Founder Group Ltd. (FGL) Risk Analysis

On July 8, 2025, at the 2025 extraordinary general meeting, to implement a dual class structure, our shareholders approved a resolution to amend and restate the Company's then-effective Memorandum and Articles of Association to reflect (among other things) the revised authorized share structure of the Company and the terms of the Class A Ordinary Shares and Class B Ordinary Shares. Holders of Class A Ordinary Shares and Class B Ordinary Shares have the same rights and privileges except for voting and conversion rights. In respect of all matters subject to vote by way of poll at general meetings of the Company, each holder of Class A Ordinary Shares will be entitled to one (1) vote per one (1) Class A Ordinary Share and each holder of Class B Ordinary Shares will be entitled to 20 votes per one (1) Class B Ordinary Share. Class B Ordinary Shares are automatically convertible into Class A Ordinary Shares where any Class B Ordinary Share is the subject of any sale, transfer, assignment, or disposal of a legal, beneficial or other interest in that Class B Ordinary Share to a holder that is not a holder of Class B Ordinary Shares nor (i) a spouse, child, grandchild and their successors (the "Privileged Relation") of the holder; (ii) any company or other entity over which that holder has control; or (iii) a trust set up wholly for the benefit of that shareholder and/or the Privileged Relation of that shareholder (the "Permitted Transferee"), or a person who ceases to be a Permitted Transferee, in which each one (1) Class B Ordinary Share is convertible into one (1) Class A Ordinary Share. The creation of any pledge, charge, encumbrance or third party right over any Class B Ordinary Share to secure contractual or legal obligations of a holder of Class B Ordinary Shares shall not be deemed as a sale transfer, assignment or disposition unless such pledge, charge, encumbrance or third party right is enforced and it results in a third party holding legal title to the Class B Ordinary Share, in which case the Class B Ordinary Share will automatically convert to a Class A Ordinary Share. Class B Ordinary Shares are convertible voluntarily at any time after issuance at the option of the holder, upon 10 business days' prior written notice to the Company, in which each one (1) Class B Ordinary Share is convertible into one (1) Class A Ordinary Share. Additionally, on the written request of the shareholder, the Company has the right at its discretion to automatically convert each one (1) Class A Ordinary Share into one (1) Class B Ordinary Share, in which each one (1) Class A Ordinary Share is convertible into one (1) Class B Ordinary Share and/or each one (1) Class B Ordinary Share into one (1) Class A Ordinary Share, in which, each one (1) Class B Ordinary Share is convertible into one (1) Class A Ordinary Share. The dual class structure of our Ordinary Shares has the effect of concentrating voting control with holders of Class B Ordinary Shares. Our Class B Ordinary Shares have stronger voting power than our Class A Ordinary Shares and certain existing shareholders have substantial influence over our Company and their interests may not be aligned with the interests of our other shareholders.

As of the date of this annual report, Reservoir Link Energy Bhd. beneficially owns 6.61% of our issued and outstanding Class A Ordinary Shares and 21.45% of our issued and outstanding Class B Ordinary Shares; our Chief Executive Officer, Director, and Chairman of the Board of Directors, Lee Seng Chi, beneficially owns 3.05% our issued and outstanding Class A Ordinary Shares and 55.71% of our issued and outstanding Class B Ordinary Shares; our non-executive director, Thien Chiet Chai, beneficially owns 22.84% of our issued and outstanding Class B Ordinary Shares. As a result, Reservoir Link Energy Bhd., Lee Seng Chi and Thien Chiet Chai beneficially own approximately 16.79%, 39.17% and 15.67%, respectively, of the aggregate voting power of our issued and outstanding shares. As a result, these shareholders will have significant influence over all matters that require approval by our shareholders, including the appointment and removal of directors and approval of certain significant corporate transactions. Corporate action might be taken even if other shareholders oppose them. This concentration of ownership might also have the effect of delaying or preventing a change of control of our Company that other shareholders may view as beneficial.

Any trading market for our Class A Ordinary Shares may depend in part on the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade us, the price of our Class A Ordinary Shares would likely decline. If one or more of these analysts cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our Class A Ordinary Shares and the trading volume to decline.

The market price of our Class A Ordinary Shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: - actual or anticipated fluctuations in our revenue 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 our 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. In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, shareholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States domestic issuers, and we are not required to disclose in our periodic reports all of the information that United States domestic issuers are required to disclose. While we currently are a foreign private issuer, we may cease to qualify as a foreign private issuer in the future, in which case we would incur significant additional expenses that could have a material adverse effect on our results of operations.

As a business company limited by shares incorporated under the laws of the British Virgin Islands, we are subject to the Nasdaq corporate governance listing standards. However, Nasdaq rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the British Virgin Islands, which is our home country, may differ significantly from the Nasdaq corporate governance listing standards. We have relied on and plan to rely on home country practice with respect to our corporate governance. Specifically, we have elected to be exempt from the requirements under Nasdaq Listing Rule 5635 to obtain shareholder approval for (i) the issuance 20% or more of our outstanding Ordinary Shares or voting power in a private offering, (ii) the issuance of securities pursuant to a stock option or purchase plan to be established or materially amended or other equity compensation arrangement made or materially amended, (iii) the issuance of securities when the issuance or potential issuance will result in a change of control of our Company, and (iv) certain acquisitions in connection with the acquisition of the stock or assets of another company. As a result, our shareholders may be afforded less protection than they otherwise would enjoy under the Nasdaq corporate governance listing standards applicable to U.S. domestic issuers.

Our securities are listed on the Nasdaq Capital Market. We cannot assure you that our securities will continue to be listed on the Nasdaq Capital Market. In order to maintain our listing on the Nasdaq Capital Market, we are required to comply with certain rules of the Nasdaq Capital Market, including those regarding minimum stockholders' equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. Even if we currently meet the listing requirements and other applicable rules of the Nasdaq Capital Market, we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy the Nasdaq Capital Market criteria for maintaining our listing, our securities could be subject to delisting. If the Nasdaq Capital Market subsequently delists our securities from trading, we could face significant consequences, including: - a limited availability for market quotations for our securities;- reduced liquidity with respect to our securities;- a determination that our Class A Ordinary Shares are a "penny stock," which will require brokers trading in our Class A Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Class A Ordinary Shares;- limited amount of news and analyst coverage; and - a decreased ability to issue additional securities or obtain additional financing in the future.

Some provisions of our M&A may discourage, delay or prevent a change in control of our Company or management that shareholders may consider favorable, including, among other things, the following: - provisions that authorize our board of directors to issue shares with preferred, deferred or other special rights or restrictions without any further vote or action by our shareholders; and - provisions that restrict the ability of our shareholders to call shareholder meetings. Additionally, under the laws of the BVI, our directors may only exercise the rights and powers granted to them under our M&A for what they believe in good faith to be in the best interests of our Company and for a proper purpose.

Our M&A provide that, to the fullest extent permitted by applicable law, unless our board of directors consents in writing to the selection of an alternative forum, the courts of the BVI shall have exclusive jurisdiction to hear and determine: - (i) any dispute, suit, action, proceedings, controversy, or claim of any kind arising out of or in connection with our M&A, including, without limitation, claims for set-off and counterclaims and any dispute, suit, action, proceedings, controversy, or claim of any kind arising out of or in connection with: (x) the creation, validity, effect, interpretation, performance, or non-performance of, or the legal relationships established by, our M&A; or (y) any non-contractual obligations arising out of or in connection with our M&A; or - (ii) any dispute, suit, action (including, without limitation, any derivative action or proceeding brought on behalf or in our name or any application for permissions to bring a derivative action), proceedings, controversy, or claim of any kind relating or connected to us, our board of directors, officers, management, or shareholders arising out of or in connection with the BVI Act, the Insolvency Act, any other statute, rule, or common law of the BVI affecting any relationship between us, our shareholders, and/or our directors and officers (or any of them) or any rights and duties established thereby (including, without limitation, Division 3 of Part VI and Part XI of the BVI Act and section 162(1)(b) of the Insolvency Act, and fiduciary or other duties owed by any director, officer, or shareholder of the Company to the Company or the Company's shareholders). To the fullest extent permitted by applicable laws, unless our board of directors consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act or the Exchange Act. Notwithstanding the foregoing, we note that holders of our Class A Ordinary Shares cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder, and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As a result, the exclusive jurisdiction provision will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under the Securities Act or the Exchange Act, or the respective rules and regulations promulgated thereunder. Although we believe this provision benefits us by providing consistency in the application of BVI law in the types of lawsuits to which it applies, the provision may impose additional litigation costs on shareholders in pursuing such claims, particularly if the shareholders do not reside in or near the BVI. Additionally, the provision may limit our shareholders' ability to bring a claim in a judicial forum that they find favorable for disputes with us or our directors, officers, or employees, which may discourage the filing of such lawsuits. The courts of the BVI may also reach different judgment or results than would other courts, including courts where a shareholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to us than our shareholders. Alternatively, if a court were to find the exclusive jurisdiction provision contained in our M&A to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

Our board of directors may, in its sole discretion, decline to register any transfer of any Class B Ordinary Share for any reason. The directors must state the reason for their refusal in a resolution of directors, and the Company must as soon as practicable, send each of the transferor and transferee a notice of refusal. Class A Ordinary Shares listed on the Nasdaq Capital Market, may be transferred without the need for a written instrument of transfer if the transfer is carried out in accordance with the laws, rules, procedures and other requirements applicable to shares listed on Nasdaq (including, but not limited to, the applicable Nasdaq listing rules). The transfer of a share is only effective once the name of the transferee is entered in the register of shareholders. If our directors refuse to register a transfer they must state the reason for their refusal in a resolution of directors and the Company must, as soon as practicable, send to each of the transferor and the transferee notice of such refusal. This, however, is unlikely to affect market transactions of the Class A Ordinary Shares purchased by investors in the public market. Our Class A Ordinary Shares are listed on the Nasdaq Capital Market, and the legal title to such Class A Ordinary Shares and the registration details of those Class A Ordinary Shares in the Company's register of members remain with the Depository Trust Company. All market transactions with respect to those Class A Ordinary Shares are carried out without the need for any kind of registration by the directors, as the market transactions are all conducted through the Depository Trust Company systems.

Sales of substantial amounts of our Class A Ordinary Shares in the public market, or the perception that these sales could occur, could cause the market price of our Class A Ordinary Shares to decline. An aggregate of 854,310 Class A Ordinary Shares are currently outstanding as of the date of this annual report and 764,347 shares are freely tradable. The remaining Class A Ordinary Shares are "restricted securities" as defined in Rule 144. These Class A Ordinary Shares may be sold without registration under the Securities Act to the extent permitted by Rule 144 or other exemptions under the Securities Act. Sales of these shares into the market could cause the market price of our Class A Ordinary Shares to decline.

We are incorporated under the laws of the BVI as a business company limited by shares. Currently, all of our operations are conducted in Malaysia, and almost all of our assets are and will be located outside of the United States. In addition, almost all of our officers and directors are nationals and residents of a country other than the United States, and almost all of their assets are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe we have violated your rights, either under United States federal or state securities laws or otherwise, or if you have a claim against us. Even if you are successful in bringing an action of this kind, the laws of the BVI and of Malaysia may not allow you to enforce a judgment against our assets or the assets of our directors and officers.