Corporate governance policy
The Company generally observes the principles of good corporate governance encouraged by the Stock Exchange of Thailand consistent with the Corporate Governance Code for listed companies 2017 developed by the Securities and Exchange Commission including the following:
Corporate governance policy
Rights of Shareholders
The Company recognizes the rights of shareholders, including the right to freely buy, sell, or transfer shares; to participate in, express opinions at, raise questions during, or propose agenda items for the annual general meeting of shareholders; nominate directors; and vote at general meetings of shareholders regarding the Company’s performance, election or removal of directors, directors’ remuneration, appointment of external auditors, auditor’s fee, declaration of final dividends, amendments to the Memorandum and Articles of Association, capital increases or decreases, and the approval of extraordinary transactions requiring shareholder approval. General meetings of shareholders are attended by relevant knowledgeable executives to answer questions.
Shareholders are provided with adequate information, including relevant opinions of the directors, regarding issues presented for voting at general meetings of shareholders in a timely manner to enable shareholders to exercise their voting rights effectively. The notice of general meeting of shareholders in both Thai and English are posted on the Company’s website at least 30 days before the meeting.
The Company facilitates and encourages its shareholders, including institutional shareholders, to attend the general meetings of shareholders. The Company attempts to select a meeting venue accessible by mass transportation for the convenience of its shareholders. In case of an appointment of a proxy, shareholders, including institutional shareholders, are encouraged to submit registration documents duly prepared in accordance with rules stipulated in the notice of the general meeting of shareholders along with all supporting documents to the Company prior to the meeting date.
A barcode system is used for registration and vote counting to expedite the registration and vote computation process.
The Company also provides stamp duty for the appointment of proxies.
Equitable Treatment of Shareholders
It is the Company’s policy that directors, officers, and employees should avoid any actual or apparent conflict between their own personal interests and the interests of the Company. Furthermore, directors, officers, and employees are expected to avoid securities transactions that are based on material, non-public information obtained through their positions with the Company. In relation to the potential misuse of insider information, the Company has undertaken the following steps:
- Educate the Company’s executives regarding their responsibilities to report holdings of the Company’s shares, and the penalties for non-disclosure under the Securities and Exchange Act B.E. 2535 and SET regulations;
- Advise the Company’s executives to report changes in such holdings of the Company’s shares to the SEC in accordance with the Securities and Exchange Act B.E. 2535;
- Counsel the Company’s executives on the sensitivities associated with the use of Company information which may have a bearing on the Company’s share price. The Company advises relevant employees one month prior to the release of the Company’s financial statements not to disclose any material information prior to disclosure of such information to the SET and the board of directors; and
- Remind the Company’s directors, executives, employees, and officers, that they and their respective spouses and dependents, are prohibited from using the Company’s information to sell, buy, transfer or receive any transfer of the Company’s shares before such information is disclosed to the public. Any such use may violate applicable laws and subject the individual to disciplinary action by the Company.
Role of Stakeholders
The Company recognizes the importance of the legal rights of various groups of stakeholders. We strive to provide channels for stakeholders to communicate their concerns with regard to potential irregularities, incorrect financial reporting, deficiencies in internal controls, or unethical practices.
We recognize the importance and value of the communities and the environment in which we operate. We have a policy that sets the expectation of compliance with all applicable laws, rules, and regulations, and reiterates the importance of respect for local and national cultures. Above all other objectives, we are dedicated to running safe and environmentally responsible operations.
Disclosure and Transparency
The Company expects compliance with its standards of integrity throughout the organization and will not tolerate employees who achieve results by violating laws or Company policies. It is expected that all transactions are appropriately and accurately reflected in the Company’s books and records. The falsification of books and records or the creation or maintenance of any off-the-record bank accounts is strictly prohibited.
It is the Company’s policy to make full, fair, accurate, timely, and understandable disclosures in reports and documents that the Company files with the authorities or in other public communications. Relevant information is disclosed to shareholders in accordance with applicable laws. In the past year, the Company disclosed essential matters as required by relevant rules and regulations through the Stock Exchange of Thailand in a timely manner. Financial reports and relevant information are also posted on the Company’s website (www.esso.co.th).
Moreover, the Company’s Investor Relations function serves as a focal point to conduct investor relations activities and ensure effective communication with investors and securities analysts. Various communication channels and methods are utilized including the Company’s website, quarterly analyst meetings, company visits, e-mails, and telephone calls.
Investor Relations Contact
Phone line: +66 02 262 4788
Board Structure and Responsibilities
The Board of Directors consists of people who have qualifications and related work experiences to create vision, policy, and business strategies for the Company. The Company operates with high standards based on appropriate risk management, strong business controls, and accountability to align with laws and regulations.
The Board Corporate Governance Guidelines reflecting the Company’s current practices suitable for the Company’s business was developed and posted on the Company’s website (www.esso.co.th).
(a) Board of Directors
For the fiscal year ended December 31, 2018, there were a total of 12 directors:
- 7 directors also hold executive officer positions
- 5 directors have no executive officer position
- 3 directors are also members of the Audit Committee
- 2 directors are also members of the Performance Evaluation Committee
The Company Secretary has responsibilities to support directors to arrange meetings, submit meeting invitation letters and materials, prepare minutes of meetings as well as store information of directors and related executives.
The Audit Committee, which was appointed by the Board of Directors, consists solely of independent directors who meet the qualifications set out in regulation of the Securities and Exchange Commission and Stock Exchange of Thailand.
The Performance Evaluation Committee was appointed by the Board of Directors. The Chairman and members of the Performance Evaluation Committee hold office for a term of two years subject to them retaining their position as directors of the Company.
(c) Scope of Duties and Responsibilities of the Board
The Board of Directors has full power and authority to conduct the Company’s business in accordance with the Company’s policies, objectives, Articles of Association, Board and shareholder resolutions and applicable laws. The Board also has duties and responsibilities prescribed in applicable laws. The Board appreciates the importance of good corporate governance, and believes in the following principles:
- Commitment to the creation of sustainable value to the business in the long run, management of the business with prudence, and the avoidance of conflicts of interest;
- Promote governance outcomes as a framework for the operation of the company and ensure that the company’s annual and medium-term objectives, goals, strategies, and plans are consistent with the long-term objectives, while utilizing innovation and technology effectively.
- Operation of the business in a transparent way with adequate disclosure to relevant parties;
- Operation of the business based on appropriate risk control and management systems;
- Implementation of appropriate Standards of Business Conduct applicable to the Company’s directors, officers, and employees.
- Regularly monitoring financial liquidity and debt servicing ability together with the management committee, including discussion to establish a mechanism to support operations under tight financial constraints
- Conduct an annual internal review of the implementation of the CG Code by means that are suitable to the company’s business.
The Board will issue a directors’ report on the activities of the Company and its financial performance for review prior to the shareholders’ meeting.
The Company realizes the importance of an effective internal control system at all levels. In this regard, extensive internal controls and procedures, including those set out in our System of Management Control (SMC) – Basic Standards and Controls Integrity Management System (CIMS) are fully established.
The internal control system, including compliance with policies and procedures and execution of all financial, operational and related controls, is formally assessed by the independent internal audit staff and the external auditors each audit cycle.
(d) Board Meeting
In accordance with the Articles of Association, the Board normally meets once every three months. However, additional meetings may be scheduled as required. The dates of the Board meetings throughout the year are scheduled with notification provided to each director in advance. Normally, the notice of the meeting is sent to the directors at least seven days prior to the date of the meeting.
The minutes of key items are documented and presented for approval at subsequent Board meetings, and retained for review by relevant persons.
Independent directors may meet to discuss Company items or issues without the presence of management. The outcome of such discussions are subsequently communicated to the Board.
(e) Directors and Executives Remuneration
The remuneration of directors who are not receiving separate compensation from the Company, or its affiliates for any type of full-time service is comparable to those paid by other companies.
(f) Director Development
Directors remain well-informed regarding current aspects of the Company’s operations, developments, and best practices in corporate governance and on a regular basis, and as needed, the Company provides an orientation for new directors. In that regard, the Board considers it desirable that directors participate in continuing education opportunities with relevant available training programs inside and outside the Company, such as the programs offered by the Thai Institute of Directors Association (IOD).
Authorized Directors and Sub-Committee
Mr. Jeremy R. Osterstock and the impression of the Company’s seal will bind the Company. Any two of the following six directors and the impression of the Company’s seal will bind the Company: Mr. Taweesak Bunluesin, Mr. Suchart Phowatthanasathian, Ms. Pajaree Meekangvan, Mr. Manoch Munjitjuntra, Ms. Ratrimani Pasiphol and Ms. Pachara Sungkhapan.
The powers exercised in any actions involving court proceedings, public prosecution, interactions with the police and other governmental entities will require the impression of the Company seal and the signature of any one of the following directors of the Company: Mr. Taweesak Bunluesin, Mr. Suchart Phowatthanasathian, Ms. Pajaree Meekangvan, Mr. Manoch Munjitjuntra, Ms. Ratrimani Pasiphol and Ms. Pachara Sungkhapan.
The Board will appoint from among its members any committees it determines are necessary or appropriate to conduct its business. Currently, the standing committees of the Board necessary and appropriated to conduct the Company’s business are the Audit Committee and Performance Evaluation Committee.
The Audit Committee members listed below were re-elected or elected (as the case may be) for another 3 year term effective October 19, 2017:
|Mr. Wattana Chantarasorn
||Independent Director / Chairman
|Mr. Buranawong Sowaprux1
||Independent Director / Member
|Ms. Prachit Hawat
||Independent Director / Member
(with accounting and finance background)
Ms. Pachara Sungkhapan is the Audit Committee secretary; Mr. Kriengkrai Srisawat is the Audit Committee Coordinator.
The scope of duties and responsibilities of the audit committee are as follows:
- to review the Company’s financial reporting process to ensure accuracy and adequacy;
- to ensure that the Company has a suitable and efficient internal control system and an internal audit system, to determine the internal audit unit’s independence, as well as to approve the appointment, transfer and dismissal of the chief of an internal audit unit or any other unit in charge of internal audit;
- to review the performance of the Company to ensure compliance with the securities and exchange law, regulations of the Stock Exchange of Thailand and laws relating to the business of the Company;
- to consider, select, nominate and recommend remuneration of the Company’s external auditors as well as to attend a non-management meeting with the external auditor at least once a year;
- to review connected transactions or transactions that may lead to a conflict of interest so as to ensure that they are in compliance with laws and the Exchange’s regulations, and are reasonable and for the benefit of the Company;
- to prepare a report on monitoring activities of the Audit Committee and disclose it in the annual report of the Company, and have such report signed by the Chairman of the Audit Committee provided that it shall consist of at least the following information:
- opinion on the reliability, completeness and credibility of the Company’s financial reports,
- an opinion on the adequacy of the Company’s internal control system,
- an opinion on the Company’s compliance with the securities and exchange laws and regulations, and others laws applicable to the Company’s business,
- an opinion on the suitability of the nominated external auditors,
- an opinion on transactions that may lead to conflicts of interest, if any,
- the number of audit committee meetings, and the attendance at such meetings by each committee member,
- an opinion or general comment observed by the audit committee from its performance of duties in accordance with the charger, and;
- other transactions, within the scope of duties and responsibilities assigned by the Board, which, according to the audit committee’s opinion, should be disclosed to the shareholders and general investors;
- to perform any other task assigned by the Board and agreed to by the Audit Committee;
- to report to the Board for rectification within the period that the Audit Committee thinks fit if the Audit Committee found or suspected that there is a transaction or any of the following acts which may materially or significantly affect the Company’s financial condition and operating results;
- a transaction which causes a conflict of interest;
- any fraud, irregularity, or material defect in an internal control system; or
- an infringement of the securities and exchange laws and regulations, or any law applicable to the Company’s business; and
- to review without delay after receiving written notice from the external auditor of the discovery of any suspicious circumstance that the director, manager or any person responsible for the Company commits an offense as prescribed by the relevant Securities and Exchange regulations, report any finding confirming the suspicion of the external auditor to the Board and request the Board to disclose such finding to the Office of the Securities and Exchange Commission and/or the external auditor or to the Office of the Securities and Exchange Commission and/or the external auditor as required by the Securities and Exchange Act within thirty days.
In 2018, the Audit Committee met 6 times which included meetings involving individual discussions with the external auditors. The details of attendance are as follows:
|Name||Audit committee attendance (times)|
|Mr. Wattana Chantarasorn||6/6|
|Mr. Smit Tiemprasert
|Ms. Prachit Hawat
Performance Evaluation Committee
The Performance Evaluation Committee members listed below were re-elected or elected (as the case may be) for another 2 year term effective November 29, 2017:
|Mr. Buranawong Sowaprux1
Independent Director, Chairman of Performance Evaluation Committee and Member of Audit Committee
|Mr. Taweesak Bunluesin||Director and Member of Performance Evaluation Committee|
Performance Evaluation Committee Responsibilities
The scope of duties and responsibilities of the Performance Evaluation Committee are to assess the performance of the Managing Director, to review the Managing Director’s performance with the Board, and to provide feedback to the Managing Director’s home affiliate regarding such performance during the regular performance appraisal cycle.
In addition to the qualification described in Nomination of Directors and Executives, independent directors meet the following qualifications pursuant to the regulation of the Securities and Exchange Commission and Stock Exchange of Thailand:
- Not hold shares exceeding 1% of the total number of voting rights of the Company, its parent company, its subsidiaries, affiliates, major shareholder or controlling person, including the shares held by related persons of the independent director;
- Not be nor have been an executive officer, employee, staff, salaried consultant or a controlling person of the Company, its parent company, its subsidiaries, affiliates, same-level subsidiaries, major shareholder or controlling person, unless foregoing status has ended not less than two years prior to the date of appointment except where the independent director(s) was the government officer or consultant of the government agency which is the major shareholders or a controlling person of the Company;
- Not be a person related by blood or registration under laws, such as father, mother, spouse, sibling or child, including spouse of the children, executives or majority shareholders or controlling persons or persons to be nominated as executive or controlling persons of the Company or its subsidiaries;
- Not have business relationship with the Company, its parent company, its subsidiaries, affiliates or major shareholder or controlling person in a manner which may interfere with his independent judgment and neither being nor having been a significant shareholder or controlling person of any person having business relationship with the Company, its parent company, its subsidiaries, affiliates, major shareholder or controlling person unless the foregoing relationship has ended not less than two years prior to the date of appointment. The term “business relationship” includes the normal business transaction, rent or lease of immovable property, transactions related 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 amounting to three (3) percent or more of the net tangible assets of the Company or Baht twenty (20) million, whichever is lower. The value of the business relationship shall be calculated according to the method stipulated by the Capital Market Supervisory Board governing rules on connected transactions. 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;
- Neither be nor have been an auditor of the Company, its parent company, its subsidiaries, affiliates, major shareholder or controlling person, and not being a significant shareholder, controlling person, or partner of an audit firm which employs auditors of the Company, its parent company, its subsidiaries, affiliates, major shareholder or controlling person, unless the foregoing relationship has ended not less than two years prior to the date of appointment;
- Neither be nor have been any professional advisor including legal advisor or financial advisor who receives an annual service fee exceeding two million Baht from the Company, its parent company, its subsidiaries, affiliates, major shareholder or controlling person, and neither being nor having been a significant shareholder, controlling person or partner of the professional advisor unless the foregoing relationship has ended not less than two years prior to the date of appointment;
- Not be 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 operate a business of the same nature as and in competition with the Company or subsidiaries nor be the partner or executive, director, employee, staff, salaried consultant or hold share exceeding 1% of the total number of voting rights of the other companies operating the business of the same nature as and in competition with the Company or subsidiaries; and
- Not have any characteristics which make him incapable of expressing independent opinions with regard to the Company’s business affairs.
Nomination of Audit Committee
The Audit Committee which was appointed by the Board of Directors, is comprised solely of independent directors who meet the qualifications set out in regulation of the Securities and Exchange Commission and the Stock Exchange of Thailand regulations. The Chairman and members of the Audit Committee hold office for a term of three years subject to them meeting the requisite qualifications and remaining as directors of the Company.
Nomination of Directors and Executives
In the event a director vacancy arises or in the event that an additional director is to be appointed, the remaining directors will nominate a qualified director with relevant knowledge, experience and skill to fill the vacancy. An appointed director must have all the qualifications set out in Section 68 of the Public Limited Companies Act B.E. 2535 (and as amended) and the Securities and Exchange Commission Notification, “The Characteristics including a Lack of Suitability and Trustworthiness of the Director and Executive” (and as amended). For directors retiring by normal rotation or for election of new directors, after the Board has approved the list of director nominees, the Board will propose the list of nominees at a general meeting of shareholders in accordance with the voting procedures described under Board of Directors - Board Appointment.
The appointment, removal or resignation of directors is prescribed in our Articles of Association which is summarized as follows:
- The Board shall consist of at least five directors and not less than half of the directors are required to reside in Thailand.
- The shareholders shall appoint directors in accordance with the following principles and procedures:
- In the election of each director, each shareholder will have vote(s) equal to the number of shares held by him/her.
- Each shareholder may vote all of his/her shares in the exercise of the right he/she has under (i) to elect each of candidate of his/her choice as a director but he cannot split his/her shares and cast his/her split votes in favor of two or more candidates to one directorship; and
- Candidates who receive the largest number of votes in descending order from the highest to the lowest number of votes received will be elected until all director positions required at such time are filled. In the event of candidates receiving equal votes and exceeding the number of vacancies to be filled, the chairman of the meeting shall have a casting vote, or, in case the chairman is not the Company’s shareholder, the decision shall be made by drawing lot;
- At each annual general meeting of shareholders, one-third or the number of directors closest to one-third, of the Board is required to retire. Retiring directors are eligible for re-election;
- Any director who decides to resign must submit a letter of resignation to the Company. The resignation shall be effective on the date the Company receives the letter; and
- Removal of a director before the end of term shall require a resolution of shareholders passed by not less than three-fourths of the total numbers of shareholders and proxies (if any) attending the meeting and eligible to vote and not less than one-half of the total number of shares held by shareholders and proxies (if any) attending the meeting and eligible to vote.
Managing Director’s Responsibilities
The Managing Director has full power to manage the affairs of the Company in accordance with its policies, objectives, Articles of Association, Board and Shareholders’ resolutions, and applicable laws provided that the Managing Director may not exercise such powers if he/she may have a conflict of interest in any manner with the Company, in exercising such authority.
If the Managing Director delegates powers to a person, such person shall have the authority to exercise such authority on the Managing Director’s behalf, provided that such person may not exercise such authority if he/she has a conflict of interest in any manner with the Company, in exercising such authority.
Nevertheless, the Board has set some limitation on the Managing Director’s power such as Mr. Jeremy R. Osterstock, Managing Director, is authorized to singly sign a check up to Baht 1 million only.
Subsidiaries’ Operation Monitoring
The Company as the shareholder shall appoint its representative to attend the meeting of its subsidiaries. The representative of the Company shall vote at the general meeting of shareholders in accordance with the principle or guidance provided by the Company. The Company shall have the same rights as other shareholders except for certain rights e.g. right to receive a dividend payment or right to nominate director in those subsidiaries pursuant to Articles of Association of those subsidiaries. In the past, the Company, as the shareholder, passed the resolution to appoint the Company’s employees as the directors and managing director of those subsidiaries. Those directors shall have power to operate the business in accordance with policy, objectives and articles of association, resolutions of board of directors and shareholders as well as applicable laws.
Refer to Equitable Treatment of Shareholders
The audit fees paid to the office of the external auditor, PricewaterhouseCoopers ABAS Limited, for the 2018 accounting period were Baht 4,500,000. There were no other fees paid to the Company’s auditor.
Implementation of the Corporate Governance Code for listed companies 2017
In 2018, the Board acknowledged the result of self-assessment of the application of the 2017 Corporate Governance Code conducted by working team. In generally, the Company’s existing policies, tools, processes and practices substantially fulfill the intended outcome of the 2017 CG Code. The Board further approved that the designated team together with the Board conduct an assessment of the application of the 2017 CG Code and review the result with the Board on an annual basis.
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