Corporate Governance Policy

The Company is committed to maintaining high standards of good corporate governance within the organization to protect and enhance long-term shareholder value. The Company has adopted and is continuously developing a set of good corporate governance practices and policies which are modeled on principles advocated by the SET as per the details set out in the following sections.  Additionally, the Company has put in place a Code of Corporate Conduct approved by the Board of Directors and Standard Operating Procedures which have been communicated throughout the organization for all employees of the Company to strictly follow in the course of performing their duties. As and when required, new internal rules and regulations are introduced to ensure there are no gaps in the policies.

Rights of Shareholders

The Company recognizes the importance of shareholders’ rights. In the Company’s Annual General Meeting held on 26 April 2016 the Company conducted the meeting in full compliance with all relevant laws and regulations in respect of shareholders’ rights in the following manner.

1.1 All shareholders have the same basis and rights in the casting of votes at the meetings and the receipt of dividends when declared by the Company. These are calculated based on their respective shareholding in the Company.

1.2 At every shareholders’ meeting, shareholders are given the right to approve important matters such as election of directors (shareholders can elect directors individually), directors’ remuneration, appointment of auditors and dividend payment, etc.

Furthermore, any shareholders who arrive at the meeting after the meeting has begun are still entitled to vote on the agenda items that are still under consideration and have not been voted upon.

1.3 The Company has a policy to facilitate and encourage all groups of shareholders including institutional shareholders to attend the Company’s Annual General Meeting such as giving an opportunity to every shareholder to propose agenda or send questions related to the Company’s business in advance, distributing a package containing the notice and meeting documents in English to foreign shareholders, selecting meeting venue that is convenient for attendance, etc.

1.4 The Company invites shareholders to propose agenda items in advance of the AGM through the SET and the Company’s website (www.lagunaresorts.com). However, none have been proposed by the shareholders.

1.5 The Company does not invite the minority shareholders to nominate their own candidates to be appointed as the Company’s directors ahead of the meeting.  This is because the Company already gives all shareholders an opportunity to nominate their own candidates (who meet the requirements under the Plc Act) and to vote for candidates at the shareholders’ meeting.

1.6 Through the Thailand Securities Depository Company Limited, the Company’s share registrar, the Company sends out package containing the notice and agenda of the meeting to the shareholders at least 21 days prior to the meeting. The meeting documents include the facts and rationales and opinions of the Board as well as other information relating to the agenda items such as information on the persons nominated for election as directors, auditors’ profiles, the part of the Company’s Articles of Association that relates to the shareholders’ meeting, map showing the venue of the shareholders’ meeting, proxy forms, documents and evidence of entitlement to attend the meeting, etc. This is to enable the shareholders to prepare themselves for the meeting. In addition, the notice of the shareholders’ meeting is advertised in the newspaper and all information contained in the meeting documents will also be posted on the Company’s website (www.lagunaresorts.com) at least 30 days prior to the meeting. Moreover, shareholders are always invited to register at least 1 hour before the meeting begins.

For convenience, transparency and accuracy of the registration and vote counting at the shareholders’ meeting, a barcode system has been utilized.

1.7 At every shareholders’ meeting, all agenda items are clearly identified and particularized, objectives, and rationale and opinions of the Board are also presented in the meeting for consideration of the shareholders.  The Chairman will conduct the meeting according to the sequence of the agenda and will not add any additional agenda items which are not indicated in advance in the notice unless there is a proposal to consider other matters other than those specified in the notice, in accordance with the law, from shareholders holding not less than one-third of the total number of shares issued.

No additional agenda item proposed to the 2016 Annual General Meeting other than those specified in the notice.

1.8 Before the start of every shareholders’ meeting, the Company Secretary will explain the voting methodology to shareholders. In the interest of good corporate governance in regard to transparency, minority shareholders are also invited to witness vote counting of each agenda item.  A team of legal counsels from a leading international law firm is appointed to verify the registration procedure before the Chairman of the meeting announces to the shareholders, the number of shareholders and proxy holders present at the meeting and the number of shares held by them.  The legal counsels also verify the vote counting procedure in respect of each agenda item before the votes are announced as resolution of the shareholders’ meeting.  Shareholders may verify the detailed results of the vote of each agenda item at the end of each meeting.  The same results and a summary of questions from shareholders will also be included in the minutes of the meeting which are accurately and completely documented in all material aspects and will be sent to all shareholders for their review prior to the following meeting.  The minutes of the 2016 Annual General Meeting is posted on the Company’s website (www.lagunaresorts.com) within 14 days after the meeting was held.

1.9 The Company’s policy in conducting shareholders’ meetings is not only to meet all legal requirements but to also provide a platform and opportunity for shareholders to communicate their views and ask the directors and management questions regarding matters affecting the Company. The Chairman allocates sufficient time for the meeting and conducts the meeting in an appropriate and transparent manner. During the meeting, shareholders are allowed to give comments and ask questions before the resolution on each agenda item.  In addition, shareholders who have any questions that require the Company’s clarification during the meeting may send their questions in advance at “ir@lagunaresorts.com” or fax them to 66 (0) 2285 0733.

1.10 Apart from the external auditor who will attend the Annual General Meeting, the Chairman of the Board, the Chairman of the Audit and Risk Committee and the Chairman of the Nomination and Remuneration Committee, and all of the Company’s directors will endeavor to be present at the shareholders’ meeting in order to assist the Board in addressing queries raised by the shareholders.  The Company also invites its legal counsels from a leading international law firm to attend the meeting in case there are any legal questions which requires clarification during the meeting.  Furthermore, the Company provides a professional translator to be present at the meeting to assist shareholders and the Board to communicate more effectively in English and Thai. At the 2016 Annual General Meeting, the Chairman of the Board, the Chairman of the Audit and Risk Committee, the Chairman of the Nomination and Remuneration Committee, and other directors were present at the Meeting. Details of their names are stated in the minutes of the 2016 Annual General Meeting.

1.11 The Company gives an opportunity for shareholders to freely communicate with each other without creating any barriers and also provides convenient access to relevant news and information via the Company’s website (www.lagunaresorts.com) for shareholders to receive adequate important information such as the resolutions of the Company’s Board of Directors on important matters, resolutions of the shareholders’ meetings, financial information, information which may affect the Company’s share price, Annual Report, etc.

1.12 The Company received a score of 96 points out of 100 points for the 2016 AGM assessment conducted by the Thai Investors Association.   The Company will continue to strive to improve its good corporate governance practices.

Equal Treatment of Shareholders

The Company treats all shareholders fairly despite different shareholding proportions and voting power due to their shares.  In recognition of its duty to ensure equal treatment of shareholders, the Company complied with all relevant laws and regulations as follows:

2.1 The Company has only one class of shares, the ordinary shares. Shareholders shall have votes equal to the number of shares held by each of them, which means one share is entitled to one vote.

2.2 For shareholders who are unable to attend a meeting in person, the Company provides opportunity for such shareholders to appoint another person as proxy to attend the meeting on their behalf by using a proxy form B sent by the Company. The Proxy form B is one of the forms prescribed by the Ministry of Commerce which allow shareholders to make voting directions. Moreover, the Company provides opportunity for shareholders to appoint the Company’s independent director as proxy to undertake proxy voting on behalf of shareholders who are unable to attend the meeting. The name of the independent director is provided in the proxy forms, together with the profile of that independent director who has been given proxy to vote on behalf of shareholders who are unable to attend the meeting, all of which are attached as part of the meeting documents.

2.3 The Company ensures that directors and management are aware of their duty to report a change in their holding of the Company’s securities to the SEC within 3 business days in accordance with the Securities and Exchange Act. The securities holding report is also included in the agenda of the Board meeting for the Board’s acknowledgment once every 3 months.

2.4 Any director or management who has an interest in, or is related to, any transaction between the Company and an interested or related person will not participate in the decision making process involving such transaction. The Company has disclosed the details and reasonableness of transaction to shareholders prior to dealing with any transaction in case such transaction requires the approval from shareholders and strictly follows the procedures on such transaction in accordance with the notification of the Capital Market Supervisory Board.  The details of all connected transactions are disclosed under the heading “Related Party Transactions” in Form 56-1 and under the heading “Persons with Mutual Interest and Connected Transactions” in the Company’s Annual Report.

During 2016, there is no report of non-compliance with the notification of the Capital Market Supervisory Board on connected transactions.

2.5 The Company has formulated a Code of Corporate Conduct to provide guidelines for the Board, senior management and employees of all levels to comply with. The Statement includes the prohibition on the improper use of insider information for personal benefit or to benefit others. Additionally, the Board approved a policy on dealing in securities of the Company which prohibits the dealing in the Company’s shares while in possession of unpublished confidential and price-sensitive information during the “Embargo Period.” Details are further described under the heading “Supervision on the Use of Inside Information” in the Form 56-1 and in the Company’s Annual Report. There is no violation of the policy found during the past year.

2.6 Apart from the credit term payment given under the normal course of business, the Company has no policy on providing financial assistance to any non-subsidiary companies except those whose loans or guarantees are in accordance with the proportion of shareholding in a joint venture agreement. In the prior year, the Company did not provide the financial assistance to any non-subsidiary companies.

Role of Stakeholders

In its pursuit for sustainable growth and financial returns for its shareholders, the Company strives to become a role model corporate citizen.  It respects the rights of all its stakeholders and conducts its operations fairly and strictly in compliance with all laws, rules and regulations.

Shareholders: The Board of Directors is committed to perform its duties honestly, transparently and diligently in the best interest of all its shareholders, to preserve and enhance long-term shareholder value. All important information which may have an impact on the Company’s share price and/or shareholders’ decisions are fully disclosed in a timely manner.
Employees: Being in the hospitality industry, the Company believes that its people are its greatest asset. The Company has taken steps to ensure that all labour laws are complied with and all employees are treated fairly without discrimination or favoritism. The Company offers competitive pay packages and welfare benefits such as meal allowance, laundry allowance, complimentary vouchers and health & personal accident insurance to all its employees with continually upgraded programs. Additionally, the Company provides its employees a safe, hygienic and conducive working environment, air-conditioned buses and provident fund.  Furthermore, the Company not only encourages its employees to attend training related to their line of responsibility to enhance their knowledge and skills but also selects talented employees to join Human Resource Development programs annually such as the Talent Development Program in order to develop their capabilities and raise their self-potential through training to improve their skills in many areas and to groom them for performing in key and challenging positions in the future, and the Management Development Program in order to develop employees in accordance with the succession plan. The Company’s operations are not in violation of any principles of human rights.
Customers: The Company aims to provide its guests a safe and unforgettable experience at its hotels and resorts. Safety of its guests is one of the Company’s top priorities and in this regard a safety committee has been formed at each property with the objective of improving the safety of our guests.
Competitors: The Company believes that competition is the essence of a free and open market and therefore avoids any actions which may prevent, obstruct or discourage potential competitors from entering the markets in which the Company operates in. The Company takes the view that healthy competition encourages product and service innovations in the market place which would increase market standards and ultimately benefit consumers and society at large. The Company will neither engage in any fraudulent act to violate or obtain competitors’ trade secrets nor in any infringement of intellectual property or copyright including corruption and bribery, which has been stipulated in the Code of Corporate Conduct approved by the Company’s Board of Directors, for the benefit of the Company’s business.
Society &
Environment:
The Company emphasized and aims to be a socially responsible company and has established a dedicated team of CSR and Community Relations practitioners who strive to make a positive difference to the local communities where the Company operates and to develop sustainable communities by initiating various CSR programs which focus on social and educational development, environmental conservation, religious and cultural preservation, associate benefits and relations, details as shown under the heading “CSR” in Form 56-1 and in the Company’s Annual Report as well as in the Company’s website (www.lagunaresorts.com).

Green Leaf Awards received by the individual hotels reflect recognition of Laguna Phuket’s commitment to conserve the environment.  In property development, the Environmental Impact Assessment (EIA) has been carried out to evaluate the likely environmental impacts of the Company’s development projects, taking into account inter-related socio-economic, cultural and human-health impacts, both beneficial and adverse including proposed measures for shaping projects to suit the local environment and reducing any potential impact.  The Company encourages and supports the staff to use resources efficiently. Day-to-day operations at the resort apply the “Three Rs” of green management: Reduce, Re-use and Recycle. Each hotel has a staff education program to teach the importance of caring for the environment, and consumption of energy and water is closely monitored through the extensive checklists to be completed by the staff. No raw sewerage is discharged into the sea from the resort complex. After being treated, sewerage and wastewater are directed into a sophisticated recycling system. The resulting water is used to irrigate the gardens, details as shown under the heading of “CSR/Environmental Policy” in the Company’s website (www.lagunaresorts.com).

Suppliers: The Company strives to forge long-term business relationships with its suppliers and therefore has the policy to always give a fair profit to its suppliers and to respect payment terms and conditions. In addition, the Company has a policy in selecting its suppliers fairly and transparently, competitive quotations from at least 3 suppliers are required according to the criteria specified in the Company’s Standard Operating Procedures which have been distributed and communicated throughout the organization in order to understand and to strictly adhere to the procedures accordingly.
Creditors: The Company considers creditors as important business partners and therefore aims to fulfill all its obligations to its creditors. In the previous year, no creditors challenged that the Company had failed to comply with any obligations.

There is no violation of laws and regulations regarding to labour, employment, consumer protection, commercial competition and environmental found in the previous year.

Policy and Practice Relating to the Control and Prevention of Corruption Involvement

The Company has established Code of Corporate Conduct and Standard Operating Procedure for directors, management, employees and associated parties to strictly follow in order to prevent corruption, fraud including commercial bribery and to ensure all decisions and business operations that may be at risk of fraud and corruption are attentively considered and practiced.

The Company has put in place a risk management system suitable to the Company’s business nature and implemented risk assessment procedure, which included internal compliance and control program to monitor and prevent possible risks including corrupt practices.  As part of the on-going risk management process, the Company’s Group Risk Committee in collaboration with Group Internal Audit regularly conduct a risk monitoring, assessment, evaluation and propose a control program to prevent and mitigate possible risk and report findings to the Audit and Risk Committee.  The Audit and Risk Committee is responsible for overseeing and reviewing strategic and operational risk management including risk assessment and control procedures as well as seeking to ensure that the Company has a continuous process for managing risk, appropriate and effective internal control and internal audit systems.
Failure to comply with the Code of Corporate Conduct may result in strict disciplinary action including termination of employment and referral to relevant external regulatory authorities in accordance with any applicable laws and regulations.

Seeing the long-term benefits to operate business ethically with integrity, and to implement business principles to encounter corruption, the Company has declared an intent to fight corruption by declaration of intent with Thailand Private Sector Collective Action Coalition Against Corruption.

There is no report of wrongful conduct involving fraud and corruption during the past year.

Policy on Whistle Blowing and Complaints

The Company recognizes the importance of compliance with good corporate governance and adheres to the high standards of conduct and responsibility for all stakeholders. The Whistle Blowing Policy has been established and approved by the Board of Directors and communicated throughout the organization. The policy emphasizes to encourage and enable associates and third parties to raise any serious concerns on wrongdoing, irregularity or impropriety within the Group. The Head of Group Internal Audit was appointed as the Receiving Officer or a channel for stakeholders to communicate critical corporate issues with the Company, any concerns can be raised either in writing via “ethics@lrh.co.th” or directly by hotline number 66 (0) 2285 0112.  The Receiving Officer will ensure that the report from the whistle blowers will be professionally and independently addressed, assessed and investigated.  Additional the Whistle Blowing Evaluation Team, comprising of members of Audit and Risk Committee and Head of Group Internal Audit, was set up to evaluate the reports from whistle blowers, assess and review the nature of the complaints, and set the direction of the investigation, where necessary.  An appropriate timeframe to consider the complaints is set and the protection of the genuine whistle blowers from any unfair treatment will be observed.  If, at the conclusion of an investigation, the Company determines that a violation has occurred or the allegations are substantiated, effective remedial action commensurate with the severity of the offence will be taken.  Results and conclusions of the investigation shall be reported to the Board of Directors.  There have been no complaints or allegations during the past year.

Policy on Environmental and Social Sustainability

The Company is committed to strive towards achieving environmental and social sustainability.   With the participation in EarthCheck program, which is widely regarded as the world’s leading sustainable environmental benchmarking and certification program used by the travel and tourism industry, the Company is committed to continually improve its environmental and social sustainability performance by implementing an environmental management system, identifying environmental risks, recording and monitoring any impact to meet the standard of EarthCheck and will comply with all relevant legislation and regulations, and strive to achieve international best practice.  In 2015, the Company was certified to environmental standards and achieved EarthCheck Silver Certification.

The Company has constantly provided an environmental training session for employees to raise awareness about environmental sustainability.  A risk assessment on potential environmental impacts resulting from the Company’s business operation have been conducted and an environmental approach have been established and communicated throughout the organization by posting on intranet and bulletin board so that all employees understand the policy and contribute to environmental sustainability.

Policy on Preventing Violation of Intellectual Property or Copyright

The Company has established a policy and practice not to support any violation of intellectual property or copyright, which has been stipulated in the Code of Corporate Conduct such as using a licensed computer program or program authorized by the copyright owner and restricting computer program installation by authorized person only.  The use of computers and information technology will be monitored periodically by the Group Internal Auditor.  There is no violation of intellectual property or copyright found in the past year.

Policy on Respecting Human Rights

The Company gives importance to respecting human rights by conducting business in compliance with laws and human rights which are the basic rights ensuring that all human beings are born free and equal in dignity and rights without discrimination against race, nationality, color, gender, religion, age, language, personal status, social value, education or political opinion.

The Company provides equal opportunity to all employees in working under the rules, regulations, notifications and orders of the Company.  The Company treats the employees’ personal information confidential and shall neither send or distribute such information to irrelevant person nor disclose personal information without the consent of the owner.  The Company also supports and respects the protection of human rights e.g. by not conducting or concerning in any violation of human rights such as forced labor, unfair dismissal and the use of child labor.   No complaints on the unfair treatment to employees in the past year.

Information Disclosure and Transparency

The Company’s emphasis on the disclosure of accurate and complete information in a transparent and timely manner as shown by the following.

4.1 Each of the directors and executives of the Company has filed with the Company a report covering his interest or his related person’s interest in relation to management of the Company or its subsidiaries in accordance with the criteria and procedures as specified in the notification of the Capital Market Supervisory Board, and has updated and filed with the Company within 30 days should there be any change in the report.   The report is also included in the agenda of the Board meeting for the Board’s acknowledgment once every 3 months.

4.2 In the previous year, the Company disclosed all general and financial information as well as information which may affect the price of the Company’s securities correctly, completely, transparently and on a timely manner, in accordance with the rules and regulations of the SEC and the SET. All information is communicated to investors, shareholders and relevant sectors through the channels of the SET and the Company’s website (www.lagunaresorts.com).

4.3 Individual investors, shareholders, stock analysts and state agencies may contact the Company through the Company Secretary at telephone number 66 (0) 2677 4455 or at “ir@lagunaresorts.com”.

4.4 The Company’s financial statements contain accurate and complete information and are prepared in accordance with generally accepted accounting standards.  In addition, they are audited / reviewed by auditors from a well-known auditing firm approved by the Securities and Exchange Commission (currently EY Office Limited) and are approved by the Company’s Audit and Risk Committee and Board before being disclosed through the SET. The information relating to the “Board of Directors’ Responsibility for the Company’s Financial Statements” is available in the Company’s Annual Report. In 2016, the Company’s quarterly and annual financial statements were unconditionally certified by the auditor.

4.5 The Company wishes to refer the following matters to the disclosure made in other places:

4.5.1 The name of directors and the scope of the powers, duties and responsibilities of the Board and other committees are detailed under the heading “Management Structure” in the Form 56-1 and in the Company’s Annual Report.

4.5.2 6e professional experience of the directors, members of other committees, Head of Group Internal Audit and Company Secretary is detailed in Attachment 1 to Form 56-1 and under the heading “Board of Directors Management, Head of Group Internal Audit and Company Secretary of the Company” in the Company’s Annual Report.

4.5.3 The number of Board meetings held and the number of Board meetings attended by each director in 2016 are detailed in clause 5 under “Board Responsibility” hereof.

4.6 The performance of the Audit and Risk Committee in the past year is detailed in Attachment 4 to Form 56-1, and under the heading “Report of the Audit and Risk Committee” in the Company’s Annual Report.

4.7 The performance of the Nomination and Remuneration Committee in the past year is detailed in Attachment 5 to Form 56-1, or under the heading “Report of the Nomination and Remuneration Committee” in the Company’s Annual Report.

4.8 The remuneration for directors and management is detailed under the heading “Directors’ and Management’s Remuneration” in Form 56-1 and in the Company’s Annual Report.

4.9In 2016, the Company made full disclosure of information within the time frame specified in the regulations of the SET and the SEC.  In addition, neither the SET nor the SEC challenged that the Company had failed to comply with any disclosure requirement.

Board Responsibility

5.1 Board Structure

5.11 Members of the Board and Terms of Directorship

The Company’s Board of Directors currently comprises 12 members, 4 of whom are Independent Directors namely Mr. Vudhiphol Suriyabhivadh, Mr. Udom Vichayabhai, Dr. Jingjai Hanchanlash and Ms. Srinthorn Ounayakovit, representing one-third of the total Board members.

The Board member are selected on the basis of, among other things, knowledge, experience, skill, diversity of expertise, integrity, abilities to make independent analytical inquiries, and their understanding of the Company’s business.  Currently the Board comprises business leaders and professionals with financial, accounting, legal, business management and sales & marketing backgrounds.

Directors and senior management of the Company have never been an employee or partner of the current external auditor in the past 2 years.

All independent directors of the Company are independent of management and major/substantial shareholders and meet the Company’s definition of Independent Director which also in line with the qualification of Audit Committee in accordance with the notification of the Capital Market Supervisory Board.

The Company’s directors are the persons with knowledge, competence, honesty, have ethical business practices and sufficient time to devote themselves to serve the Company.  There are no independent directors of the Company who serve on more than five boards of listed companies and no executive directors who serve on more than two boards of listed companies outside of the Group.

The Company’s policy to fix the term of office of directors is under Article 14 of the Company’s Articles of Association which stipulates that at each annual general meeting, one-third of directors shall retire from office and that the director who has been longest in the office shall retire.  Therefore, the term of office of a director of the Board shall be 3 years. Retiring directors would be eligible for    re-election.

5.12 Definition of “Independent Director”

“Independent Directors” means the persons who have all the necessary qualifications and independence which meet the criteria set by the Capital Market Supervisory Board. At present, the said criteria prescribe that the qualifications of an Independent Director are as follows:

(a)    holding shares not exceeding 1 percent of the total number of voting rights of the Company, its parent company, subsidiary, affiliate or juristic person which may have conflicts of interest, including the shares held by related persons of the independent director;

(b)    neither being nor having been an executive director, employee, staff, or advisor who receives salary, or a controlling person of the Company, its parent company, subsidiary, affiliate, same-level subsidiary or juristic person who may have conflicts of interest unless the foregoing status has ended not less than 2 years prior to the date of appointment;

(c)    not being a person related by blood or registration under laws, such as father, mother, spouse, sibling, and child, including spouse of the children, executives, major shareholders, controlling persons, or persons to be nominated as executive or controlling persons of the Company or its subsidiary;

(d)   not having a business relationship with the Company, its parent company, subsidiary, affiliate or juristic person who may have conflicts of interest, in the manner which may interfere with his independent judgement, and neither being nor having been a major shareholder, non-independent director or executive of any person having a business relationship with the Company, its parent company, subsidiary, affiliate or juristic person who may have conflicts of interest unless the foregoing relationship has ended not less than 2 years prior to the date of appointment.

The term ‘business relationship’ in the aforementioned under paragraph one includes any normal business transaction, rental or lease of immovable property, transaction relating to assets or services or grant or receipt of financial assistance through receiving or extending loans, guarantee, providing assets as collateral, including any other similar actions, which result in the Company or his counterparty being subject to indebtedness payable to the other party in the amount of 3 percent 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 calculation method for value of connected transactions under the Notification of the Capital Maret Supervisory Board governing rules on connected transactions mutatis mutandis. The combination of such indebtedness shall include indebtedness taking place during the course of one year prior to the date on which the business relationship with the person commences;

(e)    neither being nor having been an auditor of the Company, its parent company, subsidiary, affiliate or juristic person who may have conflicts of interest, and not being a major shareholder, non-independent director, executive or partner of an audit firm which employs auditors of the Company, its parent company, subsidiary, affiliate or juristic person who may have conflicts of interest unless the foregoing relationship has ended not less than 2 years from the date of appointment;

neither being nor having been any professional advisor including legal advisor or financial advisor who receives an annual service fee exceeding Baht 2 million from the Company, its parent company, subsidiary, affiliate or juristic person who may have conflicts of interest, and neither being nor having been a major shareholder, non-independent director, executive or partner of the professional advisor unless the foregoing relationship has ended not less than 2 years from the date of appointment;

not being a director who has been appointed as a representative of the Company’s director, major shareholder or shareholders who are related to the Company’s major shareholder;

not operating any business which has the same nature as and is in significant competition with the business of the Company or subsidiary, or not being a principal partner in any partnership, or not being an executive director, employee, staff, or advisor who receives salary; or holding shares not exceeding 1 percent of the total number of voting rights of any other company operating a business which has the same nature as and is in significant competition with the business of the Company or subsidiary;

not having any characteristics which make him incapable of expressing independent opinions with regard to the Company’s business affairs.

After having been appointed as independent director with qualifications complying with the criteria under (a) to (i) of paragraph one, the independent director may be assigned by the board of directors to take part in the business decision of the Company, its parent company, subsidiary, affiliate, same-level subsidiary or juristic person who may have conflicts of interest on the condition that such decision must be a collective one.

5.1.3 Nomination and Appointment of Directors

The nomination for the Company directorship including an independent director will be based on the suggestion among directors or searching from professional director pool e.g. the Thai Institute of Directors Association (IOD) where a candidate had undergone the director certification programs.  The nomination is considered from the board diversity, competence, knowledge, working experience, expertise from variety of professions, necessary skills which are lacking among the existing Board of Directors, to be of any gender and to have the qualifications prescribed by the SET, the SEC, the Capital Market Supervisory Board and the Public Limited Companies Act. The Nomination and Remuneration Committee will consider and recommend qualified candidates to the Board of Directors and/or the Annual General Shareholder Meeting for approval in each case. Details of director appointment are described under the heading “Method of Appointment and Removal of Directors as included in the Company’s Articles of Association”.

5.1.4 Roles of the Chairman of the Board

The key roles of the Chairman of the Board are: to ensure that Board meetings are conducted effectively and matters that are essential to the Company’s operations and/or performances are placed on the meeting agenda, particularly matter related to corporate strategy; to allocate sufficient time for management to present clear and timely information; to allow board members to express their opinions and ask questions; and to ensure that board resolutions are clear and the minutes are accurate.  The Chairman of the Board also presides over the shareholders’ meeting.  In making decision, the Chairman has a deciding or casting vote in the event of tied votes.

5.1.5 Aggregation or Separation of Positions – Chairman of the Board and Chief Executive Officer

Currently, Mr. Ho KwonPing is the Chairman of the Board and the Chief Executive Officer of the Company.  He is closely associated with the Group’s success.  The Board is of the view that the current structure is appropriate and adequate given that Mr. Ho KwonPing has been able to effectively and competently execute the responsibilities of both the Chairman of the Board and Chief Executive Officer positions.

5.2 Sub-Committees

The Board approved the establishment of two sub-committees comprising all Independent Directors to assist the Board to screen details in order to achieve operational efficiency. Additionally, in order to perform their duties transparently and independently, the Chairman of the Board is neither a Chairman nor a member of both committees as follows:

5.2.1 Audit and Risk Committee

The Audit and Risk Committee comprises three independent directors, one of whom has adequate expertise and experience to review the creditability of the financial reports by reviewing the financial reports of some listed companies in the Stock Exchange of Thailand.  The members and the scope of duties and responsibilities of the Audit and Risk Committee have been disclosed under the heading “Management Structure” in Form 56-1 and in the Company’s Annual Report.

5.2.2 Nomination and Remuneration Committee

The Nomination and Remuneration Committee comprises three independent directors, thus forming a strong and independent element which will enable decisions on nomination and remuneration to be made independently.  Members and the scope of duties and responsibilities of the Nomination and Remuneration Committee have been disclosed under the heading “Management Structure” in Form 56-1 and in the Company’s Annual Report.

5.3 Role, Duty and Responsibility of the Board

5.3.1 Corporate Governance Policy

The Company is committed to maintaining high standards of good corporate governance within the Company. The Company has adopted and is continuously developing a set of good corporate governance practices and policies which are modeled on the 2006 principles of good corporate governance for listed companies advocated by the SET. The Company has also adopted and continues to apply the Code of Corporate Conduct approved by the Board of Directors and communicated throughout the organization. The Standard Operating Procedures have also been documented and applied by the Company. In addition, new internal rules and regulations with an aim to continuously improve the good corporate governance of the Company are approved and announced from time to time.

In the past year, there was no director resigned due to the issue of corporate governance of the Company and no conduct causing a negative reputation of the Company due to the failure of the Board of Director’s supervisory performance.

5.3.2 Code of Corporate Conduct

The Board of Directors has approved the Code of Corporate Conduct to set the framework for its officers, executive directors, associates and agents to act in business matters solely for the benefit of the Company and not enter into any business or other transactions which cause or appear to cause a conflict of interest between him / her and a hotel within the group, the Company / subsidiary, owning company or any other related parties.  The Code of Corporate Conduct was distributed and communicated to all relevant persons in order to understand and to strictly adhere to the Code accordingly.  The Code was drafted based on the highest level of business ethics and law compliance.

During 2016, the Company’s Board of Directors was not aware of any claim or allegation that the Company’s Code of Corporate Conduct was disobeyed.

5.3.3 Leadership and Vision

The Board’s primary functions are to set and annually review vision, mission, corporate policy and overall strategy for the Company and to provide effective oversight of the management of the Company’s business and affairs.

Investment & Debt Approval Policy

The delegation of authority by the Board to the management is clear. All major investments, acquisition of assets and loans made by the Company and/or its subsidiaries require approvals from the Board as follows:

New investments and acquisition of assets with the value from 1.5 percent of the Company’s total assets and

New loans with the value from 5 percent of the Company’s shareholders’ equity

The approval to enter into a significant transaction by the Company’s Board of Directors and/or shareholders’ meeting as well as all information disclosure must comply with rules and regulations of the Stock Exchange of Thailand and/or the Capital Market Supervisory Board.
Duties and responsibilities of the Board have been disclosed under the heading “Management Structure” in Form 56-1 and the Company’s annual report.

5.3.4 Conflict of Interest

Transactions between the Company and its related parties which may give rise to a conflict of interest are scrutinized by the Audit and Risk Committee and if necessary, the approval to enter into such transactions is sought from the Board of Directors and/or shareholders.  Any director or management who has an interest in, or is related to, such transaction will not participate in the decision-making process.
Such transactions are made on terms and pricing that has been negotiated on an arm’s length basis.  In the event that the price is unavailable, the Company will then rely on the report of an independent appraiser appointed by the Company to value important related party transactions to arrive at a pricing which is fair to both the Company and the related party.
All related party transactions are disclosed clearly and accurately.  Details are further described under the heading “Related Party Transactions” in Form 56-1 and under the heading “Persons with Mutual Interest and Connected Transactions” in the Company’s Annual Report.

5.3.5 Internal Audit and Control

The Company realizes the significance of effective system of control, such as Standard Operating Procedures, particularly in management and operations. Hence, the duties and responsibilities of the employees and the management are clearly defined. The Company has put in place policies to safeguard the Company’s assets and duties between the operators and the appraisal which are clearly separated for effective checks and balances. Furthermore, the Company has also implemented internal audit of the financial and information technology systems.
Internal Audit

Internal audit is an independent function within the Company which reports directly to the Audit and Risk Committee on audit matters and to the Managing Director on administrative matters. Internal audits are performed to assist the Board and Management in the discharge of their corporate governance responsibilities and to improve and promote effective and efficient business processes within the Group. The internal auditor plans its internal audit schedules annually in consultation with, but independent of, Management and its plans are submitted to and approved by the Audit and Risk Committee. The Audit and Risk Committee reviews the activities of the internal auditors on a quarterly basis to ensure it is adequately resourced; and has appropriate standing within the Company to perform its role effectively.

Enterprise Risk Management

In 2005 the Company appointed an external consultant to assist management in implementing a Risk Management framework for the business of the Company. The Risk Management framework covers all aspects of the Company’s operations to enable significant business risks within the Group’s current business environment to be identified, assessed, monitored, managed and evaluated. As part of the on-going risk management process, the Company’s Group Risk Committee annually conducts a risk assessment, evaluation and treatment; considers the adoption of adequate and cost-effective system of internal controls to mitigate significant business risks; and provides for significant risks to be managed through regular reviews by the Company’s Group Risk Committee and the Audit and Risk Committee. The Audit and Risk Committee has reviewed the Group’s risk management processes and procedures and is satisfied that there are adequate internal controls in place to manage the significant risks identified.

5.3.6 Meetings of the Board and Committees

1.     The Board

The Company conducts Board meetings at least 4 times a year on a quarterly basis which are planned and formally agreed upon in advance in the fourth quarter before the start of the new financial year. The meeting documents shall be sent out to the directors in advance at least 5 days prior to the meeting date.  Additional meetings are convened as and when circumstances warrant. In 2016, the Company conducted 4 Board meetings and the attendance of all directors is shown below.

Name Number of Attendances
    Mr. Ho KwonPing

4

    Mr. Vudhiphol Suriyabhivadh

4

    Dr. Jingjai Hanchanlash

4

    Mr. Udom Vichayabhai

4

    Ms. Srinthorn Ounayakovit

4

    Mr. Surapon Supratya

3

    Mr. Ho KwonCjan

4

    Mr. Ariel P. Vera

4

    Mr. Eddy See Hock Lye

4

    Mr. Ho Ren Hua

4

    Mr. Shankar Chandran

4

    Mr. Stuart David Reading

4

The Board is of the view that the contribution of each director should not be focused only on his or her attendance at Board and/or Committee meetings.  A director’s contribution may also extend beyond the confines of the formal environment of Board meetings, through the sharing of views, advice, experience and strategic networking relationships which would further the interests of the Company.

2.     Audit and Risk Committee

The Company conducts regular scheduled Audit and Risk Committee meetings on a quarterly basis at least 4 times a year, prior to the Board meeting, which are planned and formally agreed upon in advance in the fourth quarter before the start of the new financial year. Additional meetings are convened as and when circumstances warrant. In 2016, the Company conducted 4 Audit and Risk Committee meetings. Each of the Audit and Risk Committee members attended all the meetings as follows:

Name Number of Attendances
Mr. Vudhiphol Suriyabhivadh

4

Mr. Udom Vichayabhai

4

Dr. Jingjai Hanchanlash

4

In addition, in 2016, the Audit and Risk Committee attended 1 non-management meeting with the external auditor to deliberate accounting approaches and audit plans.

3.     Nomination and Remuneration Committee

The Company conducts Nomination and Remuneration Committee at least   2 times a year.  The meetings are planned and formally agreed upon in advance in the fourth quarter before the start of the new financial year. Additional meetings are convened as and when circumstances warrant. In 2016, the Company conducted 2 Nomination and Remuneration Committee meetings. Each of the Nomination and Remuneration Committee members attended the meetings as follows:

Name Number of Attendances
Dr. Jingjai Hanchanlash

2

Mr. Udom Vichayabhai

2

Mr. Vudhiphol Suriyabhivadh

2

5.3.7 The Non-Management Meeting

The Company encourages non-executive directors to hold meetings with the external auditor as necessary without the presence of executive directors and management attendance to review and discuss freely on any business issues that are of interest.  In 2016, there was one non-management meeting held in November.

5.3.8 Board of Directors’ Report

1 Financial Report

The Board of Directors is accountable to its shareholders for the Company’s financial statements as well as the financial information as shown in the Annual Report. The Board of Directors is satisfied that the Company’s financial statements are prudently prepared in accordance with generally accepted accounting principles and are independently reviewed by the external auditors every quarter with a full audit performed at each year-end.  Additionally, the Audit and Risk Committee has been tasked to independently review the Company’s financial report and internal control practices directly with the auditors. All pertinent information relating to the financial statements is clearly and completely disclosed in the accompanying notes.

Details are described under the heading “Internal Control and Risk Management” in Form 56-1 and under the heading “Opinion of the Board of Directors on the Company’s Internal Control” and the “Board of Directors’ Responsibility for the Company’s Financial Statements” in the Company’s Annual Report.

2 Minutes of Meetings

The minutes of the meetings of the Board and other committees are accurately and completely recorded in all material aspects addressed at each meeting, including the questions, opinions and clarifications.  The Company has a safe and secure filing system in place to keep the minutes of meetings and other supporting documents.

5.3.9 Development of Directors and Management

The Company’s directors, management and employees are constantly encouraged to develop their skills by attending various seminars and training courses organized by various organizations, e.g. the Thai Institute of Directors Association, the SET and the SEC, etc. Seminars and training courses are periodically forwarded to them. Furthermore, relevant information is regularly provided to the directors so that they are kept abreast of latest developments thus enabling them to make informed decisions.  In 2016, Dr. Jingjai Hanchanlash, an Independent Director, attended the seminar “The UK Experience on Implementing the Enhanced Auditor Reporting” held by the SEC, SET and Federation of Accounting Professions.

Details of the training previously undertaken by each director are set out in Attachment 1 to Form 56-1 and under the heading “Board of Directors, Management, Head of Group Internal Audit and Company Secretary of the Company” in the Company’s Annual Report.

5.3.10 Orientation for New Director

The Company recognizes the importance of supporting new directors in performing their duties. The Company has provided the information on its business and other information related to the operations of the Company to new directors such as an annual report and relevant laws and regulations so that they are adequately informed of the rules and regulations and business of the Company prior to performing their duties.

Governing Over Operations of Subsidiary / Associated Companies

Members of the Company’s management have been assigned to act as Directors, as well as being entrusted with Directorship roles within subsidiaries and affiliates companies. They act as representatives on behalf of the Company. This allows the Company to have a say in the formation of policy. It also helps the Company to stay current and monitor the performance of these companies more efficiently, being able to closely track their key performance indicators.

Supervision on the Use of Inside Information

In order to prevent the misuse of confidential and price-sensitive corporate information, the Board of Directors of the Company approved the policy on dealing in securities of the Company which prohibits any directors, management and employees, regardless of rank, from disclosing or using such confidential and price-sensitive corporate information. Employees are prohibited to trade in the Company’s shares for personal gain or for any other reason not in the Company’s interest or dealing in the Company’s securities while in possession of unpublished confidential and price-sensitive information during the “embargo period” which is defined as 2 weeks before and up to the date of announcement of results for each of the first three quarters of the Company’s financial year, and 1 month before and up to the date of announcement of the full-year financial results. The policy and reminder of the embargo period is communicated to directors, management and employees on an annual and quarterly basis to strictly comply with this policy. Confidential and price-sensitive information is also restricted to only directors, management and those officers who have a direct responsibility over such matters. Any violation of this policy shall be subject to disciplinary actions under the working regulation. Additionally, the Company monitors the trading of the Company’s securities by its directors, and senior management who are required to report to the Board of Directors on a quarterly basis on the holding of the Company’s securities and in accordance with the rules of the Securities and Exchange Commission.

Auditors’ Remuneration

(for the fiscal year ended 31 December 2016)

6.1 Audit Fees

The Company and subsidiaries paid audit fees for the fiscal year to an audit firm which amounted to Baht 7,530,000 and subsidiaries paid audit fees to other audit firms which amounted to Baht 1,064,273. This amount does not include the audit fees paid by associated companies.

6.2 Non-Audit Fees

There is no non-audit fees for agreed upon procedures of net sales and other consultant fees for the fiscal year paid to other audit firms by the Company and subsidiaries. There is no outstanding commitment to pay any fees in the future for uncompleted engagements relating to the year 2016.