Corporate Governance

The Board of Directors has realized the importance of development of good corporate governance, which is a major factor to add value to business and increase organization management efficiency. This will affect confidence of shareholders, investors, and related parties. The Board of Directors' meeting thus resolved to establish corporate governance principles, taking effect since 2011, incorporating the philosophy, policy, and procedure of the Company's corporate governance to be used as guidelines for parties concerned.

With the Company's continuous development of good corporate governance, in 2018, it was assessed and recognized by regulatory agencies and organizations as follows:

  • Assessment of the quality of the annual general meeting of shareholders 2018 by Thai Investors Association at "Very Good" level.
  • In the assessment of corporate governance (CG) practices of Thai listed companies for 2018 by Thai Institute of Directors (IOD), the Company earned "Very Good" CG scoring, with the categories of rights of shareholders and equitable treatment of shareholders scoring "Excellent," disclosure and transparency "Very Good," and roles of stakeholders and board responsibilities "Good."

The Board has considered and reviewed the Company's practices under the Corporate Governance Code for Listed Companies 2017. Its good corporate governance is anchored on the following eight principles:

Principle 1: Role and responsibility of Board of Directors in leading the organization creating value to the business on a sustainable basis

  1. The Board of Directors understands the role and realizes the responsibility as the leader who oversees the business operation to ensure sound management covering (1) determination of objectives and targets, (2) formulation of strategy, operational policy, and allocation of important resources to achieve objectives and targets, and (3) follow-up, assessment, and monitoring of operational performance reports.
  2. The Board of Directors has put in place good corporate governance policy to create sustainable value to the business with the objectives (1) to ensure the Company is competitive and generates good operating results with long term effects also taken into consideration, (2) to conduct business with ethics, respect the rights and have responsibility toward shareholders and other stakeholders, (3) to perform in the way benefiting the society, and develop or reduce adverse impacts on the environment, and (4) to adapt to the changing circumstances.
  3. The Board of Directors is duty-bound to supervise and ensure all directors and executives perform duties with responsibility, care, and loyalty, and the Company's operations comply with the laws, objectives, articles of association, and resolutions of the Board meeting and shareholders' meeting, as well as the Company's policies.
  4. The Board of Directors understands its roles, duties, and responsibilities, and clearly sets the scope of delegation of authority and duties to Chief Executive Officer and the management, as well as monitors to ensure Chief Executive Officer and the management perform duties as assigned.

Principle 2: Setting of objectives and main business targets toward sustainability

  1. The Board of Directors sets objectives and business targets toward sustainability, and such objectives and targets must be in response to creation of value to the business, customers, stakeholders, and society.
  2. The Board of Directors has a duty to oversee and ensure that the medium-term and/or annual objectives, targets, and business strategy of the Company are conducive to the achievement of the Company's main objectives and targets with secure and appropriate adoption of innovation and technology.

Principle 3: Enhancement of efficiency of Board of Directors

  1. The Board of Directors has duties and responsibilities of establishing and reviewing the structure of the Board in terms of composition and proportion of independent directors that is appropriate and necessary for leading the organization to attainment of the objectives and targets set forth, comprising qualifications, experiences, capabilities, and number of directors for efficient business operation with balanced proportion of independent directors and proper disclosure of information of each director. Relevant details are provided in the Board Charter.
  2. The Board of Directors will appoint a qualified person as Chairman, and ensure that composition and operation of the Board allow for exercise of discretion in independent decision making. For example, the Chairman must be an independent director for clear segregation of power and duties of the Chairman and Chief Executive Officer to prevent any particular person from having unlimited power and committees will be appointed to consider, screen, and recommend guidelines for consideration before proposing matters to the Board for approval.
  3. The Board of Directors will supervise and arrange to have a clear and transparent director selection and nomination process to ensure the Board has directors with qualifications that meet the criteria with the appointment of the Nomination Committee which is chaired by an independent director.
  4. The shareholders' meeting has the power to consider and approve directors' remuneration. The Board will consider and come up with the remuneration rate and structure that is commensurate to the directors' responsibilities and motivate the Board to lead the organization toward achieving the targets set forth.
  5. The Board of Directors is duty-bound to supervise and ensure all directors are accountable for their performance of duties and adequate time is allocated.
  6. The Board of Directors is duty-bound to put in place framework and mechanism in monitoring policies and operations of subsidiaries and other businesses in which the Company has material investment at an appropriate level.
  7. The Board of Directors arranges to have annual self-assessment of the Board, committees, and individual directors, and the results of which will be further used for development of their performance of duties.
  8. The Board of Directors supervises and ensures each director has knowledge and understanding about roles and duties, nature of business operation, and relevant laws, and encourages him/her to undergo enhancement of relevant skill and knowledge regularly.
  9. The Board of Directors supervises and ensure the Board's smooth operation, accessibility to necessary information, and Company secretary having knowledge and experience required and appropriate to support the Board's operation.

Principle 4: Nomination and development of top executives and personnel management

  1. The Board of Directors oversees to ensure there is nomination and development of Chief Executive Officer and top executives as regards knowledge, skills, experiences, and qualifications needed to drive the organization toward the targets.
  2. The Board of Directors oversees to ensure appropriate remuneration structure and performance evaluation system is in place.
  3. The Board of Directors understands structure and relation of shareholders which may affect the Company's business administration and operation.
  4. The Board of Directors monitors management and development of personnel to have appropriate knowledge, skills, experiences, and motivation.

Principle 5: Promotion of innovation and business conduct with responsibility

  1. The Board of Directors gives importance to and supports creation of innovation to add value to business in conjunction with bringing benefits to customers and parties concerned, and responsibility toward the society and environment.
  2. The Board of Directors supervises the management's conduct of business with responsibility toward the society and environment as reflected in the operational plan to ensure all work units of the organization perform in line with objectives, main targets, and strategies. Policy and procedure are put in place covering (1) responsibility toward permanent and contract employees, (2) responsibility toward customers, (3) responsibility toward partners, (4) responsibility toward the community, (5) responsibility toward the environment, (6) fair competition, and (7) anti-fraud and corruption.
  3. The Board of Directors supervises to ensure the management's efficient and effective allocation and management of resources taking into consideration impact and development of value chain to sustainably achieve objectives and main targets.
  4. The Board of Directors puts in place framework of corporate governance and information technology management at organization level in response to business needs, and adoption of information technology to increase business opportunities and operational development and risk management so as to achieve the Company's objectives and main targets.

Principle 6: Overseeing to ensure appropriate risk management and internal control systems

  1. The Board of Directors supervises to ensure the Company has in place risk management and internal control systems to effectively achieve objectives and comply with relevant laws and standards.
  2. The Board of Directors appoints Audit Committee to perform duties efficiently and independently.
  3. The Board of Directors supervises and manages potential conflict of interest arising between the Company and the Board/committee/management members or shareholders, as well as prevents undue use of the Company's assets, data, and opportunities, and transactions with connected persons of the Company in an undue manner.
  4. The Board of Directors puts in place anti-fraud and corruption policy and supports activities which encourage employees to perform in compliance with relevant laws, rules and regulations.
  5. The Board of Directors sets a mechanism to receive and deal with complaints and whistleblowing reports having channels available via Company website or independent directors/Audit Committee members, as well as data check, action taking and Board reporting process, and appropriate measures to protect whistleblowers. Complaint and whistleblowing channels are disclosed on the Company's website and in its annual report.

Principle 7: Maintaining of financial reliability and disclosure of information

  1. The Board of Directors is responsible for ensuring there is a financial reporting system and disclosure of important information accurately, sufficiently, and timely, in accordance with relevant criteria, standards, and practices.
  2. The Board of Directors follows up on sufficiency of financial liquidity and debt servicing capability of the Company.
  3. The Board of Directors arranges for the Company to have a contingency plan or other mechanisms to solve financial problems in case of occurrence or tendency of occurrence of a financial problem with the rights of stakeholders taken into account.
  4. The Board of Directors considers preparation of sustainability report as appropriate.
  5. The Board of Directors supervises the management to put in place an investor relations work unit or person to communicate appropriately with shareholders and other stakeholders, e.g. investors and analysts.
  6. The Board of Directors promotes application of information technology to disseminate information such as presentation of information through Company website.

Principle 8: Support of participation of and communication with shareholders

  1. The Board of Directors supervises to ensure shareholders participate in making decision on the Company's important matters.
  2. The Board of Directors supervises to ensure proceedings on the date of the shareholders' meeting are carried out smoothly, transparently, and efficiently conducive to shareholders' exercise of their rights.
  3. The Board of Directors supervises to ensure accurate and complete disclosure of the meeting's resolutions and preparation of the meeting minutes.

Structure of Board of Directors

To perform duties efficiently and effectively, the Board of Directors has established committees to assist in studying and screening operations as necessary. As of 31 December 2018, the Company's management structure consists of six Board/committees comprising Board of Directors, Executive Committee, Audit Committee, Nomination and Remuneration Committee, Risk Management Committee, and Corporate Governance Committee, as follows:

  1. Board of Directors

    The Board of Directors' meeting no. 3/2011 on 18 April 2011 resolved to approve formulation of scope, power, duties and responsibilities of the Board of Directors as follows:

    Power, duties and responsibilities of Board of Directors

    1. Organize an annual general meeting of shareholders within four months from the final day of the Company's fiscal year.
    2. Organize a Board meeting at least once every three months with all Board members required to attend, and hold any special Board meeting in addition thereto as considered necessary.
    3. Prepare the annual report and take responsibility for preparation and disclosure of duly audited financial statements to reflect the Company's financial position and operational performance in the previous year, and present them to the annual general meeting of shareholders for their approval.
    4. Have power and responsibility for performance according to the objectives and articles of association of the Company, as well as the resolutions of the shareholders' meetings, with integrity and accountability in the interests of the Company and the shareholders.
    5. Determine goals, directions, policies, plans and budget of the Company; monitor and supervise the performance and administration of the Executive Committee to ensure that it is in accordance with the policies, and maximize economic value added to the Company and returns to the shareholders.
    6. Have power to scrutinize and approve the policies, directions and action plans for the Company's large investment projects proposed by committees and/or the management.
    7. Monitor and ensure that the Company has complied with the law on securities and exchange and the rules and regulations of the Stock Exchange of Thailand ("SET"), such as connected transactions, acquisition and disposal of assets as per the criteria of the Capital Market Supervisory Board or the SET or other laws relevant to the Company's business.
    8. Consider and have power to determine organization structure, appoint, assign or advise the committees or the working groups to consider or perform any tasks as the Board may deem appropriate.
    9. Monitor and follow up the Company's operational results to ensure consistency with the work plan and budget, and regularly follow up the business operation and performance of the management to ensure the Company's effective operation.
    10. The Board members shall not operate any business which has the same nature as and is in competition with the Company's business, or not become a partner in an ordinary partnership or a partner who has unlimited liability in a limited partnership or not be a board member of a private company or other company operating business which has the same nature as and is in competition with the Company's business, either for his own benefits or other person's benefits, unless the annual general meeting of shareholders has been informed prior to the appointment.
    11. The Board members shall notify the Company without delay if they have a stake, either directly or indirectly, in the Company's contract or when they decide to reduce or increase the number of shares or debentures held in the Company or its subsidiary company.
    12. Be responsible for the shareholders and perform duties to protect the shareholders' optimum benefits, as well as disclose to the shareholders complete and accurate information up to the standards in place and with transparency.
    13. Put in place internal audit measures, and establish an efficient internal control system, risk management system, and reliable financial reports, with Internal Audit Office designated to monitor and fulfill the tasks in coordination with the Audit Committee.
    14. Have power to approve any relevant and necessary matters relevant to the Company or as deemed appropriate for the benefits of the Company.
  2. Audit Committee

    Audit Committee has duties and responsibilities to audit the Company's financial reports, and supervises the Company to have efficient and effective internal control and internal audit systems. At least one Audit Committee member shall have sufficient accounting knowledge and experience to audit reliability of the Company's financial statements. The Board meeting no. 3/2011 on 18 April 2011 resolved to approve formulation of scope, power, duties and responsibilities of the Audit Committee as follows:

    Power, duties and responsibilities of Audit Committee

    1. Have power to invite the management or officers of the Company to attend the meeting to clarify, provide an opinion, or provide the documents as requested and as necessary.
    2. Consider, select, and nominate an independent person to serve as the Company's auditor and propose remuneration for such person in order to get an approval from the shareholders' meeting, as well as evaluate the performance of the auditor.
    3. Acknowledge other non-audit operations and the remuneration in relation thereto to ensure independence of the auditor.
    4. Consider and make decision in case the management and the auditor have contrasting opinions on the financial reports.
    5. Consider the disclosure of connected transactions or transactions with possible conflict of interest to ensure conformity to the relevant laws and regulations and that the transactions are reasonable with maximum benefit to the Company.
    6. Consider and approve the appointment, removal, transfer or termination of employment, and consider merits in the performance of Internal Audit Head.
    7. Consider the reports from Risk Management Committee and discuss with the management on risk assessment and management policy.
    8. Attend a joint meeting with the auditor, without the management's presence, at least once a year.
    9. Consider the financial reports as follows:
      1. Review the financial reports and ensure the accuracy and adequacy of the data acknowledged and assessed by the Audit Committee as regards the appropriateness of the accounting principles applied in the annual and quarterly financial reports;
      2. Review the significant accounting issues and financial reports, including complex or unusual transactions which require judgment for making decisions;
      3. Enquire the management and the auditor about the audit result, major risks relating to financial reporting and risk mitigation plan;
      4. Review the internal control system in relation to the preparation of the financial statements with the auditor and the internal auditor.
      5. Consider the disclosure of connected transactions or transactions with possible conflict of interest to ensure conformity to the relevant laws and regulations and that the transactions are reasonable with maximum benefit to the Company.
      6. Consider and approve the appointment, removal, transfer or termination of employment, and consider merits in the performance of Internal Audit Head.
      7. Consider the reports from Risk Management Committee and discuss with the management on risk assessment and management policy.
      8. Attend a joint meeting with the auditor, without the management's presence, at least once a year.
      9. Consider the financial reports as follows:
        • Review the financial reports and ensure the accuracy and adequacy of the data acknowledged and assessed by the Audit Committee as regards the appropriateness of the accounting principles applied in the annual and quarterly financial reports;
        • Review the significant accounting issues and financial reports, including complex or unusual transactions which require judgment for making decisions;
        • Enquire the management and the auditor about the audit result, major risks relating to financial reporting and risk mitigation plan;
        • Review the internal control system in relation to the preparation of the financial statements with the auditor and the internal auditor.
      10. Consider the internal control system as follows:
        • Review and ensure the management has established proper internal control system, internal control of information technology system, and guidelines for communicating the importance of internal control and risk management systems organization-wide;
        • Review and ensure the management has made remedy and improvement as recommended by the auditor and the internal auditor regarding the internal control.
      11. Consider the internal audit system as follows:
        • Review and approve the Charter of Internal Audit Department, the annual audit plan, and also the personnel and resources necessary for the operation of Internal Audit Department;
        • Review the activity and the operation of the audit and compliance unit to ensure the independence of Internal Audit Department;
        • Review and ensure that the internal audit performance complies with internal audit standards.
      12. Have power to inspect and make enquiries about any of the following transactions or acts which might have material effects on the Company's financial position and operational performance:
        • Transactions with conflict of interest;
        • Fraud or unusual practice or material deficiency in the internal control system;
        • Violation of the law on securities and exchange, regulations of the SET and the laws relevant to the Company's business.
      13. Monitor compliance with rules and regulations:
        • Consider regularly laws and regulations that have changed and have impacts on the Company's business operation;
        • Review the results or findings of regulatory bodies and results of remedial actions, and report the same to the Board of Directors;
        • Review the effectiveness of the monitoring system in relation to compliance with relevant laws and regulations and the remedial actions in case of non-compliance.
      14. Monitor compliance with the business ethics and code of conduct for the management and the employees:
        • Review and ensure that the business ethics and code of conducts for the management and the employees and the policy to prevent conflict of interest have been made available in writing and acknowledged by the management and the employees;
        • Promote operation in compliance with the business ethics and code of conduct as well as the policy to prevent the conflict of interest.
      15. Other responsibilities:
        • Perform any other acts as assigned by the Board of Directors and with consent of the Audit Committee;
        • Review and evaluate the Audit Committee Charter regularly, as well as propose it for approval by the Board when there are any changes thereto;
        • Prepare report of Audit Committee, duly signed by the Chairman of Audit Committee, for disclosure in the Company's annual report, containing at least the following details:
          a) Opinion on the accuracy, completeness and reliability of the Company's financial report;
          b) Opinion on the adequacy of the Company's internal control system;
          c) Opinion on the Company's compliance with the law on securities and exchange, the SET regulations and the laws relevant to its business;
          d) Opinion on the suitability of the auditor;
          e) Opinion on the transaction with a possible conflict of interest;
          f) Number of the Audit Committee meeting held and attendance by the individual Audit Committee members;
          g) Opinion or overall observations received by Audit Committee from its performance of duties in accordance with the Charter; and
          h) Other transactions that should be notified to the shareholders and general investors within the scope of duties and responsibilities designated by the Board of Directors.
  3. Risk Management Committee

    Risk Management Committee has been set up to review and consider risks as well as the overall risk management policy of the CHOW Group.

    The Board meeting no. 3/2011 on 18 April 2011 approved formulation of scope, power, duties and responsibilities of the Risk Management Committee as follows:

    Power, duties and responsibilities of Risk Management Committee

    1. Set out risk management policy and submit to the Board of Directors for consideration in relation to overall risk management, such as strategic risks, liquidity risks, credit risks, marketing risks, operational risks, or other risks that may be significant to the Company.
    2. Set out strategies for the structure and resources to be used for risk management in accordance with risk management policy of the steel industrial sector so as to effectively analyze, assess, measure and monitor the risk management procedures.
    3. Set out risk limits in important different dimensions for the Board's consideration.
    4. Oversee, review and recommend to the Board concerning the risk management policy, standard practices, strategies and overall risk measurement to ensure the risk management strategies are implemented appropriately.
    5. All Risk Management Committee members shall have the duty to attend the meeting. They may participate the meeting in person or by teleconference.
    6. The Risk Management Committee may invite outsiders to join the meeting as necessary. They must be related to, or in charge of, the matter for consideration at the meeting.
  4. Nomination and Remuneration Committee

    Nomination and Remuneration Committee is composed of three members, the chairman thereof shall be an independent director.

    The Board meeting no. 3/2011 on 18 April 2011 approved formulation of scope, power, duties and responsibilities of the Nomination and Remuneration Committee as follows:

    Power, duties and responsibilities of Nomination and Remuneration Committee

    1. Provide recommendation to the Board of Directors regarding remuneration for Board Chairman and members, Audit Committee Chairman and members, and members of other committees (if any) (for proposal to the shareholders' meeting for approval afterward).
    2. Establish remuneration rate policy and conditions for employing the executives from the level of vice president and higher.
    3. Consider and determine qualifications and appropriateness of candidates for nomination as an executive from the level of vice president and higher.
    4. Determine and make recommendations to the Board of Directors and monitor the operations in line with the vision and human resource strategies as well as executive development plan.
    5. Select and nominate candidates for nomination as a director for the first time; consider performance, qualifications and appropriateness of the director who has completed his term of service and should be re-nominated for the Board's consideration and approval; and propose the qualified nominee to the shareholders' meeting for appointment as the Company's director.
  5. Executive Committee

    Executive Committee shall perform work according to business operation guidelines and strategy to achieve the target set by Board of Directors.

    The Board meeting no. 3/2011 on 18 April 2011 approved formulation of scope, power, duties and responsibilities of the Executive Committee as follows:

    Power, duties and responsibilities of Executive Committee

    1. Have power to administer and operate the Company's business as defined or approved by the Board of Directors on a case by case basis.
    2. Have power and duty in administering the Company's business according to the policies and work plans.
    3. Have power as designated by Board of Directors.
    4. Propose the following matters for prior approval from Board of Directors:
      • Matters relating to the Company's policies;
      • Matters that, if undertaken, may cause significant change to the Company's business;
      • Matters relating to legal obligations that must be performed by the Board of Directors;
      • Matters relating to the regulations that must be observed as required by the Company
      • Matters that Executive Committee deems appropriate to seek approval case by case or according to the criteria set out by the Board.
    5. Have power and duty to carry out the planned activities for the Company's success and achievement of targets comprising:
      • Formulate and revise strategic objectives, financial plan, and key policies of the Company, and propose them to the Board of Directors for approval;
      • Examine and screen the annual business plan, capital expenditure budget, operational targets, and key initiatives, to achieve the defined goals and propose them to the Board for approval;
      • Examine and screen projects with capital expenditure exceeding the amount set by the Board of Directors, and propose them to the Board for approval;
      • Consider and approve the matters according to the delegation of authority or as authorized by the Board of Directors;
      • Review the power to perform the tasks as listed in the delegation of authority table and propose them to the Board of Directors for approval;
      • Manage and keep balance between short-term and long-term objectives;
      • Develop and maintain human resources in line with the human resource strategy endorsed by Nomination and Remuneration Committee;
      • Monitor and report the performance and progress of work to the Board of Directors in order to accomplish the Company's objectives.
    6. Consider and examine annual budget allocation before submitting to the Board of Directors for consideration and approval, including the authority to consider and approve an amendment to the annual budget, as an urgent matter, during the time no Board meeting will be convened, which must thereafter be reported to the upcoming Board meeting.
    7. Approve purchase of scrap in the normal business operation in a volume up to 10,000 tons per transaction or not exceeding 200 million baht per transaction, and up to 60,000 tons per month or not exceeding 1,200 million baht per month.
    8. Approved sale of products in the normal business operation in a volume up to 20,000 tons per order and no exceeding 60,000 tons per month.
    9. Approve an expenditure for buying assets in a manner of investment (including machinery and equipment repairs) other than that identified in the annual budget in an amount not exceeding 30 million baht.
    10. Approve key investment expenditure indicated in the annual budget as assigned by the Board of Directors, or as earlier approved in principle by the Board.
    11. Allocate bonus as approved by the Board of Directors to the Company's permanent or contract employees or any other persons having performed work for the Company.
    12. Appoint or authorize any person or persons to act on behalf of Executive Committee as deemed appropriate, and the authority of whom may be revoked, withdrawn, changed or rectified by Executive Committee.
  6. Corporate Governance Committee

    The Board meeting no. 1/2017 on 24 February 2017 approved formulation of scope, power, duties and responsibilities of the Corporate Governance Committee as follows:

    Power, duties and responsibilities of Corporate Governance Committee

    1. Propose good governance principles to Board of Directors.
    2. Oversee the Company's business operation in compliance with good governance principles, the Company's policy, and relevant laws.
    3. Establish and review policy, regulations, and code of best practice regularly.
    4. Report the Company's corporate governance operation to Board of Directors.
  7. Chief Executive Officer

    The Board meeting no. 3/2011 on 18 April 2011 approved formulation of scope, power, duties and responsibilities of Chief Executive Officer as follows:

    Power, duties and responsibilities of Chief Executive Officer

    1. Control and oversee the Company's business operation and/or daily administration, monitor and evaluate the Company's daily performance to be prepared for and prevent any risks that may arise from internal and external factors.
    2. Undertake or perform in accordance with the policy, work plan and budget approved by the Company's Board of Directors and/or Executive Committee.
    3. Have power to approve juristic act in relation to the Company's normal business undertaking, such as sale and purchase, procurement of goods, expenses for normal business undertaking, investment, acquisition or disposal of machine tools, properties, and services, etc. for the benefits of the Company within the approval limit set forth.
    4. Approve purchase of scrap in the normal business operation in a volume up to 5,000 tons per transaction or not exceeding 100 million baht per transaction, and up to 30,000 tons per month or not exceeding 600 million baht per month.
    5. Approve sale of products in the normal business operation in a volume up to 10,000 tons per transaction and not exceeding 30,000 tons per month.
    6. Approve an expenditure for buying assets in a manner of investment (including machinery and equipment repairs) other than that identified in the annual budget in an amount not exceeding 15 million baht per transaction.
    7. Be the authorized person of the Company for managing the business in accordance with the objectives, rules, policies, regulations, requirements, orders, resolutions of the shareholders' meeting and/or resolutions of the Company's Board of Directors and Executive Committee.
    8. Have power to issue an order, regulation, notification, or memorandum to direct work performance in line with the policies and in the interests of the Company as well as to maintain work discipline of the organization.
    9. Have power to act and represent the Company when contacting outside parties in relevant and necessary business in the normal business operation for the Company's benefits.
    10. Perform any other duties as assigned by the Company's Board of Directors and/or Executive Committee, and delegate authority concerning the above tasks to allow for flexibility in the operation.
  8. Company Secretary

    Power, duties and responsibilities of Company Secretary

    1. Prepare and keep the Company's documents as follows:
      • Director register
      • Invitation letter to Board meeting, meeting minutes, and annual report
      • Invitation letter to shareholders' meeting and meeting minutes
    2. Maintain report of beneficial interests of directors or executives.
    3. Proceed with holding of Board meeting and shareholders' meeting.
    4. Give advice on rules and regulations which directors or executives need to know.
    5. Proceed with and coordinate the Company's compliance with laws, rules, regulations and resolutions of the Board meeting and shareholders' meeting, as well as good corporate governance policy and code of conduct
    6. Take other proceeding as required under the Securities and Exchange Act and notifications of the Capital Market Supervisory Board. Company Secretary appointed by the Board shall be qualified, knowledgeable, and capable of performing duties.

Selection and Appointment of Directors and Executives

  1. Board of Directors

    In the selection of persons to be appointed as directors, the Nomination and Remuneration Committee will consider criteria and policy for consideration of selection of directors to propose to the Board and/or shareholders' meeting. Persons to be appointed shall have qualifications according to the Public Limited Companies Act B.E. 2535, the law on securities and exchange, notifications of the SEC, notifications of Capital Market Supervisory Board, and other relevant rules and/or regulations. Also, other qualifications like work experience, knowledge, capabilities, etc, are taken into consideration. The list of directors will then be presented to the shareholders' meeting for approval. Appointment of directors shall be in accordance with the Company's articles of association which can be summarized as follows:

  2. Composition and qualifications

    1. The Company's Board of Directors shall be composed of a total of at least five directors, and at least half of them shall have domicile in the kingdom. The Board shall comprise:
      • Executive directors
      • Non-executive directors
      • Non-executive directors who are independent directors in a proportion of at least one-third of the total number of directors, and not less than three persons. Each independent director and his/her related persons shall hold shares not exceeding 1% of the issued and paid-up registered capital of the Company and related companies.
    2. Directors shall have qualifications according to Section 68 of the Public Limited Companies Act B.E. 2535, notifications of the SEC, and/or notifications of Capital Market Supervisory Board.
    3. Independent directors are persons who have qualifications according to notifications of the SEC and/or notifications of Capital Market Supervisory Board, as well as have proper experience and good judgment without bias, and perform duties with fairness, who may come from any professions considered by the Nomination and Remuneration Committee appointed by the Board of Directors as a suitable for proposal for appointment as a director for the first time.

    Qualifications of Independent Directors

    The Board of Directors has specified qualifications of independent directors to be in accordance with the minimum criteria of relevant notifications of Capital Market Supervisory Board as follows:

    1. Hold shares not exceeding one per cent of the total number of voting shares of the Company, its parent company, subsidiary company, associated company, or juristic person who may have conflict of interest, including shares held by related persons of such independent director;
    2. Neither be nor have been an executive director, employee, staff, advisor who receives a salary, or controlling person of the Company, its parent company, subsidiary company, associated company, same-level subsidiary company, or juristic person who may have conflict of interest, unless the foregoing status has ended for not less than two years;
    3. Not be a person related by blood or legal registration as father, mother, spouse, sibling, and child, including spouse of a child, of executive, major shareholder, controlling person, or a person nominated as an executive or controlling person of the Company or its subsidiary company;
    4. Neither have nor have had a business relationship with the Company, its parent company, subsidiary company, associated company, or juristic person who may have conflict of interest, in the manner not being an independent judgment, or executive of a party having a business relationship with the Company, its parent company, subsidiary company, associated company, or juristic person who may have conflict of interest, unless the foregoing relationship has ended for not less than two years; as well as any normal business transaction for business operation, rent or lease of immovable property, transaction relating to assets or services, or granting or receipt of financial assistance through receiving or extending loans, guarantees, providing assets as collateral, and any other similar action, which result in the Company or the counterparty being subject to indebtedness to the other party in the amount of three percent or more of the net tangible assets of the Company or 20 million baht or more, whichever is lower. The amount of such indebtedness shall be calculated by the valuation method applicable to connected transactions pursuant to the Capital Market Supervisory Board Notification regarding criteria on connected transactions mutatis mutandis. The consideration of such indebtedness shall include indebtedness occurring during the period of one year prior to the date on which the business relationship with the person commences;
    5. Neither be nor have been an auditor of the Company, its parent company, subsidiary company, associated company, or juristic person who may have conflict of interest, and not be a major shareholder or a non-independent director, executive, nor managing partner of an audit firm which employs the auditor of the Company, its parent company, subsidiary company, associated company, or juristic person who may have conflict of interest, unless the foregoing relationship has ended for not less than two years;
    6. Not be or never be professional service provider which includes legal or financial advisor who receives service fees of over 2 million baht per year from the Company, parent company, subsidiaries, affiliates or juristic persons who may have conflict of interest. In case professional service provider is a juristic person, being a major shareholder, non-independent director, executive or managing partner of professional service provider shall be included unless not being in the position for not less than two years prior to the date of filing the application with the SEC or prior to the date of appointment of audit director;
    7. Not be a director who is appointed as representative of the Company's director, major shareholder or shareholder who is related person of the major shareholder of the Company;
    8. Not have any other characteristics which prevent the independent director from expressing opinions independently on the Company's operation.
    9. Not be a director assigned by the Board to make a decision on the business operation of the Company, parent company, subsidiary company, associated company, same-level subsidiary company, or juristic person who may have conflict of interest;
    10. Not be a director of the parent company, subsidiary company, or same-level subsidiary company which is a listed company.

    Term of office

    1. At each annual general meeting of shareholders, one-third of the total directors are due to vacate the office. If the number of directors cannot be divided by three, the closest number to one-third shall apply. Directors who are in office the longest shall retire. If vacating the office cannot be mutually agreed, final decision shall be made by drawing lots. The retiring directors may be re-elected as the directors for another term.
    2. The shareholders' meeting shall appoint directors by majority votes in accordance with the following criteria and methods:
      • Each shareholder shall have one vote for each share held.
      • In election of directors, votes shall be cast on the candidates either individually or as a group in the number required to be elected as deemed appropriate by the meeting. However, each candidate shall receive votes from each shareholder in the full amount of shares held by such shareholder. Votes cannot be divided to any particular person or group.
      • Election of directors shall require majority votes of shareholders. In case of a tie of votes, chairman of the meeting shall have a casting vote. Nomination and Remuneration Committee shall propose candidates for election of the Company's directors to replace directors due to retire by rotation. Shareholders are also invited to propose the names of persons to be candidates ahead of the annual general meeting of shareholders in each year.
    3. In case there is a vacancy for director other than retiring by rotation, the Nomination and Remuneration Committee may select and nominate a qualified person not having prohibited characteristics according to the law on public limited companies as a replacement at the next Board meeting, unless the remaining term of such vacancy is less than two months. The new director shall be in office for a period equal to the remaining term of the vacating director. The Board's resolution on this matter shall require votes of at least three-fourths of the number of the remaining directors.
  3. Audit Committee
  4. Composition and qualifications

    1. The Board meeting or the meeting of shareholders appoints Audit Committee. All Audit Committee must come from the Company's directors.
    2. Audit Committee is composed of at least three independent directors, and one of whom shall serve as Chairman of the Audit Committee.
    3. Audit Committee members shall be fully qualified as follows:
      1. Hold shares not exceeding one per cent of the total number of voting shares of the Company, its parent company, subsidiary company, associated company, or juristic person who may have conflict of interest, including shares held by related persons of such audit director;
      2. Neither be nor have been a director participating in the management, an employee, staff, advisor who receives a salary, or controlling person of the Company, its parent company, subsidiary company, associated company, same-level subsidiary company, or juristic person who may have conflict of interest, unless the foregoing status has ended for not less than two years prior to the date of filing the application with the SEC or prior to the date of appointment of audit director;
      3. Not be a person related by blood or legal registration as father, mother, spouse, sibling, and child, including spouse of a child, of executive, major shareholder, controlling person, or a person nominated as an executive or controlling person of the Company or its subsidiary company (if any);
      4. Neither have nor have had a business relationship with the Company, its parent company, subsidiary company, associated company, or juristic person who may have conflict of interest, in the manner which may interfere with his/her independent judgment, or not be nor have been a major shareholder, non-independent director, or executive of a party having a business relationship with the Company, its parent company, subsidiary company, associated company, or juristic person who may have conflict of interest, unless the foregoing relationship has ended for not less than two years prior to the date of filing the application with the SEC or prior to the date of appointment of audit director; as well as any normal business transaction for business operation, rent or lease of immovable property, transaction relating to assets or services, or granting or receipt of financial assistance through receiving or extending loans, guarantees, providing assets as collateral, and any other similar action, which result in the Company or the counterparty being subject to indebtedness to the other party in the amount of three percent or more of the net tangible assets of the Company or 20 million baht or more, whichever is lower. The amount of such indebtedness shall be calculated by the valuation method applicable to connected transactions pursuant to the Capital Market Supervisory Board Notification regarding criteria on connected transactions mutatis mutandis. The consideration of such indebtedness shall include indebtedness occurring during the period of one year prior to the date on which the business relationship with the person commences;
      5. Neither be nor have been an auditor of the Company, its parent company, subsidiary company, associated company, or juristic person who may have conflict of interest, and not be a major shareholder or a non-independent director, executive, nor managing partner of an audit firm which employs the auditor of the Company, its parent company, subsidiary company, associated company, or juristic person who may have conflict of interest, unless the foregoing relationship has ended for not less than two years prior to the date of filing the application with the SEC or prior to the date of appointment of audit director;
      6. Not be or never be professional service provider which includes legal or financial advisor who receives service fees of over 2 million baht per year from the Company, parent company, subsidiaries, affiliates or juristic persons who may have conflict of interest. In case professional service provider is a juristic person, being a major shareholder, non-independent director, executive or managing partner of professional service provider shall be included unless not being in the position for not less than two years prior to the date of filing the application with the SEC or prior to the date of appointment of audit director;
      7. Not be a director who is appointed as representative of the Company's director, major shareholder or shareholder who is related person of the major shareholder of the Company;
      8. Not have any other characteristics which prevent the director from expressing opinions independently on the Company's operation.
      9. Not be a director assigned by the Board to make a decision on the business operation of the Company, parent company, subsidiary company, associated company, same-level subsidiary company, or juristic person who may have conflict of interest;
      10. Not be a director of the parent company, subsidiary company, or same-level subsidiary company which is a listed company.
      11. Have adequate knowledge and expertise to perform the duties as an audit officer. There shall be at least one member of the Audit Committee who has adequate knowledge and experience in accounting and/or finance to be able to review the reliability of the financial statements.

    The criteria and procedures for appointing Audit Committee members shall accord with the criteria and procedures for appointing directors. The retiring audit director may be re-elected to take office for another term. In case there is a vacancy for audit director other than retiring by rotation, the Board meeting or the shareholders' meeting may appoint a qualified person as a replacement so that the number of audit directors specified by the Board is complete. New director shall be in office for a period equal to the remaining term of the vacating director. The Company also has to notify the SET as soon as an audit director has resigned or been terminated before completion of the term of office.

    Term of office is 3 years. Retiring audit director may be re-appointed by the Board meeting or the meeting of shareholders to take office for another term.

  5. Executive Committee

    Composition and Qualifications

    1. Board of Directors appoints Executive Committee, composed of at least three members including the Company's directors and executives.
    2. Executive committee members shall be persons with appropriate qualifications and experience, as well as having discretion for operation to bring benefits to the Company's business operation.
    Term of office
  6. Executive director has no definite term of office, hence not required to retire by rotation. However, when any executive director and/or executive vacates the office for any reasons, such director and/or executive shall forthwith and no longer be executive director, and the Company shall appoint a new executive director as a replacement without delay.

  7. Nomination and Remuneration Committee

    Composition and qualifications

  8. Nomination and Remuneration Committee is appointed by Board of Directors, being composed of at least three members and with Chairman appointed by the Board.

    Term of office

    Nomination and Remuneration Committee member has a term of office of three years. Retiring member may be re-appointed by the Board to take office for another term.

  9. Risk Management Committee

    Composition and qualifications

    1. Board of Directors appoints Risk Management Committee.
    2. Risk Management Committee is composed of at least three members, coming from directors.
    Term of office
  10. Risk Management Committee member has a term of office for three years. Retiring member may be re-appointed by the Board to take office for another term.

  11. Corporate Governance Committee

    Composition and qualifications

    Corporate Governance Committee is composed of at least three members, coming from directors, at least one of whom shall be an independent director. Chairman of Corporate Governance Committee should be an independent director.

    Term of office

    Corporate Governance Committee member has a term of office of three years. Retiring member may be re-appointed by the Board to take office for another term.

  12. Chief Executive Officer

    Composition and qualifications

    Nomination and Remuneration Committee shall select and nominate to Board of Directors appointment of Chief Executive Officer. Nomination and Remuneration Committee shall select and screen qualified persons who have knowledge, capabilities, skills, and experience beneficial to the Company's operation and well understand the Company's business.

Supervision of Operations of Subsidiary and Associated Companies

The Board of Directors has set a framework and mechanism in governing policy and operation of subsidiary and associated companies at the level appropriate to each business as follows:

  1. Management structure of subsidiary and associated companies

    The Company has set a management structure of subsidiaries and affiliates in order to control and supervise management and take responsibility for operation of subsidiaries and affiliates effectively, and has a measure to follow up on the management of subsidiaries and affiliates to take care of interest in investment of the Company, details of which are as follows;

    1. Nomination of representative directors in subsidiary and associated companies:

      The Company will second persons with qualifications, knowledge and capabilities appropriate to business operation of subsidiary and associated companies as directors of such companies at least in proportion to the shareholding thereof by the Company. Nomination of appropriate persons as representative directors of the Company in subsidiary and associated companies is made by Board of Directors.

    2. Scope of duties and responsibilities of representative directors in subsidiary and associated companies:

      Directors appointed to sit on the Boards of subsidiary and associated companies have scope of duties and responsibilities as specified in the objectives, articles of association, and resolutions of the Board and the shareholders' meetings of such companies, and are duty-bound to oversee and ensure executives and employees of subsidiary and associated companies perform according to the Company's objectives, articles of association, and resolutions of the Board and shareholders' meetings.

      Directors of subsidiary companies have the duty to implement operational policies to support the business group to achieve the objectives and long-term targets, and to exercise discretion in administering the subsidiary companies for the benefits of such companies and the group in overall, as well as report the progress thereof to the Board of Directors for acknowledgement and consideration on a regular basis.

      Directors of subsidiary companies have the duty to perform under the code of conduct and various policies as well as corporate governance policy established by the Company and to oversee and ensure the subsidiary companies have proper, efficient, and sufficient internal control and risk management systems.

  2. Disclosure of information of subsidiary companies

    Subsidiary companies shall report the Company of their business plan, business expansion plan, large investment plan, and joint investment with other entrepreneurs, or other acts which may materially affect the Company's business operation. Moreover, the Company has the right to instruct the subsidiary companies to give clarification or submit documents for consideration, and such subsidiary companies shall immediately perform as instructed in case of material issues found, in which the Company may ask the subsidiary companies to give clarification and/or submit documents for consideration.

  3. Use of internal information of subsidiary companies:

    Subsidiary companies' directors, executives, permanent employees, contract employees, or assignees, and the spouses and minor children thereof as well as related persons thereto, are prohibited from using internal information of the Company and subsidiaries as obtained from their performance of duties or any other ways which have or may have material impact on the Company and subsidiaries for their own benefits or those of others either directly or indirectly, and either with or without remuneration in return.

  4. Transactions by directors, executives or related persons of subsidiary companies:

    Directors, executives or related persons of subsidiaries shall strictly comply with the policy of the Company in making transactions which may cause conflicts of interest with the group.

  5. Financial control of subsidiary companies:

    Subsidiaries are duty-bound to submit to the Company financial statements as specified by law and supporting information for preparation of their financial statements and allow the Company to use such information for preparation of consolidated financial statements or operating results. Subsidiaries also have the duty to report to the Company significant financial issues when found or as requested by the Company for examination and reporting.

Use of Internal Information

The Company has set a policy and measure to oversee and prevent directors and executives' use of internal information not yet publicly disclosed for their own benefits, including stock trading, as follows:

  • Disseminate knowledge to directors and executives about their duty to report securities holding by them and their spouses and minor children to the Office of the SEC and the SET in accordance with Section 59 and penal provisions under Section 59 and Section 275 of the Securities and Exchange Act B.E. 2535.
  • Require that directors and executives have the duty to report any change in their securities holding to the Office of the SEC in accordance with Section 59 of the Securities and Exchange Act B.E. 2535 within three working days following the date of change and submit a copy of this report to the Company on the same date thereof.
  • Require that directors, executives, and operating staff concerned who have known about significant internal information that could trigger changes in stock prices refrain from trading the Company's stocks for at least one month before disclosure of the financial statements or internal information to the public, and at least 24 hours after disclosure to the public, and disclose no significant information to any other persons.

The Company has set penalty in case of violation of using internal information for personal benefits, beginning from written warning to salary cut, temporary suspension without pay, and dismissal. The degree of penalty is subject to the intent of the act and its seriousness.

Director and Executive Development

The Board of Directors has a policy to provide training and knowledge to the directors involved in the Company's corporate governance system, as well as its executives, for ongoing development of their performance of duties. In the event of new directors, business operation guidelines and information beneficial to their performance of duties will be introduced to ensure consistent efficiency in performance of duties under good corporate governance principles.

Directors attend training and seminars in 2018 were as shown below:

List of directors Training course/Seminar
Assoc. Prof. Dr. Narong Yoothanom
Chairman Dinner 2018 on topic of "Social Responsibilities in Action"
Mr. Suppachai Yimsuwan
Strategic CFO in Capital Markets Program (Class 7/2019) the Stock Exchange of Thailand

Executives and staff training courses and seminars in 2018 were as classified below:

  1. Technical courses: To improve technical skills of staff in Maintenance Department, regarding maintenance of machinery, electrical appliances and machinery with high energy value; to enhance capabilities of the machinery.
  2. Management course: Internal training comprising 10 courses, classified by level of staff, namely Manager Course, Employee Course, and courses not classified by level of staff such as Safety Promotion Course, Anti-Corruption Education, and Corporate Quality Development.
  3. Courses for top management: The Company has allowed top management staff to attend courses provided by external agencies including government and private sectors like Stock Exchange of Thailand, Industrial Energy Institution, Metallurgy Institute in order to promote skill development, create network relations, and exchange of knowledge and experience among attendees.
  4. Potentiality promotion by nature of work. Our staff are assigned to attend training courses provided by external institutions classified by nature of work of each unit, totaling 33 courses.

In 2018, 78% of total executives and staff attended internal and external courses with average hours/person classified by staff level as follows:

Staff level Average hours/person/year
Middle - top executive 18
Junior executive 12
staff in general 6
  1. Achieving the Vision

The Board of Directors of Chow Steel Industries Public Company Limited (“the Board”) strongly believes that good corporate governance will enhance the performance of the Company, and is instrumental to achieving the Company's principal objective of maximizing shareholder value.

The Board is, by law, responsible for governing the Company’s business operation, and accountable to all the Company’s stakeholders, i.e. customers, shareholders, employees, service providers and the society.

  1. Board Composition and Qualifications
  1. The Board shall be composed of at least five members, of whom no less than half shall have domicile in the kingdom, comprising:
  • Executive directors,
  • Non-executive directors,
  • Non-executive directors, who are independent, for at least one-third of all directors and no less than three.  Independent directors and related persons thereof shall hold no more than one percent of the issued and paid-up registered shares of the Company and related companies.
  1. All directors shall have qualifications pursuant to Section 68 of Public Limited Companies Act, B.E. 2535 (1992), notifications of the Securities and Exchange Commission, and/or notifications of the Capital Market Supervisory Board.
  2. Directors who are independent shall comprise persons of requisite qualifications according to notifications of the Securities and Exchange Commission, and/or notifications of the Capital Market Supervisory Board, and with proper experience being able to bring quality and fair judgments, free of bias, to all issues. They may be people from any professions considered appropriate to be directors by the Nomination and Remuneration Committee appointed by the Board to propose qualified persons for new appointments of directors.
  1. Term of Office and Holding of Meeting
  1. One-third of the directors of the Board shall be due to retire by rotation at every annual general meeting of the shareholders, whereby the directors who have been in office the longest shall vacate office first. If the number of directors to vacate office is not a multiple of three, the closest number to one-third will be applied. If an agreement for vacating office cannot be reached, a lots drawing shall be adopted. Any retiring director may be re-elected.
  2. The resolution of the shareholders’ meeting to appoint a director shall be passed by the majority votes under the following criteria and procedure:
  • Each shareholder shall have one vote per share;
  • In election of directors, each shareholder may vote to elect each candidate as a director one by one or several candidates altogether as directors as deemed fit by the shareholders’ meeting. However, in each voting, he/she shall allot all the votes he/she owns, and shall not divide his/her votes to any particular candidate or candidates.  
  • Election of directors shall be decided by majority votes.  In case where the votes cast are tied, the chairman of the meeting shall cast the final vote.

The Nomination and Remuneration Committee shall nominate candidates for appointment as directors in replacement of directors due to retire by rotation, and shareholders will be invited to make nominations of directors before the shareholders’ meeting is held in each year.

  1. Any vacancy of director due to reason other than retiring by rotation, the Nomination and Remuneration Committee may nominate any person having qualifications and not prohibited under the public limited company law as director to fill the vacancy in the next meeting, unless the remaining duration of the director’s term of office is less than two months.  Any person so appointed shall retain office only for the remaining term of the vacating director. The resolution of the committee shall be supported by the votes of at least three-fourths of the number of remaining directors.
  2. At least half of the total number of directors of the Board shall constitute a quorum of the meeting.
  1. Authorities, Duties and Responsibilities

The Board has duties and responsibilities in administering the Company as stipulated by laws, the objectives and the articles of association of the Company, as well as the lawful resolutions of its shareholders’ meeting, with integrity and prudence in the best interest of the Company, as follows:

  1. Arrange an annual general meeting of shareholders within 4 months from the end of each fiscal year of the Company.
  2. Hold a Board meeting, which each director is duty-bound to attend, at least once every 3 months, and also a special meeting as necessary. 
  3. Prepare the Board’s annual report, and be accountable for the preparation and disclosure of audited financial statements to exhibit the financial position and the operating results of the Company in the previous year, which shall be submitted for the consideration and approval of the shareholders’ meeting.
  4. Have the authority and responsibility to perform duty in accordance with the laws, the objectives and the articles of association of the Company, as well as the resolutions of its shareholders’ meeting, with integrity and prudence in the best interest of the Company and with accountability to the shareholders on a consistent basis.
  5. Set the business targets, strategies, policies, plans and budgets of the Company; and control and monitor the implementation and administration of the Executive Committee to be in line with the policies assigned, aiming at maximizing the Company’s economic value and shareholders’ wealth. 
  6. Have the power to examine, consider and approve policies, operational directions and plans in relation to the Company’s large projects as proposed by subcommittees and/or the management.
  7. Have the duty to monitor the Company’s performance to ensure compliance with the law on securities and securities exchange and the stipulations of the stock exchange, such as making of connected transactions and acquisition and disposal of core assets pursuant to the regulations of the Capital Market Supervisory Committee or the Stock Exchange of Thailand or other laws relevant to the Company’s business, etc.
  8. Consider the Company’s management structure, and have power to appoint, assign or give suggestions to subcommittees or working committees for their consideration and implementation of any issues as deemed appropriate by the Board.
  9. Follow up consistently the Company’s operating results in accordance with the plans and budgets, and the operation and performance of subcommittees and/or the management to ensure effectiveness in the Company’s business operation.
  10. Not carry on any business of the same nature as or in competition with that of the Company, nor be a partner in any ordinary partnership, or an unlimited partner in any limited partnership, or a director of a private company or another company carrying on business of the same nature and competitive to the business of the Company, whether for his/her own benefit or others, unless he/she has informed the shareholders’ meeting prior to being elected.
  11. Inform the Company, without delay, of any direct or indirect interests in the agreement to be entered into by the Company, or of any increase or decrease in his/her holding of shares or debentures of the Company or affiliated companies.
  12. Be accountable to the shareholders constantly, operate the business in the best interest of the shareholders, and ensure disclosure of information is accurate, complete, transparent, and up to the standard. 
  13. Arrange for the Company to have in place internal audit measures to ensure there are efficient internal controls and risk management as well as reliable financial reports, with an internal audit work unit designated to follow up and implement in collaboration and coordination with the Audit Committee.
  14. Have power to consider and approve any issues as necessary and in relation to the Company, or as appropriate in the best interest of the Company.

The following issues shall be subject to prior approval of the shareholders’ meeting:

a)Any issue prescribed by law to require a resolution of the shareholders’ meeting; and

b)Any issue in which a director has interest and falling in the purview of the laws or the notifications of the Office of the Securities and Exchange Commission, or as stipulated by the Stock Exchange of Thailand to seek approval from the shareholders’ meeting.

Decision of the Board to carry out the following issues shall be subject to prior approval of the shareholders’ meeting with affirmative votes of at least three-fourths of the total votes of the shareholders attending the meeting and having the right to vote:

  1. Sale or transfer of the entire or the major part of the Company’s business to another party;
  2. Purchase or acceptance of transfer of the business of another company to the Company;
  3. Entering into, amendment or termination of an agreement relating to lease of the entire or the major part of the Company’s business, assignment of another party to manage the Company’s business, or business merger with another party, with the objective of profit/loss sharing;
  4. Amendment of the Company’s memorandum or articles of association;
  5. Capital increase, capital decrease or issuance of debenture of the Company;
  6. Merger or liquidation of the Company’s business;
  7. Any other matters prescribed under the law on securities and securities exchange, and/or notifications of the Stock Exchange of Thailand to require prior approval of the shareholders’ meeting with the above-mentioned affirmative votes.

Director who has interest in or conflict of interest with the Company and/or its subsidiary (if any) in any issue shall have no right to vote on such issue.

  1. Board Committees
  1. The Board may appoint Board Committees to assist the Board in carrying out any business under its responsibilities, including Audit Committee, Risk Management Committee, Nomination and Remuneration Committee, and Executive Committee.
  2. The Board will, as it may deem appropriate, consider and approve the appointment of members of the Board Committees and the charters thereof, in which the essence with regard to the composition, duties and responsibilities, administration, and other matters relating to the Board Committees, are included.
  1. Assessment of Board Performance

The Board is duty-bound to assess the performance of the Board every year in comparison with that prescribed in this charter. The Board will use the assessment results for the development of the charter.

  1. Advisor

The Board may seek opinion from an external professional advisor at the cost of the Company.

1.  Composition and Qualifications

  1. The Audit Committee shall be appointed by the Board of Directors meeting or the shareholders’ meeting, and all members of which shall be Board members.
  2. The Audit Committee shall be composed of at least 3 independent directors, one of whom shall be appointed as the Chairman of the Audit Committee.
  3. The Committee members shall have the qualifications stipulated under Notification no. TorChor. 28/2551 of the Capital Market Supervisory Board regarding Application for and Approval of Offer for Sales of Newly Issued Shares, as follows:
  1. Hold shares not exceeding one per cent of the total number of shares with voting rights of the Company, its parent company, subsidiary company, associated company, or juristic person that may have conflict, including shares held by related persons of such Audit Committee member;
  2. Neither be nor used to be an executive director, employee, staff, advisor who receives salary, or controlling person of the Company, its parent company, subsidiary company, associated company, same-level subsidiary company, or juristic person that may have conflict, unless the foregoing status has ended not less than two years prior to the date of filing an application with the Office of the Securities and Exchange Commission (SEC) or prior to the date of appointment as Audit Committee member;
  3. Not be a person related by blood or legal registration as father, mother, spouse, sibling and child, including spouse of child, executive, major shareholder, controlling person, or person to be nominated as executive or controlling person of the Company or its subsidiary company;
  4. Neither have nor used to have a business relationship with the Company its parent company, subsidiary company, associated company, or juristic person that may have conflict, in the manner which may interfere with his/her independent judgment, and neither be nor used to be a major shareholder, director that is not independent director, or executive of any person having a business relationship with the Company, its parent company, subsidiary company, associated company, or juristic person that may have conflict, unless the foregoing relationship has ended not less than two years prior to the date of filing an application with the Office of the SEC or prior to the date of appointment as Audit Committee member. The term ‘business relationship’ above-mentioned shall include any normal business transaction, rent or lease of immovable property, transaction relating to assets or services, or granting or receipt of financial assistance through receiving or extending loans, guarantee, providing assets as collateral, and any other similar actions, which result in the Company or its counterparty being subject to indebtedness payable to the other party in the amount of three per cent or more of the net tangible assets of the Company or Baht 20 million or more, whichever is lower. The amount of such indebtedness shall be calculated according to the method for calculation of value of connected transactions under the Notification of the Capital Market Supervisory Board governing rules on connected transactions mutatis mutandis. The consideration of such indebtedness shall include indebtedness occurred during the period of one year prior to the date on which the business relationship with the person commences;
  5. Neither be nor used to be an auditor of the Company, its parent company, subsidiary company, associated company, or juristic person that may have conflict, and not be a major shareholder, director that is not independent director, executive or partner of an audit firm which employs auditors of the Company, its parent company, subsidiary company, associated company, or juristic person that may have conflict, unless the foregoing relationship has ended not less than two years prior to the date of filing an application with the Office of the SEC or prior to the date of appointment as Audit Committee member;
  6. Neither be nor used to be a provider of any professional services including those as legal advisor or financial advisor who receives service fees exceeding Baht 2 million per year from the Company, its parent company, subsidiary company, associated company, or juristic person that may have conflict, and, in case where the provider of professional services is a juristic person, not be a major shareholder, director that is not independent director, executive or managing partner of the provider of professional services, unless the foregoing relationship has ended not less than two years prior to the date of filing an application with the Office of the SEC or prior to the date of appointment as Audit Committee member;
  7. Not be a director appointed as representative of directors of the Company, major shareholder or shareholder who is related to major shareholder of the Company;
  8. Not have any other characteristics which would disable the expression of independent opinions with regard to the Company’s business operation;
  9. Not be a director assigned by the Board to take part in the business decision of the Company, its parent company, subsidiary company, associated company, same-level subsidiary company, or juristic person that may have conflict;
  10. Not be a director of the parent company, subsidiary company or same-level subsidiary company which is a listed company;
  11. Have sufficient knowledge and experience to perform duties as Audit Committee member, provided that at least one member of the Audit Committee shall have sufficient accounting and/or financial knowledge and experience to review the reliability of financial statements.

2.  Term of Office and Holding of Meeting

  1. The Audit Committee shall have a term of office of 3 years. Any retiring member of the Committee may be re-appointed by the Board or the shareholders’ meeting.
  2. At least half of the total number of the Committee members shall constitute a quorum of the meeting.
  3. The Audit Committee shall hold 4 meetings or more each year, as may be deemed fit by Chairman of the Committee.

3.  Authorities, Duties and Responsibilities

The Audit Committee shall have the same authorities, roles, and responsibilities to conduct any matters as provided in the Notifications of the Stock Exchange of Thailand (SET) governing the Qualifications and Scope of Work of the Audit Committees, as follows:

  1. Have power to invite the management or the officers of the Company to attend the meeting in order to clarify, give opinions, or provide documents as requested and as necessary.
  2. Consider, select, and nominate an independent person to serve as the Company’s auditor together with the auditor remuneration to the Board for endorsement before proposing to the Company’s shareholders’ meeting for approval, as well as evaluate the performance of the auditor.
  3. Acknowledge other non-audit operations and the remuneration in relation thereto to ensure independence of the auditor.
  4. Consider and make decision in case the management and the auditor have contrasting opinions on the financial reports.
  5. Consider the disclosure of connected transactions or transactions with possible conflict of interest to ensure that they comply with the relevant laws and regulations, and the transactions are reasonable with maximum benefit to the Company.
  6. Consider and approve the appointment, removal, transfer or termination of employment, and consider performance of Internal Audit Department.
  7. Consider the reports of Risk Management Committee, and discuss with the management on risk management and assessment policy.
  8. Attend joint meeting with the auditor, without the management’s presence, at least once a year.
  9. Consider the financial reports as follows:
  • Review the financial reports and ensure the adequacy of the data acknowledged by the Audit Committee, and assess the appropriateness of the accounting principles applied in the annual and quarterly financial reports;
  • Review the accounting issues and important financial reports, including the complex or unusual transactions which require judgment in decision making;
  • Enquire the management and the auditor about the audit result, the major risks relating to financial reports and the relevant risk mitigation plan;
  • Review the internal control system in relation to the preparation of the financial statements with the auditor and the internal auditor.
  1. Consider the internal control process as follows:
  • Review and ensure that the management has put in place proper internal control system, including internal control of information technology system, and guidelines for communicating the importance of internal control system and risk management system organization-wide;
  • Review and ensure that the management has made remedy and improvement as recommended by the auditor and the internal auditor regarding the internal control.
  1. Consider the internal audit process as follows:
  • Review and approve the Charter of Internal Audit Department, the annual audit plan, and also the personnel and resources necessary for the operation of Internal Audit Department;
  • Review the activity and the operation of the Audit and Compliance function line to ensure the independence of Internal Audit Department;
  • Review and ensure the effectiveness of the internal audit performance in conformity with the internal audit standard.
  1. Have power to inspect and make investigation, as necessary, of any of the following transactions or acts which might have material effects on the Company’s financial position and operational performance:
  • Transactions with conflict of interest;
  • Fraud or unusual practice or material deficiency in the internal control system;
  • Violation of the law on securities and exchange, regulations of the SET and the laws relevant to the Company’s business.
  1. Monitor compliance with rules and regulations:
  • Consider, on a consistent basis, laws and regulations that have changed and have impacts on the Company’s business operation;
  • Review the results or findings of regulatory bodies and results of remedial actions, and report the same to the Board;
  • Review the effectiveness of the monitoring system in relation to compliance with relevant laws and regulations and the results of remedial actions in case of non-compliance.
  1. Monitor compliance with the business ethics and code of conduct of the management and the employees:
  • Review and ensure that the business ethics and code of conducts of the management and the employees and the policy to prevent conflict of interest have been made available in writing and acknowledged by the management and the employees;
  • Promote performance in compliance with the business ethics and code of conducts as well as the policy to prevent conflicts of interest.
  1. Other responsibilities:
  • Perform any other act as assigned by the Board and with consent of the Audit Committee;
  • Review and evaluate the Audit Committee Charter regularly, as well as propose it for approval by the Board when there are any changes thereto;
  • Prepare report of Audit Committee, duly signed by the Chairman of Audit Committee, for disclosure in the Company’s annual report, containing at least the following details:
    1. Opinion on the accuracy, completeness and reliability of the Company’s financial report;
    2. Opinion on the adequacy of the Company’s internal control system;
    3. Opinion on the Company’s compliance with the law on securities and exchange, the SET regulations and the laws relevant to its business;
    4. Opinion on the suitability of the auditor;
    5. Opinion on the transaction with a possible conflict of interest;
    6. Number of the Audit Committee meeting held and attendance by the individual Audit Committee members;
    7. Opinion or observation in overall received by Audit Committee from its performance of duties in accordance with the Charter;
    8. Other transactions that should be notified to the shareholders and the general investors within the scope of duties and responsibilities designated by the Board.

4.  Reporting of Audit Committee

The Audit Committee shall report its activities to the Board and the shareholders in the annual report and to regulatory authorities as prescribed by law.  

5.  Advisor

The Audit Committee may seek opinion from an independent advisor at the cost of the Company, and may seek additional information as required, or request to have the Company’s officers or an external party to jointly attend the meeting as considered appropriate, provided that such person is in relation to or in charge of the agenda item under consideration at the meeting.

1. Composition and Qualifications

  1. The Risk Management Committee shall be appointed by the Board of Directors.
  2. The Risk Management Committee shall be composed of at least 3 members.
  3. Chairman of the Risk Management Committee shall appoint Secretary to the Risk Management Committee.

2. Term of Office and Holding of Meeting

  1. The Risk Management Committee shall have a term of office of 3 years. Any retiring member of the Committee may be re-appointed by the Board.
  2. At least half of the total number of the Committee members shall constitute a quorum of the meeting.
  3. A Risk Management Committee meeting shall be held at least once a quarter, and a special meeting may be held as necessary.

3. Authorities, Duties and Responsibilities

  1. Determine the risk management policy for submission to the Board for consideration of overall risk management issues, e.g. strategic risk, liquidity risk, credit risk, market risk, operational risk, and other risks that are of importance to the Company.
  2. Determine structure and resource strategies in consistency with risk management policy of steel industry sector, being able to effectively analyze, assess, measure and monitor risk management procedure.
  3. Set risk limits in various significant dimensions for submission to the Board for approval.
  4. Monitor, review and give recommendation to the Board regarding risk management policy, standard procedure, overall risk measurement and strategy, to ensure risk management strategy has been implemented properly.
  5. All Risk Management Committee members are duty-bound to attend the meeting either in person or by conference call.
  6. The Risk Management Committee may invite any other person to attend the meeting as necessary, and such person must be related to or responsible for the agenda item under consideration by the meeting.  

4. Reporting

1.  To Audit Committee

The Risk Management Committee shall regularly report to the Audit Committee risk status and changes that would impact risk appetite to ensure that risk management policy and system could be translated into efficient and effective implementation for the Company.

2.  To Board of Directors

The Risk Management Committee shall report to the Board on the following matters:

2.1 Portfolio exposure and change in risk framework, as well as change in new product development and policy;

2.2 Risk status and changes that would impact risk appetite at appropriate timing;

2.3 Ensure that the Board is aware of and realized importance of factors that may pose significant impact on the Company’s risk status. 

3.  To Shareholders

The Risk Management Committee shall prepare an annual report for submission to the shareholders’ meeting on behalf of the Board, as an integral part or appendix to the annual report and financial report.

6. Advisor

The Risk Management Committee may seek opinion from an external professional advisor at the cost of the Company.

1. Composition and Qualifications

Nomination and Remuneration Committee shall be appointed by the Board of Directors, being composed of at least 3 members from the Board, and Chairman of which shall also be appointed by the Board.

2. Term of Office and Holding of Meeting

  1. The Nomination and Remuneration Committee shall have a term of office of 3 years. Any retiring member of the Committee may be re-appointed by the Board.
  2. At least half of the total number of the Committee members shall constitute a quorum of the meeting.
  3. A Nomination and Remuneration Committee meeting shall be held at least once a year.

3. Authorities, Duties and Responsibilities

  1. Give recommendation to the Board in relation to remuneration rates of Chairman of the Board, Board members, Chairman of Audit Committee, Audit Committee members, and various subcommittees (if any) (with approval of the shareholders’ meeting to be sought afterward).
  2. Work out remuneration policy and set conditions in engagement of executives from department head upward.
  3. Consider qualifications and appropriateness of personnel to assume executive positions from department head upward.
  4. Consider and give recommendations to the Board and follow up implementation concerning human resource vision and strategy as well as executive development plan.
  5. Nominate name of person with appropriate qualifications for first appointment as Committee member, and consider achievements, qualifications and appropriateness of retiring member for re-appointment prospect before submission to the Board for endorsement, and to the shareholders’ meeting for approval.

4. Reporting

Chairman of the Nomination and Remuneration Committee shall report directly to the Board, with minutes taken at each meeting to be submitted to the Board after the meeting.

5. Advisor

The Nomination and Remuneration Committee may seek opinion from an external professional advisor at the cost of the Company.

1. Composition and Qualifications

  1. The Executive Committee shall be appointed by the Board of Directors, being composed of at least 3 members who are Board members and management members.
  2. Members of the Executive Committee shall have appropriate expertise and experience, being able to make good judgments in performing duty to benefit the Company’s business operation.

2. Term of Office and Holding of Meeting

  1. There is no requirement of retirement by rotation for members of the Executive Committee. However, when any Committee member who is Board member and/or management member of the Company has retired as Board member and/or as management member for whatever reason, such Committee member shall forthwith retire as Committee member, and a new Committee member shall, without delay, be appointed by the Company to replace the vacating member.
  2. Chairman of the Executive Committee shall appoint Secretary to the Executive Committee.
  3. An Executive Committee meeting shall be held as deemed appropriate, at least once a month, and a special meeting may be held as necessary.
  4. A quorum of the meeting shall be composed of at least half of the total number of Committee members, and always with attendance by Chairman of the Committee or person assigned by the Chairman.
  5. All Executive Committee members are duty-bound to attend the meeting either in person or by conference call.

3. Authorities, Duties and Responsibilities

  1. Have the authority and duty to manage and conduct the business of the Company as prescribed by the Board or approved by the Board to undertake case by case.
  2. Have the authority and duty to administer the business of the Company in accordance with the policy and plan set forth.
  3. Have the authority as delegated by the Board.
  4. The following issues shall be subject to prior approval of the Board meeting:
    1. Matters relating to Company policies;
    2. Matters which, if undertaken, would pose significant changes to the Company business;
    3. Matters required by law to be undertaken by the Board;
    4. Matters to be undertaken to comply with the regulations set forth by the Company;
    1. Matters deemed appropriate by the Executive Committee to approve case by case, or in accordance with the criteria set forth by the Board.
  1. Have the authority and duty to conduct the business as specified to administer the Company to its success and achievement of its business target, including:
    1. Preparation and review of the Company’s strategic objectives, financial plans and significant policies before submission to the Board for consideration and approval;
    2. Scrutinize annual business plan, capital expenditure budget, operational targets, and significant initiatives to achieve the targets for submission to the Board for consideration and approval;
    3. Scrutinize projects with capital expenditure exceeding the limits set out by the Board before submission to the Board for consideration and approval;
    4. Consideration and approval of the issues designated under its scope of authority or as authorized by the Board;
    5. Consideration and review of the power to act in various issues according to the delegation of authority table before submission to the Board for consideration and approval;
    6. Managing and creating balance between short-term and long-term objectives;
    7. Developing and ensuring personnel implement according to the human resource strategy as endorsed by the Nomination and Remuneration Committee;
    8. Follow up and report to the Board the Company’s operating results and progress in implementation to achieve the objectives.
  2. Consider allocation of annual budget before submission to the Board for consideration and approval, including consideration and approval of any change and addition in annual expenditure budget in urgent case during the absence of Board meeting, and thereafter submit to the Board for acknowledgment at the next Board meeting.
  3. Approve procurement of steel scraps in the normal course of business operation in the volume up to 10,000 metric tons per transaction, or up to Baht 200 million per transaction; and up to 60,000 metric tons per month or up to Baht 1,200 million per month.
  4. Approve sales of goods in the normal course of business operation in the volume up to 20,000 metric tons per transaction and up to 60,000 metric tons per month.
  5. Approve expenses in purchase of assets which is in the nature of investment (including repair of machinery and equipment) beyond that specified in the annual budget in an amount of not exceeding Baht 30 million per transaction.
  6. Approve expenses in significant investments specified in the annual expenditure budget as assigned by the Board or as earlier approved in principle by the Board. 
  7. Allocate bonus payment duly approved by the Board to permanent and contract employees of the Company or any persons conducting business for the Company.
  8. Appoint or authorize any one or several persons to conduct any act on behalf of the Executive Committee as deemed appropriate, which shall be subject to cancellation, revocation, change or rectification by the Executive Committee.

The Executive Committee’s approval of transactions shall not include transactions in which Committee members or persons that may have conflicts, vested interest or conflict of interest in any other nature with the Company and/or subsidiary (if any), and transactions specified to seek shareholders’ approval, e.g. connected transactions and acquisition and disposal of core assets of the Company and/or subsidiary (if any) to comply with the stipulations of the Stock Exchange of Thailand and Office of the Securities and Exchange Commission, or any laws relevant to the Company’s business.

4. Advisor

  The Executive Committee may seek opinion from an external professional advisor at the cost of the Company.

ทบทวน ครั้งที่ 1 วันที่ 9 ส.ค. 2555

  1. Composition

The Nomination and Remuneration Committee shall nominate and propose for the Board’s appointment of Chief Executive Officer (CEO).

  1. Authorities, Duties and Responsibilities
  1. Control, oversee operation, and/or administer day to day operation of the Company, and follow up and assess operating results on a daily basis to be well prepared for and prevent any risk that may take place both internally and externally.
  2. Conduct business and perform duty in accordance with the policies, plans and budgets approved by the Board and/or the Executive Committee.
  3. Endorse legal acts relating to normal business operation of the Company, e.g. trading, procurement of goods, expenses in normal business operation, investment, acquisition and disposal of tools, assets and services, etc., for the benefits of the Company and within the limits set forth.
  4. Approve procurement of steel scraps in the normal course of business operation in the volume up to 5,000 metric tons per transaction, or up to Baht 100 million per transaction; and up to 30,000 metric tons per month or up to Baht 600 million per month.
  5. Approve sales of goods in the normal course of business operation in the volume up to 10,000 metric tons per transaction and up to 30,000 metric tons per month.
  6. Approve expenses in purchase of assets which is in the nature of investment (including repair of machinery and equipment) beyond that specified in the annual budget in an amount of not exceeding Baht 15 million per transaction.
  7. Be attorney of the Company in its business management in line with the objectives, articles of association, policies, regulations, covenants, orders, resolutions of shareholders’ meeting and/or resolutions of Board and Executive Committee meetings in all respects.
  8. Issue orders, regulations, notifications and memorandum to ensure performance of duty is in line with the policies and for the benefits of the Company, as well as to maintain work rules and discipline within the organization.
  9. Act and present oneself as representative of the Company to external parties in relevant business as necessary, and in the normal course of business operation for the benefits of the Company.
  10. Perform other duties as assigned by the Board and/or the Executive Committee
  11. Sub-authorize another person to conduct the above acts on his behalf to allow for flexibility in the Company’s operation.

However, the CEO’s power shall not include approval of any transaction that may have conflict of interest or any transaction in which the CEO or related person has vested interest or benefit in any other nature that has conflict with the Company or subsidiary as provided in the laws and notifications of Securities and Exchange Commission or the Stock Exchange of Thailand. Transaction in such nature shall be subject to endorsement by the Audit Committee and further submission to the Board meeting and/or the shareholders’ meeting (as the case may be) for consideration and approval in accordance with the Company’s articles of association or relevant laws, unless it is the transaction in the nature of normal course of business operation on which the Board has already set a clear consideration framework.

ทบทวน ครั้งที่ 1 วันที่ 9 ส.ค. 2555

Name No. of shares (shares) No. of shares increased (decreased) during the year (shares)
31 December 2017 31 December 2018
Ph.D, P.E. Pruchya Piumsomboon
1,298,000 1,298,000 -
Assoc. Prof. Dr. Narong Yoothanom
- - -
Assoc. Prof. Kalyaporn Panmarerng
- - -
Mr. Noppadon Jason Chirasanti
- - -
Mr. Kanawath Aran
- - -
Mr. Sanguankiat Lewmanomont
- - -
Mr. Mark D. Remijan
414,000 414,000 -
Mr. Anavin Jiratomsiri
408,000,000 408,000,000 -
Ms. Koo Man Wai
40,500,000 40,500,000 -
Mrs. Sharuta Chin
40,500,000 40,500,000 -
Mr. Suppachai Yimsuwan
- - -
Mr. Jirayu Saisangthong
- - -
Mr. Satit Cheybobpha
- - -

Note: Including shareholding of spouses and minor children (unless individual disclosure has been made)

Steel Billet Business

1. Raw Material Risks

  1. Risk from fluctuation of raw material prices

    Normally, the key raw material used in the melting process to produce steel billet is steel scrap which accounts for 70-80% of the production cost so price fluctuation of steel scrap directly affects cost of production and sales. Typically, price of steel scrap distributed domestically is changeable based on global prices of steel and steel scrap and sharp price change in certain periods is common. Therefore, the Company's profitability may be affected by fluctuation of steel scrap price if the Company cannot adjust its selling price to correspond with the changing cost of steel scrap used in the production and the cost of scrap inventory.

    Having realized such risks and to minimize possible impact, the Company has a policy in place to stock sufficient steel scrap for production in normal situation. Supply of steel scrap will be kept in the volume 1-2 times the monthly demand for steel scrap. Also, the Company has set a policy of matching orders, thereby orders for steel scrap will be made only upon customers' orders for steel billet products. This strategy helps set the selling price in line with the cost of goods sold and allows for flexibility in response to market conditions in a given period. The Company has also kept abreast of price fluctuations of steel billet and raw materials leveraging on past experience and good relationships with scrap suppliers. This will help the Company to properly forecast demand and price trends of steel billet in both domestic and global markets and effectively work out its production plan.

  2. Risk in relation to raw material procurement and dependence on suppliers

    As the Company's business operation mainly relies on steel scrap as the main raw material and the supply from its top five suppliers accounts for 80-90% of its total steel scrap purchasing value, the Company may risk procuring inadequate supply of steel scrap if demand for steel scrap is higher than scrap inventory available and/or the suppliers cannot procure and deliver steel scrap to timely meet the demand and the Company cannot procure from sources elsewhere to timely meet the production plan. This may cause the Company to fall short of raw material to meet production in a given period and/or to bear high cost of steel scrap to the extent that it may be unable to produce and distribute products at competitive prices compared with those of imported steel billet. This may accordingly affect its operating and financial results.

    However, impact from any shortage of raw material is estimated by the Company to be minimal because there are a small number of manufacturers of steel billet that have furnace of their own. In view of this, the supply of steel scrap under normal conditions should be sufficient to meet the demand. For the past years, including during abnormal situations in 2008, the Company has faced no problem in steel scrap procurement. Moreover, the Company has strong relationships with all domestic suppliers with consistent purchases of steel scrap from them and has from time to time ordered imported scrap to build good relationship with offshore suppliers to serve as alternative sources in time of need when domestic sources cannot adequately serve the requirement. In addition, the Company has further mitigated risk by closely keeping up with latest trends of steel scrap demand and drawing up a clear production plan.

2. Marketing and Distribution Risks

  1. Billet price fluctuation risk

    Steel billet is the Company's key product to be processed to produce long steel, such as round bar and deformed bar. Normally, demand for and supply of steel billet depends upon construction business which utilizes long steel as a main material for the construction activity. However, steel billet is a commodity product so its price is changeable based on demand and production capacity in both domestic and export markets.

    The Company has realized such risk and set a policy to produce its product based on customers' orders, thus helping it to set the selling price in line with the cost of goods sold and market conditions at the moment. In addition, the Company has kept abreast of latest changes in steel billet prices with consideration made in conjunction with overall economic conditions, construction industry trends, and information from interviews with customers in order to forecast demand for long steel which will subsequently affect demand for steel billet. This aims to support its planning on production, distribution, and inventory of steel billet to suit the demand and situations.

  2. Risk of changes in government policies

    Steel industry in Thailand mainly serves as import substitution. It has been developed to meet demand for domestic downstream steel products, which are basic raw materials of several related industries. Thus, steel industry greatly relates with the growth of the country's economy as a whole, and has prompted the government to give priority and set out measures on domestic steel industry as follows:

    • ASEAN Free Trade Area (AFTA)

      The Association of Southeast Asian Nations or ASEAN has reached an agreement on reduction of tariffs under the Common Effective Preferential Tariff (CEPT) scheme, thereby the six original member countries (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand) and the four new member countries (Vietnam, Laos, Myanmar and Cambodia) are required to cut down tariffs under the CEPT scheme to 0% by 2010 and by 2015, respectively.

      List of goods entitled under the CEPT scheme covers a total of 105,123 items, including iron and steel which meet the production process criteria whereby the products have adequately been processed in home country. Steel billet, steel bar and deform bar are subject to cuts of tariffs under the CEPT to 0% by 2010. At present, Thailand has set tariff rates of 2-5% on products from ASEAN counterparts depending on product type and size. Thus, prices of imported steel bar tend to go down in the future, while steel billet, which can be produced by the Company, can be imported freely without any import tariff as domestic production cannot adequately fulfill domestic demand. However, steel billet import has constraints in delivery time, operating expense, and minimum volume per purchase, end-use industries thus still prefer domestic steel billets to imported ones. Therefore, the Company has expected no material negative impact from such measure. On the contrary, domestic producers like the Company will have advantage and better opportunity to penetrate the ASEAN markets such as Malaysia, the Philippines and Vietnam which in the past charged import tariffs on steel billets from Thailand but will have to lift tariff barrier against Thai steel billets by the deadline set forth.

      Even if the no-tariff measure and policy is later terminated for whatever reasons, impacts on the Company are considered minimal, as domestic producers of steel billets have for the past years been unable to fully meet domestic demand, necessitating imports of billets all along. However, imported billets carry very high transport costs and take longer time of delivery as compared with domestic products.

    • Investment promotion policy on intermediate steel industry

      The Board of Investment (BOI) has announced guidelines to support investment in steel industry in a bid to develop high quality steel, boost competitive advantage of related industries, and promote Thailand as the hub of steel production and export of the region. BOI privileges and benefits have been granted to the intermediate steel manufacturers according to the criteria in the BOI Notification No. 1/2000 dated 1 August 2000. In this regard, as the Company's factory is located in Prachinburi Province, which is in Investment Promotion Zone 3, the Company has been granted privileges and benefits such as corporate income tax holiday for eight years, 50% reduction of corporate income tax for the following five years after the end of tax holiday, allowance of deductibles two times the actual transportation, electricity and tap water expenses for 10 years, etc. If the government terminates or changes the said privileges and/or if the privileges expire or are terminated in the future, the Company's operating performance and income generation capabilities may be affected.

      The Company is strongly confident that the government has no plan to change and/or remove any privileges as it could affect confidence in investment in businesses eligible for investment promotion. However, the Company may be affected by the expiration of the promotion period and/or amount, namely 1st phase plant and 2nd phase plant having received investment promotion privileges since December 2005 and July 2008 respectively, thereby exemption of corporate income tax will end upon the end of 8 years from the commencement date of the exemption.

      The BOI also approved investment promotion for companies listed on the Market for Alternative Investment (MAI) within the specified period of promotion privileges from the BOI with a change in the type of corporate income tax exemption from limited investment amount to unlimited investment amount, and applicants were required to submit application for promotion privileges from the BOI by 31 December 2012. On 14 September 2011, the Company applied for such privileges and was able to be listed on the MAI and take proceeding as required by the BOI. This has enabled the Company to be granted tax exemption and unlimited investment amount. Therefore, if the Company records net profit in the amount more than the investment amount during the investment promotion period, corporate income tax will still be exempted in full, hence an advantage for its operating result.

3. Financial Risks

  • Foreign exchange risk

    The Company has procured raw materials such as steel scrap, chemicals, and spare parts from abroad for its own operation accounting for 5% of total procurement value, and also has in place a policy to export steel billet. Thus, the Company is exposed to certain foreign exchange risk.

    The Company has a policy to prevent such risk by entering into forward contracts with a number of financial institutions, as well as hedging facility provided by domestic financial institutions. It will closely keep abreast of foreign exchange movements and seek proper timing for deriving maximum foreign exchange benefits.

4. Risks in Relation to Investors

  • Risk from having major shareholders who have influence over the operation

    Jiratomsiri family holds a total of 529 million of shares, or 66% of total paid-up registered capital of 800 million Baht. In the event that the Jiratomsiri family votes in the same direction, they will have almost the entire control of the resolution at the shareholder's meeting in the matters regarding the appointment of directors or otherwise requiring majority votes unless in the matters as stipulated by law to have the votes of three-fourths (3/4) of the shareholders present at the shareholders' meeting. Accordingly, other shareholders may be not able to gather enough votes to control and balance the power in voting on the matters proposed by the major shareholders.

    The Company is aware of such risk, and has appointed Audit Committee composed of four members, or 40% of total number of directors, as independent directors. The Audit Committee members must be qualified with education and skills, as well as with competence and capability to protect minor shareholders. Furthermore, the Board of Directors has a policy to or not to conduct any act with the shareholders' benefits mainly taken into account. If it is necessary to execute transaction with the person who may have any conflict of interest, the Company will strictly follow all required procedures for the approval of related party transactions and the criteria pursuant to the Notifications of the Capital Market Supervisory Board and the Stock Exchange of Thailand.

Renewable Energy Business

Risk factors mentioned in this clause are risk factors assessed from the current situations. There may be other risk factors of which the Company may not yet be aware or those which the Company considers as having no significant impact on the business operation at present as well as those with reference to economic conditions and government policies as derived from government agencies and other reliable sources. In view of this, the investor should consider all relevant factors prudently before making investment decision.

  1. Risks from factors having impact on power generating output
  2. Seasonal and changeable weather risk

    Electrical energy output from solar power plants depends on such main uncontrollable external factors as solar radiation intensity and weather conditions. Any changeable weather conditions or natural disasters or unprecedented force majeure can affect power plants' electrical energy output and materially pose negative impacts on their business operations and operating results.

    Therefore, the Company has taken out income protection insurance with an insurance company under which the insurance company will compensate the Company for the income difference as specified in the agreement in case of electrical energy output lower than the projection due to seasonal and weather condition changes.

    Risk of early impairment of PV cells

    PV cells are power plants' core equipment used in solar power production. Any impairment of solar cell quality will affect power generating output and hence operating results of the Company. To mitigate such risk, the Company has got warranty of PV cell quality from each manufacturer covering a 10-year period from the commercial operation date (COD) of each power plant. However, in case of PV cell quality impairment after the end of the warranty period, the Company will have to bear additional expenses to improve the PV cell quality, thus significantly posing negative impact on its business operation, financial status and operating results.

    However, in the purchase of PV cells and other equipment items, the Company has a policy in place to select and purchase only quality products from reliable manufacturers in this industry to ensure that PV cells to be used for electric power production are of standard quality. Such PV cells have also been examined and certified in term of quality by experts as required by financial lenders in financing the Company's power plant development. Moreover, the Company has taken out income protection insurance under which it can claim for compensation if power plant income is lower than the target due to equipment functioning deficiencies.

    Risk of lacking efficiency and stability in solar power generation

    There are several factors that may threaten power generating efficiency and stability, the key ones of which are efficiency of key equipment in power generation, waste from generation process, disruption of power plant operation caused by instability of electric power companies or EPCOs' transmission system, etc.

    To prevent such risk, the Company has closely monitored the power plant operation through supervisory control and data acquisition (SCADA) system, which can track the operation 24 hours a day so that examination and solution of problems can timely be made to get the power plant back to normal operation as fast as possible. Moreover, the Company has entered into operation & maintenance (O&M) agreement and also manufacturer warranty of core equipment, such as inverters, etc., for a 20-year contractual term which covers the term of the respective power purchase agreement in order to prevent any potential problems and to ensure the continuation of power generation with efficiency and stability.

  3. Risk of increase in solar power plant maintenance costs and expenses
  4. The Company has engaged its subsidiary in which the Company has 99.99% shareholding to provide maintenance services of its solar power plants in Japan. The O&M agreement term is 20 years which covers power purchase agreement term of each plant. However, the subsidiary has made short-term subcontract agreement with a third party to provide the services according to the terms of reference agreed upon between the contract parties. As a result, the Company may risk bearing higher costs and expenses from the extension of the subcontract agreement if the subcontracting rate is raised, which may materially pose negative impact on its business, financial status and operating results.

    However, if the extension of the subcontracting with the existing subcontractor is considered bearing materially higher costs, the Company will opt for selecting and engaging a new subcontractor who has competence on a par with the previous one and with reasonable pricing.

  5. Risk of incomplete compliance with legal and other regulatory requirements
  6. The Company operates solar power business in Thailand and Japan under the governance of relevant laws and regulatory authorities. The Company has tried its best to ensure that it has fully complied with the laws and other relevant regulatory requirements, especially those in Japan. Before each investment, the Company has engaged a legal consultant to examine and give advice on legal and other regulatory compliance. However, the relevant laws and regulatory requirements may be revised, modified, construed and enforced differently from the current ones. In such case, the Company may risk incompletely complying with the relevant legal and regulatory provisions, which may accordingly force it to discontinue its business operation or to pay for additional expenses in order to fully comply with the changing laws and regulations, or to even be punished by the civil or criminal court for the said offence. To prevent such risk, the Company has appointed a working team to monitor any changes in the laws and other regulatory provisions and to consult with relevant experts to ensure full compliance with the laws and regulations in place.

  7. Risk from expiration of power purchase agreements
  8. The Company has entered into power purchase agreements (PPAs) with EPCOs under a 20-year contractual term for its solar power plants in Japan and with purchasers in Thailand under a 25-year contractual term for its solar rooftop power plants in Thailand. Both types of PPAs do not contain provisions regarding extension of the PPAs further from the period in place and there is no assurance that new PPAs may be executed upon the expiry of the existing ones. If the PPAs cannot be extended or the terms of new PPAs generate business benefits to the Company inferior to the existing ones, material negative impact may be posed on its business, financial status and operating results.

    Despite having realized the above risk of limited PPA term, the Company has normally considered and justified each investment in solar power plant project based on appropriate returns expected to be generated within the term of each PPA. Therefore, if the Company cannot enter into a new PPA or cannot renew the existing one or the terms of the renewal generate business benefits to the Company inferior to the existing one, limited negative impact on the Company is expected. In addition, due to the limited life cycle of power plants, the changes in technology, and the consistently increasing demand for electricity consumption, the Company has planned to invest in new solar power plant projects for its sustainable profitability looking forward.

  9. Risk from dependence on any particular electric power purchasers
  10. The Company is an operator of solar power plants to generate and distribute the total output of electrical energy to purchasers under the term in PPAs. Regarding its solar power plants in Japan, the Company distributes all electrical energy to the regional EPCOs designated by Japanese government, and there is only one EPCO in each region in Japan. Meanwhile, electrical energy from solar rooftop projects in Thailand is distributed under PPAs with Metropolitan Electricity Authority and Provincial Electricity Authority. In case where some power purchasers fail to comply with the obligations in the PPAs with the Company or the Company has any dispute with any of the power purchasers due to unclear provisions in the PPA, any of such cases occurring to any PPA or to the major PPA of the Company may significantly pose negative impact on its business, financial status and operating results.

    However, as the power purchasers in Thailand are state enterprises and the EPCOs in Japan are large companies under long-term concession granted by Japanese government, the risk of their non-compliance with the obligations in the PPAs made with the Company is unlikely to take place. However, the Company has in place a policy of diversifying investment in solar power plants in Japan by location, i.e. having power plants located in different regions under similar PPAs and generating capacity in order to mitigate risk of dependence on any particular power purchasers.

  11. Risk of changes in technology
  12. PV cell technology is mainly employed in solar power generation. With the currently lower prices of PV cells or innovation of PV cells with higher generating efficiency than those of former technology, the Company may have to bear additional expenses for investment in technology improvement. If the Company does not adapt to the technological development in an appropriate timing, negative impact may be posed on its business, financial status and operating results.

    However, the Company has appointed a working team to monitor the ongoing technological development and analyze potential impact in case the Company has to replace its PV cells by considering the investment returns in comparison with the investment value as well as other factors, such as the remaining term of the respective PPA, the installation period, the restrictions in PPA during the temporary suspension of the production, or other restrictions relating to such PV cell change.