims, liabilities, damages and expenses, including reasonable attorneys’ fees and costs of litigation, arising out of or in connection with any violation of this Agreement by the Executive.
Article
IV
INTELLECTUAL PROPERTY
Section 4.01 Prior Inventions. The Executive has attached hereto, as Schedule B, a list of patents duly registered with relevant authorities, original works of authorship and trade secrets made or conceived by or belonging to the Executive (whether made solely by the Executive or jointly with others) that (a) were developed by Executive prior to the Executive’s employment by the Company, (b) relate to the Company’ actual or proposed business, products or research and development, and (c) are not assigned to the Company hereunder (collectively, the “Prior Inventions”); or, if no such list is attached, the Executive represents that there are no such Prior Inventions. Except to the extent set forth in Schedule B, the Executive hereby acknowledges that, if in the course of his/her service for the Company, the Executive incorporates into a Company product, process or machine a Prior Invention owned by the Executive or in which he/she has an interest, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide right and license (which may be freely transferred by the Company to any other person or entity) to make, have made, modify, use, sell, sublicense and otherwise distribute such Prior Invention as part of or in connection with such product, process or machine.
Section 4.02 Assignment of Intellectual Property. The Executive hereby assigns to the Company or its designees, without further consideration and free and clear of any lien or encumbrance, the Executive’s entire right, title and interest to any and all inventions, discoveries, improvements, developments, works of authorship, concepts, ideas, plans, specifications, software, formulas, databases, designees, processes and contributions to Confidential Information created, conceived, developed or reduced to practice by the Executive (alone or with others) during the Term which (a) are related to the Company’s current or anticipated business, activities, products, or services, (b) result from any work performed by Executive for the Company, or (c) are created, conceived, developed or reduced to practice with the use of Company property, including any and all Intellectual Property Rights (as defined below) therein (the “Work Product”). Any Work Product which falls within the definition of “work made for hire”, as such term is defined in the U.S. Copyright Act, shall be considered a “work made for hire”, the copyright in which vests initially and exclusively in the Company. The Executive waives any rights to be attributed as the author of any Work Product and any “droit morale” (moral rights) in Work Product. The Executive agrees to immediately disclose to the Company all Work Product. For purposes of this Agreement, “Intellectual Property Rights” shall mean any patent, copyright, trademark or service mark, trade secret, or any other proprietary rights protection legally available.
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Section 4.03 Patent and Copyright Registration. The Executive agrees to execute and deliver any instruments or documents and to do all other things reasonably requested by the Company in order to more fully vest the Company with all ownership rights in the Work Product. If any Work Product is deemed by the Company to be patentable or otherwise registrable, the Executive shall assist the Company (at the Company’s expense) in obtaining letters of patent or other applicable registration therein and shall execute all documents and do all things, including testifying (at the Company’s expense) as necessary or appropriate to apply for, prosecute, obtain, or enforce any Intellectual Property Rights relating to any Work Product. Should the Company be unable to secure the Executive’s signature on any document deemed necessary to accomplish the foregoing, whether due to the Executive’s disability or other reason, the Executive hereby irrevocably designates and appoints the Company and each of its duly authorized officers and agents as the Executive’s agent and attorney-in-fact to act for and on the Executive’s behalf and stead to take any of the actions required of Executive under the previous sentence, with the same effect as if executed and delivered by the Executive, such appointment being coupled with an interest.
Section 4.04 Maintenance of Records. The Executive agrees to keep and maintain adequate and current written records of all Intellectual Property Rights made by the Executive (solely or jointly with others) during the term of his/her employment with the Company. The records will be in the form of notes, sketches, drawings, and any other format that may be specified by the Company. The records will be available to and remain the sole property of the Company at all times.
Article
V
TERMINATION
Section 5.01 Termination By the Company.
(a) By Reason of Death. The employment of the Executive by the Company shall be automatically ceased upon the death of the Executive. In the event that employment of the Executive by the Company terminates as a result of the Executive’s death, the Executive’s estate or heirs will receive all unpaid compensation accrued as of the date of the termination of the employment as provided in Article II hereof; provided that the Company may deduct and withhold any amount it is entitled to as damages under applicable laws. Thereafter, all obligations of the Company under this Agreement shall terminate. Nothing contained herein shall prevent the estate or heirs of the Executive from being entitled to any interest or other applicable benefits under any life insurance programs (if any).
(b) By Reason of Disability. In the event that the Executive is entitled to long-term disability benefits of the Company, or in the event that, in the judgment of the Company, the Executive is not able to perform his/her duties for 90 consecutive days or 120 days or longer in a 12-month period due to his/her physical or psychological problems, the Company may terminate the Executive’s employment; provided that such termination is permitted by the law. Upon termination, the Company shall pay all compensation of the Executive accrued up to the date of termination pursuant to Article II hereof; provided, however, that the Company may deduct and withhold any amount it is entitled to as damages under applicable laws. Thereafter, all obligations of the Company under this Agreement shall terminate. The provisions of this Section 5.01(b) shall not affect the Executive’s rights under any disability program that he/she participates (if any).
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(c) For Cause. For purposes of this Agreement, unless otherwise provided under applicable laws, “Cause” will exist at any time after the occurrence of one or more of the following events: (i) the Executive commits willful misconduct or gross negligence in performance of his/her duties hereunder (the “Malfeasance”) and fails to correct such Malfeasance within a reasonable period specified by the Company after the Company has sent the Executive a written notice demanding correction within such a period; (ii) the Executive has committed Malfeasance and has caused serious losses and damages to the Company; (iii) the Executive seriously violates the internal rules of the Company and fails to correct such violation within a reasonable period specified by the Company after the Company has sent the Executive a written notice demanding correction within such a period; (iv) the Executive has seriously violated the internal rules of and has caused serious losses and damages to the Company; (v) the Executive is convicted by a court of competent jurisdiction or has pleaded guilty of theft, fraud or other criminal offense; (vi) the Executive seriously breaches his/her duty of loyalty to the Company or an affiliated entity of the Company under the laws of the Cayman Islands, Malaysia or other relevant jurisdictions; or (vii) the Executive continues failure to satisfactorily perform his/her duties. The Company may terminate the employment of the Executive for Cause at any time without prior written notice. Upon termination, the Company shall pay all compensation of the Executive accrued up to the date of termination pursuant to Article II hereof and severance payments as expressly required by applicable law; provided, however, that the Company may deduct and withhold any amount it is entitled to as damages under applicable laws. Thereafter, all obligations of the Company under this Agreement shall terminate.
(d) Without Cause. The Company may terminate the Executive’s employment by a three-month prior written notice. Upon termination, the Company shall pay all compensation of the Executive accrued up to the date of termination pursuant to Article II hereof; provided, however, that the Company may deduct and withhold any amount it is entitled to as damages under applicable laws. Thereafter, all obligations of the Company under this Agreement shall terminate.
Section 5.02 Termination by the Executive. The Executive may voluntarily terminate his/her employment with the Company with or without cause by a three-month prior written notice. During such three-month notice period, the Executive shall continue to perform diligently his/her duties and responsibilities under this Agreement. The Company shall have the discretion to terminate its employment with the Executive prior to the last day of such three-month period; provided that the Company shall have paid the Executive all of his/her compensation accrued through the last day of such three-month period pursuant to Article II hereof; provided further that the Company may deduct and withhold any amount it is entitled to as damages under applicable laws. Thereafter, the Company’s obligations hereunder shall terminate. In such case, the Company shall not be responsible for paying any severance pay or other benefits to the Executive.
Section 5.03 Notice of Termination. Any termination of the Executive’s employment under this Agreement shall be communicated by written notice of termination (the “Notice of Termination”) from the terminating party to the other party. The Notice of Termination shall indicate the specific provision(s) of this Agreement relied upon in effecting the termination. The “date of termination” shall mean (a) the date set forth in the Notice of Termination, or (b) if the Executive’s employment is terminated by the Executive’s death, the date of his/her death.
Section 5.04 Return of Group Property. The Executive agrees that following the termination of the Executive’s employment for any reason, or at any time prior to the Executive’s termination upon the request of the Company, he/she shall return all property of the Group that is then in or thereafter comes into his/her possession, including, but not limited to, any Confidential Information or Intellectual Property Rights, or any other documents, contracts, agreements, plans, photographs, projections, books, notes, records, electronically stored data and all copies, excerpts or summaries of the foregoing, as well as any automobile or other materials or equipment supplied by the Group to the Executive, if any.
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Section 5.05 Requirement for a Release. Notwithstanding the foregoing, the Company’s obligations to pay or provide any benefits shall (a) cease as of the date the Executive breaches any of the provisions of this Agreement, and (b) be conditioned on the Executive signing the Company’s customary release of claims in favor of the Group and the expiration of any revocation period provided for in such release.
Article
VI
ANTI-CORRUPTION
Section 6.01 Anti-Corruption. The Executive agrees to diligently adhere to the U.S. Foreign Corrupt Practices Act of 1977, as amended, and applicable anti-corruption laws, rules and regulations in other relevant jurisdictions. The Executive agrees and promises not to provide or offer any remuneration, gift, service or article of value to any government officials (including working stuff or employees of any government or administrative agencies, political parties or candidates) of any country for any reason. The Executive further agrees and promises that the Executive will not accept any remuneration in the form of cash or other tangible objects from any person in performing his/her duties under this Agreement other than the compensation specified in Article II of this Agreement. The Executive promises that all conducts of the Executive under this Agreement shall be in compliance with all applicable laws, regulations and administrative rules at all times.
Article
VII
MISCELLANEOUS
Section 7.01 Withholding Taxes. Notwithstanding anything else herein to the contrary, the Company may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due or payable under or pursuant to this Agreement such national, state, provincial, local or any other income, employment, or other taxes as may be required to be withheld pursuant to any applicable law or regulation.
Section 7.02 Continuing Obligation. If the Executive is employed by any existing or future member of the Group at any time, or provides services to such member of the Group, or otherwise retained by such member of the Group, then the obligations under this Agreement shall continue to apply. Any reference to the Company shall include such member of the Group. In the event that this Agreement expires or terminates for any reason, the Executive shall immediately resign from any position at such member of the Group, unless otherwise required by the Company.
Section 7.03 Notice to Employer. The Executive hereby authorizes the Company to notify the relevant provisions of this Agreement and the Executive’s obligations under this Agreement to the actual or future employer of the Executive (including the member of the Group with which the Executive will work), unless otherwise agreed by and between the Executive and the Company.
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Section 7.04 Right to Name and Image. The Executive hereby authorizes the Company to use, or authorize any other person to use, once or from time to time during his/her employment with the Company, the names, photos, images (including cartoons), voices and resume of the Executive as well as photocopies and duplicates thereof in any media now known or developed in the future (including but not limited to movies, videos, digital or any other electronic media) for purposes as may be deemed appropriate by the Company.
Section 7.05 Survival. The Executive further agrees that (a) Articles III and IV shall survive the termination or expiration of the Term and the termination of this Agreement, and (b) after termination or expiration of the Term, the Executive shall use his/her best efforts to cooperate with the Company in connection with such surviving obligations, including, without limitation to, completion of outstanding work on behalf of the Company, transfer of his/her assignments to designated employees of the Company, and defense of the Company against claims raised by any third party in connection with any action or negligence of the Executive during his/her employment with the Company.
Section 7.06 Amendment. This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.
Section 7.07 Waiver. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
Section 7.08 Transfer; Successors and Assigns. The Executive agrees that he/she will not transfer, sell, assign or otherwise dispose of (whether voluntarily, involuntarily or by operation of law) any rights or interests under this Agreement, and the rights of the Executive shall not be subject to any security interest or creditors’ claims. Any such transfer, assign or other disposal shall be invalid. Nothing contained in this Agreement shall prevent the Company from merging into or with any other company or selling all or substantially all of the assets of the Company, or transfer this Agreement or any obligation under this Agreement. In the event of any change in the ownership interest or the control of the Company, the provisions of this Agreement shall continue to apply and shall be binding upon any successors. Notwithstanding and subject to the foregoing, this Agreement shall be valid and binding upon, and inure to the benefit of, the successor, representative, heirs and permitted assigns of each party, and shall not vest in any other individual or entity any interest.
Section 7.09 Notice. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and made if (a) delivered by hand, (b) otherwise delivered against receipt therefor, (c) sent by a recognized courier with next-day or second-day delivery to the last known address of the other party; or (d) sent by e-mail with confirmation of receipt.
Section 7.10 Severability; Enforceability. Without prejudice to Section 3.07, if all or any portion of any provision of this Agreement as applied to any person, to any place or to any circumstance shall be ruled by an arbitration commission or a court of competent jurisdiction to be invalid, illegal or incapable of being enforced, the same shall in no way affect (to the maximum extent permissible by applicable laws) that provision or the remaining portions of that provision as applied to any parties, places or circumstances or any other provisions of this Agreement or the validity or enforceability of this Agreement as a whole.
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Section 7.11 Entire Agreement. This Agreement constitutes the entire agreement and understanding between the Executive and the Company regarding the terms of the Employment and supersedes all prior or contemporaneous oral or written agreements concerning such subject matter. The Executive acknowledges that he/she has not entered into this Agreement in reliance upon any representation, warranty or undertaking which is not set forth in this Agreement.
Section 7.12 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York without regard to the conflict of laws principles thereof.
Section 7.13 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.
The Executive acknowledges that (a) he/she has consulted or has the opportunity to consult with independent counsel of his/her choice regarding this Agreement, and the Company has suggested that he/she do so and (b) he/she has read and understands this Agreement, fully understands its legal effect, and has entered into this Agreement voluntarily in his/her own judgment. The Executive hereby agrees that the obligations under Articles III and IV hereof and the definition of Confidential Information contained in those provisions shall also apply to the Confidential Information relating to any work performed for the Company prior to the execution of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
| CCH HOLDINGS LTD | ||
| By: | ||
| Name: | ||
| Title: | ||
| EXECUTIVE | ||
| Name: | ||
[Signature Page to Executive Employment Agreement]
Schedule A
Compensation
Part I. Base Salary
Part II. Bonus
Schedule B
List of Prior Inventions
| Title | Date | Identifying Number or Brief Description | ||
_____________No inventions or improvements
__________Additional Sheets Attached
Signature of Executive:
Print Name of Executive: _____________
Date:_____________
Exhibit 10.3
FORM OF LICENSING AGREEMENT
This Agreement (“Agreement”) is entered into as of [ ]
BETWEEN
[ ] (Company No: [ ]), a company incorporated in Malaysia with its registered address at [ ] (“the Licensor”) of the one part;
AND
[ ] (Company No: [ ]), a company incorporated under the laws of Malaysia and having its place of business at below (“the Licensee”) of the other part
1st Outlet: [ ]
2nd Outlet: [ ]
WHEREAS:
| 1. | The Licensor is the registered legal and beneficial owner of the Proprietary Marks and is engaged in the business of selling food and beverages using, amongst others, the Products and trading under the [ ] trademarks (“Business”). |
| 2. | The Licensor is the proprietor of Intellectual Property including the [ ] trademarks, Confidential Information and other business identifiers, slogans and related logos. |
| 3. | The Licensee acknowledges the importance of the standard of Products used in the Business to the reputation and goodwill of Business and the Licensee hereby agrees to obtain the Products from the Licensor and/or its Authorized Suppliers in the operation of the Business. |
| 4. | The Licensor and the Licensee hereby agree to enter into this Agreement to regulate their relationship in accordance with the terms and conditions hereinafter set forth. |
1. Grant of License:
1.1 Licensor hereby grants to Licensee a non-exclusive, non-transferable license to use the Intellectual Property for the purposes of carrying out and operating the Business in the Outlet within the Territory in accordance with the terms of this Agreement.
1.2 The Licensee shall not operate the Business establishment at any other location other than the Premises and shall not relocate without the Licensor’s prior written approval.
2. Fees and Payments:
2.1 In consideration of the grant of the License in accordance with the terms and conditions of this Agreement, the Licensee hereby agrees and undertakes to pay the Licensor the following:
| a. | Royalty Fee: |
| ● | [ ] % of Gross Monthly Revenue (during the Term) |
| b. | Admin Fee: |
| ● | [ ] per month |
1 | Page
| ● | Licensor have right to review and revise the Admin Fee Charges from time to time |
| ● | Admin Fee is for the costs of handling and bookkeeping for Licensee’s Business Account |
| c. | Other Charges: |
| ● | Licensor shall bill to Licensee for the Costs or Expenses that associated with Business for Licensee’s particular outlet as at when there is |
2.2 All payments due to the Licensor form the Licensee shall be made within 7 days after the invoice provide by Licensor. And payment shall be made in Ringgit Malaysia (MYR) and at the Licensor’s option, be paid by cheque or bank draft or by electronic funds transfer directly into a bank account designated by the Licensor.
3. Accounting and Records:
All parties shall keep accurate and complete records pertaining to the calculation and payment of royalties hereunder. Due to Licensor handling for the account, Licensee have right to inspect and audit such records upon reasonable notice to Licensor.
4. Term and Termination:
This Agreement shall commence on the effective date and shall continue for a period of at least 3 years, unless earlier terminated at any time by the mutual agreement of the Parties.
5. Renewal:
This Agreement shall auto renew after 3 years from the commencement date unless reqeust change of term and condition of the agreeemnt or request discontiune operated Business by the mutual agreement of the Parties.
6. Governing Law and Jurisdiction:
This Agreement shall be governed by and construed in accordance with the laws of Malaysia and the Parties agree to submit to the non-exclusive jurisdiction of the courts of Malaysia.
7. Entire Agreement:
This Agreement constitutes the entire understanding between the parties with respect to the subject matter hereof and supersedes all prior agreements, discussions, representations, and understandings, whether written or oral.
[the remainder of this page is intentionally left blank]
2 | Page
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
| THE LICENSOR | ||
| SIGNED by, for and on behalf of, | ) | |
| [ ] | ) | |
| Company No: [ ] | ) | |
| Authorized Signature | ||
| Name: [ ] | ||
| NRIC No: [ ] | ||
| Witness | ||
| Name: [ ] | ||
| NRIC No: [ ] | ||
| THE LICENSEE | ||
| SIGNED by, for and on behalf of, | ) | |
| [ ] | ) | |
| Company No: [ ] | ) | |
| Authorized Signature | ||
| Name: [ ] | ||
| NRIC No: [ ] | ||
| Witness | ||
| Name: [ ] | ||
| NRIC No: [ ] |
3 | Page
Exhibit 10.4
FORM OF LICENSING AGREEMENT
THIS AGREEMENT is made on _ ____
BETWEEN
[ ] (Company No. [ ]), a company incorporated in Malaysia whose registered address is at [ ] (“the Licensor”);
AND
THE PARTY WHOSE NAME, ADDRESS AND OTHER DETAILS are set out in SECTION A of SCHEDULE 1 (“the Master Licensee”).
RECITAL
| (A) | The Licensor is the registered legal and beneficial owner of the Proprietary Marks and is engaged in the business of selling food and beverages using, amongst others, the Products and trading under the Proprietary Marks (“the Business”). |
| (B) | The Master Licensee desires to obtain, and the Licensor is willing to grant to the Master Licensee, a right to use the Proprietary Marks to carry out the Business in the Outlets and to further grant to others the right to use the Proprietary Marks to carry out the Business in the Outlets within the Territory in accordance with the terms and conditions of this Agreement. |
| (C) | The Master Licensee acknowledges the importance of the standard of the Products used in the Business to the reputation and goodwill of the Proprietary Marks, and the Master Licensee hereby agrees to obtain the Products from the Licensor and/or its Authorized Suppliers in the operation of the Business. |
| (D) | The Licensor and the Master Licensee hereby agree to enter into this Agreement to regulate their relationship in accordance with the terms and conditions hereinafter set forth. |
NOW IT IS HEREBY AGREED as follows:-
| 1. | DEFINITIONS & INTERPRETATION |
| 1.1 | In this Agreement, the following words and expressions will (except where the context otherwise requires) have the following meanings: |
| “Authorised Suppliers” |
shall mean the suppliers nominated by the Licensor in writing to the Master Licensee to supply the Products to the Master Licensee;
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| “Business” |
shall have the meaning ascribed to it in Recital (A); |
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| “Business Day” |
shall mean a day on which banks are generally open for business in the Territory, other than a Saturday or Sunday;
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| “Commencement Date” |
shall have the meaning ascribed to it in Clause 9.1;
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| “Confidential Information” |
shall mean the terms of this Agreement, and all information and/or data including non-public, confidential and proprietary information and without limitation, information in respect of the following, whether disclosed prior to or after the signing of this Agreement, belonging to or relating to the Licensor, its associates, its business, disclosed to the Master Licensee (whether in writing, orally or by any other means and whether directly or indirectly) and all information and/or data not disclosed to the Master Licensee but derived or developed by the Master Licensee and from the aforementioned information and/or data during the performance of this Agreement: |
| (a) | technologies, activities, affairs, products, and services; | |
| (b) | customers, potential customers, suppliers, potential suppliers, licensees, potential licensees, franchisees, potential franchisees, and agents; | |
| (c) | financing arrangements and credit lines; | |
| (d) | prices, pricing methods, and policies; | |
| (e) | trade secrets, know-how, processes, techniques, formulae, ideas, concepts and methodologies including without limitation recipes, presentation styles and methods; | |
| (f) | marketing strategies, and research and development; | |
| (g) | trading, operational, management, business or financial information; | |
| (h) | the Products; | |
| (i) | the Intellectual Property Rights; and | |
| (j) | other information which is by its nature confidential or proprietary or competitively sensitive to the business, property or affairs of a company; |
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| “Expiry Date” |
shall have the meaning ascribed to it in Clause 9.1;
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| “Force Majeure” |
shall mean an act, omission or circumstance relied on by one of the parties to this Agreement as a force majeure event and over which that party could not reasonably have exercised control including but not limited to acts of God, acts or omissions of government, general strikes and/or lockouts, riots, acts of war, epidemics or pandemics, flood, or governmental regulations imposed after the date of execution of this Agreement, earthquakes or other natural disasters;
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| “Gross Monthly Revenue” |
shall mean the aggregate of all monthly gross revenue income, money or other consideration (before taxes, costs and expenses) received or receivable for all food and beverage products, merchandise, any other goods sold, leased, hired or otherwise disposed of and for all services whatsoever performed or provided and all business of any nature whatsoever conducted in, at, from and/or upon each Outlet and/or in any form whatsoever derived from any business activity of each Outlet (whether in or outside such Outlet);
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| “Gross Yearly Revenue” |
shall mean the aggregate of the Gross Monthly Revenue in respect of each Outlet on a yearly basis in respect of the relevant year;
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| “Intellectual Property Rights” | shall mean all patents, rights to inventions, utility models, copyright and related rights, trade marks, service marks, trade, business and domain names, rights in trade dress or get-up, rights in goodwill or to sue for passing off, unfair competition rights, rights in designs, rights in computer software, database rights, topography rights, moral rights, rights in Confidential Information, trade secrets, know-how, processes, techniques, formulae, ideas, concepts and methodologies including without limitation recipes, presentation styles and methods, the Proprietary Marks, and any other intellectual property rights, in each case whether registered or unregistered and including all applications for and renewals or extensions of such rights, and all similar or equivalent rights or forms of protection in any part of the world relating to the Business; |
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| “Licensees” |
shall mean the third parties whom are granted by the Master Licensee the right to use the Proprietary Marks to carry out the Business in the Outlets within the Territory; and “Licensee” shall be construed accordingly;
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| “Master License” |
shall have the meaning ascribed to it in Clause 2.1;
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“Master License Business”
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shall mean the business under which the Master License is operated, including the Business in the Outlet(s) owned and operated by the Master Licensee;
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“Master License Renewal Fee”
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shall have the meaning ascribed to it in Clause 9.2(b); |
| “Master Licensing Fee” |
shall have the meaning ascribed to it in Clause 3.1(a);
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| “Outlet” |
shall mean a place of business or premise or kiosk where the Business is carried out by the Master Licensee or its Licensees; and “Outlets” shall be construed accordingly;
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| “Outlet License Fee” |
shall have the meaning ascribed to it in Clause 3.1(b);
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| “Products” |
shall mean the food materials, ingredients and products to be supplied exclusively by the Licensor and/or the Authorised Suppliers to the Master Licensee for the use of the Business as listed in ANNEXURE 2, including any change thereof as may be notified in writing by the Licensor to the Master Licensee from time to time;
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| “Proprietary Marks” | shall mean the patents, trademarks, trade names, logos and registered designs details of which are set out in ANNEXURE 1 to this Agreement under “[ ]” and all other patents, trademarks, trade names, logos, designs, symbols, emblems, insignia, fascia, slogans, copyrights, know-how, information, drawings, plans and other identifying materials whether or not registered or capable of registration and all other proprietary marks whatsoever owned by or available to the Licensor adopted or designated now or at any time hereafter by the Licensor for use in connection with the Business, including any change thereof as may be notified in writing by the Licensor to the Master Licensee from time to time from time to time; and |
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“Royalty”
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shall have the meaning ascribed to it in Clause 3.1(c); |
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“Royalty Share”
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shall have the meaning ascribed to it in Clause 3.1(d); |
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“Territory”
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shall mean the territorial area set out in SECTION 6 of SCHEDULE 1; and
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| “Term” |
shall have the meaning ascribed to it in Clause 9.1. |
| 1.2 | References to statutory provisions shall be construed as references to those provisions as amended or re-enacted or as their application is modified by other provisions (whether before or after the date hereof) from time to time and shall include any provisions of which they are re-enactments (whether with or without modification). |
| 1.3 | References herein to Clauses, Schedules and Annexures are to clauses in and Schedules and Annexures to this Agreement unless the context requires otherwise and the Annexures to this Agreement shall be deemed to form essential part of this Agreement. |
| 1.4 | The expressions “party” and “parties” shall, where the context permits, include their respective successors, representatives and permitted assigns. |
| 1.5 | References to “persons” shall include individuals, firms, companies, corporations or other body corporate, government, state or agency of a state or any joint venture, association or partnerships (whether or not having separate legal personality). |
| 1.6 | A reference to any document (including this Agreement) is to that document as varied, novated, ratified or replaced from time to time. |
| 1.7 | Provisions contained herein which are primarily and literally applicable to the case of natural persons shall be construed and take effect as if the parties were companies and shall bind all of its/their permitted assigns, persons deriving title there under and successors-in-title. Accordingly, any references herein relating to bankruptcy shall thereafter be references relating to the winding-up, liquidation, amalgamation or reconstruction, as the case may be, of the parties. |
| 1.8 | The headings are inserted for convenience only and shall not affect the construction of this Agreement. |
| 1.9 | Words importing the singular include the plural and vice versa and words importing a gender include every gender. |
| 1.10 | A warranty, representation, undertaking, indemnity, covenant or agreement on the part of two or more persons binds them jointly severally; |
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| 1.11 | Any reference to ‘writing’ or cognate expressions includes a reference to electronic communication, facsimile transmission or comparable means of communications; |
| 1.12 | If a period of time is specified and dates from, after or before, a given day or the day of an act or event, it is to be calculated exclusive of that day. |
| 1.13 | If a payment or other act shall (but for this Clause) be made or done on a day which is not a Business Day, then it shall be made or done on the next Business Day. |
| 2. | GRANT OF LICENSE |
| 2.1 | For the duration of the Term, the Licensor grants to the Master Licensee the master license comprising of a non-exclusive right to use the Proprietary Marks for the purposes of carrying out and operating the Business in the Outlets and an exclusive right to further grant to its Licensees a non-exclusive right to use the Proprietary Marks for the purposes of carrying out and operating the Business in the Outlets within the Territory (collectively, “the Master License”) in accordance with the terms of this Agreement. |
| 3. | FEES |
| 3.1 | In consideration of the grant of the Master License in accordance with the terms and conditions of this Agreement, the Master Licensee shall pay to the Licensor the following: |
| (a) | such sum as stated in SECTION 5(a) of SCHEDULE 1 (“Master Licensing Fee”) which shall be payable to the Licensor upon the execution of this Agreement; |
| (b) | such sum as stated in SECTION 5(b) of SCHEDULE 1 (“Outlet License Fee”) in respect of each subsequent Outlet after the second (2nd) Outlet which is opened and operated in the Territory by the Master Licensee and/or its Licensees and which shall be payable to the Licensor: |
| (i) | where such Outlet is opened and operated by a Licensee, upon the execution of the relevant license agreement between the Master Licensee and its Licensee in respect of such Outlet; |
| (ii) | where such Outlet is sold or otherwise transferred by an existing Licensee to another Licensee or to the Master Licensee (as the case may be), upon the execution of the relevant license agreement between the Master Licensee and such other Licensee in respect of such Outlet or upon the completion of such sale or transfer of such Outlet to the Master Licensee (as the case may be); or |
| (iii) | where such Outlet is opened and operated by the Master Licensee, upon the notification by the Master Licensee to the Licensor pursuant to Clause 6.1 (a) (iii); |
| (c) | such sum as stated in SECTION 5(c) of SCHEDULE 1 (“Royalty”) in respect of each Outlet which is opened and operated in the Territory by the Master Licensee and which shall be payable to the Licensor within seven (7) days from the end of each calendar month during the Term; |
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| (d) | such sum as stated in SECTION 5(d) of SCHEDULE 1 (“Royalty Share”) in respect of each Outlet which is opened and operated in the Territory by the Licensees and which shall be payable to the Licensor within seven (7) days from the end of each calendar month during the Term; and |
| (e) | such sum as stated in SECTION 5(e) of SCHEDULE 1 (“Security Deposit”) in respect of each Outlet which is opened and operated in the Territory by the Master Licensee and/or its Licensees and which shall be payable to the Licensor: |
| (i) | where such Outlet is opened and operated by a Licensee, upon the execution of the relevant license agreement between the Master Licensee and its Licensee in respect of such Outlet; or |
| (ii) | where such Outlet is opened and operated by the Master Licensee, upon the notification by the Master Licensee to the Licensor pursuant to Clause 6.1 (a) (iii). |
| 3.2 | The Security Deposit shall at all times be maintained at such sum as stated in SECTION 5(e) of SCHEDULE 1, and in the event of any deduction by the Licensor of such Security Deposit in accordance with the terms of this Agreement, the Master Licensee shall upon the request of the Licensor, forthwith pay or top-up such sums to maintain the Security Deposit at such afore-stated sum. |
| 3.3 | For the avoidance of doubt, the fees payable pursuant to this Clause shall be exclusive of any applicable taxes, duties and levies required to be paid in Malaysia and the jurisdiction in which the Master Licensee is located and any such applicable taxes, duties and levies shall be borne solely and separately by the Master Licensee. |
| 3.4 | Except otherwise granted under this Agreement, no goodwill or other rights in and associated with the Proprietary Marks will pass to the Master Licensee as a result of the payment of the Master License Fee and the License Fee. |
| 4. | OWNERSHIP OF THE PROPRIETARY MARKS |
| 4.1 | The Master Licensee acknowledges and agrees that the Licensor is the sole legal and beneficial owner of the Proprietary Marks and all the rights thereto, and the Master Licensee shall not challenge the validity and ownership of the Proprietary Marks nor shall the Master Licensee otherwise object to such ownership or otherwise interfere with or make any claims whatsoever towards such ownership. |
| 4.2 | Except otherwise granted under this Agreement, the Master Licensee shall not have any ownership or other rights in the Proprietary Marks and the goodwill associated with the Proprietary Marks inures directly and exclusively to the Licensor’s benefit. The Master Licensee shall hold any goodwill associated with the Proprietary Marks generated by the Master Licensee in any manner and in respect of any subject matter whatsoever during the course of this Agreement on trust for the Licensor and the Master Licensee shall only act as bare trustee for the Licensor. |
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| 4.3 | The Master Licensee shall, as and when requested, render to the Licensor reasonable assistance and execute such documents or do such things to enable the Licensor to obtain registration, transfer or assign the Proprietary Marks. In no circumstances will the Master Licensee apply for registration as proprietor of any of the Proprietary Marks in any part of the world but if at the time the Licensor desires to apply for registration, transfer or assignment of the Proprietary Marks in its favour and has so applied, the Master Licensee agrees it shall not challenge such registration, transfer or assignment or otherwise object to such title as the Licensor has to all the Proprietary Marks or otherwise interfere with or make any claims whatsoever during the registration, transfer or assignment process. |
| 4.4 | The Master Licensee will notify the Licensor forthwith of any and all circumstances coming to the attention of the Master Licensee, its directors, agents, employees and Licensees which may constitute an infringement of any of the Proprietary Marks or any suspected passing off by any unauthorized person and shall take such reasonable action or enter into such arrangement or agreement as may be required by the Licensor in connection therewith and including without limitation the prosecution of the Proprietary Marks. For the avoidance of doubt, the Master Licensee shall not be entitled to call upon the Licensor to take infringement proceedings or any other action. |
| 4.5 | The Master Licensee shall take such action in relation to the use of any of the Proprietary Marks in the Business as the Licensor may from time to time direct in order to make clear that the Proprietary Marks are the subject of patent, copyright or trade mark protection. |
| 4.6 | The Master Licensee acknowledges that the Licensor shall always be entitled and at its absolute discretion and liberty to sell, transfer and/or dispose any the Proprietary Marks without require to obtain any consent or approval from the Master Licensee save and except the Licensor shall serve or furnish three (3) months’ written notice to the Master Licensee prior to such sale, transfer or disposition. |
| 5. | SUPPLY OF PRODUCTS |
| 5.1 | The Master Licensee acknowledges the importance of the standard of the Products used in the Business to the reputation and goodwill of the Proprietary Marks. In consideration of the foregoing, the Master Licensee hereby agrees to obtain, and shall further procure its Licensees to obtain, all the Products for the use of the Business in the Outlets from the Licensor and/or its Authorized Suppliers. |
| 5.2 | The Master Licensee acknowledges that the Licensor shall be entitled to: |
| (a) | make any changes to the Products, including varying, withdrawing, or adding-in raw materials or ingredients from or to the Products, from time to time as the Licensor deems fit; and |
| (b) | make any changes to the specifications, ingredients and/or price of the Products from time to time as the Licensor deems fit; |
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and the Master Licensee shall comply, and shall procure its Licensees to comply, with and accept such changes upon receiving a prior notice from the Licensor in respect of such changes.
| 6. | PARTIES’ OBLIGATIONS, WARRANTIES AND UNDERTAKINGS |
| 6.1 | The Master Licensee hereby covenants, represents, warrants and/or undertakes to and with the Licensor that it shall and where applicable, shall procure its Licensees to: |
| (a) | Master License |
| (i) | in respect of the first year during the Term, procure the opening and operation of at least [ ] Outlets in the Territory which shall each be wholly owned and operated by the Master Licensee; |
| (ii) | in respect of each subsequent year after the first year of the Term, procure the opening and operation of at [ ] Outlet in the Territory each year; |
| (iii) | provide the Licensor with a sixty (60) days’ notice in writing prior to the opening and operation of any Outlet in the Territory which is wholly owned and operated by the Master Licensee; |
| (iv) | obtain the Licensor’s written approval in respect of any potential Licensee prior to granting such Licensee the license to use the Proprietary Marks to carry out the Business in an Outlet within the Territory; |
| (v) | obtain the Licensor’s written approval in respect of the form and substance of the license agreement to be signed between the Master Licensee and its Licensees prior to the execution of such license agreement and forthwith furnish the Licensor with a copy of such duly signed, stamped and/or registered license agreement; |
| (vi) | ensure that the term of any license agreement signed between the Master Licensee and its Licensees shall not exceed the Term or any renewed term of this Agreement; |
| (vii) | obtain the Licensor’s written approval in respect of the license fee sum chargeable by the Master Licensee to its Licensees prior to charging such license fee; |
| (viii) | shall not sell, assign or otherwise transfer the Master License Business or the Business carried out in the Outlets to any third party without the prior approval of the Licensor. In the event the Master Licensee wishes to sell the Master License Business or the Business carried out in the Outlet upon receiving the prior approval of the Licensor, the Master Licensee shall offer a first right of refusal to purchase to the Licensor. If the Licensor accepts such offer, the Master Licensee shall be bound to forthwith sell to the Licensor the Master License Business and/or the Business in the Outlet based on such price as may be negotiated between the parties subject to the condition of the premise, assets, and Products, and the Master Licensee shall further do all things as may be deemed necessary by the Licensor to effect such sale, including novating the tenancy or lease agreement of the Outlet to the Licensor. In the event the Licensor declines such offer, the Master Licensee may sell the Master License Business or such Business in the Outlet to a third party approved by the Licensor, provided that such third party shall enter into a fresh agreement with the Licensor; |
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| (b) | Proprietary Marks: |
| (i) | protect the Proprietary Marks, and promote and preserve the goodwill and reputation associated with the Proprietary Marks; |
| (ii) | not make any use nor will it permit or authorize any use directly or indirectly of the Proprietary Marks outside the Territory and out of the ordinary course of the Business and the Master License Business; |
| (iii) | use the Proprietary Marks on the packaging material, advertisement, marketing, and promotional materials, signage, items, stationeries, and menu relating to the Business and the Master License Business as may be directed by the Licensor; |
| (iv) | indicate clearly on all packaging material, advertisement, marketing, and promotional materials, signage, items, stationeries, and menu relating to the Business and the Master License Business that the Licensor is the sole owner of the Proprietary Marks; |
| (v) | where the Proprietary Marks are pending registration or registered (as the case may be), indicate that such Proprietary Marks are pending registration or registered (as the case may be) and that the Master Licensee or the Licensee (as the case may be) is an authorized user of the Proprietary Marks; |
| (vi) | not use the Proprietary Marks or any part thereof in the company name or trade name of the Master Licensee or the Licensee (as the case may be) or the domain name of any website operated by the Master Licensee or the Licensee (as the case may be) without the prior approval of the Licensor; |
| (vii) | not use any other trademarks, service marks, trade names or copyrights, other than the Proprietary Marks in connection with the Master License Business and the Business carried out in the Outlets without the prior approval or the Licensor; |
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| (viii) | not make any changes to its shareholding or directorship structure without the prior approval of the Licensor; |
| (ix) | not to do or omit to do any act or thing or use the Proprietary Marks in any manner which is likely to depreciate or cause material harm or bring disrepute to the goodwill attached to the Proprietary Marks; |
| (x) | ensure that the signage of “[ ]” and the use of the Proprietary Marks shall comply with the Licensor’s specifications; |
| (xi) | if at any time the Master Licensee is required in writing, to modify or discontinue use of the Proprietary Marks and to replace with substitute names or marks, immediately do so in the manner specified in the notice from the Licensor; |
| (xii) | not alter or modify the Proprietary Marks without the prior approval of the Licensor or use the Proprietary Marks in a confusing way that confuses the Proprietary Marks with another brand; |
| (xiii) | not engage in any act that diminishes the value of the Proprietary Marks nor shall it engage in any conduct or activity that may undermine or jeopardise the value of the Proprietary Marks which may in the sole opinion of the Licensor damage or conflict with the interest and valuable goodwill of the Proprietary Marks, such as collaboration with any activities against the laws or governmental policies; |
| (xiv) | not knowingly offer or provide any information or assistance concerning the Proprietary Marks to any third party other than its key management, employees and its Licensees; |
| (xv) | not claim, use, or apply to register any trademark, trade name, business name, corporate name, domain name, social media user name, email address, copyright, or design that is identical with, confusingly similar to, clearly derived from or based on or that includes the Proprietary Marks or any part thereof; |
| (c) | the Products: |
| (i) | purchase the Products for the use of the Business exclusively from the Licensor and/or its Authorized Supplier, and shall not procure, obtain, outsource or purchase the Products from any other third party; |
| (ii) | promptly pay the invoices issued by the Licensor or the Authorized Suppliers (as the case may be) for the supply of the Products within such period of time as may be stipulated therein, failing which the Licensor shall have the right to deduct such sums remaining due and unpaid from the Security Deposit; |
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| (iii) | fulfil the terms and conditions of the supply of the Products as may be set by the Licensor or its Authorised Suppliers (as the case may be) and make payment accordingly and promptly before the delivery of such Products; |
| (iv) | acknowledge that the Licensor or the Authorized Suppliers (as the case may be) may cease or cause to cease supplies of the Products due to the default or failure of the Master Licensee in making full payment of any fees due under this Agreement or any invoices issued by the Licensor and/or the Authorized Suppliers in respect of the supply of the Products; |
| (v) | not hold the Licensor or the Authorized Suppliers (as the case may be) liable for any loss of business and profitability of the Business due to the state of the Products (e.g. the Products being not fresh) or due to disruption and/or cessation of supply of the Products for whatsoever reasons and to not make any claims for compensation from the Licensor or the Authorized Suppliers (as the case may be) in this regard; |
| (vi) | not resell or distribute the Products to any third party and not use the Products for any purposes other than for the carrying out and operation of the Business. |
| (d) | the Business: |
| (i) | not sell the food and beverage products of the Business to any person, firm or corporation or anybody corporate who intends or may seek to resell them within and/or outside the Territory; |
| (ii) | use its reasonable effort to ensure and maintain the highest standards and quality in the operation of the Business in the Outlets and the Master License Business in order to maintain and enhance the value of the Proprietary Marks and goodwill associated therewith; |
| (iii) | not sell any product, render any service, or carry out or operate the Business and the Master License Business in any manner which does not conform to or which conflicts with the standards associated with the Proprietary Marks; |
| (iv) | determine the operating days and hours of the Outlets and the type of delivery and other services to be provided at the Outlets, provided that if requested by the Master Licensee, the Licensor may advise on and assist with the same; |
| (v) | develop standard operating procedures, methodologies, techniques, manuals, formulae, ideas, concepts, plans, directions, and specifications in respect of the Business and the Outlets and continuously review and improve the same, provided that if requested by the Master Licensee, the Licensor may advise on and assist with the same; |
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| (vi) | procure raw ingredients and other items (other than the Products) required for the operation of the Business and the Outlets from third party suppliers and ensure that such raw ingredients and other items are of merchantable and acceptable quality based on industry standards; |
| (e) | the Outlet: |
| (i) | source, assess, evaluate and select a suitable location to set up the Outlets provided that if requested by the Master Licensee, the Licensor may advise on and assist with the same; |
| (ii) | appoint a contractor to renovate and set-up the Outlets provided that the layout design plan, colour scheme, and basic requirements of the Outlets shall comply with the Licensor’s specifications in order to maintain and enhance the value of the Proprietary Marks and goodwill associated therewith, and provided further that if requested by the Master Licensee, the Licensor may advise on and assist with the same; |
| (iii) | procure the items and other equipment, fittings, fixtures, furniture, cutleries, crockery, utensils, kitchen set up items and other items required at the Outlets provided that if requested by the Master Licensee, the Licensor may advise on and assist with the same; |
| (iv) | maintain the Outlets in good condition and state of repair and shall keep the same clean, neat, well-lit and sanitized, and in compliance with the applicable standards prescribed from time to time by the Licensor and the relevant authorities, and shall promptly effect all maintenance, repairs and replacements as shall reasonably be required by the Licensor or otherwise needed in connection with maintaining the Outlets as reasonably required by Licensor in order to maintain and enhance the value of the Proprietary Marks and goodwill associated therewith; |
| (v) | use the Proprietary Marks to carry out and operate the Business exclusively at the Outlets and all material times, the location of the Outlets shall not be changed; |
| (vi) | adopt the point-of-sales system required by the Licensor in the Outlets; |
| (f) | Food and Beverage Items |
| (i) | adopt the menu provided by the Licensor in respect of the signature food and beverage items to be sold by the Business in the Outlets in order to maintain and enhance the value of the Proprietary Marks and goodwill associated therewith; |
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| (ii) | continuously develop, review and improve on the menu provided that the Master Licensee shall propose any additional items or promotional menu to the Licensor and obtain the prior written approval of the Licensor prior to implementing the same; |
| (iii) | maintain the highest standards and quality in the preparation of the food and beverage products of the Business and strictly prepare food and beverage products in accordance with the recipes, preparation methods and presentation styles set by the Licensor in order to maintain and enhance the value of the Proprietary Marks and goodwill associated therewith; |
| (iv) | comply strictly with the Licensor’s instructions for disposal of food and beverages products not prepared according to recipes, preparation methods or presentation styles; |
| (g) | Employees and Training |
| (i) | prior to the opening of the Outlets, ensure that its employees attend any training conducted by the Licensor in respect of the operation of the Business at such location as may be decided by the Licensor in its sole discretion, provided that Master Licensee shall bear its own costs and any expenses incurred by the employees in attending such training; |
| (ii) | conform, and procure its employees to conform, in all respects and at all times to any training in relation to the operation of the Business in the Outlet in order to maintain and enhance the value of the Proprietary Marks and goodwill associated therewith; |
| (iii) | provide ongoing trainings to its employees and its Licensees on a fortnightly basis and shall provide to the Licensor a training record of such form and substance acceptable to the Licensor in respect of each fortnightly training in order to maintain and enhance the value of the Proprietary Marks and goodwill associated therewith; |
| (iv) | provide training to its Licensees in respect of the operation of the Business in order to maintain and enhance the value of the Proprietary Marks and goodwill associated therewith; |
| (v) | ensure that the employees at the Outlets are suitably attired in the uniforms bearing the Proprietary Marks as may be required by the Licensor at all times in order to maintain and enhance the value of the Proprietary Marks and goodwill associated therewith; |
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| (h) | Marketing: |
| (i) | reserve such sum equivalent to [ ] percent of the projected Gross Yearly Revenue of the first year of operation of each Outlet which is opened and operated by the Master Licensee and/or its Licensees in the Territory during the first year of the Term, and utilize such sum for the marketing and promotional activities of the relevant Outlets; |
| (ii) | obtain the Licensor’s prior written consent in the event the Master Licensee wishes to conduct or carry out its own marketing activities or produce any marketing or promotional materials bearing the Proprietary Marks; |
| (i) | Others: |
| (i) | promptly pay any sums due to any third parties engaged by the Master Licensee or by the Licensor on behalf of the Master Licensee pursuant to this Agreement, including but not limited to the contractor, the landlord, and the suppliers; and |
| (ii) | at its own cost, arrange and provide the Licensor and its representatives with accommodation and transportation in the event the Licensor is required to travel to any of the Outlets. |
| 6.2 | The Licensor hereby covenants, represents, warrants and/or undertakes to and with the Master Licensee that it shall: |
| (a) | provide the Master Licensee with the specifications and other information relating to the Proprietary Marks in order to allow the Master Licensee to use the Proprietary Marks in accordance with the terms of this Agreement; |
| (b) | ensure sufficient supply of the Product to fulfil the Master Licensee’s purchase orders; |
| (c) | ensure that the Products supplied by the Licensor are of merchantable and acceptable quality based on industry standards; |
| (d) | provide the Master Licensee with demonstrations in respect of certain Products and the food and beverage items in the menu; |
| (e) | notify the Master Licensee of any changes to the Products, including to the prices of the Products, at least thirty (30) days prior to such changes taking effect; |
| (f) | endeavour to deliver the Products to the Master Licensee as soon as possible upon the receipt of a purchase order from the Master Licensee provided that the Master Licensee shall have made full payment for such Products and provided further that the Master Licensee shall have given to the Licensor at least seven (7) days notice in advance of such purchase order; |
| (g) | advise on and guide the Master Licensee in respect of the management and operation of the Master License Business, the Business, and the Outlets including but not limited to inventory control, human resources, finances, and marketing and promotion; |
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| (h) | provide the Master Licensee with samples of advertising and promotional materials from time to time; and |
| (i) | provide field support service to the Master Licensee and assist the Master Licensee to review and audit the Master License Business, the Business, the Outlets and its operation in order to improve upon the same. |
| 6.3 | For the avoidance of doubt, all of the Licensor’s obligations under this Agreement are solely to the Master Licensee. No other party is entitled to rely on, enforce or obtain relief for breach of the obligations either directly or by subrogation. |
| 6.4 | The parties hereby acknowledge and agree that a breach of any provision in Clause 6.1 shall constitute a material breach of this Agreement. |
| 7. | INDEMNITY |
| 7.1 | The Master Licensee hereby agrees that it shall fully indemnify, defend and hold the Licensor harmless from and against all claims, losses, damages, costs and expenses (including, but not limited to, reasonable fees and expenses of attorneys) arising out of or related to: |
| (a) | the use of the Proprietary Marks by the Master Licensee and/or its Licensees; |
| (b) | any breach or non-compliance of any term, obligation, warranty and/or undertaking hereunder by the Master Licensee, provided that such breach or non-compliance is not attributable to the Licensor; |
| (c) | the breach by the Master Licensee and/or its Licensees of any applicable laws and regulations; |
| (d) | any death of any third party, any bodily injury to any third party and/or any loss of or damage to any property belonging to any third party arising out of, in connection with or relating to the operation of the Business in the Outlet; and |
| (e) | the negligence, gross negligence, omission, bad faith or wilful misconduct of the Master Licensee and/or its Licensees. |
| 8. | REPRESENTATIONS AND WARRANTIES |
| 8.1 | Each party warrants to the other party (to the extent that such warranties and representations are applicable to such party) that: |
| (a) | where applicable, it is a company duly incorporated under the laws of Malaysia and all resolutions (if applicable) required for the execution of this Agreement by each party have been duly passed; |
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| (b) | it has the power and the authority to enter into this Agreement and to do the acts and things on its part to be done and performed pursuant to this Agreement; |
| (c) | the statements contained in the recitals to this Agreement are true and accurate in all material respects; |
| (d) | this Agreement constitutes the valid and binding obligation of the party enforceable in accordance with its terms; |
| (e) | no order has been made, no resolution has been passed, no petition presented, no meeting convened for the winding up or bankruptcy of it or for an official receiver or a provisional liquidator to be appointed in respect of it and it has not been a party to any transaction which could be avoided in a winding up or bankruptcy; and/or |
| (f) | it is not insolvent, has failed or is or unable to pay, or has no reasonable prospect of being able to pay, any of its debts as they fall due. |
| 9. | TERM AND TERMINATION |
| 9.1 | This Agreement shall commence on the date stated in SECTION 2 of SCHEDULE 1 (“Commencement Date”), and shall continue to be in full force and effect for such period as stated in SECTION 3 of SCHEDULE 1 (“Term”), expiring on such date stated in SECTION 4 of SCHEDULE 1 (“Expiry Date”) unless otherwise renewed or terminated in accordance with this Agreement. |
| 9.2 | In the event the Master Licensee desires to renew this Agreement, the Master Licensee shall give to the Licensor a notice-in-writing of such intention at least three (3) months prior to the Expiry Date, and this Agreement may or may not, at the sole discretion of the Licensor, be renewed for a further period of three (3) years subject always to the Master Licensee: |
| (a) | having made full payment of such sum as stated in SECTION 7(a) of SCHEDULE 1 (“Master License Renewal Fee”); |
| (b) | agreeing to comply with the condition stated in SECTION 7(b) of SCHEDULE 1 in respect of the renewed term; and |
| (c) | having satisfactorily complied with all the terms and conditions contained in this Agreement and as may be set by the Licensor including executing any agreement for such renewal. |
| 9.3 | This Agreement may be terminated at any time by the mutual agreement of the parties. |
| 9.4 | Without prejudice to any other rights to which it may be entitled, in the event the Master Licensee commits any of the following defaults, the Licensor may serve a written notice requiring the Master Licensee to rectify such default within fourteen (14) days, failing which the Licensor shall be entitled to terminate this Agreement without incurring any liability or paying any compensation to the Master Licensee:- |
| (a) | commits any material breach of any of the terms of this Agreement and (if such a breach is remediable) fails to remedy that breach within fourteen (14) days from the date of receipt of the relevant notice by the Licensor; |
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| (b) | abuses the Proprietary Marks and its right to use the same for the Business that substantially impairs the goodwill associated with the Proprietary Marks; |
| (c) | fails to purchase the Products from the Licensor or its Authorized Suppliers or procures, obtains, outsources or purchases the Products from any other third party; |
| (d) | voluntarily abandoned the Outlet; |
| (e) | a criminal offense has been committed by any of its directors or members |
| (f) | has a winding-up proceeding commenced or filed against it or has an order made for its winding up or passes a resolution for its winding-up; |
| (g) | ceases or threatens to cease the operation of the Business in the Outlet; |
| (h) | convenes a meeting of creditors (whether formal or informal), or enters into liquidation (whether voluntary or compulsory) except a solvent voluntary liquidation for the purpose only of reconstruction or amalgamation, or has a receiver and/or manager, administrator or administrative receiver appointed of its undertaking or any part thereof, or a resolution is passed or a petition presented to any court for the winding up of the Master Licensee or for the granting of an administration order in respect of the Master Licensee, or any proceedings are commenced relating to the insolvency or possible insolvency of the Master Licensee or if the Master Licensee takes or suffers any similar or analogous action in any jurisdiction in consequence of debt; |
| (i) | makes any changes to its shareholding or directorship structure without the prior approval of the Licensor; or |
| (j) | suffers or allows any execution, whether legal or equitable, to be levied on its property or obtained against it, or is unable to pay its debts as they fall due. |
| 9.5 | Upon the expiration or termination of this Agreement and the license granted hereunder, the Master Licensee agrees and undertakes that it shall: |
| (a) | forthwith pay all and any amounts due to the Licensor and the Authorized Suppliers which shall become immediately become due and payable and be recoverable as monetary debt; |
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| (b) | immediately cease the use of the Proprietary Marks and cease to hold itself out as a Master Licensee of the Licensor or do anything which would indicate any relationship between itself and Licensor; |
| (c) | not, and shall procure its officers, directors, partners, shareholders, employees and agents to not, thereafter use, duplicate or adopt any Proprietary Marks or other property on which the Licensor’s or its trade name or service or Proprietary Marks or any similar marks are imprinted; |
| (d) | return all materials relating to the Proprietary Marks as instructed by the Licensor and destroy all materials and undertake in writing that no copies are kept; |
| (e) | discard all the Products in its possession; |
| (f) | modify appearance of the Outlets owned and operated by the Master Licensee to remove any images or items bearing the Proprietary Marks, including the removal of signboard or signage of the Proprietary Marks; |
| (g) | cooperate with the Licensor in the cancellation of any license registered, if any, and shall execute such documents and do all acts and things as may be necessary to effect such cancellation; |
| (h) | forthwith execute and deliver to the Licensor any and all documents necessary or convenient to complete the termination of this Agreement and the license granted hereunder as required by the Licensor; |
| (i) | do all things necessary to procure the consent of its Licensees to the assignment, novation or transfer of Master Licensee’s rights, entitlements and benefits in and under the relevant license agreement(s) in respect of the respective Outlet(s) in favour of the Licensor or any replacement master licensee approved by the Licensor (as the case may be) and where applicable, procure the execution by the respective Licensee(s) of any document or agreement on such terms as may be determined solely by the Licensor to give effect to the aforementioned assignment, novation or transfer; and |
| (j) | notwithstanding the reason for the termination of this Agreement, offer to sell to the Licensor or its nominee the Master License Business, including the Business in the Outlets owned and operated by the Master Licensee, if it wishes to sell or transfer the same, at such terms and conditions to be mutually agreed, and the Licensor shall have the priority right to purchase and/or continue the Master License Business including the Business operated in such Outlet. If the Licensor accepts such offer, the Master Licensee shall be bound to forthwith sell to the Licensor the Master License Business including the Business in the Outlets and the Master Licensee shall further do all things as may be deemed necessary by the Licensor to effect such sale, including novating the tenancy or lease agreement of the Outlet to the Licensor. For the avoidance of doubt, the Master Licensee shall have no right to sell the Master License Business including the Business in such Outlet to any third-party and at less favourable terms than those offered to the Licensor, unless otherwise agreed in prior by the Licensor. |
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| 9.6 | Notwithstanding the foregoing, in the event the Master Licensee has, in the sole opinion of the Licensor, caused any disrepute, depreciation or material harm to the Proprietary Marks and/or the goodwill and reputation associated therewith, the Licensor shall be entitled to forthwith terminate this Agreement by serving a written notice of such intention to the Master Licensee. In such an event, the Master Licensee hereby agrees that it shall be bound to forthwith sell to the Licensor the Master License Business, including the Business in the Outlets owned and operated by the Master Licensee, based on such price as may be negotiated between the parties subject to the condition of the premise, assets, and Products, and the Master Licensee shall further do all things as may be deemed necessary by the Licensor to effect such sale, including novating the tenancy or lease agreement of the Outlet to the Licensor. For the avoidance of doubt, the Master Licensee shall not be entitled to any revenue or profit generated by the Master License Business, including the Business in the Outlets owned and operated by the Master Licensee, from the date of the afore-stated written notice. |
| 9.7 | Termination of this Agreement and the license granted hereunder shall not affect any rights, remedies, obligations or liabilities of the parties that have accrued up to the date of termination, including the right to claim damages in respect of any breach of this Agreement which existed at or before the date of termination. |
| 9.8 | The party terminating this Agreement pursuant to the terms hereof shall not be liable for any penalty, loss or damage for such termination, except that neither party shall be relieved from payment of any amount owed to the other party under this Agreement or any liability arising from the breach or non-compliance of any provision hereunder accruing on or prior to termination of this Agreement. |
| 10. | NON-COMPETITION |
| 10.1 | The Master Licensee agrees and undertakes that: |
| (a) | during the Term and for a period of [ ] years following the expiration or termination of this Agreement and the license granted hereunder, it shall not, (whether alone or in partnership or joint venture with anyone else) or otherwise be concerned with or interested in (whether as trustee, principal, agent, adviser, shareholder, unit holder or in any other capacity),be directly or indirectly engaged in any business which in the sole opinion of the Licensor, is similar to the Master License Business or which uses the Proprietary Marks or similar marks, within a radius of ten (10) kilometres from the Territory; |
| (b) | during the Term and for a period of [ ] years following the expiration or termination of this Agreement and the license granted hereunder, it shall procure its key management, employees, immediate family members and agents to undertake that they shall not, (whether alone or in partnership or joint venture with anyone else) or otherwise be concerned with or interested in (whether as trustee, principal, agent, adviser, shareholder, unit holder or in any other capacity), be directly or indirectly engaged in any business which in the sole opinion of the Licensor, similar to the Master License Business or which uses the Proprietary Marks or similar marks, within a radius of ten (10) kilometres from the Territory; |
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| (c) | it shall not solicit, endeavour to entice away from, discourage from being employed by or engaged in performing services for the Licensor’s business, employ, engage, attempt to employ or engage, negotiate or arrange the employment or engagement of (or assist any other person, firm, company or other organisation so to do) any employee of the Licensor; and |
| (d) | this Clause 10 shall survive the expiration or earlier termination of this Agreement. |
| 10.2 | Each restraint under Clause 10 is separate, distinct and several from each other restraint under Clause 10, so that the validity and enforceability of any such restraint does not affect the validity or enforceability of any other such restraint and that the duration, extent and application of each of the undertakings is no greater than is reasonable and necessary for the protection of the legitimate interests of the Licensor but that, if any such restraint shall be adjudged by any court or authority of competent jurisdiction to be void or unenforceable but would be valid if part of the wording thereof were to be deleted and/or the period thereof were to be reduced and/or the area dealt with/range of activities covered thereby were to be reduced, the said restraint shall apply within the jurisdiction of that court or competent authority with such modifications as are necessary to make it valid and effective and any such modification shall not thereby affect the validity of any other restraint. |
| 11. | EXECUTION OF A FRANCHISE AGREEMENT |
| 11.1 | The Master Licensee hereby acknowledges that the Licensor is in the midst of applying to the registrar of franchise for the registration of the Business as a franchise business with the Licensor as the franchisor. |
| 11.2 | The Master Licensee agrees that, upon the request of the Licensor, it shall forthwith enter into a master franchise agreement or such similar agreement with the Licensor in respect of the Master License Business. |
| 11.3 | The Master Licensee further agrees that it shall procure its Licensees to forthwith enter into a franchise agreement or such similar agreement with the Master Licensee as the master franchisor. |
| 12. | NO PARTNERSHIP OR AGENCY |
| 12.1 | The Master Licensee shall not pledge the credit of the Licensor nor represent itself as being the Licensor nor an agent, partner, employee or representative of the Licensor and shall not hold itself out as such nor as having any power of authority to incur any obligation of any nature expressed or implied on behalf of the Licensor. The Master Licensee acknowledges that nothing in this Agreement shall operate so to constitute the Master Licensee an agent, partner, employee or representative of the Licensor. |
| 12.2 | The Master Licensee shall not make any statement, representation or claim and shall give no warranty to any person in respect of the Proprietary Marks. |
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| 13. | NOTICE |
| 13.1 | Any notice or communication to be given under this Agreement shall be in writing and be in the English language and may be delivered by hand or sent by facsimile transmission or registered mail to the intended recipient at its address as follows: |
The Licensor
| Address: |
| Telephone: |
Email:
| Attention: |
The Master Licensee
To the contact details stated in SECTION 1 of SCHEDULE 1.
| 13.2 | Any notice or communication shall be deemed to have been duly received: |
| (a) | if delivered by hand, at the date and time of delivery; |
| (b) | if sent by facsimile transmission, at the date and time the party sending the facsimile has received a transmission report evidencing the same; |
| (c) | if sent by mail, three (3) days after dispatch by registered mail; and |
| (d) | if sent by email (including scan attached to the email), upon receipt by the sender of a transmission report indicating that the email was sent to the recipient’s email address. |
| 14. | CONFIDENTIALITY |
| 14.1 | Subject to Clause 14.3, the Master Licensee shall not use (other than for the performance of this Agreement and the carrying out or operation of the Master License Business) or disclose to any third party any Confidential Information of the Licensor. The Master Licensee shall take any appropriate security precautions requested by the Licensor. |
| 14.2 | The Master Licensee must use its reasonable endeavours to cause its employees advisors who have or are likely to have access to all such Confidential Information, to observe all the obligations of confidentiality under this Clause. |
| 14.3 | The Master Licensee may disclose any such Confidential Information if and to the extent – |
| (a) | it is required to do so by law or any securities exchange or regulatory or governmental body to which it is subject wherever situated; |
| (b) | it considers it necessary to disclose the Confidential Information to its professional advisers, auditors and bankers provided that it does so on a confidential basis; or |
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| (c) | the Confidential Information has come into the public domain through no fault of the Master Licensee. |
| 14.4 | The parties hereby acknowledge and agree that a breach of this Clause 14 shall constitute a material breach of this Agreement. |
| 14.5 | The obligation of the parties under this Clause shall survive the termination or expiration of this Agreement. |
| 15. | LEGAL FEES AND COSTS |
| 15.1 | Each party shall bear their own costs and expenses in respect of this Agreement including their own solicitors’ costs. Notwithstanding the foregoing, the Master Licensee shall bear the stamp duty payable on this Agreement. |
| 16. | FORCE MAJEURE |
| 16.1 | If a party is prevented or delayed in the performance of any of its obligations under this Agreement by Force Majeure, that party shall forthwith serve notice in writing on the other party specifying the nature and extent of the circumstances giving rise to such Force Majeure, and shall, subject to service of such notice and provided that such party shall have mitigated the effect of such Force Majeure event to the best of its abilities, have no liability in respect of the performance of such of its obligations as are prevented by such Force Majeure during the continuation of such event(s), and for such time after they cease as is necessary for that party, using all reasonable endeavours to recommence its affected operations in order for it to perform its obligations. |
| 16.2 | If a party is prevented by Force Majeure from performance of its obligations for a continuous period in excess of one (1) month, the parties shall enter into discussions with a view to alleviating the effects of the Force Majeure and shall mutually agree on such alternative arrangements as may be reasonable in the circumstances, failing which the party not affected by the Force Majeure may terminate this Agreement by giving a thirty (30) days prior written notice to the other party. |
| 17. | WAIVER |
| 17.1 | No omission or delay on the part of any party in exercising its rights under this Agreement shall operate as a waiver of such rights, nor shall any single or partial exercise by any party of any such right preclude the further or other exercise of such right or the exercise of any other right which it may have. |
| 18. | GOVERNING LAW AND JURISDICTION |
| 18.1 | This Agreement shall be governed by and construed in accordance with the laws of Malaysia and the Parties agree to submit to the non-exclusive jurisdiction of the courts of Malaysia. |
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| 19. | ENTIRE AGREEMENT |
| 19.1 | This Agreement constitutes the entire agreement between the parties relating to the subject matter in this Agreement and supersedes all prior agreements and arrangements between the parties and there are no promises, terms, conditions or obligations, oral or written, expressed or implied, other than those contained in this Agreement. |
| 20. | SUCCESSORS |
| 20.1 | This Agreement shall be binding on and be for the benefit of the heirs, personal representatives, successors-in-title and assigns of each of the parties. |
| 21. | ASSIGNMENT |
| 21.1 | The parties shall not assign or otherwise transfer its rights and obligations under this Agreement without prior written consent of the other party. Any attempted assignment without the required prior written consent shall be void and of no force and effect. |
| 22. | VARIATION OR AMENDMENT |
| 22.1 | This Agreement may be varied by mutual agreement between the parties. All such variations shall be in writing signed by the duly authorised representatives of the parties and shall be attached to this Agreement and form part of the same. |
| 23. | SEVERANCE |
| 23.1 | If any provision of this Agreement is found by any competent authority to be invalid or unenforceable in whole or in part, the validity of the other part of the affected provision and the remainder of the provisions of this Agreement shall not be affected thereby. |
| 23.2 | If it is not possible to read down a provision as required in this Agreement, that provision is severable without affecting the validity or enforceability of the remaining parts of that provision or the other provisions in this Agreement. |
| 24. | TIME |
| 24.1 | Time whenever mentioned shall be of the essence of this Agreement. |
| 25. | COUNTERPARTS |
| 25.1 | This Agreement may be executed in any number of counterparts all of which taken together constitute one document. |
[the remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF the parties hereto have hereunto set their hands the day and month and year first above written.
| THE LICENSOR | ||
| SIGNED by, for and on behalf of, | ) | |
| [ ] | ) | |
| (Company No. [ ]) | ) | |
| in the presence of: - | ) | |
| Authorized Signatory | ||
| Name: | ||
| Witness | ||
| Name: | ||
| NRIC No.: |
| THE MASTER LICENSEE | ||
| SIGNED by, for and on behalf of, | ) | |
| [ ] | ) | |
| (Company No. [ ]) | ) | |
| in the presence of: - | ) | |
| Authorized Signatory | ||
| Name: | ||
| Witness | ||
| Name: | ||
| NRIC/Passport No.: |
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SCHEDULE 1
| SECTION | MATTER | PARTICULARS |
| 1. | The Master Licensee |
Name: [ ]
Company No.: [ ] Address: [ ]
Email Address: [ ] Contact No.: [ ] Person in Charge: [ ] (NRIC/Passport No. [ ])
|
| 2. | Commencement Date | [ ] |
| 3. |
Term
|
[ ] years from the Commencement Date |
| 4. |
Expiry Date
|
[ ] |
| 5. |
Fees
|
(a) Master Licensing Fee: [ ]
(b) Outlet License Fee: [ ]
(c) Royalty:
(i) during the Term: [ ]% of the Gross Monthly Revenue;
(ii) during the first renewed term: [ ]% of the Gross Monthly Revenue; and
(iii) during each subsequent renewed terms: [ ]% of the Gross Monthly Revenue.
(d) Royalty Share: [ ]% of the Royalty.
(e) Security Deposit: [ ]
|
|
6.
|
Territory | [ ] |
|
7.
|
Renewal |
(a) Master License Renewal Fee: [ ]
(b) Condition: The Master Licensee shall procure the opening and operation at least [ ] Outlet in the Territory each year during the renewed term. |
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ANNEXURE 1
Proprietary marks
27
Annexure 2
the products
GROCERIES & OTHERS
KITCHEN EQUIPMENT
KITCHEN CUTLERIES
FRONT OF HOUSE
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Exhibit 10.5
cch hOLdings ltd
2025 EQUITY INCENTIVE PLAN
1. Purposes of this Plan. The purposes of this Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants (each a “Service Provider” and, together, the “Service Providers”) and to promote the success of the Company’s business. This Plan permits the grant of an Option, Restricted Shares, Restricted Share Units and Local Awards.
2. Definitions. As used herein, the following definitions will apply:
(a) “Administrator” means the Board, a Committee or any subcommittee or specified Officers to whom the Board or Committee delegates its administrative authority consistent with Applicable Laws and in accordance with Section 4 of the Plan.
(b) “Applicable Laws” means any applicable legal requirements relating to the administration of and the issuance of equity-based awards under the applicable laws of any country or jurisdiction in connection with the granting, vesting and/or exercising of Awards under this Plan, including, without limitation, the requirements of U.S. federal and state securities laws, the Code, the laws of the Cayman Islands, the laws of Malaysia and the requirements of any stock exchange or quotation system upon which the Shares may be listed or quoted and the applicable laws of any country or jurisdiction where Awards are granted under the Plan. For all purposes of this Plan, references to statutes and regulations shall be deemed to include any successor statutes or regulations, where necessary as determined by the Administrator.
(c) “Award” means, individually or collectively, a grant under this Plan of an Option, Restricted Shares, Restricted Share Units or Local Awards.
(d) “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under this Plan. The Award Agreement is subject to the terms and conditions of this Plan.
(e) “Board” means the Board of Directors of the Company.
(f) “Change in Control” means the occurrence of any of the following events:
(i) Any person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities; or
(ii) The individuals who, as of the date of grant, constituted the Company’s Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual (other than any individual whose initial assumption of office is in connection with an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act)) becoming a Director subsequent to the date of grant of an award, whose election, or nomination for election by the shareholders of the Company, was approved by a vote of at least a majority of the Directors then comprising the Incumbent Board, shall be considered as though such individual was a member of the Incumbent Board; or
(iii) The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or
(iv) The consummation of a merger, amalgamation or consolidation of the Company with any other corporation or business entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.
Anything in the foregoing to the contrary notwithstanding, a transaction shall not constitute a Change in Control if its sole purpose is to change the legal jurisdiction of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the Persons who held the Company’s Securities immediately before such transaction. In addition, a sale by the Company of its Securities in a transaction, the primary purpose of which is to raise capital for the Company’s operations and business activities including, without limitation, a Qualified IPO, shall not constitute a Change in Control.
(g) “Code” means the U.S. Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code.
(h) “Committee” means the compensation committee of the Board or such other committee satisfying Applicable Laws appointed by the Board to administer the Plan, in accordance with Section 4 of the Plan.
(i) “Company” means CCH Holdings Ltd, a company organized under the laws of the Cayman Islands, or any successor thereto.
(j) “Consultant” means any person, including an advisor, engaged by the Company or any Subsidiary to render services to such entity.
(k) “Director” means a member of the Board.
(l) “Disability” means, unless determined otherwise by the Administrator, a disability that entitles the Participant to benefits under the Company’s long-term disability plan, if any, and in the absence of such a plan, the Participant being unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
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(m) “Employee” means any person employed by the Company or any Subsidiary of the Company. Neither service as a Non-Employee Director nor payment of a Director’s fee by the Company will be sufficient to constitute “employment” by the Company.
(n) “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(o) “Fair Market Value” means, as of any date, the value of the Shares determined as follows:
(i) If the Shares are listed on any established stock exchange or a national market system, the Fair Market Value (on a per Share basis) will be the closing sales price for such Shares (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(ii) If the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value (on a per Share basis) will be the mean between the high bid and low asked prices for the Shares on the day of determination (or, if no bids and asks were reported on that date, as applicable, on the last trading date such bids and asks were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(iii) For purposes of any Awards granted on the date of a Qualified IPO, the Fair Market Value (on a per Share basis) will be the initial price to the public as set forth in the final prospectus for the initial public offering of Shares; or
(iv) In the absence of an established market for the Shares, the Fair Market Value will be determined in good faith by the Administrator in accordance with Applicable Laws.
(p) “Liquidity Event” means the occurrence of (i) a Qualified IPO or (ii) a Change in Control; provided, however, that the Board may determine that a particular transaction is or is not a Liquidity Event notwithstanding that the transaction falls within the foregoing definition.
(q) “Local Award” shall have the meaning ascribed thereto in Section 9 of this Plan.
(r) “Lock-Up Agreement” shall have the meaning ascribed thereto in Section 13(d) of this Plan.
(s) “Non-Employee Director” means a member of the Board who is not an Officer or Employee.
(t) “Officer” means a person who is an officer of the Company, as determined by the Board.
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(u) “Option” means a share option granted pursuant to this Plan.
(v) “Participant” means the holder of an outstanding Award.
(w) “Person” means any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Exchange Act.
(x) “Plan” means this 2025 Equity Incentive Plan, as it may be amended from time to time.
(y) “Plan Limit” shall have the meaning ascribed thereto in Section 3(a) of this Plan.
(z) “Qualified IPO” means the closing of an underwritten initial public offering of the Shares (i) pursuant to an effective registration statement under the Securities Act or (ii) on the basis of an approved prospectus and/or pursuant to a valid registration, qualification or filing under Applicable Laws of another jurisdiction, in each case of the Shares or other equity securities of the Company; provided, however, that a Qualified IPO shall not include a registration relating solely to employee benefit plans or to a Rule 145 transaction under the Securities Act or to similar registrations under Applicable Laws of another jurisdiction.
(aa) “Restriction Period” shall have the meaning ascribed thereto in Section 7(d)(i) of this Plan.
(bb) “Restricted Shares” means Shares issued and allotted pursuant to a Restricted Share award under Section 7 of this Plan, or issued and allotted pursuant to the early exercise of an Option.
(cc) “Restricted Share Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 8 of this Plan. Each Restricted Share Unit represents an unfunded and unsecured obligation of the Company.
(dd) “Securities” means any equity interest in, or shares of any class in the share capital (equity, preferred or otherwise) of, the Company and any convertible securities, options, warrants and any other type of equity or equity-linked securities convertible, exercisable or exchangeable for any such equity interest or shares of any class in the share capital of the Company.
(ee) “Service Provider” or “Service Providers” shall have the meaning ascribed thereto in Section 1 of this Plan.
(ff) “Share” means ordinary shares of US$0.00001 par value in the share capital of the Company, adjusted in accordance with Section 13 of this Plan.
(gg) “Shareholder” means a person whose name is entered in the Register of Members of the Company as the holder of one or more shares in the capital of the Company.
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(hh) “Subsidiary” means any corporation, partnership, limited liability company, or other organization, whether incorporated or unincorporated, which is controlled by the Company.
(ii) “Successor Plan” means in the event of a Change in Control where Awards are assumed or replaced by substituted awards, the successor plan applicable to assumed Awards and/or new substituted awards.
(jj) “Termination of Service” shall have the meaning ascribed thereto in Section 6(d)(iii) of this Plan.
(kk) “Triggering Event” means the later to occur of (i) a Liquidity Event and (ii) if so determined by the Administrator at or before the time of a Liquidity Event in order for the issuance of Shares to comply with Applicable Laws, the completion of a Successor Plan prior to or following a Liquidity Event.
(ll) “Triggering Event Exercise Period” means:
(i) in the event of a Change in Control, whichever of the following two periods expires later: (x) the ninety (90) day period commencing on a Change in Control and (y) the ninety (90) day period commencing on the completion of the Successor Plan, if necessary to comply with Applicable Laws; and
(ii) in the event of a Qualified IPO, whichever of the following two periods expires later: (x) the thirty (30) day period commencing on the expiration of the Lock-Up Agreement period and (y) the ninety (90) day period commencing on the completion of the Successor Plan, if necessary to comply with Applicable Laws to permit the issue and allotment of Shares.
3. Shares Subject to this Plan.
(a) Shares Subject to this Plan. Subject to the provisions of Section 13 of this Plan, the maximum aggregate number of Shares that may be issued for all purposes under the Plan shall be 5,000,000 (the “Plan Limit”). Shares to be issued under the Plan may be authorized and unissued Shares, issued Shares that have been repurchased by the Company and that are being held in treasury, or a combination thereof.
(b) Automatic Share Reserve Increase. Subject to the provisions of Sections 13 and 19 of the Plan, the number of Shares available for issuance under the Plan will be increased on the first calendar day of each fiscal year during the period beginning with the year immediately following the fiscal year in which a Qualified IPO is consummated, by an amount equal to 1% of the total number of Securities issued and outstanding on the last calendar day of the immediately preceding fiscal year.
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(c) Rules Applicable to Determining Shares Available for Issuance. The number of reserved Shares remaining available for issuance will be reduced by the number of Shares subject to outstanding Awards. For purposes of determining the number of Shares that remain available for issuance under the Plan, the number of Shares that are tendered by a Participant or withheld by the Company to pay the exercise price of an Option or to satisfy the Participant’s tax withholding obligations in connection with an Award, shall not be added back to the Plan Limit. However, for purposes of determining the number of Shares that remain available for issuance under the Plan, the number of Shares corresponding to an Option under the Plan that are forfeited or cancelled or otherwise expire for any reason without having been exercised shall be added back to the Plan Limit and again be available for the grant of Awards. Similarly, if and to the extent an Award of Restricted Shares or Restricted Share Units is cancelled or forfeited for any reason, the Shares subject to that Award shall be added back to the Plan Limit and again be available for the grant of Awards. The Shares underlying any cash-settled Award of Restricted Share Units shall not be added back to the Plan Limit. In contrast, and for the avoidance of doubt, the Shares underlying any Local Awards settled in cash shall not be counted against the Plan Limit.
(d) Limits on Awards to Non-Employee Directors. After the occurrence of a Qualified IPO, the total of any cash compensation and the aggregate grant date fair value (as determined in accordance with FASB ASC Topic 718 or any successor provision) of all Awards granted during any calendar year to any Non-Employee Director shall not exceed US$1,000,000.
(e) Share Reserve. The Company, during the term of this Plan, will at all times keep available such number of unissued Shares in its authorized capital available for issue as will be sufficient to satisfy the requirements of this Plan.
4. Administration of the Plan.
(a) Administration. The Plan will be administered by (i) the Board or (ii) a Committee, which Committee will be constituted to satisfy Applicable Laws.
(b) Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.
(c) Delegation of Authority. Except to the extent prohibited by Applicable Laws, the Administrator may, from time to time, delegate limited authority over the day-to-day administration of the Plan to such other subcommittees or specified Officers as it deems necessary, appropriate or advisable under such conditions or limitations as it may set at the time of such delegation or thereafter. Such delegation may be revoked at any time.
(d) Powers of the Administrator. Subject to the provisions of this Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority:
(i) to determine the Fair Market Value;
(ii) to determine eligibility for Plan participant and select the Service Providers to whom Awards may be granted hereunder;
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(iii) to determine the number of Shares to be covered by each Award granted hereunder;
(iv) to approve forms of Award Agreements for use under this Plan;
(v) to determine the terms and conditions of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, cancellation or repurchase restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine;
(vi) to construe and interpret the terms of this Plan and Awards granted pursuant to this Plan;
(vii) to prescribe, amend and rescind rules and regulations relating to this Plan, including rules and regulations relating to sub-plans and/or Local Awards established for the purpose of satisfying Applicable Laws, including, without limitation, the Exchange Act, the Securities Act, and/or qualifying for preferred tax treatment under Applicable Laws, including, without limitation, the Code;
(viii) to modify or amend each Award (subject to Section 18 of this Plan), including but not limited to (A) the discretionary authority to extend the post-termination exercisability period of Awards and to extend the maximum term of an Option and (B) accelerate the satisfaction of any vesting or exercisability criteria or waiver of forfeiture, cancellation or repurchase restrictions;
(ix) to allow Participants to satisfy withholding tax obligations in such manner as prescribed in Section 14 of this Plan;
(x) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;
(xi) to allow a Participant to defer the receipt of the payment of cash or the issuance of Shares that would otherwise be due to such Participant under an Award;
(xii) to determine whether Awards will be settled in Shares, cash or in any combination thereof;
(xiii) to determine whether Awards will be adjusted for dividend equivalents;
(xiv) to establish a program whereby Service Providers designated by the Administrator can reduce compensation otherwise payable in cash in exchange for Awards under the Plan;
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(xv) without Shareholder approval, to (A) amend the terms of an outstanding Option or Local Award to reduce the exercise price or purchase price, as applicable, of such Option or Local Award; (B) cancel an outstanding Option or Local Award in exchange or substitution for an Option or Local Award with an exercise price or purchase price, as applicable, that is less than the exercise price or purchase price, as applicable, of the original Option or Local Award; or (C) cancel an outstanding Option or Local Award with an exercise price or purchase price, as applicable, above the current Fair Market Value per share covered by such Option of Local Award in exchange for cash or other securities;
(xvi) to impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant or other subsequent transfers by the Participant of any Shares issued as a result of or under an Award, including without limitation, (A) restrictions under an insider trading policy and (B) restrictions as to the use of a specified brokerage firm for such resales or other transfers; and
(xvii) to make all other determinations deemed necessary or advisable for administering this Plan.
(e) Plan Construction and Interpretation. The Administrator shall have full power and authority, subject to the express provisions hereof, to construe and interpret the Plan. The Administrator’s decisions, determinations and interpretations in carrying out and administering the Plan and in construing and interpreting the Plan shall be made in the Administrator’s sole discretion and shall be final, binding and conclusive for all purposes and upon all persons interested herein.
(f) Liability of Administrator. Subject to Applicable Laws: (i) no member of the Administrator (or its delegates) shall be liable for any good faith action or determination made in connection with the operation, administration or interpretation of the Plan and (ii) the members of the Administrator (and its delegates) shall be entitled to indemnification and reimbursement in the manner provided in the Company’s governing documents, as they may be amended from time to time. In the performance of its responsibilities with respect to the Plan, the Administrator shall be entitled to rely upon information and/or advice furnished by the Company’s Officers or Employees, the accountants of the Company or the Administrator, the counsel of the Company or the Administrator and any other party the Administrator deems necessary, and no member of the Administrator shall be liable for any action taken or not taken in reliance upon any such information and/or advice.
(g) Action by the Board. Anything in the Plan to the contrary notwithstanding, subject to Applicable Laws, any authority or responsibility that, under the terms of the Plan, may be exercised by a Committee or the delegate of such Committee may alternatively be exercised by the Board.
5. Eligibility. Awards may be granted to Service Providers. Neither the Plan nor any Award shall confer upon a Participant any right with respect to continuing his or her relationship as a Service Provider, nor shall they interfere in any way with the right of the Participant or the right of the Company or its parent or Subsidiaries to terminate such relationship at any time, with or without cause.
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6. Share Option.
(a) Share Option Award Agreement. Each Award of an Option will be evidenced by an Award Agreement that will specify the vesting and exercise terms of such Award, the number of Shares that may be issued upon exercise of an Option, any restrictions or limitations regarding the Option, and such other terms and conditions as the Administrator will determine. The terms of an Option may vary among Participants, and the Plan does not impose upon the Administrator any requirement to make each Award of an Option subject to uniform terms. Accordingly, the terms of individual Award Agreements may vary.
(b) Term of Option. Unless the Administrator provides otherwise in the applicable Award Agreement, the term of an Option will be ten (10) years.
(c) Option Exercise Price and Consideration.
(i) Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator; provided, however, that the per Share exercise price will be no less than the par value of a Share.
(ii) Vesting and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option shall vest and may be exercised and will determine any conditions that must be satisfied before the Option may vest or be exercised. Unless specified otherwise in the Award Agreement, and subject to the other provisions of the Plan, including, without limitation, Section 6(d) and Section 13(c) of the Plan, one-fourth (1/4) of the Shares subject to an Award will vest on each of the first, second, third and fourth annual anniversaries of the vesting commencement date. The Administrator may accelerate the vesting of an Award at any time. Notwithstanding the foregoing, unless the Administrator provides otherwise, no Option will be permitted to be exercised prior to the occurrence of a Qualified IPO.
(iii) Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. Such consideration may consist entirely of: (A) cash, (B) check, (C) promissory note, to the extent permitted by Applicable Laws, (D) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option will be exercised and provided that accepting such Shares will not result in any adverse accounting consequences to the Company, as the Administrator determines, (E) consideration received by the Company under a broker-assisted (or other) cashless exercise program (whether through a broker or otherwise) implemented by the Company in connection with this Plan, (F) by net exercise, (G) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws, or (H) any combination of the foregoing methods of payment.
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(d) Exercise of Option.
(i) Procedure for Exercise; Rights as a Shareholder. Any vested portion of the Option granted hereunder will be exercisable according to the terms of this Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement; provided, however, that unless the Administrator provides otherwise in an Award Agreement, or except as provided in Section 13(c) of this Plan, an Option may not be exercised prior to a Qualified IPO. An Option will be deemed exercised when the Company receives: (A) a notice of exercise (in such form as the Administrator may specify from time to time) from the person entitled to exercise the Option, (B) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes) and (C) all representations, indemnifications, and documents reasonably requested by the Administrator including, without limitation, any shareholders agreement; provided, that such exercise complies with the terms of this Plan and the applicable provisions of the applicable Award Agreement. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued and allotted upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Exercising an Option in any manner will decrease the number of Shares thereafter available for sale under the Option, by the number of Shares as to which the Option is exercised. An Option may not be exercised for a fraction of a Share.
(ii) Rights of a Shareholder. Until Shares are issued and allotted (as evidenced by the appropriate entry in the Register of Members of the Company) and subject to Section 12 of this Plan, no right to receive dividends or any other rights as a Shareholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. Subject to subsection (vi) below, the Company will issue and allot (or cause to be issued and allotted) Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued and allotted, except as provided in Section 13 of this Plan.
(iii) Termination of Relationship as a Service Provider Prior to the Occurrence of a Triggering Event. If a Participant ceases to be a Service Provider (“Termination of Service”) prior to the occurrence of a Triggering Event, any vested Option held by such Participant shall remain outstanding for such period of time as is specified in the Award Agreement (but in no event following the expiration of the term of such Option as set forth in the Award Agreement), and, in the absence of a specified time in the Award Agreement, such vested Option shall remain outstanding following the Termination of Service until the expiration of the Triggering Event Exercise Period; provided, however, that in the event of Termination of Service due to death or Disability of such Participant within the three (3) month period preceding a Triggering Event, the periods referenced in the Triggering Event Exercise Period shall be extended to twelve (12) months. Unless otherwise provided by the Administrator, on the date of Termination of Service, the Shares covered by any unvested Option will revert to this Plan. If after the Termination of Service the Participant does not exercise any vested Option within the time specified by the Administrator (and in the absence of any such specification, within the foregoing default periods), such Option will terminate, and the Shares covered by such Option will revert to this Plan.
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(iv) Termination of Relationship as a Service Provider After the Occurrence of a Triggering Event. In the event of a Participant’s Termination of Service after the occurrence of a Triggering Event, any vested Option shall remain exercisable for such period as is specified in the Award Agreement, and, in the absence of a specified time in the Award Agreement, an Option shall remain outstanding for twelve (12) months in the event of Termination of Service due to death or Disability of such Participant and three (3) months otherwise; provided, however, an Option shall cease to be outstanding and shall no longer be exercisable ten (10) years from the date the Option is granted. Unless otherwise provided by the Administrator, on the date of Termination of Service, the Shares covered by any unvested Option will revert to this Plan. If after Termination of Service the Participant does not exercise any vested Option within the time specified by the Administrator (and in the absence of any such specification, within the foregoing default periods), such Option will terminate, and the Shares covered by such Option will revert to this Plan.
(v) Exercise upon death. In the event of the Participant’s death, the Participant’s Option, to the extent vested and exercisable, may be exercised by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to the Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then the Participant’s Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Participant’s Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s death. Unless otherwise provided by the Administrator, if at the time of death the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not exercised as to all of the vested Awarded Shares within the time specified by the Administrator, the Option will terminate, and the remaining Shares covered by such Option will revert to the Plan.
(vi) Issuance of Shares. Notwithstanding anything herein to the contrary, upon the exercise of an Option, the Administrator shall have the discretion to provide for payment in cash or property of equivalent value in lieu of the Shares that otherwise would be issued.
7. Restricted Shares.
(a) Issue and Allotment of Restricted Shares. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may issue and allot Restricted Shares to Service Providers in such amounts as the Administrator will determine.
(b) Restricted Share Award Agreement. Each Award of Restricted Shares will be evidenced by an Award Agreement that will specify the Restriction Period, the number of Shares issued and allotted, and such other terms and conditions as the Administrator will determine. The prospective recipient of an Award of Restricted Shares will not have any rights with respect to such Award, unless and until such recipient has delivered to the Company an executed Award Agreement and has otherwise complied with the applicable terms and conditions of such Award. The Administrator may arrange to have the Company hold Restricted Shares in custody or designate an escrow agent to hold Restricted Shares, in each case until the restrictions on such Shares have lapsed.
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(c) Certificates. Any share certificate issued in connection with an Award of Restricted Shares will be registered in the name of the Participant receiving the Award, and will bear the following legend and/or any other legend required by this Plan, any shareholders agreement among Shareholders of the Company, the Award Agreement or by Applicable Laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED OR REGISTERED UNDER STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION, AND NEITHER THESE SECURITIES NOR ANY INTEREST OR PARTICIPATION THEREIN MAY BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE STATE SECURITIES OR BLUE SKY LAWS AND THE APPLICABLE RULES AND REGULATIONS THEREUNDER. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE RESTRICTED SHARE AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.
Share certificates evidencing Restricted Shares will be held in custody by the Company or in escrow by an escrow agent until the restrictions thereon have lapsed.
(d) Restrictions and Conditions. The Award Agreement evidencing the grant of any Restricted Shares will incorporate the following terms and conditions and such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator deems appropriate:
(i) Restriction Period. During a period commencing with the date of an Award of Restricted Shares and ending on the later to occur of (i) such time or times as specified by the Award Agreement (the “Restriction Period”) or (ii) a Triggering Event, the Participant will not be permitted to sell, transfer, pledge, assign or otherwise encumber Restricted Shares awarded under the Plan. The Administrator may condition the lapse of restrictions on Restricted Shares upon the continued employment or service of the recipient, the attainment of specified individual or corporate performance goals, or such other factors as the Administrator may determine. Unless specified otherwise in the Award Agreement, and subject to the other provisions of the Plan, including, without limitation, this Section 7 and Section 13(c) of the Plan, one-fourth (1/4) of the Restricted Shares subject to an Award will vest, and the restrictions on those Shares will lapse, on each of the first, second, third and fourth annual anniversaries of the vesting commencement date. Unless the Administrator provides otherwise, no Restricted Share subject to an Award will vest before the occurrence of a Qualified IPO.
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(ii) Termination of Service. Subject to the provisions of the applicable Award Agreement or as otherwise determined by the Administrator, in the event of a Participant’s Termination of Service prior to the expiration of the applicable Restriction Period, the Participant’s Restricted Shares then remaining subject to forfeiture will be forfeited automatically.
(iii) Removal of Restrictions. Upon the later to occur of (i) the expiration of the Restriction Period without a prior forfeiture or repurchase by the Company of the Restricted Shares subject to such Restriction Period or (ii) a Triggering Event, the Restricted Shares will be released from custody or escrow and any certificates for such Shares will be replaced with new certificates, without the restrictive legends described in Section 7(c) applicable to such lapsed restrictions, and such new certificates will be delivered to the Participant, the Participant’s representative (if the Participant has suffered a Disability), or the Participant’s estate or heir (if the Participant has died). Notwithstanding the foregoing, the Administrator may accelerate the time at which any restrictions will lapse or be removed.
(e) Dividends and Other Distributions. Service Providers holding Restricted Shares will be entitled to receive all dividends and other distributions paid with respect to the vested Restricted Shares, subject to Section 12 of this Plan and unless the Administrator provides otherwise and except as required to comply with Applicable Laws. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions and provisions on transferability and repurchase by the Company as the Restricted Shares with respect to which they were paid until such restrictions on the Restricted Shares have lapsed or been removed in accordance with Section 7(d) of this Plan.
(f) Return of Restricted Shares to Company. On the date set forth in the Award Agreement, the Restricted Shares for which restrictions have not lapsed will be subject to repurchase by the Company and, if so repurchased, again will become available for grant under this Plan.
8. Restricted Share Units.
(a) Grant. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Restricted Share Units to Service Providers and may impose conditions on such units as it may deem appropriate, including, without limitation, the continued employment or service of the recipient or the attainment of specified individual or corporate performance goals.
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(b) Vesting Criteria and Other Terms. Each Restricted Share Unit shall be evidenced by an Award Agreement that will specify the applicable vesting criteria, the number of Restricted Share Units granted, the terms and conditions relating to the time and form of payment and termination of units, and such other terms and conditions as the Administrator will determine. Each Restricted Share Unit will represent a right to receive from the Company, upon fulfillment of any applicable conditions, an amount equal to the Fair Market Value (at the time of the distribution) of one Share. The Participant shall not have any shareholder rights with respect to any Shares subject to a Restricted Share Unit until that Award vests and such Shares are actually issued thereunder and registered in the Company’s Register of Members. The Participant will not be permitted to sell, transfer, pledge, assign or otherwise encumber Restricted Share Units awarded under the Plan. Subject to the provisions of the applicable Award Agreement, or as otherwise determined by the Administrator, if a Participant’s service with the Company terminates prior to the Restricted Share Unit vesting, the Participant’s Restricted Share Units that then remain subject to forfeiture will then be forfeited automatically.
(c) Form and Timing of Payment. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a distribution in the form of cash and/or Shares as determined by the Administrator in accordance with Applicable Laws. Notwithstanding the foregoing, at any time after the grant of Restricted Share Units, the Administrator may reduce or waive any vesting criteria that must be met to receive a payout. Unless the Administrator provides otherwise, no distributions of cash and/or Shares will be issued in settlement of vested Restricted Share Units before the occurrence of a Qualified IPO.
(d) Cancellation. On the date set forth in the Award Agreement, all unearned Restricted Share Units will be forfeited to the Company.
9. Other Local Awards. In order to comply with Applicable Laws, the Administrator may cause a local Subsidiary to grant local cash-settled awards in lieu of any other Award described hereunder, which such local awards shall be paid through local payroll and wholly funded by the local Subsidiary (a “Local Award”). Each Local Award shall be linked to the Fair Market Value of a Share of the Company. The terms and conditions of each Local Award shall be set forth in an Award Agreement in a form approved by the Administrator for such Local Award, which Award Agreement shall contain terms and conditions not inconsistent with the Plan.
10. Leaves of Absence/Transfer Between Locations. Unless the Administrator provides otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, any parent entity or any Subsidiary, unless determined otherwise by the Administrator.
11. Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate. Shares issued upon the exercise of an Option or in connection with the vesting of any Restricted Shares or Restricted Share Units may be subject to such special forfeiture conditions, rights of repurchase or redemption, rights of first refusal, and other transfer restrictions as the Administrator may determine or as may apply to holders of Shares pursuant to the Company’s then-effective memorandum of association and articles of association.
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12. Voting Rights. Anything in the Plan to the contrary notwithstanding, the Awards and the Shares relating thereto issued pursuant to the Plan shall only entitle the Participant to the economic rights of a Shareholder of the Company and shall not confer on the Participant any rights to vote on matters submitted to the Shareholders of the Company. Anything in the Plan to the contrary notwithstanding, the Shares relating to the Awards issued pursuant to the Plan may be issued to a Person formed or to be formed in connection with the administration of the Awards under the Plan or such other Person as the Administrator may decide from time to time, which Person shall hold all such Shares for the benefit of the Participant.
13. Adjustments; Dissolution or Liquidation; Merger or Change in Control; Lock-Up Agreement.
(a) Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other Securities or other property), recapitalization, share division, share consolidation, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other Securities, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under this Plan, will adjust the number and class of shares that may be delivered under this Plan and/or the number, class, and price of shares covered by each outstanding Award, and the numerical share limits in Section 3 of this Plan.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action.
(c) Change in Control.
(i) In the event of a Change in Control, except as provided otherwise in an individual Award Agreement, any unvested Award shall expire, be forfeited and/or be terminated on the effective date of the Change in Control.
(ii) Except as provided otherwise in an individual Award Agreement, each outstanding and vested Award will be treated as the Administrator determines, including, without limitation, that each such Award be assumed or an equivalent replacement award be substituted by the successor corporation or a parent or Subsidiary of the successor corporation. The Administrator will not be required to treat all Awards similarly in the transaction.
(iii) Except as provided otherwise in an individual Award Agreement, in the event that the successor corporation does not assume or substitute for the outstanding and vested Award in accordance with subsection (ii) above, the Participant will have the right to exercise all of his or her outstanding and vested Option, and all restrictions on vested Restricted Shares, vested Restricted Share Units and vested Local Awards will lapse. In addition, if an Option is not assumed or substituted in the event of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option will be exercisable for a period of time determined by the Administrator, and the Option will terminate upon the expiration of such period.
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(iv) For the purposes of this subsection (c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, shares, cash or other securities or property) received in the Change in Control by holders of Shares for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock or ordinary shares of the successor corporation or its parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or a Local Award, or upon the payout of a Restricted Share or a Restricted Share Unit, for each Share subject to such Award, to be solely common stock or ordinary shares of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Shares in the Change in Control.
(d) Lock-Up Agreement. By exercising any right granted under this Plan, each Participant shall be deemed to have agreed that, in connection with any underwritten public offering by the Company of its equity securities, including the Company’s Qualified IPO, such Participant will not sell, make any short sale of, loan, hypothecate, pledge, grant any option for the repurchase of, or otherwise dispose or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to any Shares without the prior written consent of the Company or its underwriters, for such period of time from and after the effective date of such registration statement as may be requested by the Company or such underwriters (the “Lock-Up Agreement”).
14. Tax.
(a) Withholding Requirements. Subject to Applicable Laws, prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof) or such earlier time as any tax withholding obligations are due, the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy U.S. federal or state taxes, local, foreign or other taxes (including the Participant’s employment tax obligation) required to be withheld with respect to such Award (or exercise thereof).
(b) Withholding Arrangements. Subject to Applicable Laws, the Administrator, pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, or (iii) delivering to the Company already-owned Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.
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15. No Effect on Employment or Service. Neither this Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.
16. Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.
17. Term of Plan. This Plan will become effective upon its adoption by the Board. It will continue in effect for a term of ten (10) years from the date it becomes effective, unless terminated earlier under Section 18 of this Plan.
18. Amendment and Termination of this Plan.
(a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate this Plan.
(b) Shareholder Approval. The Company will obtain Shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws, the Company’s then-effective memorandum of association and articles of association and any shareholders agreement among Shareholders of the Company.
(c) Effect of Amendment or Termination. Subject to compliance with Applicable Laws, no amendment, alteration, suspension or termination of this Plan will materially impair the rights of any Participant with respect to an Award outstanding at the time of the amendment, alteration, suspension or termination of the Plan, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of this Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under this Plan prior to the date of such termination.
19. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares will not be issued and allotted pursuant to the exercise of an Award unless the exercise of such Award and the issuance and allotment of such Shares will comply with Applicable Laws, and will be further subject to the approval of counsel for the Company with respect to such compliance if deemed necessary by the Administrator.
(b) Investment Representations. As a condition to the exercise, vesting or settlement of an Award, the Company may require the person exercising such Award or receiving rights to transfer or payment upon such vesting or settlement to represent and warrant at the time of any such exercise, vesting or settlement that the Shares are being acquired only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, any such representation is required.
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20. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction or to complete or comply with the requirements of any registration or other qualification of the Shares under any Applicable Laws or under the rules and regulations of the stock exchange on which the Shares of the same class are then listed, or any other governmental or regulatory body, which authority, registration, qualification or rule compliance is deemed by the Company’s counsel to be necessary or advisable for the issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority, registration, qualification or rule compliance will not have been obtained.
21. Severability. Notwithstanding any contrary provision of the Plan or an Award to the contrary, if any one or more of the provisions (or any part thereof) of this Plan or the Awards shall be held invalid, illegal, or unenforceable in any respect, such provision shall be modified so as to make it valid, legal, and enforceable, and the validity, legality, and enforceability of the remaining provisions (or any part thereof) of the Plan or Award, as applicable, shall not in any way be affected or impaired thereby.
22. Sections 409A and 457A. Notwithstanding other provisions of the Plan or any Option Agreement, no Award may be granted, deferred, accelerated, extended, paid out or modified under this Plan in a manner that would result in the imposition of an additional tax under Section 409A or Section 457A of the Code upon a Participant. In the event that it is reasonably determined by the Board or, if delegated by the Board to the Administrator, by the Administrator that, as a result of Section 409A of the Code, payments in respect of any Award under the Plan may not be made at the time contemplated by the terms of the Plan or the relevant Option Agreement, as the case may be, without causing the Participant holding such Award to be subject to taxation under Section 409A of the Code, including as a result of the fact that the Participant is a “specified employee” under Section 409A of the Code, the Company will make such payment on the first day that would not result in the Participant incurring any tax liability under Section 409A of the Code. The Company will use commercially reasonable efforts to implement the provisions of this Section 22 in good faith; provided that neither the Company, the Administrator nor any of the Company’s Employees, Directors or representatives will have any liability to Participants with respect to this Section 22.
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Exhibit 21.1
Subsidiaries of the Registrant
| Subsidiaries | Place of incorporation | |
| SIGNATURE TASTY CLAYPOT HOUSE HOLDING SDN. BHD. | Malaysia | |
| SIGNATURE TASTY CLAYPOT HOUSE (GH) SDN. BHD. | Malaysia | |
| CHH KL GROUP SDN. BHD. | Malaysia | |
| GTL F&B SDN. BHD. | Malaysia | |
| ZI WEI YUAN (RAJA UDA) SDN. BHD. | Malaysia | |
| CCH TROPIKA SDN. BHD. | Malaysia |
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption “Experts” and to the use of our report dated June 26, 2025, in this Registration Statement (Form F-1 No. 377-08141) and the related Prospectus of CCH Holdings Ltd dated August 27, 2025.
| /s/ ST & Partners PLT | |
| ST & Partners PLT | |
| Selangor Darul Ehsan, Malaysia | |
| August 27, 2025 |
Exhibit 99.1
CCH HOLDINGS LTD
CODE OF BUSINESS CONDUCT AND ETHICS
Table of Contents
| Page | |||
| 1. | INTRODUCTION | 1 | |
| 1.1 | About the Code of Business Conduct and Ethics | 1 | |
| 1.2 | Meeting Our Shared Obligations | 1 | |
| 2. | RESPONSIBILITY TO OUR ORGANIZATION | 1 | |
| 2.1 | Conflicts of Interest | 1 | |
| 2.2 | Company Opportunities | 3 | |
| 2.3 | Entertainment, Gifts and Gratuities | 3 | |
| 2.4 | Protection and Proper Use of Company Assets | 4 | |
| 2.5 | Network Use, Integrity & Security | 4 | |
| 2.6 | Company Books and Records | 5 | |
| 2.7 | Compliance with Laws, Rules and Regulations | 6 | |
| 2.8 | Insider Trading | 6 | |
| 2.9 | Documentation | 7 | |
| 2.10 | Responding to Inquiries from the Press and Others | 7 | |
| 3. | FAIR DEALING | 7 | |
| 3.1 | Trade Practice and Antitrust Compliance | 7 | |
| 4. | RESPONSIBILITY TO OUR PEOPLE | 8 | |
| 4.1 | Respecting One Another | 8 | |
| 4.2 | Employee Privacy | 8 | |
| 4.3 | Equal Employment Opportunity and Nondiscrimination | 8 | |
| 4.4 | Sexual and Other Forms of Harassment | 8 | |
| 4.5 | Other Forms of Harassment | 9 | |
| 4.6 | Reporting Responsibilities and Procedures | 9 | |
| 4.7 | Safety in the Workplace | 9 | |
| 5. | INTERACTING WITH GOVERNMENT | 9 | |
| 5.1 | Prohibition on Gifts to Government Officials and Employees | 9 | |
| 5.2 | Political Contributions and Activities | 10 | |
| 5.3 | Lobbying Activities | 10 | |
| 5.4 | Bribery of Foreign Officials | 10 | |
| 6. | IMPLEMENTATION OF THE CODE | 10 | |
| 6.1 | Reporting Violations | 10 | |
| 6.2 | Investigations of Suspected Violations | 11 | |
| 6.3 | Subpoenas and Government Investigations | 11 | |
| 6.4 | Discipline for Violations | 11 | |
| 6.5 | Waivers of the Code | 11 | |
| 6.6 | No Rights Created | 11 | |
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1. INTRODUCTION
1.1 About the Code of Business Conduct and Ethics
This Code of Business Conduct and Ethics (the “Code”) is designed to develop the values, principles and standards that guide the actions of CCH Holdings Ltd including its direct and indirect subsidiaries that currently exist or that may be created in the future (collectively, the “Company”) and what is expected of its employees, officers and directors. The Code has been approved by the Company’s board of directors (the “Board”). The Code helps the Company conduct its business in accordance with all applicable laws and regulations and in accordance with the highest standards of business conduct that govern its operations. The Code contains values, principles and standards that guide the conduct of the Company and its employees, officers and directors among themselves, in front of customers and in the community in general, which do not exclude the obligations assumed under local and international laws and regulations binding the Company and its employees, officers and directors in each of the countries where it has a presence, and where its employees, officers and directors provide their services.
The Company expects all employees, officers and directors to act in accordance with the highest levels of professional integrity in all aspects, and to comply with all applicable laws, policies or procedures adopted by the Company. The Company will not tolerate any behavior that violates or jeopardizes the Code, or any other external or internal policies or rules.
The Code is a statement of policies for individual and business conduct and does not, in any way, constitute an employment contract or an assurance of continued employment.
Nothing in this Code is meant to limit or restrict the terms of (i) any employment letter or confidentiality agreement an employee may have previously signed, (ii) any policy or directives adopted by the Company or advised by the Company’s general counsel or a similarly situated executive (the “General Counsel”) from time to time or (iii) any employee handbook.
1.2 Meeting Our Shared Obligations
All employees, officers and directors are responsible for knowing and understanding the policies and guidelines contained in the following pages. Any questions should be raised with the General Counsel and the Company’s compliance officer. The legal department of the Company (the “Legal Department”), which is responsible for overseeing and monitoring compliance with the Code, and the other resources set forth in this Code, is available to answer any questions and provide guidance and can be reached at No. 1, Jalan Perda Jaya, Kawasan Perniagaan Perda Jaya, 14000 Bukit Mertajam, Pulau Pinang, Malaysia. The same address may also be used to report suspected misconduct. Reports can be made online at the Company’s website. The conduct of our employees, officers and directors should reflect the Company’s values, demonstrate ethical leadership, and promote a work environment that upholds the Company’s reputation for integrity, ethical conduct and trust.
2. RESPONSIBILITY TO OUR ORGANIZATION
The employees, officers and directors of the Company are expected to dedicate their best efforts to advancing the Company’s interests and to make decisions that affect the Company based on the Company’s best interests, independent of outside influences.
2.1 Conflicts of Interest
A conflict of interest occurs when an employee, officer or director of the Company has a private interest which interferes in any way, or may appear to interfere, with the Company’s interests as a whole. The Company expects all employees, officers and directors to exercise good judgment and the highest ethical standards in their activities on behalf of the Company as well as in their private activities outside the Company. Particular care should be taken to ensure that no detriment to the interests of the Company (or appearance of such detriment) may result from a conflict between those interests and any personal or business interests which an individual employee, officer or director may have. In particular, every employee, officer and director has an obligation to avoid, or, if avoidance is not feasible, disclose in accordance with this Code, any activity, agreement, business investment or interest or other situation that might in fact or in appearance cause the individual to place his or her own interests, or those of another, above his or her obligation to the Company. Care should be taken about the appearance of a conflict since such appearance might impair confidence in, or the reputation of, the Company even if there is no actual conflict and no wrongdoing.
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Special rules apply to executive officers and directors who engage in conduct that creates an actual, apparent or potential conflict of interest. Before engaging in any such conduct, executive officers and directors must make full disclosure of all facts and circumstances to the General Counsel, who shall inform and seek the prior approval of the audit committee of the Board (the “Audit Committee”).
While it is not possible to describe or anticipate all the circumstances and situations that might involve a conflict of interest, a conflict of interest can arise whenever an employee, officer or director takes action or has interests that may make it difficult to perform his or her work objectively or effectively or when they (or a member of their family) receive improper personal benefits as a result of their position in the Company. Conflicts may arise where an employee, officer or director, or member of his or her family:
| ● | has a financial interest in the Company’s competitors, customers, suppliers or others dealing with the Company (excluding interests that are less than 1% of the outstanding securities of a publicly traded corporation); |
| ● | is indebted to a competitor or supplier of goods or services to the Company, other than banks or other financial institutions for typical consumer debt generally available to non-Company employees; |
| ● | has a consulting, managerial or employment relationship in any capacity with, or is a board member of, a competitor, customer, supplier or others dealing with the Company; or |
| ● | acquires, directly or indirectly, real property, leaseholds, patents or other property or rights in which the Company has, or the employee, officer or director knows or has reason to believe at the time of acquisition that the Company is likely to have, an interest. |
Focus of Employees and Officers The Company’s employees and officers are expected to devote their full time and attention to the Company’s business during regular working hours and for whatever additional time may be required. Outside business activities can easily create conflicts of interest or diminish productivity and effectiveness. For these reasons, employees and officers should avoid outside business activities that divert their time and talents from the Company’s business. Though the Company encourages professional activities and community involvement, special care must be taken not to compromise duties owed to the Company. Employees and officers are expected to disclose the nature of any non-Company activity for which compensation is received. Employees and officers must obtain approval from the Board before agreeing to serve on the board of directors or similar body of a for-profit enterprise or government agency. Serving on boards of not-for-profit or community organizations does not require prior approval. However, if service with a not-for-profit or community organization creates a situation that poses a conflict of interest with the Company (for example, the organization solicits charitable contributions from the Company or purchases significant services from the Company), the General Counsel should be contacted for approval to continue such service.
Investments in Other Companies Employees, officers and directors of the Company should not acquire a significant equity ownership position in any significant customer, supplier or competitor of the Company or in any company with which the Company is engaged in, or proposes to engage in, or, to the knowledge of the employee, officer or director, is considering entering into, a significant business transaction. The significance of an equity ownership position will be determined with reference to the size of the position with respect to the other company’s outstanding equity and with respect to the size of the employee’s, officer’s or director’s personal net worth. An equity ownership position that exceeds 1% of the outstanding equity securities of another company will be deemed to be significant (regardless of its size with respect to the size of the employee’s, officer’s or director’s personal net worth), unless the Audit Committee determines otherwise based on a review of the specific facts and circumstances relating to the investment. An employee, officer or director who holds a significant equity ownership position in another company that, subsequent to the acquisition of the ownership position, becomes a significant customer, supplier or competitor of the Company, or with which the Company is considering or proposes to enter into a significant business transaction, shall promptly disclose his or her ownership in the other company to the Audit Committee and shall recuse himself or herself with respect to final Board deliberations and votes of directors regarding the Company’s relationship with the other company, unless the constitutional documents provide otherwise. In addition, upon the request of the Audit Committee or a majority of disinterested directors, a director shall also recuse himself or herself from any negotiations or preliminary Board discussions regarding the Company’s relationship with the other company, unless the constitutional documents provide otherwise. Employees, officers and directors should contact the General Counsel if they have a question as to whether a company in which they have invested or wish to invest is a significant customer, supplier or competitor of the Company, or is a company with which the Company is considering or proposes to enter into a significant business transaction. No employee, officer or director of the Company may participate in an initial public offering or otherwise accept special investment opportunities from a supplier, vendor (including banks or financial advisers), or customer with whom the Company is doing business or that is seeking to sell products or services to the Company without first disclosing the opportunity to the Audit Committee.
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There are several factors to consider in assessing a situation involving a potential conflict of interest. Among them: the relationship between the Company and the other company; the nature of the employee, officer or director’s responsibilities as a representative of the Company and those of the other person; and the access each employee, officer and director has to the Company’s confidential information. The very appearance of a conflict of interest can create problems, regardless of the propriety of the employee, officer or director’s behavior. To remove any such doubts or suspicions, the employee, officer or director must disclose their specific situation to the General Counsel to assess the nature and extent of any concern and how it can be resolved. In some instances, any risk to the Company’s interests is sufficiently remote that the General Counsel may only remind the employee, officer or director to guard against inadvertently disclosing Company confidential information and not to be involved in decisions on behalf of the Company that involve the other company.
2.2 Company Opportunities
Employees, officers and directors owe a duty to advance the legitimate interests of the Company when they arise. No employee, officer or director of the Company shall for personal or any other person’s or entity’s gain deprive the Company of any business opportunity for benefit which could be construed as related to any existing or reasonably anticipated future activity of the Company. Employees, officers and directors who learn of any such opportunity through their association with the Company may not disclose it to a third party or invest in the opportunity without first offering it to the Company. Nor should any employee, officer or director use Company property, information or position for personal gain or compete with the Company.
2.3 Entertainment, Gifts and Gratuities
The following should be read in conjunction with the Company’s “Anti-Bribery and Gifts and Entertainment Policy,” as adopted by the Board and as amended from time to time (the “Anti-Bribery Policy”). Employees, officers and directors are required to abide by all of the terms of the Anti-Bribery Policy.
Receipt of Gifts and Entertainment When an employee, officer or director is involved in making business decisions on behalf of the Company, their decisions must be based on uncompromised, objective judgment. Employees, officer and directors interacting with any person who has business dealings with the Company (including suppliers, customers, competitors, contractors and consultants) must conduct such activities in the best interest of the Company, using consistent and unbiased standards. Employees, officers and directors must never accept gifts or other benefits if their business judgment or decisions could be affected.
Employees, officers and directors must never ask for gifts, entertainment or any other business courtesies from people doing business with the Company. Unsolicited gifts and business courtesies, including meals and entertainment, are permissible if they are customary and commonly accepted business courtesies; not excessive in value; and given and accepted without an express or implied understanding that the employee, officer or director is in any way obligated by their acceptance of the gift or that the gift is a reward or inducement for any particular business decision already made or forthcoming. Gifts that are or seem extravagant in value or unusual in nature should not be accepted without the prior written approval of the General Counsel. Gifts of cash or cash equivalents (including securities, below-market loans, etc.) in any amount are prohibited and must be returned promptly to the donor.
Offering Gifts and Entertainment Employees, officers and directors providing a gift, entertainment or other accommodation in connection with Company business, must do so in a manner that is in good taste and without excessive expense. Gifts may not be furnished or offered to be furnished that are of more than token value or that go beyond the common courtesies associated with accepted business practices or that are an inducement or reward for entering into a business transaction. Employees, officers and directors should follow the Anti-Bribery Policy in determining when it is appropriate to give gifts and when prior written approval from the General Counsel is required.
The Company’s suppliers, customers and consultants likely have gift and entertainment policies of their own. Employees, officers and directors must be careful never to provide a gift or entertainment that violates the other company’s gift and entertainment policy.
What is acceptable in the commercial business environment may be entirely unacceptable in dealings with the government, including representatives of foreign governments and government-owned companies in foreign countries. There are strict laws that govern providing gifts, including meals, entertainment, transportation and lodging, to government officials and employees. Employees, officers and directors are prohibited from providing gifts or anything of value to government officials or employees or members of their families, including representatives of foreign governments and government-owned companies in foreign countries, in connection with Company business without prior written approval from the General Counsel in accordance with the Anti-Bribery Policy.
Giving or receiving any payment or gift in the nature of a bribe or kickback is absolutely prohibited.
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2.4 Protection and Proper Use of Company Assets
Employees, officers and directors have the responsibility of protecting the Company’s assets and preventing their misuse and misappropriation. The assets of the Company include tangible assets, such as products, equipment and facilities, as well as intangible assets, such as corporate opportunities, intellectual property, trade secrets and business information (including any nonpublic information learned as an employee, officer or director of the Company).
Theft/Misuse of Company Assets The Company’s assets may only be used for business purposes and such other purposes as are approved by the Company. No employee, officer or director may take, make use of, or knowingly misappropriate the assets of the Company, for personal use, for use by another, or for an improper or illegal purpose. No employee, officer or director is permitted to remove, dispose of, or destroy anything of value belonging to the Company without the Company’s consent, including both physical items and electronic information.
Confidential Information/Privacy No employee, officer or director of the Company who is entrusted with information of a confidential or proprietary nature (about the Company, its suppliers, customers or other constituents) shall disclose that information outside the Company, either during or after service with the Company, except with written authorization of the Company or as may be otherwise required by law. Employees, officers and directors may not use confidential information for their own personal benefit or the benefit of persons or entities outside the Company.
Confidential information includes all non-public information learned as an employee, officer or director of the Company. It includes, but is not limited to:
| ● | non-public information that might be (i) of use to competitors, suppliers, vendors, joint venture partners or others, (ii) of interest to the press, or (iii) harmful to the Company or its customers, if disclosed; |
| ● | non-public information about the Company’s financial condition, prospects or plans, its marketing and sales programs and research and development information, as well as information relating to mergers and acquisitions, stock splits and divestitures; |
| ● | non-public information concerning possible transactions with other companies or information about the Company’s customers, suppliers or joint venture partners, which the Company is under an obligation to maintain as confidential; |
| ● | non-public information about discussions and deliberations, relating to business issues and decisions, between and among employees, officers and directors. See section relating to Insider Trading; and |
| ● | non-public information about fellow employees or any other individuals about whom the Company may hold information from time to time. |
2.5 Network Use, Integrity & Security
The Company reserves the right to monitor or review any and all data and information contained on any employee’s or officer’s computer or other electronic device issued by the Company. In addition, the Company reserves the right to monitor or review an employee’s or officer’s use of the Internet, Company Intranet and Company e-mail or any other electronic communications without prior notice.
Access to Company systems will be revoked and disciplinary action may be taken in the event that such systems are used to commit illegal acts, or to violate the nondiscrimination, harassment, pornography, solicitation or proprietary information terms of this Code, or any other terms of this Code.
In order to maintain systems integrity and protect the Company network, no employee or officer should divulge any passwords used to access any Company computer or database. Any suspected breach of the Company’s network security systems should be reported to a responsible supervisor or appropriate internal authority immediately.
All employees and officers should refrain from using or distributing software that may damage or disrupt the Company’s work environment by transmitting a virus or conflicting with Company systems. No employee or officer should engage in the unauthorized use, copying, distribution or alteration of computer software whether obtained from outside sources or developed internally. All software, including “shareware,” contains terms of use that must be adhered to.
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2.6 Company Books and Records
It is the Company’s policy to fully and fairly disclose the financial condition of the Company in compliance with applicable accounting principles, laws, rules and regulations and to make full, fair, accurate timely and understandable disclosure in our periodic reports filed with the United States Securities and Exchange Commission and in other communications to securities analysts, rating agencies and investors. Honest and accurate recording and reporting of information is critical to our ability to make responsible business decisions. The Company’s accounting records are relied upon to produce reports for the Company’s management, rating agencies, investors, creditors, governmental agencies and others. Our financial statements and the books and records on which they are based must accurately reflect all corporate transactions and conform to all legal and accounting requirements and our system of internal controls.
All employees, officers and directors and, in particular, the chief executive officer of the Company (the “Chief Executive Officer”) and the chief financial officer (or an equivalent position) of the Company, have a responsibility to ensure that the Company’s accounting records do not contain any false or intentionally misleading entries. The Company does not tolerate intentional misclassification of transactions as to accounts, departments or accounting periods and, in particular:
| ● | all accounting records, as well as reports produced from those records, are to be kept and presented in accordance with the laws of each applicable jurisdiction; |
| ● | all records are to fairly and accurately reflect the transactions or occurrences to which they relate; |
| ● | all records are to fairly and accurately reflect in reasonable detail the Company’s assets, liabilities, revenues and expenses; |
| ● | no accounting records are to contain any intentionally false or misleading entries; |
| ● | no transactions are to be misclassified as to accounts, departments or accounting periods; |
| ● | all transactions are to be supported by accurate documentation in reasonable detail and recorded in the proper account and in the proper accounting period; |
| ● | all accounting records are to comply with generally accepted accounting principles; and |
| ● | the Company’s system of internal accounting controls, including compensation controls, is required to be followed at all times. |
Any effort to mislead or coerce the independent auditors or a member of internal audit staff concerning issues related to audit, accounting or financial disclosure has serious legal consequences for the perpetrator, including criminal sanctions, and for the Company, and is strictly prohibited. If any employee, officer or director becomes aware of any violation of this policy, he or she must report the matter immediately to the Audit Committee as follows:
Audit Committee, CCH Holdings Ltd
No. 1, Jalan Perda Jaya,
Kawasan Perniagaan Perda Jaya,
14000 Bukit Mertajam,
Pulau Pinang,
Malaysia
Consistent with the reporting and recordkeeping commitments discussed above and elsewhere in the Code, all employees, officers and directors should accurately and truthfully complete all records used to determine compensation or expense reimbursement. This includes, among other items, reporting of hours worked (including overtime), reimbursable expenses (including travel and meals), and sales activity.
Compliance with the Company’s records retention procedures is mandatory. Destroying or altering a document with the intent to impair the document’s integrity or availability for use in any potential official proceeding is a crime. Destruction of corporate records may only take place in compliance with the records retention policy. Documents relevant to any pending, threatened or anticipated litigation, investigation or audit shall not be destroyed for any reason. Any belief that Company records are being improperly altered or destroyed should be reported to a responsible supervisor, the Chief Executive Officer or the chairperson of the Audit Committee.
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2.7 Compliance with Laws, Rules and Regulations
The Company requires its employees, officers and directors to comply with all applicable laws, rules and regulations in countries where the Company does business. Violation of domestic or foreign laws and regulations may subject an individual, as well as the Company, to civil and/or criminal penalties.
Legal compliance is not always intuitive. To comply with the law, employees, officers and directors must learn enough about the national, state and local laws that affect the Company to spot potential issues and to obtain proper guidance on the right way to proceed. This means, for example, that employees and officers whose day-to-day work is directly affected by particular laws have a responsibility to understand them well enough to recognize potential problem areas and to know when and where to seek advice. When there is any doubt as to the lawfulness of any proposed activity, advice should be sought from the General Counsel, who may retain outside legal counsel to investigate the proposed activity.
Specific laws and regulations apply to participation in international business. Employees and officers involved in foreign business transactions must be fully familiar with, and strictly adhere to, all applicable foreign and domestic laws and regulations. Employees and officers involved in international business matters must, at a minimum, be familiar with and comply with all applicable laws controlling exports or regulating with whom the Company and its employees may do business. These laws include export control and licensing laws, economic sanctions, anti-boycott laws and various laws regulating the transnational movement of technology, goods and services. Questions regarding whether particular international transactions are permissible and compliance with applicable laws and this policy must be directed to the General Counsel.
2.8 Insider Trading
The following is intended to provide a summary of certain provisions of the Company’s “Insider Trading Policy,” as adopted by the Board and as amended from time to time (the “Trading Policy”), and should be read in conjunction with the Trading Policy. Employees, officers and directors are required to abide by all of the terms of the Trading Policy. Nothing in this summary is intended to amend, modify or limit the terms of the Trading Policy.
Employees, officers and directors are prohibited by Company policy and the law from buying or selling securities of the Company at a time when in possession of “material nonpublic information.” (There is, however, an exception for trades made pursuant to a pre-existing trading plan, as discussed below.) This conduct is known as “insider trading.” Passing such information on to someone who may buy or sell securities, known as “tipping,” is also illegal. The prohibition applies to Company securities and to securities of other companies if employees, officers and directors learn material nonpublic information about other companies, such as the Company’s customers, in the course of the employees’, officers’ and directors’ duties for the Company.
Information is “material” if (a) there is a substantial likelihood that a reasonable investor would find the information “important” in determining whether to trade in a security; or (b) the information, if made public, likely would affect the market price of a company’s securities. Examples of types of material information include unannounced dividends, earnings, financial results, new or lost contracts or products, sales results, important personnel changes, business plans, possible mergers, acquisitions, divestitures or joint ventures, important litigation developments, and important regulatory, judicial or legislative actions. Information may be material even if it relates to future, speculative or contingent events and even if it is significant only when considered in combination with publicly available information.
Information is considered to be nonpublic unless it has been adequately disclosed to the public, which means that the information must be publicly disclosed, and adequate time must have passed for the securities markets to digest the information. Examples of adequate disclosure include public filings with securities regulatory authorities and the issuance of press releases, and may also include meetings with members of the press and the public. A delay of one or two business days is generally considered a sufficient period for routine information to be absorbed by the market. Nevertheless, a longer period of delay might be considered appropriate in more complex disclosures. The appropriate amount of time is something that must be discussed, before trading, with the General Counsel.
The Trading Policy establishes restrictions on the trading of the Company’s securities by directors, officers and certain “Restricted Employees” (as defined in the Trading Policy). Such persons are not permitted to trade the Company’s securities during “blackout periods.” In addition, directors and offers must have their trades cleared by the General Counsel prior to completing the trade.
Employees, officers and directors are not permitted to disclose material nonpublic information to anyone, including co-workers, unless the person receiving the information has a legitimate need to know the information for purposes of carrying out the Company’s business. Employees, officers and directors that leave the Company must maintain the confidentiality of all such information until it has been adequately disclosed to the public by the Company. If there is any question as to whether information regarding the Company or another company with which the Company has dealings is material or has been adequately disclosed to the public, employees, officers and directors should contact the General Counsel.
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Notwithstanding the prohibition against insider trading, the law and Company policy permit employees, directors and officers to trade in Company securities regardless of their awareness of material nonpublic information if the transaction is made pursuant to a pre-arranged trading plan that was established in compliance with applicable law and was entered into when the person was not in possession of material nonpublic information. A person who wishes to enter into a trading plan must submit the plan to the General Counsel for approval prior to the adoption, modification or termination of the trading plan.
2.9 Documentation
Employees, officers and directors who are authorized to make expenditures or enter into transactions on behalf of the Company must ensure that the applicable records comply with the Company’s accounting and purchasing policies and that all transactions are recorded properly.
2.10 Responding to Inquiries from the Press and Others
Company employees who are not official Company spokespersons may not speak with the press, securities analysts, other members of the financial community, shareholders or groups or organizations as a Company representative or about Company business unless specifically authorized to do so by Investor Relations. Requests for financial or other information about the Company from the media, the press, the financial community, shareholders or the public should be referred to the Investor Relations Manager or the General Counsel. Requests for information from regulators or the government should be referred to the General Counsel.
3. FAIR DEALING
All employees, officers and directors should deal fairly with the Company’s customers, competitors, suppliers and employees. Employees, officers and directors must never take unfair advantage of others through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice.
3.1 Trade Practice and Antitrust Compliance
The Company’s efforts in the marketplace must be conducted in accordance with all applicable antitrust and competition laws. Moreover, failure to comply with antitrust and other trade regulation laws in every jurisdiction in which the Company does business could result in serious consequences both for the Company and the offending individuals, including significant civil and criminal penalties and damage to the Company’s reputation. Therefore, it is the Company’s policy to compete solely on the basis of its superior and innovative products and services, through the efforts and contributions of its employees, officers and directors, and to avoid improper actions that unreasonably restrain trade. Every Company employee, officer and director is expected to support Company efforts to compete vigorously in the marketplace in compliance with both the letter and the spirit of all applicable federal, state and foreign antitrust laws. Antitrust and trade regulation issues are very complex. Determining what actions unreasonably restrain trade or are otherwise improper will depend on the structure of the market and a number of other factors. Employees, officers and directors should consult the General Counsel for further guidance if they are involved in any conduct that could potentially raise antitrust concerns.
To avoid even the perception of unlawful conduct, employees should avoid: (a) discussing with a competitor: prices, costs, products and services, bidding practices, other non-public business matters, or customers; and (b) restricting the right of a customer to sell or lease a product or service at or above any price. In addition, the following practices should not be engaged in without advanced written approval by the General Counsel: (a) conditioning the sale or lease of a product or service on the sale or lease of another product or service; (b) conditioning the purchase, sale or lease of a product or service on a reciprocal agreement with a customer or supplier; (c) entering into an exclusive dealing arrangement with a customer (including a lessee) or supplier; (d) limiting a customer (including a lessee) as to the territories in which, or the customers to whom, a product or service can be resold or leased; and (e) discriminating in the prices or allowances offered to competing customers (including lessees).
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4. RESPONSIBILITY TO OUR PEOPLE
4.1 Respecting One Another
All employees want and deserve a work place where they are respected and appreciated. Everyone who works for the Company must contribute to the creation and maintenance of such an environment, and supervisors and managers have a special responsibility to foster a workplace that supports honesty, integrity, respect and trust.
4.2 Employee Privacy
The Company respects the privacy and dignity of all individuals. The Company collects and maintains personal information that relates to the employment of employees, officers and directors, including medical and benefit information. Special care is taken to limit access to personal information to Company personnel with a need to know such information for a legitimate purpose. Employees who are responsible for maintaining personal information and those who are provided access to such information must not disclose private information in violation of applicable law or in violation of the Company’s policies.
Employees, directors and officers should not search for or retrieve items from another employee’s workspace without prior approval of that employee or management. Similarly, employees, directors and officers should not use communication or information systems to obtain access to information directed to or created by others without the prior approval of management, unless such access is part of their job function and responsibilities at the Company.
Personal items, messages or information that is considered to be private should not be placed or kept in telephone systems, computer or electronic mail systems, office systems, offices, work spaces, desks, credenzas or file cabinets. The Company reserves all rights, to the fullest extent permitted by law, to inspect such systems and areas and to retrieve information or property from them when deemed appropriate in the judgment of management.
4.3 Equal Employment Opportunity and Nondiscrimination
The Company is an equal opportunity employer in hiring and promoting practices, benefits and wages. The Company will not tolerate discrimination against any person on the basis of race, religion, color, gender, age, marital status, pregnancy, national origin, sexual orientation, citizenship, disabled veteran status or disability (where the applicant or employee is qualified to perform the essential functions of the job with or without reasonable accommodation), or any other basis prohibited by law in recruiting, hiring, placement, promotion, or any other condition of employment.
All Company people, employees, customers, suppliers and others must be treated with respect and dignity.
4.4 Sexual and Other Forms of Harassment
Company policy strictly prohibits any form of harassment in the workplace, including sexual harassment. The Company will take prompt and appropriate action to prevent and, where necessary, discipline behavior that violates this policy.
Sexual harassment consists of unwelcome sexual advances, requests for sexual favors and other verbal or physical conduct of a sexual nature when:
| ● | submission to such conduct is made a term or condition of employment; |
| ● | submission to or rejection of such conduct is used as a basis for employment decisions; or |
| ● | such conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, offensive or hostile work environment. |
Forms of sexual harassment include, but are not limited to, the following:
| ● | verbal harassment, such as unwelcome comments, jokes or slurs of a sexual nature; |
| ● | physical harassment, such as unnecessary or offensive touching, or impeding or blocking movement; and |
| ● | visual harassment, such as derogatory or offensive posters, cards, cartoons, graffiti, drawings or gestures. |
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4.5 Other Forms of Harassment
Harassment on the basis of other characteristics is also strictly prohibited. Under this policy, harassment is verbal or physical conduct that degrades or shows hostility or hatred toward an individual because of his or her race, gender, color, national origin, sexual orientation, citizenship, religion, marital status, age, mental or physical handicap or disability, veteran status or any other characteristic protected by law, which:
| ● | has the purpose or effect of creating an intimidating, hostile, or offensive work environment; |
| ● | has the purpose or effect of unreasonably interfering with an individual’s work performance; or |
| ● | otherwise adversely affects an individual’s employment. |
Harassing conduct includes, but is not limited to, the following: epithets; slurs; negative stereotyping; threatening, intimidating or hostile acts; and written or graphic material that ridicules or shows hostility or aversion to an individual or group and that is posted on Company premises or circulated in the workplace.
4.6 Reporting Responsibilities and Procedures
Harassment of any kind should be promptly reported to the General Counsel. The harassed persons may also wish to confront the offender and state that the conduct is unacceptable and must stop. Complaints of harassment, abuse or discrimination will be investigated promptly and thoroughly and will be kept confidential to the extent possible. The Company will not in any way retaliate against any employee for making a good faith complaint or report of harassment or participating in the investigation of such a complaint or report.
The Company encourages the prompt reporting of all incidents of harassment, regardless of the offender’s identity and relationship to the Company. This procedure should also be followed for dealings with non-employees who have engaged in prohibited conduct. Supervisors must promptly report all complaints of harassment to the General Counsel.
Any employee who is found to be responsible for harassment, or for retaliating against any individual for reporting a claim of harassment or cooperating in an investigation, will be subject to disciplinary action, up to and include discharge.
Regardless of legal definitions, the Company expects employees to interact with each other in a professional and respectful manner.
4.7 Safety in the Workplace
The safety and security of employees is of primary importance. All employees, officers and directors are responsible for maintaining the Company’s facilities free from recognized hazards and obeying all Company safety rules. Working conditions should be maintained in a clean and orderly state to encourage efficient operations and promote good safety practices.
Weapons and Workplace Violence No employees, officers or directors may bring firearms, explosives, incendiary devices or any other weapons into the workplace or any work-related setting, regardless of whether or not they are licensed to carry such weapons. Similarly, the Company will not tolerate any level of violence in the workplace or in any work-related setting. Violations of this policy must be referred to a supervisor, manager or the human resources department of the Company immediately. Threats or assaults that require immediate attention should be reported to the police.
Drugs and Alcohol The Company intends to maintain a drug-free work environment. Except at approved Company functions, employees, officers and directors may not use, possess or be under the influence of alcohol on Company premises. Employees, officers and directors cannot use, sell, attempt to use or sell, purchase, possess or be under the influence of any illegal drug on Company premises or while performing Company business on or off the premises.
5. INTERACTING WITH GOVERNMENT
5.1 Prohibition on Gifts to Government Officials and Employees
The branches and levels of governments of various jurisdictions have different laws restricting gifts, including meals, entertainment, transportation and lodging, that may be provided to government officials and government employees. Employees, officers and directors are prohibited from providing gifts, meals or anything of value to government officials or employees or members of their families without prior written approval from the General Counsel.
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5.2 Political Contributions and Activities
Laws of certain jurisdictions prohibit the use of Company funds, assets, services or facilities on behalf of a political party or candidate. Payments of Company funds to any political party, candidate or campaign may be made only if permitted under applicable law and approved in writing and in advance by the General Counsel. Indirect political contributions or payments of political contributions through third parties (such as suppliers or consultants) in the name of the Company are not permitted, unless permitted under applicable law and approved in writing and in advance by the General Counsel.
The work time of an employee, officer or director may be considered the equivalent of a contribution by the Company, and as such, employees, officers and directors will not be paid by the Company for any time spent running for public office, serving as an elected official, or campaigning for a political candidate. The Company will not compensate or reimburse an employee, officer or director, in any form, for a political contribution made or intended to be made.
Employees, officers and directors may make personal contributions, but they must avoid any appearance that the contribution is made with Company funds or on behalf of the Company. Personal political contributions will not be reimbursed by the Company.
5.3 Lobbying Activities
Laws of some jurisdictions require registration and reporting by anyone who engages in a lobbying activity. Generally, lobbying includes: (1) communicating with any member or employee of a legislative branch of government for the purpose of influencing legislation; (2) communicating with certain government officials for the purpose of influencing government action; or (3) engaging in research or other activities to support or prepare for such communication. Employees, directors and officers must notify the Legal Department before engaging in any activity on behalf of the Company that might be considered “lobbying” as described above.
5.4 Bribery of Foreign Officials
The Company strictly prohibits giving or promising, directly or indirectly, anything of value to any employee or official of a government (including state-owned companies) or a political party, candidate for office, or to any person performing public duties or state functions, anywhere in the world, in order to obtain or retain business or to secure an improper advantage (including the failure by such individual to perform his/her official duty), the purpose of which is to obtain favored treatment with respect to any aspect of the Company’s business. Under no circumstance is it acceptable for any employee, officer or director to offer, give, solicit or receive any form of bribe, kickback, payoff, or inducement.
As a company listed in the United States, the Company is subject to the Foreign Corrupt Practices Act, as amended (the “Foreign Corrupt Practices Act”), which makes it illegal for the Company to offer, pay, give, promise or authorize the payment of any money or of anything of value, directly or indirectly, to any foreign government official or employee, foreign political party or candidate for foreign political office for the purpose of obtaining or retaining business or to secure an improper advantage, and comparable laws in other countries. Under the Foreign Corrupt Practices Act, improper payments are defined expansively to include payments, both direct and indirect (for example through agents or contactors); gifts; entertainment; and certain travel expenses. Although written local law may permit gift-giving or the payment of entertainment expenses, the General Counsel must approve in advance any such payments. Although the anti-bribery laws permit in narrow circumstances small “facilitation” payments to expedite the routine performance of legitimate duties, this area is not always clear, and the situation must be discussed with the General Counsel prior to any action being taken. Any question as to whether a gift or payment would be considered improper under the Company’s guidelines or national or foreign laws must be discussed with the General Counsel.
6. IMPLEMENTATION OF THE CODE
Each employee, officer and director is responsible for the compliance with the Code. Copies of this Code are available from the Legal Department. A statement of compliance with the Code must be signed by all officers, directors and employees on an annual basis. If there are any questions regarding any of the policies discussed in this Code or if the best course of action is unclear, guidance should be sought from supervisors, managers, or the other resources identified in this Code.
6.1 Reporting Violations
Each employee, officer and director is responsible for promptly reporting to the Company any circumstances that such person believes in good faith may constitute a violation of this Code, or any other Company policy, or applicable law, regulations and rules.
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Any complaint regarding accounting, internal accounting controls or auditing matters (including confidential complaints) should be reported to the Audit Committee. Employees, officers and directors may make a confidential report by:
● sending a letter to Audit Committee, CCH Holdings Ltd, No. 1, Jalan Perda Jaya, Kawasan Perniagaan Perda Jaya, 14000 Bukit Mertajam, Pulau Pinang, Malaysia.
No retribution against any individual who reports violations of this Code in good faith will be permitted, and mechanisms for reporting in a confidential manner are noted above. Every effort will be made to investigate confidential reports within the confines of the limits on information or disclosure such reports entail.
While self-reporting a violation will not excuse the violation itself, the extent and promptness of such reporting will be considered in determining any appropriate sanction, including dismissal. The Company will investigate any matter which is reported and will take any appropriate corrective action.
6.2 Investigations of Suspected Violations
All reported violations will be promptly and thoroughly investigated and treated confidentially to the extent reasonably possible. It is imperative that reporting persons not conduct their own preliminary investigations. Investigations of alleged violations may involve complex legal issues. Employees, officers and directors are encouraged not to act on their own as that action may compromise the integrity of an investigation and lead to adverse consequences.
6.3 Subpoenas and Government Investigations
As a general matter, it is the Company’s policy to cooperate in any government investigations and inquiries. All subpoenas, information document requests, or other inquiries should be referred immediately to the General Counsel.
6.4 Discipline for Violations
The Company intends to use every reasonable effort to prevent the occurrence of conduct not in compliance with its Code and to halt any such conduct that may occur as soon as reasonably possible after its discovery. Subject to applicable law and agreements, Company personnel who violate this Code and other Company policies and procedures may be subject to disciplinary action, up to and including discharge.
6.5 Waivers of the Code
The Company will waive application of the policies set forth in this Code only where circumstances warrant granting a waiver. Waivers of the Code for directors and executive officers may be made only by the Board as a whole or the Audit Committee and must be promptly disclosed as required by law or regulation. Any waiver given shall not constitute a waiver for future purposes or bind the Company to give any such waiver in the future.
6.6 No Rights Created
This Code is a statement of the fundamental principles and key policies and procedures that govern the conduct of the Company’s business. It is not intended to and does not create any obligations to or rights in any employee, director, officer, client, supplier, competitor, shareholder or any other person or entity.
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ACKNOWLEDGMENT FORM
I have received and read the Code of Business Conduct and Ethics (the “Code”), and I understand its contents. I agree to comply fully with the standards, policies and procedures contained in the Code and CCH Holdings Ltd’s related policies and procedures. I understand that I have an obligation to report to human resources department, the general counsel or the compliance officer any suspected violations of the Code that I am aware of. I acknowledge that the Code is a statement of policies for business conduct and does not, in any way, constitute an employment contract or an assurance of continued employment.
| Printed Name | |
| Signature | |
| Date |
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Exhibit 99.2
| 郑 | TEH & LEE | Advocates & Solicitors Notary Public | |
| (Registration Number: 000020001825) | |||
|
李 |
Partners Billy Lee Chong Hoe Teh Lip Jin Aw Ee Leng Chan Chang Yang
|
Xavier Lim Ri Feng Lim Wan Ci Clement Ong Ye Xiang Darren Lum Kien Lun Danny Hu Shi En Tee Ai Jing Koh Chun Yik Matthew Lum Jun Liang | |
| 律 | Consultant Chan Siew Cheong |
Rachel Goh Yin Mei Hank Ng Kah Heng Valance Ling Chea Woon Mervyn Ng Wai Hong | |
| 师 | Low
Pey Shin
Simone Perry Lee Samantha Thong Yi Wen Bailey Teoh May Xuan | ||
| 楼 | Please quote our reference when replying | ||
| Date | : | 27 August 2025 |
CCH Holdings Ltd
No. 1, Jalan Perda Jaya,
Kawasan Perniagaan Perda Jaya,
14000 Bukit Mertajam,
Pulau Pinang, Malaysia
Attn: The Board of Directors
Dear Sirs
(THE “COMPANY”) – REGISTRATION STATEMENT ON FORM F-1 OF THE COMPANY
| 1 | Introduction |
We act as the Malaysian legal counsel to the Company, a company incorporated under the laws of the Cayman Islands, in connection with the proposed initial public offering (the “Offering”) of its ordinary shares (the “Share”), par value of US$0.00001 per share, of the Company, by the Company on the Nasdaq Capital Market (“Listing”) as set forth in the Company’s registration statement on Form F-1, including all amendments or supplements thereto (the “Registration Statement”), filed by the Company with the Securities and Exchange Commission.
| 2 | Scope of opinion |
| (a) | This opinion is given only with respect to Malaysian law in force at the date of this opinion as applied by the Malaysian courts. Statements relating to taxation are based on Malaysian law (including case law) as applied by the Malaysian courts as at the date of this opinion. We assume no obligation or responsibility to notify you of any change in Malaysian law which may occur after today or to update or supplement this opinion in any respect. Save as expressly provided in this opinion, we do not express any views as to matters of taxation or tax consequences of any transactions contemplated by the Offering. |
| (b) | We express no opinion with regard to any other system of law. |
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| (c) | To the extent that foreign laws are or may be relevant, we have made no independent investigation of such laws, and our opinion is subject to the effect of such laws. |
| (d) | This opinion is strictly limited to the matters stated in paragraph 5 of this opinion, do not extend to any other matters and is intended to be used in the context which is specifically referred to herein. In particular, this opinion does not relate to any additional documents or statements concerning the Registration Statement, the Company, the Offering or the Listing that may be made by any person or any other conduct that any person may engage in concerning the Registration Statement. |
| 3 | Documents reviewed |
For the purposes of giving this opinion, we have examined originals or copies certified or otherwise authenticated to our satisfaction of such of such agreements, documents, certificates and other statements provided by the Company and of corporate officers and representatives of the Company and such other papers as we have deemed relevant and necessary as a basis for such opinion (the “Documents”).
| 4 | Searches |
We are not instructed to make, and have not made, any enquiries or searches concerning any of the parties to the Documents.
| 5 | Opinion |
On the basis set out above, and subject to the assumptions in Appendix 1 (Assumptions) and the qualifications in Appendix 2 (Qualifications), we are of the opinion that that the statements set forth in the Registration Statement under the captions:
| (a) | “Enforceability of Civil Liabilities – Malaysia”; |
| (b) | “Regulation”; and |
| (c) | “Taxation – Malaysian Enterprise Taxation”, |
insofar as such statements constitute summaries of the Malaysian legal matters referred to therein as of the date of this opinion, fairly present the information required with respect to such legal matters and fairly summarise the Malaysian legal matters referred to therein, in each case as at the date of this opinion.
| 6 | Benefit of the opinion |
| (a) | This opinion is addressed to the Company and is solely for the Company’s benefit in connection with the filing of the Registration Statement with the Securities and Exchange Commission and, except with our prior written consent, this opinion may not, in whole or in part, be used, relied on or referred to in any manner for any other purpose or be disclosed to or relied on by any other person or quoted or made public in any way or filed with any authority, other than for the purposes of filing this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement but on the strict basis that (i) it will not be relied upon by any person; and (ii) we accept no duty or liability to any other person as a result of such disclosure. |
| (b) | We consent to the reference to our name in the Registration Statement. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the U.S. Securities Act of 1933, as amended, or the regulations promulgated thereunder. |
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| 7 | Governing law and jurisdiction |
This opinion and any non-contractual obligations arising out of or in connection with it are governed by Malaysian law and the Malaysian courts shall have exclusive jurisdiction, to which the Company and we submit, in relation to all disputes (including claims for set-off and counterclaims) arising out of or in connection with this opinion. Having requested production of this opinion and in order to rely on its contents, the Company agrees to be bound by its terms.
Yours faithfully
| /s/ Teh & Lee |
in alliance with Teh & Lee
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Appendix 1
Assumptions
In rendering this opinion, we have assumed, without independent verification, that:
| 1 | Factual assumptions |
Any factual assumptions made by us are accurate. The addressee of this opinion has no actual knowledge that any of our factual assumptions are inaccurate.
| 2 | Signatures etc. genuine |
All signatures, stamps and seals on all documents submitted to us (if any) are genuine and were made or done in a manner recognised by law as valid signatures of or affixing of the seal to (as applicable) the documents and all signatures which purport to have been attested were made in the presence of the relevant witness.
| 3 | Originals |
All documents submitted to us as originals are authentic, accurate and complete and all documents submitted to us as copies, whether or not certified by any person, are true, complete and up-to-date and conform to the originals.
| 4 | Natural Persons |
Each natural person executing the Documents has the legal capacity to execute the Documents.
| 5 | Corporate capacity |
Each party (not a natural person) to the Documents is duly established and existing under the laws of its jurisdiction of incorporation; has the corporate capacity, power and authority to enter into, exercise its rights and to perform its obligations under the Documents to which it is a party; and has duly authorised, executed and delivered the Documents to which it is a party, in each case under all applicable laws.
| 6 | Validity and enforceability under other laws |
Each of the Documents, upon execution, constitutes the legal, valid, binding and enforceable obligations of each party to it, in each case under all applicable laws (other than the laws of Malaysia). Insofar as the laws of any jurisdiction (other than Malaysia) may be relevant to the obligations or rights of any of the parties under any of the Documents or any of the transactions contemplated by the Documents, such laws and regulations (other than Malaysia) do not prohibit and are not inconsistent with the execution and delivery of the Documents and the entering into and performance of any such obligations, rights and transactions.
| 7 | Consents etc |
All consents, licences, approvals, notices, filings and registrations which are necessary under any applicable laws (other than the laws of Malaysia) in order to permit the execution, delivery and performance of the Documents or to protect, perfect or preserve any of the interest created by the Documents, have been made or obtained or will be made and obtained within the period permitted or required by such laws or regulations.
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| 8 | No sanctioned person |
None of the parties to any of the Documents is controlled by or otherwise connected with a person or is itself resident in, incorporated in, or constituted under the laws of or exercising public functions in a country which is the subject of United Nations or other sanctions implemented or effective in Malaysia or is otherwise the target of any such sanctions.
| 9 | Documents examined are complete |
The Documents accurately describe and contain the mutual understanding of the parties thereto and all relevant information which is material for the purposes of our opinion, and there is no other agreement, undertaking, representation or warranty (oral or written) and no other arrangement (whether legally binding or not) between all or any of the parties to any of the Documents which modify the terms of or supersede any of the Documents or which may render such information inaccurate, incomplete or misleading or which may otherwise affect the conclusions stated in this opinion.
| 10 | No other facts or circumstances |
There are no other facts or circumstances (and no documents, agreements, instruments or correspondence) which are not apparent from the face of the Documents or which have not been disclosed to us which may affect the validity or enforceability of the Documents or any obligation in them or otherwise affect the conclusions stated in this opinion.
| 11 | Arm’s Length Terms |
The Documents have been entered into for bona fide commercial reasons and on arm’s length terms by each of the parties to them.
| 12 | Representations and warranties |
The representations and warranties by the parties in the Documents are, or were, as applicable, true, correct, accurate and complete in all respects on the date such representations and warranties were expressed to be made and that the terms of the Documents have been and will be observed and performed by each of the parties to them.
| 13 | Not insolvent |
Each of the parties under the Documents are not insolvent or unable to pay their debts at the time of entering into the Documents and each of the parties under the Documents will not become insolvent or unable to pay its debts in consequence of doing so and no equivalent event has occurred in any other jurisdiction.
| 14 | No insolvency steps or proceedings |
Prior to or at the time of execution of the Documents and immediately after the execution and delivery of the Documents, each of the parties under the Documents is solvent and will not be rendered insolvent as a result of its execution and delivery of any of the Documents to which it is party. Each of the parties under the Documents has not passed a resolution for its winding-up, nor has any step been taken in relation to its winding-up, liquidation, receivership, judicial management or analogous circumstances or proceedings in Malaysia or in any other jurisdiction. For this purpose, “any step” includes, without limitation presenting a petition, making an application, passing a resolution or filing or serving a notice.
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| 15 | Bad faith etc |
There is no bad faith, breach of duty, breach of trust, fraud, coercion, incapacity, duress, undue influence or mistake on the part of any of the parties to the Documents and their respective directors, employees, agents and advisers (excepting, of course ourselves).
| 16 | No unlawful activity |
The parties to the Documents are compliant with all applicable anti-terrorism, anti-corruption, anti-money laundering, sanctions and human rights laws and regulations and the performance and enforcement of the Documents is, and will continue to be, consistent with all such laws and regulations.
| 17 | No other agreements |
Each of the parties under the Documents is not precluded by any agreement to which it is party from entering into or performing its obligations under any of the Documents to which it is a party, and no party was on notice of any contractual prohibition or restriction on any party entering into, performing its obligations under or exercising its rights under the Documents.
| 18 | No injunctive proceedings |
No proceedings have been commenced or injunction granted against each of the parties under the Documents to restrain it from performing any of its obligations under the Documents to which it is a party.
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Appendix 2
Qualifications
The opinion(s) set out herein are subject to the qualifications set out below:
| 1 | Interpretation of laws |
This Opinion is issued based on our understanding of the laws of Malaysia. For matters not explicitly provided under the laws of Malaysia, the interpretation, implementation and application of the specific requirements under the laws of Malaysia are subject to the final discretion of competent Malaysian legislative, administrative and judicial authorities, and there can be no assurance that the government agencies will ultimately take a view that is not contrary to our opinion stated herein.
| 2 | Foreign laws |
We have made no investigation into, and do not express or imply any views on, the laws or regulations of any country other than Malaysia or on any non-legal regulation or standard such as but not limited to accounting, financial or technical rules or standard. In respect of the Registration Statement, we have assumed due compliance with all matters concerning the laws of all other jurisdictions other than Malaysia.
| 3 | Foreign courts |
We express no opinion as to whether or not a foreign court (applying its own conflict of laws rules) will act in accordance with the parties’ agreement as to dispute resolution mechanism and/or choice of law.
| 4 | Illegality |
Any provision in the Documents providing for the severance of any provision which is illegal, invalid or unenforceable may not be binding under the Malaysian Laws as it depends on the nature of the illegality, invalidity or unenforceability in question which issue would be determined by a court of Malaysia at its discretion.
| 5 | Enforceability |
The enforcement of the Documents in the courts of Malaysia will be subject to the application rules of civil procedure of Malaysia.
| 6 | Statutory Power |
Any provision of the Documents which constitutes or purports to constitute a restriction on the exercise of any statutory power by any party to the Documents or any other person may be ineffective.
| 7 | Anti-trust |
We have not considered and express no opinion on whether the entry into the Documents complies with anti-trust or competition laws.
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| 8 | Factual Matters |
We express no opinion on matters of fact. As to any facts material to our opinion, we have relied, to extent that we deemed such reliance proper, upon the representations, confirmations, certificates and other statements of officers and representatives of the Company or its subsidiaries. We have not undertaken any independent investigation to determine the existence or absence of any facts and no inference as to our knowledge of the existence or absence of such facts should be drawn from our serving as counsel in giving this opinion.
| 9 | Information provided to us |
This Opinion is based solely on the Documents provided to us. We are not responsible for any inadequacy of failing in such information.
| 10 | False or misleading statements |
If a person for whose benefit our opinion is given is actually aware of or believes there to be a false or misleading statement or an omission of the information requested to be provided to us in connection with the work performed by us in rendering this opinion, that person may not rely on this opinion in relation to that statement or omission and should seek legal advice on the specific matter concerned.
Exhibit 99.3
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Suite 3006, Two Exchange Square 8 Connaught Place, Central Hong Kong Tel: 852 2191 7566 Fax: 852 2191 7995 www.frost.com |
Date: 27 Aug 2025
CCH Holdings Ltd
No. 1, Jalan Perda Jaya,
Kawasan Perniagaan Perda Jaya,
14000 Bukit Mertajam,
Pulau Pinang,
Malaysia
Re: Consent of Frost & Sullivan Limited
Ladies and Gentlemen,
We understand that CCH Holdings Ltd (the “Company”) intends to file a registration statement (the “Registration Statement”) with the United States Securities and Exchange Commission (the “SEC”) in connection with its initial public offering (the “Proposed IPO”).
We hereby consent to the references to our name and the inclusion of information, data, and statements from our research reports and amendments thereto, including but not limited to the industry research report titled “2024 Specialty Hotpot Restaurant Market” (the “Report”), and any subsequent amendments to the Report, as well as the citation of our research report and amendments thereto, (i) in the Registration Statement and any amendments thereto, (ii) in any written correspondences with the SEC, (iii) in any other future filings with the SEC by the Company, including, without limitation, filings on Form 20-F, Form 6-K or other SEC filings (collectively, the “SEC Filings”), (iv) on the websites of the Company and its subsidiaries and affiliates, (v) in institutional and retail road shows and other activities in connection with the Proposed IPO, and in other publicity materials in connection with the Proposed IPO.
We further hereby consent to the filing of this letter as an exhibit to the Registration Statement and any amendments thereto and as an exhibit to any other SEC Filings. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the U.S. Securities Act of 1933, as amended, or the rules and regulations of the SEC thereunder.
Yours faithfully
For and on behalf of
Frost & Sullivan Limited
| /s/ Terry Tse | ||
| Name: | Terry Tse | |
| Title: | Consulting Director | |
Exhibit 99.4
August 27, 2025
CCH Holdings Ltd
No. 1, Jalan Perda Jaya,
Kawasan Perniagaan Perda Jaya,
14000 Bukit Mertajam,
Pulau Pinang,
Malaysia
+(60) 4-5307694
Dear Sirs:
Pursuant to Rule 438 under the Securities Act of 1933, as amended, I hereby consent to the references to my name in the Registration Statement on Form F-1 (the “Registration Statement”) of CCH Holdings Ltd (the “Company”) and any amendments thereto, which indicate that I have accepted the nomination to become a director of the Company. I further agree that immediately upon the United States Securities and Exchange Commission’s declaration of effectiveness of the Registration Statement, I will serve as a member of the board of directors of the Company.
* * *
Sincerely yours,
| /s/ Goh Kok E | |
| Name: Goh Kok E |
[Signature Page to Consent of Director]
Exhibit 99.5
August 27, 2025
CCH Holdings Ltd
No. 1, Jalan Perda Jaya,
Kawasan Perniagaan Perda Jaya,
14000 Bukit Mertajam,
Pulau Pinang,
Malaysia
+(60) 4-5307694
Dear Sirs:
Pursuant to Rule 438 under the Securities Act of 1933, as amended, I hereby consent to the references to my name in the Registration Statement on Form F-1 (the “Registration Statement”) of CCH Holdings Ltd (the “Company”) and any amendments thereto, which indicate that I have accepted the nomination to become a director of the Company. I further agree that immediately upon the United States Securities and Exchange Commission’s declaration of effectiveness of the Registration Statement, I will serve as a member of the board of directors of the Company.
* * *
Sincerely yours,
| /s/ Ng Yah Ling | |
| Name: Ng Yah Ling |
[Signature Page to Consent of Independent Director]
Exhibit 99.6
August 27, 2025
CCH Holdings Ltd
No. 1, Jalan Perda Jaya,
Kawasan Perniagaan Perda Jaya,
14000 Bukit Mertajam,
Pulau Pinang,
Malaysia
+(60) 4-5307694
Dear Sirs:
Pursuant to Rule 438 under the Securities Act of 1933, as amended, I hereby consent to the references to my name in the Registration Statement on Form F-1 (the “Registration Statement”) of CCH Holdings Ltd (the “Company”) and any amendments thereto, which indicate that I have accepted the nomination to become a director of the Company. I further agree that immediately upon the United States Securities and Exchange Commission’s declaration of effectiveness of the Registration Statement, I will serve as a member of the board of directors of the Company.
* * *
Sincerely yours,
| /s/ Wu Wai Kong | |
| Name: Wu Wai Kong |
[Signature Page to Consent of Independent Director]
Exhibit 99.7
August 27, 2025
CCH Holdings Ltd
No. 1, Jalan Perda Jaya,
Kawasan Perniagaan Perda Jaya,
14000 Bukit Mertajam,
Pulau Pinang,
Malaysia
+(60) 4-5307694
Dear Sirs:
Pursuant to Rule 438 under the Securities Act of 1933, as amended, I hereby consent to the references to my name in the Registration Statement on Form F-1 (the “Registration Statement”) of CCH Holdings Ltd (the “Company”) and any amendments thereto, which indicate that I have accepted the nomination to become a director of the Company. I further agree that immediately upon the United States Securities and Exchange Commission’s declaration of effectiveness of the Registration Statement, I will serve as a member of the board of directors of the Company.
* * *
| Sincerely yours, | |
| /s/ Ang Woei Shang | |
| Name: Ang Woei Shang |
[Signature Page to Consent of Independent Director]