Corporate governance is the set of structures, principles and procedures that affects the way an organization is administered and includes the relationships among the Board of Directors, the management and all stakeholders. It is used as the framework for setting direction, objectives and procedures in the business operations so that the targets and mission are achieved, and competitiveness and enterprise value are enhanced, which will lead the organization to sustainable growth and stability.

The Bank has formulated the framework based on six principles which are of international standards as follows:

1. Accountability
2. Responsibility
3. Equitable treatment
4. Transparency
5. Code of conduct and code of ethics
6. Creation of long-term value added

Chapter 1 Structure and Responsibilities of Board of Directors

1. Structure of Board of Directors

   • 1.1 Leadership and vision

     The Board of Directors has a major role in corporate governance, with duties and responsibilities in formulating the Bank's policy, direction, target and strategy to ensure its operational efficiency and effectiveness. The Board Chairman is in charge of leading the Board and encouraging all Board members to share accountability and express ideas and comments in the capacity as directors on an equitable basis and in the best interests of the organization as well as fair treatment of shareholders.

   • 1.2 Composition and qualifications of Board of Directors
     • 1.2.1The Board of Directors is composed of professionals with diversified backgrounds in banking and finance, business administration, marketing, law, auditing and accounting, and government agencies; and shall have no disqualifications prescribed by law.
     • 1.2.2Pursuant to the Bank's Articles of Association, the Board shall have at least five members but not more than 12 members, and at least half of the members shall have domicile in the kingdom.
     • 1.2.3The Board of Directors by the consent of the Shareholders' Meeting shall comprise both executive directors and non-executive directors. Of the total members, at least three members or one-third shall be independent directors and the remaining shall be in fair proportion to and commensurate with the shareholding of the controlling shareholders.
     • 1.2.4The Board shall appoint one of its members to be the Chairman of the Board. The person so appointed shall not be the same person as the President. There is clear segregation of authority and duties in formulating policy, governance and administration of day-to-day business to prevent excessive use of power by any person and to ensure independence of the Chairman.

     Independent director means a director who does not have any related business or hold any position or have any beneficial interest with any other financial institution that may affect his or her independent decision. Each independent director shall have the following qualifications:

     • (a)Holding shares not exceeding one per cent of the total number of shares with voting rights of the Bank, its parent company, subsidiary company, associate company, major shareholder or controlling person, including shares held by related persons of such independent director;
     • (b)Neither being nor used to be an executive director, employee, staff, advisor who receives salary, or controlling person of the Bank, its parent company, subsidiary company, associate company, same-level subsidiary company, major shareholder or controlling person, unless the foregoing status has ended not less than two years prior to the date of filing an application with the Office of the SEC. Such prohibited characteristic shall not include the case where the independent director used to be a government official or advisor of a government unit which is a major shareholder or controlling person of the Bank;
     • (c)Not being 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 Bank or its subsidiary company;
     • (d)

       Neither having nor used to have a business relationship with the Bank, its parent company, subsidiary company, associate company, major shareholder or controlling person, in the manner which may interfere with his or her independent judgement, and neither being nor used to be a significant shareholder or controlling person of any person having a business relationship with the Bank, its parent company, subsidiary company, associate company, major shareholder or controlling person, 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.

       The term ‘business relationship' under the first paragraph shall include any normal business transaction, rental 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 Bank or its counterparty being subject to indebtedness payable to the other party in the amount of three percent or more of the net tangible assets of the Bank or twenty million baht 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;

     • (e)Neither being nor used to be an auditor of the Bank, its parent company, subsidiary company, associate company, major shareholder or controlling person, and not being a significant shareholder, controlling person, or partner of an audit firm which employs auditors of the Bank, its parent company, subsidiary company, associate company, major shareholder or controlling person, 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;
     • (f)Neither being nor used to be a provider of any professional services including those as legal advisor or financial advisor who receives service fees exceeding two million baht per year from the Bank, its parent company, subsidiary company, associate company, major shareholder or controlling person, and not being a significant shareholder, controlling person or 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;
     • (g)Not being a director appointed as representative of directors of the Bank, major shareholder or shareholder who is related to major shareholder;
     • (h)Not undertaking any business in the same nature and in competition to the business of the Bank or its subsidiary company or not being a significant partner in a partnership or being an executive director, employee, staff, advisor who receives salary or holding shares exceeding one per cent of the total number of shares with voting rights of other company which undertakes business in the same nature as and in competition to the business of the Bank or its subsidiary company;
     • (i)

       Not having any other characteristics which cause the inability to express independent opinions with regard to the Bank's business operations.

       After being appointed as independent director with the qualifications under (a) to (i) of the first paragraph, the independent director may be assigned by the board of directors to take part in the business decision of the Bank, its parent company, subsidiary company, associate company, same-level subsidiary company, major shareholder or controlling person, provided that such decision shall be in the form of collective decision.

       The provisions in (b), (d), (e) and (f) of the first paragraph relating to the consideration of qualifications of the Bank's independent directors during the two-year period prior to the date of filing an application with the Office of the SEC shall be applied to the application filed with the Office of the SEC from 1 July 2010 onwards.

   • 1.3

     Nomination, appointment and terms of director

     • 1.3.1The Bank has put in place the director nomination procedure that is transparent and open for inspection. The Nomination and Remuneration Committee shall be appointed to take charge of selecting and nominating qualified persons who have no disqualifications according to the law for appointment as directors by recommending through the Board of Directors before submitting to the meeting of the Shareholders for approval and appointment. This shall be compliant with the rules and procedure specified in the Bank's Articles of Association and the relevant laws.
     • 1.3.2Each director has term of office as prescribed in the Articles of Association, i.e. at every annual general meeting, one-third of the directors shall retire. In any subsequent years, the directors who have been in office the longest shall retire. The retired directors may be re-elected.
   • 1.4

     Directorship in other companies

     The Board has well realized the importance of efficient performance of duties as directors and executives of the Bank. It has thus worked out policy to determine the number of companies in which the President or the persons with managing power can assume directorship in line with the ethical practices prescribed by the relevant supervisory bodies, such as the Bank of Thailand (BOT) and the Stock Exchange of Thailand (SET) as follows:

     • 1.4.1Directors, managers, and persons with managing power of the Bank may assume either or several of the positions of Chairman, executive directors or authorized directors in other limited companies of no more than three business groups in compliance with the regulations of the BOT.
     • 1.4.2Directors of the Bank should hold directorship in not more than five listed companies.
   • 1.5

     Appointment of Company Secretary

     by the Board to perform duties of advising on laws and rules and regulations relevant to the Board members, and taking care of the activities of the Board members to ensure adherence to good corporate governance standards as below:

     • Give preliminary advice and suggestions to Board members on legal issues, and rules, regulations and practices of the Bank in a manner of good corporate governance.
     • Make arrangements for holding of Board meeting and Shareholders' meeting in line with the law and Articles of Association of the Bank, and take minutes of such meetings, as well as follow up the execution in accordance with the resolutions given at such meetings.
     • Ensure the disclosure of information and report of data on the part under responsibility to the supervisory bodies under the relevant rules and regulations.
     • Contact and communicate with Shareholders in general to ensure they are aware of their rights and have access to the news and information of the Bank.
     • Prepare and keep directors' register, invitation notice of Board meeting, minutes of Board meeting, annual report, and invitation notice of Shareholders' meeting, as well as keep directors' report on their beneficial interests, and proceed with any other activities as prescribed by law.

2. Roles, Duties and Responsibilities of Board of Directors

   • Perform duties as prescribed by law, and in accordance with the objectives and Articles of Association of the Bank as well as the resolutions of the shareholders' meeting with honesty, integrity and prudence in the best interests of the Bank and the shareholders.
   • Determine the Bank's business operation policies, strategies and targets, consider and approve its business policies and framework, and control and monitor the management's discharge of functions in accordance with the policies set forth in an efficient and effective manner in order to enhance financial value to the Bank and the shareholders.
   • Select and nominate individuals qualified for the shareholders' consideration and election as directors, and support the shareholders' exercise of rights with channels available for them to nominate candidates to stand for election as directors.
   • Select and nominate qualified individuals from diverse professional expertise and experience for appointment as top executives.
   • Approve business budgets based on joint consideration with the management.
   • Delegate authority to executives to carry out the tasks in accordance with the targets, except in case of significant issues with drastic impacts and those not in normal course of business of the Bank, such as investment in other businesses, making sizable transactions, etc., or the issues with conflict of interests of the executives, thereby the Board shall handle in order to relieve managerial risks, or make recommendation to the shareholders' meeting if shareholders' approval is required pursuant to the regulatory criteria.
   • Determine the issues to be brought by the management to the attention of the Board.
   • Establish measures for the management to take in order to meet the targets and plans set out, and ensure that the management communicates the policies, targets and plans to staff at all levels across the organization.
   • Supervise and monitor the management's business administration to ensure the Bank's operations comply with the laws and provisions in the relevant agreements.
   • Supervise and monitor the Bank's determination of risk factors, risk assessment, seeking risk management measures, risk monitoring and examination, and review of risk management system on a regular basis.
   • Ensure the Bank has in place and maintain adequate, appropriate and effective internal control system for the benefits of the Bank, determine clear guidelines to prevent and eliminate conflict of interests, formulate policy and procedure to control and prevent abuse of the Bank's inside information for own benefits, and assess and review internal control system at every year-end.
   • Coordinate and maintain good balance among different groups of stakeholders and the Bank by fair treatment of all parties.
   • Be accountable for the Bank's financial statements and disclosure thereof, and ensure monitoring of the management's operations is accessible by the Board and that of the Bank in overall by the shareholders,
   • Ensure there is operational reporting system to track whether the actual operations are on track compared with the targets and identify problems and obstacles so that the Board can monitor and improve or modify the action plans and strategies as deemed appropriate.
   • Set guidelines for evaluation of executives' performance to support consideration and adjustment of annual salaries and bonuses taking into account duties and responsibilities and associated risks, as well as enhancement of shareholder value in the long run.
   • Consider structure and guidelines of bonus and compensation payments to employees, contract employees or any person doing business for the Bank, whether full-time or part-time, as proposed by the management.
   • Appoint any person as advisor to the Board or request any professional opinion from external advisor to assist and advise on the Bank's operations at the Bank's own expense, and determine remuneration and bonuses as deemed appropriate.
   • Appoint a number of Board members to sit on other committees or subcommittees to take charge of any one or several activities, determine remuneration and bonuses for them as deemed appropriate, and render support to them with delegation of authority so that they can fully function and engage consultants/advisors with specialized expertise to give additional opinions at the Bank's own expense, as well as make available full-time staff to follow up, seek information and coordinate in support of the operations of the committees/subcommittees.
   • Ensure the Bank's complete, adequate, reliable and timely disclosure of information.
   • Put in place provisions regarding corporate governance principles, business ethics, director's handbook and policy, human resource management policy, and codes of conduct for staff to be internal guidelines and practices, and make regular review thereof within the proper timeframe to ensure updatedness and alignment with the current circumstances.

3. Establishment of Board Committees

   The Board has established Board committees comprising Audit Committee, Nomination and Remuneration Committee, Risk Management Committee, Management Committee, and others, to assist in screening and scrutinizing specific operations and support the performance of duties of the Board to ensure efficiency and effectiveness and so that the Bank has good corporate governance system. Bank committees have the duties and responsibilities as prescribed and ordered by the Board.

   • 3.1

     Audit Committee

     The Audit Committee is composed of at least three independent directors and at least one of them has good knowledge, expertise and experience in finance and banking. All of them shall be qualified as regards independence pursuant to the Notifications of the Capital Market Supervisory Board and the Stock Exchange of Thailand regarding Qualifications and Scope of Operations of Audit Committee.

     The Audit Committee's duties and responsibilities comprise review of the accuracy and reliability of the Bank's financial reports, review of the adequacy, appropriateness and efficiency of internal control, internal audit and risk management systems, review of the Bank's compliance with relevant laws and regulations, selection of auditors and determination of their remuneration, consideration of significant transactions that may have conflict of interests, and supervision of the disclosure of accurate and complete information.

   • 3.2

     Nomination and Remuneration Committee

     The Nomination and Remuneration Committee is composed of at least three non-executive directors and the Chairman of the committee shall be an independent director.

     The Nomination and Remuneration Committee has the following main duties and responsibilities:

     • Selection and nomination

       Determine policy, criteria and procedure of selecting the President and persons with managing power and nominating persons for appointment as members of Board committees to the Board for consideration and approval.

     • Determination of remuneration

       Determine policy on payment of remuneration and other benefits and set the amount of remuneration and other benefits to the President and persons with managing power, with clear and transparent criteria to ensure the President and persons with managing power receive proper remuneration commensurate with the duties and responsibilities assigned, for submission to the Board for consideration and approval, and formulate guidelines of annual evaluation of the performance of the President and persons with managing power.

   • 3.3

     Risk Management Committee

     The Risk Management Committee is composed of the President as the Chairman and members coming from Senior Executive Vice Presidents and Executive Vice Presidents in the relevant function lines, altogether five members at a minimum.

     Duties and responsibilities of the Risk Management Committee comprise determining overall risk management policy of the Bank, supervising and monitoring as well as reviewing and recommending on the policy, procedure, standard and strategy relating to risks and overall risk assessment, to ensure proper implementation of risk management strategy.

   • 3.4

     Management Committee

     The Management Committee is composed of the President as the Chairman and members coming from Senior Executive Vice Presidents and Executive Vice Presidents in the relevant function lines.

     The Management Committee principally takes charge of controlling, supervising and assessing results of operations of the Bank, and reviewing and adjusting business strategy to be in line with the policy.

4. Board of Directors Meeting

   • 4.1The Board meeting shall consist of at least one-half of the total number of directors to constitute a quorum in accordance with the law.
   • 4.2Directors with beneficial interests in any issues on the agenda shall not participate in the consideration of such issues or shall abstain from voting thereon to prevent conflict of interests. Moreover, the directors having or expected to have involvement in the consideration process should avoid or cease participating in such process or practice.
   • 4.3The schedule of the Board meeting shall be set in advance for the entire year at least once a quarter to allow the directors to arrange their timetable for attendance of every meeting. Special session of the meeting may be called by the Chairman as deemed appropriate.
   • 4.4The Chairman and the President or the Board Secretary shall jointly determine the businesses on the agenda for proposal to the Board meeting to ensure significant issues have been addressed.
   • 4.5The Board Secretary shall have the duty to send invitation notice together with meeting agenda and documents to the Board members at least seven days in advance to allow them to priorly study the issues and seek additional information necessary for their decision making through the Board Secretary.
   • 4.6The Chairman has the duty to take care of and allocate sufficient time for the management to present the proposed issues and the Board meeting to discuss and comment on key points at their discretion.
   • 4.7The Board shall encourage the President to invite top executives to attend the meeting and give additional information on the issues related directly to them to support the Board's consideration on the succession plan.
   • 4.8The Board shall require that non-executive directors hold meeting among them at least once a year without participation by any executive directors to open room for broad discussion on management problems.
   • 4.9The Board Secretary has the duty to prepare and submit the written draft minutes of the Board meeting to the Board members for their consideration within 14 days after the meeting. The minutes duly approved and adopted by the Board shall be kept and made available for inspection by the Board and relevant agencies.
   • 4.10If at any time the Chairman is absent or is unable to perform the duty and there is Vice Chairman, the Vice Chairman shall act as chairman of the meeting. If there is no Vice Chairman or the Vice Chairman is unable to perform the duty, the meeting shall elect one of the directors present at the meeting to act as chairman of the meeting. All resolutions of the Board meeting shall be passed by the affirmative vote of a majority of the directors. One director shall have one vote. In case of an equality of votes, the chairman shall have a casting vote.
   • 4.10If at any time the Chairman is absent or is unable to perform the duty and there is Vice Chairman, the Vice Chairman shall act as chairman of the meeting. If there is no Vice Chairman or the Vice Chairman is unable to perform the duty, the meeting shall elect one of the directors present at the meeting to act as chairman of the meeting. All resolutions of the Board meeting shall be passed by the affirmative vote of a majority of the directors. One director shall have one vote. In case of an equality of votes, the chairman shall have a casting vote.

5. Board Self-assessment

   The Board has made available Board self-assessment every year so that the Board can use as framework in the determination of standards, examine performance of duties and measurement and comparison of the results thereof with the operations according to the Board charter. This will reflect the Board's accountability for the results of the performance of duties to enhance higher efficiency.

6. Remuneration for Directors and Executives

   The Board has assigned the Nomination and Remuneration Committee to consider and determine the criteria for payment of remuneration and other benefits to the directors and executives at appropriate rates commensurate with the scope of duties and responsibilities assigned and in line with or on a par with those paid by other banks of similar ranks. The committee shall propose the matter for the Board's consideration before submission to the shareholders' meeting for approval.

7. Director and Executive Development

   The Bank has set a policy to encourage its Board members to attend training courses on the roles, duties and responsibilities of directors on a regular basis in a bid to enhance their knowledge and broaden their vision so that they can efficiently and effectively supervise and monitor the Bank's business operations.

   The Bank has also made available orientation session for new directors with provision of briefings on the Bank's overall business operations, business plan and operational plan, and director's handbook which features role, duties and responsibilities of directors and relevant rules and regulations to ensure the directors have sufficient information on these issues before commencing performance of duties.

8. Succession Plan

   The Bank has well been aware of the necessity in operating the business efficiently and continuously. Thus, Human Resources Management Division is responsible for providing Succession Plan to ensure that the Bank will have identified executives or talents as successors with appropriate training and development plan to up-skill each individual to be ready to replace key positions in case of unexpected conditions/situations with immediate effect, 1 year or more than 1 year. The necessary process to get the approval of the Management Committee is as follows:

   • 8.1Identify key positions in each Group/Division
   • 8.2Identify successor's required core competencies
   • 8.3Identify qualified managerial personnel/executives individually as appropriate successors to replace key positions with immediate effect or at least within a year
   • 8.4Identify qualified managerial personnel/executives individually as appropriate successors to replace key positions in more than 1-year time
   • 8.5Identify talents in key area as high potential resources to be successors in respective timeframe
   • 8.6Provide preparation and development plan to bridge the gap
   • 8.7Review and complete Succession Plan in place by quarter 3 each year

Chapter 2 Respect for Rights of Shareholders and Equitable Treatment of Shareholders

1. Rights of Shareholders

   The Bank has recognized the rights of all shareholders and encouraged them to exercise their basic rights on an equitable basis, such as:

   • 1.1

     Right to acquisition, sale and transfer of shares, and access to news and information of the Bank,

   • 1.2

     Right to sharing of profit on an equitable basis,

   • 1.3

     Right to attendance of meeting to exercise the right to vote, give opinion and suggestions, and make decision on the issues that have material impacts, such as election of directors, appointment of auditor, appropriation of profit, dividend payment, capital increase or decrease, approval of extra items, and so on.

2. Shareholders' Meeting

   • 2.1The Bank shall convene an annual ordinary general meeting of shareholders within four months from the end of each fiscal year. All other general meetings are called extraordinary meetings.
   • 2.2The Bank shall send an invitation notice to the shareholders giving details of the meeting agenda, such as factual information and rationale, opinions of the Board and criteria and procedure of meeting attendance. The notice shall be sent to the shareholders in advance of the meeting and within the timeframe set by law and also posted on the Bank's website to allow the shareholders enough time to study the issues to support their voting.
   • 2.3The shareholders are entitled to propose an issue to be included on the meeting's agenda and to propose names of persons to be elected as directors in advance of the meeting, the criteria and procedure of which shall be announced by the Bank through the SET and on its website.
   • 2.4Any shareholder who cannot attend the meeting in person may appoint a proxy to attend and vote on his/her behalf at such meeting. The proxy may be appointed from the list of the independent directors designated by the Bank to be the proxy to act or vote on the shareholder's behalf.
   • 2.5Shareholders are entitled to attend the meeting throughout the meeting session and to vote on the agenda items, except for the item in which such shareholders have beneficial interests. The chairman of the meeting has also given opportunity for the shareholders to raise questions and comments independently on each agenda item.
   • 2.6The chairman of the meeting should allocate proper time and encourage the shareholders to raise questions and comments at the meeting.
   • 2.7The Bank shall support the attendance of every meeting by the directors and chairmen of all the Board committees to learn about the opinions and comments raised by the shareholders and answer their questions on the relevant issues.
   • 2.8The Bank shall have the minutes of the meeting taken within 14 days from the meeting date and posted on its website so as to be inspected by the shareholders.

Chapter 3 Roles toward the Stakeholders

The Bank has realized the equitable rights of all stakeholders, namely shareholders, management, employees, customers, business partners, creditors, the public sector, and other organizations in the society, who are considered significant mechanisms in the development and improvement of the Bank's business operations for consistent growth in the long run. The practice and procedure for treatment of each group of stakeholders are thus stated in the Bank's codes of conduct to which all the personnel of the Bank shall mutually adhere.

Chapter 4 Disclosure and Transparency

1. The Bank has prepared information memorandum, financial report and other significant information such as that on financial status and operating results, corporate governance structure and other information in accordance with the relevant laws or regulations and as required by the regulators, and made such information available in annual report (Form 56-2), annual registration statement (Form 56-1) and others for accurate, complete, transparent and equitable disclosure to the public and all stakeholders.
2. The Bank has disclosed its information memorandum, reports and rules and regulations through supervisory bodies such as the SET and also through its own website in both Thai and English to ensure quick and convenient access to information by the shareholders and parties concerned.
3. Office of the President and Corporate Communication Office are in charge of handling and preparing the Bank's information memorandum and publicizing news and information beneficial to the shareholders, securities analysts and other relevant parties.

Chapter 5 Internal Control and Risk Management

The Audit Committee has performed duties as assigned by the Board of Directors by review of adequacy, completeness and appropriateness of internal control system, risk management, financial report, and internal audit work system development, as well as attendance of meetings with the management and certified public accountants for improvement and rectification thereof and in the adequacy assessment of the internal control system of the Bank.

Chapter 6 Prevention of Conflict of Interests

The Board has put in place measures to prevent transactions that may involve conflict of interests, or improper connected or related transactions. Policy, regulations and procedure in the consideration and approval of transactions have been mapped out as below:

• Making of such significant transactions as connected transactions and/or acquisition or disposal of assets of the Bank shall comply with the rules and regulations of the relevant regulators.
• The Bank has a policy to consider granting of credits to or making investments or commitments or making credit-like transactions with its major shareholder, or to the business in which directors or persons with managing power have beneficial interests in all cases pursuant to the ratio prescribed by the BOT. Such transactions are subject to unanimous approval by the Board and without involvement in the consideration and approval thereof by directors or persons with managing power who have beneficial interests in such credit or investment granting or credit-like transactions.

Monitoring of the Use of Inside Information

The Bank has established guidelines and regulations governing the use of inside information, thereby directors, executives and staff of the Bank are prohibited from using inside information which is of material aspect and has impact on the change of securities, and which has not yet been disclosed to the public, for their personal benefits or benefits to others or for competition in an undue or unrighteous manner.

Chapter 7 Business Ethics and Codes of Conduct

Treatment of stakeholders with adherence to highest ethical standards is essential to building good image and reputation of the Bank. The Board has formulated practices and procedure in the codes of conduct for the Board members, executives and employees to follow in their performance with accountability, integrity, fairness, confidentiality, professional morality and compliance with relevant criteria and rules in order to enhance confidence and trust among all stakeholders and parties concerned.