Nurture Innovation and Responsible Business
Principle 5.1The board should prioritise and promote innovation that creates value for the company and its shareholders together with benefits for its customers, other stakeholders, society, and the environment, in support of sustainable growth of the company.
5.1.1 The board should prioritise and promote a corporate culture that embraces innovation and ensure management’s inclusion of innovation in corporate strategy, operational development planning, and operation monitoring.
5.1.2 The board should nurture innovation that enhances long-term value creation for the business in a changing environment. Such innovation may include designing innovative business models, products and services, promoting research, improving production and operation processes, and collaborating with partners.
Innovation should create benefits for the company, customers, business partners, the community, society and the environment. In addition, innovation should not facilitate or result in unethical, non-compliant or illegal conduct by individuals or the company.
The board should encourage management to adopt responsible operations, and incorporate them into the company’s operations plan. This is to ensure that every department and function in the company adopts the company’s objectives, goals, and strategies, applying high ethical, environmental and social standards, and contributes to the sustainable growth of the company.
5.2.1 The board should encourage management to ensure that the company’s operations reflect the company-wide implementation of high ethical, environmental and social standards and ensure that appropriate company-wide policies and procedures are implemented to further the company’s objectives, goals and strategies in support of sustainable value creation. Policies and procedures for running the business fairly and respecting and adhering to stakeholders’ rights should at least cover:
(1) Responsibilities to employees, staff, and workers at least by adhering to applicable law and standards and providing fair treatment and respect for human rights, including a fair level of remuneration and other benefits, a level of welfare that is not less than the legal limit (but can be over the legal limit where appropriate), hea lth care, non-discrimination and safety in the workplace, access to relevant training, potential skills development and advancement.
(2) Responsibilities to customers at least by adhering to applicable law and standards, considering impact on health, safety of products and services, customer information security, sales conduct, after-sales service throughout the lifespan of products and services, and following up on customer satisfaction measurements to improve the quality of products and services. In addition, advertising and public relations should promote responsible consumption and must be done responsibly, avoiding taking advantage of or misleading customers, or causing misunderstanding about the products and services offered by the company.
(3) Responsibilities to business partners by engaging in and expecting fair procurement and contracting, including fair contract or agreement conditions, providing access to training, developing potential and enhancing production and service standards in line with applicable law and standards, and expecting and supervising business partners to respect human rights, social and environmental responsibilities, and treat their employees, staff, and workers fairly including ensuring that business partners have implemented sustainable and values-based business policies and procedures.
(4) Responsibilities to the community by applying business knowledge and experience to develop and follow up on the success of projects that can concretely add value to the community while respecting community interests.
(5) Responsibilities to the environment by preventing, reducing and managing negative impact on the environment from all aspects of the company’s operations, including in the context of raw material use, energy use, water use, renewable resources use, rehabilitating the diversity of biology, waste management, and greenhouse gas emissions.
(6) Fair competition by promoting ethical business conduct and not using anti-competitive practices to gain or protect a market position.
(7) Anti-fraud and corruption by ensuring that the company complies with applicable anti-fraud and corruption law and standards, and implements, announces and reports on anti-fraud and corruption policies and practices to the public, including on its participation in private sector anti-corruption initiatives and certification programmes. The board should encourage the company to collaborate with other companies and business partners to establish and implement anti-fraud and corruption measures.
The board should ensure that management allocates and manages resources efficiently and effectively throughout all aspects of the value chain to enable the company to meet its objectives.
5.3.1 The board should have a thorough understanding of the company’s resource needs to support its business model, and how available resources correlate.
5.3.2 The board should have a thorough understanding of how the business model affects resources optimisation in support of ethical, responsible, and overall sustainable value creation.
5.3.3 The board should ensure that management continuously reviews, adapts, and develops the company’s use and optimisation of resources, considering internal and external factors to meet the company’s objectives.
The types of resources that the company should consider include financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital, and natural capital.
The board should establish a framework for governance of enterprise IT that is aligned with the company’s business needs and priorities, stimulates business opportunities and performance, strengthens risk management, and supports the company’s objectives.
5.4.1 The board should ensure that the company has an IT resource allocation policy that ensures adequate and optimal investment in and allocation of IT resources.
5.4.2 The board should ensure that the company’s risk management includes IT risk management.
5.4.3 The board should ensure that IT security policies and procedures are in place.
A company’s governance of enterprise IT should cover:
(1) Compliance with relevant law and standards.
(2) An information security system to safeguard against unauthorised access to information, measures to maintain the integrity of relevant data and ensure availability of critical data.
(3) Consideration of IT risks and risk mitigation policies, plans, and measures. For example, business continuity management, IT security, incident management, and IT asset management.
(4) Proper allocation and management of IT resources, including criteria to identify IT priorities, that takes into consideration the company’s business model.
Strengthen Effective Risk Management and Internal Control
Principle 6.1The Board should ensure that the company has effective and appropriate risk management and internal control systems that are aligned with the company’s objectives, goals and strategies and comply with applicable law and standards.
6.1.1 The board should be aware of and understand the nature and scope of the company’s principal and substantial risks and should approve the risk appetite of the company.
6.1.2 The board should ensure the establishment and implementation of risk management policies that are consistent with the company’s goals, objectives, strategies and risk appetite. The risk management policies should support identification and prioritisation of early warning signals of material risks. The risk management policies should be reviewed regularly, such as annually.
6.1.3 The board should ensure that the company’s principal and substantial risks are identified through consideration of internal and external factors.
6.1.4 The board should ensure that the impact and likelihood of identified risks are assessed and prioritised, and that suitable risk mitigation strategies and plans are in place. br> 6.1.5 Considering the size and nature of the company, the board may establish a risk management committee or assign responsibility to the audit committee to assist the board in its oversight functions related to guidelines nos. 6.1.1 – 6.1.4.
6.1.6 The board should regularly monitor the effectiveness of the company’s risk management.
6.1.7 The board has to ensure and monitor that the company complies with relevant and applicable law and standards, whether domestic, international or foreign.
In assessing the effectiveness of the company’s internal controls and risk management, the board should consider the results of internal controls and risk management at its subsidiaries and businesses in which it has a significant investment (between 20 percent to 50 percent of shares with voting rights).
1. For guideline no. 6.1.3, relevant principal and substantial risk categories include strategic, operational, financial, compliance, reputational, environmental, social and ethical risks.
2. For guideline no. 6.1.4, risk response examples are tolerate, treat, terminate, and transfer.
The board shall establish an audit committee that can act effectively and independently.
6.2.1 The board shall establish an audit committee that comprises at least three directors, all of whom must be independent directors, with required qualifications, and comply with applicable legal requirements, including those promulgated by the Securities and Exchange Commission and Stock Exchange of Thailand.
6.2.2 The board should clearly set out in writing the audit committee’s duties and responsibilities, and include at least the following:
(1) Review the company’s financial reports for accuracy and completeness.
(2) Review the company’s internal control and internal audit systems to ensure that they are suitable and effective.
(3) Review the company’s operations to ensure compliance with all relevant and applicable law and standards.
(4) Review internal auditor’s independence, and approve the appointment and termination of the head of the internal audit function. Outsourcing of the internal audit function has to be reviewed for independence and approved by the audit committee.
(5) Review, select, and recommend to the board for nomination and shareholder approval an independent party to be the company’s external auditor, consider and recommend the auditor’s remuneration, and hold a meeting with the external auditor without the presence of management at least once a year.
(6) Review related party transactions and other transactions that may create conflicts of interest, to ensure that they comply with applicable law, are reasonable, and carried out in the best interest of the company.
(7) Review the company’s compliance with private sector’s anti-corruption and certification programmes, including the Collective Action Coalition Against Corruption’ s Self-Evaluation Tool.
The board should ensure that procedures are established that allow the audit committee to fulfil its duties and responsibilities, including by having access to management, employees and staff, professional advisers (such as external auditor), and information relevant and necessary to perform their duties.
6.2.4 The board should ensure the designation of an internal auditor or establish an independent internal audit function that is responsible for reviewing and improving the effectiveness of the risk management and internal control systems, and reporting review results to the audit committee. The result of the internal audit review must be disclosed in the company’s annual report.
6.2.5 The audit committee should express its opinion on the adequacy of the company’s internal control and risk management systems, and disclose its opinion in the company’s annual report.
The board should manage and monitor conflicts of interest that might occur between the company, management, directors, and shareholders. The board should also prevent the inappropriate use of corporate assets, information, and opportunities, including preventing inappropriate transactions with related parties.
6.3.1 The board should establish an information security system, including appropriate policies and procedures, to protect confidentiality, integrity, and availability of business information, including market-sensitive information. The board should monitor the implementation of the information security policies and procedures and the adherence to confidentiality requirements by insiders, including directors, executives, employees and staff, and professional advisers, such as legal or financial advisers.
6.3.2 The board should ensure management and monitoring of conflict of interest situations and transactions. The board should adopt an ethics and conflicts of interest policy consistent with applicable law and standards (including fiduciary duties), and establish clear guidelines and procedures for disclosure and decision-making in conflict of interest situations. For example, any party who has a vested interest in a particular transaction, should disclose that interest, and not be involved in the decision-making.
6.3.3 The board should set requirements for all directors to report conflicts of interest in relation to any meeting agenda item at least before consideration of the matter at the meeting and record the reported conflict of interest in the meeting minutes. The board should also ensure that all directors that have a conflict of interest in relation to an agenda item abstain from being present for discussion of or voting on that agenda item.
The board should establish a clear anti-corruption policy and practices (including communication and staff training), and strive to extend its anti-corruption efforts to stakeholders.
6.4.1 The board should ensure company-wide awareness and implementation of the company’s anti- corruption policy and practices, and compliance with applicable law and standards.
The board should establish a mechanism for handling complaints and whistleblowing.
6.5.1 The board should oversee that an effective mechanism is in place to record, track, resolve, and report complaints and feedback. The board should ensure the availability of convenient complaint channels (more than one), and that stakeholders are made aware through the company’s website or annual report of all channels available for complaints.
6.5.2 The board should ensure that the company has a clear whistleblowing policy, including designated whistleblowing channels for reporting of suspected wrongdoing, such as through the company’s website, e-mail, designated independent directors or the audit committee. The board should ensure proper and effective handling of whistleblowing complaints, including the investigation, any remedial action, and reporting to the board.
6.5.3 The board should ensure that whistleblowers are protected from retaliation as a result of their good faith whistleblowing activities.
Ensure Disclosure and Financial Integrity
The board must ensure the integrity of the company’s financial reporting system and that timely and accurate disclosure of all material information regarding the company is made consistent with applicable requirements.
7.1.1 The board should ensure that any person (including chief financial officer, accountant, internal auditor, company secretary, Investors Relation officer) involved in the preparation and disclosure of any information of the company has relevant knowledge, skills and experience, and that sufficient resources, including staffing, are allocated.
7.1.2 When approving information disclosures, the board should consider all relevant factors, including for periodic financial disclosures:
(1) The evaluation results of the adequacy of the internal control system.
(2) The external auditor’s opinions on financial reporting, observations on the internal control system, and any other observations through other channels.
(3) The audit committee’s opinions.
(4) Consistency with objectives, strategies and policies.
7.1.3 The board should ensure that information disclosures (including financial statements, annual reports, and Form 56-1) reflect the company’s financial status and performance accurately and fairly. The board should promote the inclusion of the Management Discussion and Analysis (MD&A) in quarterly financial reports in order to provide to investors more complete and accurate information about the company’s true financial status, performance and circumstances.
7.1.4 For disclosures related to any individual director, that director should ensure the accuracy and completeness of the information disclosed by the company, including of shareholders’ information and any shareholders’ agreement.
The board should monitor the company’s financial liquidity and solvency.
7.2.1 The board should ensure that management regularly monitors, evaluates and reports on the company’s financial status. The board and management should ensure that any threats to the company’s financial liquidity and solvency are promptly addressed and remedied.
7.2.2 The board should ensure that it does not consciously approve any transactions or propose any transactions for shareholder approval which could negatively affect business continuity, financial liquidity, and solvency.
The board should ensure that risks to the financial position of the company or financial difficulties are promptly identified, managed and mitigated, and that the company’s governance framework provides for the consideration of stakeholder rights.
7.3.1 In the event of financial risk or difficulties, the board should enhance monitoring of the affairs of the company, and duly consider the company’s financial position and disclosure obligations.
7.3.2 The board should ensure that the company has sound financial mitigation plans that consider stakeholder rights including creditor rights. The board should monitor management’s handling of financial risk or difficulties and seek regular reports.
7.3.3 The board should ensure that any actions to improve the company’s financial position are reasonable and made for a proper purpose.
The following are examples of indicators of financial risk or difficulties to the company’s sustainability:
(3) incomplete financial records
(4) lack of a proper or incomplete accounting system
(5) lack of cash flow forecasts and other budgets
(6) lack of a business plan
(7) increasing debt (liabilities greater than assets), and
(8) problems selling stock or collecting debts
The board should ensure sustainability reporting, as appropriate.
7.4.1 The board should consider and report data on the company’s compliance and ethical performance (including anti-corruption performance), its treatment of employees and other stakeholders (including fair treatment and respect for human rights), and social and environmental responsibilities, using a report framework that is proportionate to the company’s size and complexity and meets domestic and international standards. The company can disclose this information in the annual report and in separate reports, as appropriate.
7.4.2 The board should ensure that the company’s sustainability reporting reflects material corporate practices that support sustainable value creation.
The board should ensure the establishment of a dedicated Investor Relations function responsible for regular, effective and fair communication with shareholders and other stakeholders (such as analysts and potential investors).
7.5.1 The board should establish a communication and disclosure policy to assist the company in meeting its disclosure obligations and to ensure that all information relevant and material to the company’s shareholders, the market and third parties is disclosed in an appropriate, equal, and timely manner, using appropriate channels, while protecting the company’s sensitive and confidential information. The board should ensure company-wide communication and implementation of the company’s communication and disclosure policy.
7.5.2 The board should ensure the creation of an Investor Relations function responsible for regular, effective and fair communication with shareholders and external parties. The company’s designated Investor Relations contact should be suitable for the role and have a thorough understanding of the nature of the company’s business, and its objectives and values. Examples of suitable Investor Relations contacts are the chief executive officer, the chief financial officer, and the Investor Relations manager.
7.5.3 The board should ensure that management sets clear directions for and supports the Investor Relations function (such as through a code of conduct), and clearly defines the roles and responsibilities of the Investor Relations function, so as to ensure effective communication between the company, the financial community and other stakeholders.
The board should ensure the effective use by the company of information technology in disseminating information.
7.6.1 In addition to the company’s mandatory periodic and non-periodic disclosure of information pursuant to applicable requirements, the board should consider regularly disclosing relevant information in both Thai and in English through other channels, such as the company’s website.
Information to be disclosed on the company’s website includes:
(1) the company’s objectives and values
(2) nature of the company’s business and the company’s operations
(3) list of the company’s board of directors and of executives
(4) financial statements and reports about the financial status and the company’s financial and non-financial performance for current and previous year
(5) downloadable version of annual reports and SEC Form 56-1
(6) information and documents that the company discloses to the investment community and other external parties
(7) shareholding structure, both direct and indirect
(8) the company’s group structure, including subsidiaries, affiliates, joint ventures, and special purpose enterprises/vehicles (SPEs/SPVs)
(9) direct and indirect major shareholders, holding at least 5 percent of paid-in capital with voting rights
(10) direct and indirect shareholdings in the company held by directors, major shareholders, and key executives of the company
(11) invitation letters to the shareholders’ ordinary and extraordinary meetings
(12) the company’s regulations, and memorandum and articles of association
(13) the company’s corporate governance policy and related policies including IT governance policy, anti-corruption policy and practices, and risk management policy
(14) a charter or statement of duties and responsibilities, directors’ qualifications, board composition, terms, and authority of the board and board committees, including audit committee, nomination committee, remuneration committee, and corporate governance committee
(15) the company’s code of ethics and conduct applicable to all directors, executives, employees and staff, as well as the company’s Investor Relation’s code of conduct, and
(16) contact information (name of department or relevant person, phone number, and e-mail) for complaints, investor relations and the company secretary.
Ensure Engagement and Communication with Shareholders
The board should ensure that shareholders have the opportunity to participate effectively in decision-making involving significant corporate matters.
8.1.1 The board should ensure that significant corporate decisions are considered and/or approved by the shareholders pursuant to applicable legal requirements. Matters that require shareholder approval should be included in the agenda for the shareholders’ meeting and shareholders should be provided sufficient notice thereof.
8.1.2 The board should support participation of all shareholders through reasonable measures, including:
(1) Establishing criteria that allow minority shareholders to propose agenda items for shareholders’ meetings. The board should consider shareholders’ proposals to be included in the agenda, and if the board rejects a proposal, the reasons should be given at the meeting.(2) Establishing criteria for minority shareholders to nominate persons to serve as directors of the company.
The board should ensure that measures and criteria are established and promptly disclosed to ensure shareholder engagement and participation.
8.1.3 The board should ensure that the notice of the shareholders’ meeting (including the Annual General Meeting (AGM)) is accurate, complete, and sufficiently in advance for the shareholders to exercise their rights.
8.1.4 The board should ensure that the company arranges for the notice of the shareholders’ meeting and related papers to be sent to shareholders and posted on the company’s website at least 28 days before the meeting.
8.1.5 Shareholders should be allowed to submit questions prior to the meeting. The board should therefore ensure that there are clear criteria and a process for shareholders to submit questions. The criteria should be posted on the company’s website.
8.1.6 The notice of the shareholders’ meeting and related papers should be fully translated into English and published at the same time as the Thai version.
The notice of the shareholders’ meeting should comply with applicable legal requirements and include the following:
(1) Date, time, and place of the meeting.
(2) Meeting agenda and matters to be proposed for information, consideration or approval. The agenda should clearly specify each individual matter or item of information to be considered or approved, such as the separate listing of election of directors, and approval of directors’ remuneration instead of a general reference to matters related to directors.
(3) Sufficient information, objectives and reasons, and board of directors’ opinions, concerning each agenda item, including as follows:
a) Approval or rejection of dividend payment: dividend payment policy, proposed dividend payment rate, including reasons and supporting information, or reasons and supporting information for rejecting a dividend payment.
b) Appointment of directors: name, age, gender, education, experience, the number of listed companies and other companies where they each hold directorial positions, the criteria and procedures for selection, and types of proposed directors. Where proposed directors are those who are re-entering the same position, information must be identified about participation in meetings in previous years and the date of original appointment as a director.
c) Approval of directors’ remuneration: the policy and criteria for determining role-specific director remuneration and all monetary and non-monetary components of a director’s remuneration.
d) Appointment of external auditors: auditor’s name and the name of the auditor’s audit firm, auditor’s experience, independence, and audit and non-audit fees.
(4) Proxy form and supporting documentation using the form specified by the Ministry of Commerce.
(5) Other supporting information, including on voting procedures (such as voting count and verification of voting results criteria, voting rights of each class of shares), details concerning independent directors proposed by the company to act as proxies for shareholders, and map of meeting venue.
The board should ensure that the shareholders’ meetings are held as scheduled and conducted properly, with transparency and efficiency, and ensure inclusive and equitable treatment of all shareholders and their ability to exercise their rights.
8.2.1 The board should set the date, time, and place of the meeting by considering the interests of shareholders, such as allocating sufficient time for debate, and choosing a convenient location.
8.2.2 The board should ensure that the company does not through its meeting attendance requirements or prerequisites prevent attendance by or places an undue burden on shareholders, including as a result of identification requirements that exceed applicable legal and regulatory requirements.
8.2.3 In the interest of transparency and accountability, the board should promote the use of information technology to facilitate the shareholders’ meetings, including for registration and vote counting.
8.2.4 The chairman of the board is the chairman of the shareholders’ meeting with responsibility for compliance with applicable legal requirements and the company’s articles of association, allocating sufficient time for consideration and debate of agenda items, and providing opportunity to all shareholders who wish to share their opinions or ask questions related to the company.
8.2.5 To ensure the right of shareholders to participate in the company’s decision-making process in relation to significant corporate matters by participating and voting at shareholder’s meetings on the basis of sufficient notice and information, directors who are shareholder should not be allowed to add items to the meeting agenda that have not been duly notified in advance.
8.2.6 All directors and relevant executives should attend the meeting to answer questions from shareholders on company-related matters.
8.2.7 The attending shareholders should be informed of the number and the proportion of shareholders and shares represented at the meeting in person and through proxies, the meeting method, and the voting and vote counting methods before the start of the meeting.
8.2.8 There should not be any bundling of several items into the same resolution. For example, the appointment of each director should be voted on and recorded as separate resolution.
8.2.9 The board should promote the use of ballots for voting on resolutions proposed at the shareholders’ meeting and designate an independent party to count or to audit the voting results for each resolution in the meeting, and to disclose such voting results at the meeting by identifying the number of “for”, “against” and “abstain” votes. The voting results for each proposed resolution should be included in the minutes of the meeting.
The board should ensure accurate, timely and complete disclosure of shareholder resolutions and preparation of the minutes of the shareholders’ meetings.
8.3.1 The board should ensure that the company discloses the results of voting on proposed resolutions at the shareholders’ meeting through the designated Stock Exchange of Thailand channels and through the company’s website by the next business day.
8.3.2 The board should ensure that minutes of the shareholders’ meeting is submitted to the Stock Exchange of Thailand within 14 days from the shareholders’ meeting date.
8.3.3 The board should ensure that the company promptly prepares the minutes of the shareholders’ meeting, including the following information:
(1) attendance of directors, executives, and the proportion of attending directors;
(2)voting and vote counting methods, meeting resolutions, and voting results (“for”, “against”, and “abstain”) for each proposed resolution; and
(3) questions asked and answers provided during the meeting, including the identity of the persons asking and answering the questions.