Question 2 Teguh Setia Bhd (TSB), a company principally engaged in investment holding, is controlled by Lim Sdn Bhd (LSB), which in turn is controlled by the Lim family. Its group structure is diagrammatically shown below: Lim Sdn Bhd (LSB) 100% Teguh Setia Sdn Bhd (TSB) 100% 100% 100% TS Healthcare Sdn Bhd (TSH) TS Gloves Sdn Bhd (TSG) TS Plantations Sdn Bhd (TSP) 100% 100% 100% TS Vietnam Ltd (TSV) TS Shanghai Ltd (TSS) PT TS Indonesia (TSI) LSB, TSB, TSH, TSG and TSP are resident in Malaysia. TSV, TSS and TSI are resident in Vietnam, China and Indonesia respectively. TSB only derives dividend income from its subsidiaries. Its expenses are financed solely from these dividends. TSB manages the operations of its subsidiaries but does not charge any management fees. The level of management services provided to the subsidiaries has increased significantly over the years due to expansion of their operations. TSH is engaged in the manufacturing of surgical rubber gloves. Due to stiff competition in the export market, it has been incurring significant losses over the years. TSH also has significant capital allowances due to an aggressive expansion programme in the last 2 years. TSH intends to manufacture a special range of surgical rubber gloves which have a huge potential in the European market. The additional capital expenditure required to acquire plant and machinery is estimated at RM20 million. TSH is contemplating incorporating a wholly owned subsidiary to undertake this project. TSG is engaged in the manufacturing of household rubber gloves. It is a highly profitable company. 7