The Board of Directors at its Meeting No. 3/2015 on 26th June 2015 duly considered and approved the application of Corporate Governance Policy (1st Revision) and Business Ethics (1st Revision) which is amended from the former policy as of 3rd February 2015. The purpose of revision is to conform to the criteria of the ASEAN Corporate Governance Scorecard (ASEAN CG Scorecard), and also to prepare to be a member of Collective Action Coalition against Corruption. The newly revised Corporate Governance Policy and Business Ethics include principle regarding Anti-Corruption Policy, Policy on Providing Information of Commission of Wrongdoing and Dishonesty, Investigation, and Protection of Informant. The newly revised Corporate Governance Policy comprises 7 Chapters; and Business Ethics comprises 16 Chapters. The 1st revision was effective on 27th June 2015. A Corporate Governance Policy comprises as follows:
- Rights of Shareholders
- Equal Treatment of Shareholders
- Roles of Stakeholders
- Disclosure of Information and Transparency
- Roles and Responsibility of Board of Directors
- Giving Information of Wrongdoing and Dishonest Acts
- DOWNLOAD PDF FILE CORPORATE GOVERNANCE POLICY
Disclosure of Information and Transparency
The company ensures that corporate information is provided correctly, accurately, on time, and transparently through channels that are trustworthy and equally easy to access for the public. The followings are corporate practices:
- Annual Statement (Form 56-1) is disclosed within 3 months after accounting period end and Annual Report (Form 56-2) is disclosed within 4 months after accounting period end through the SET channels and corporate website, www.kslsugar.com. There are also updates related to the company and the industry posted on the website to facilitate decision-making of those involved.
- In the previous year, the company’s disclosure of information and transparency were approved by the Securities and Exchange Commission and the Stock Exchange of Thailand, as its practice was in accordance with disclosure requirements. Effectiveness of the corporate information disclosure procedure was evaluated by outsiders.
- The company disclosed additional information including duties of the Board of Directors and committees, the director and executive remuneration policy, summarized corporate governance policy, environmental and social policies, the company’s compliance with established policies, summarized business ethics, and directors’ training background were disclosed.
- A statement of the Board of Directors’ responsibilities for the company’s financial statements is provided along with the auditor’s report in the corporate annual report. The contents include the certification that the company’s financial statements are fairly presented in accordance with generally accepted accounting principles and regulations, and that the financial statements are accurate, complete, and true according to accounting standards. The statement is signed by the Chairman and managing director.
- Contents of the Company’s website consist of organizational information, shareholding structure, the Board structure, vision/missions, businesses and products, corporate governance policies and compliance results, business ethics, information for investors, environmental and social policies, annual reports, financial statements, news and updates in both Thai and English.
- The company specifies that directors and executives need to prepare a report of interests of directors, executives and related persons which involved with the Company once they are being directors or executives and report when information changes and every year end. The Office of Company Secretary and Legal will send the report to the Chairman and the Chairman of the Audit Committee.
- The company is well aware of the importance of disclosing information to investors with accuracy, transparency, and accessibility. A team set up to coordinate communications between the company, investors, and shareholders can be reached by email at email@example.com or the following contacts:
- Mr. Meechai Piyavisadpat Telephone: 02-642-6230 Email: firstname.lastname@example.org
- Mr. Chanachai Chutimavoraphand Email: email@example.com
- Mr. Chalush Chinthammit Telephone: 02-642-6230 Email: firstname.lastname@example.org
To promote better understanding of the company’s businesses and facilitates the distribution of the information to interested investors, the company has produced an annual investor relations plan; held quarterly analyst meetings at corporate conference room. Additionally, in 2016, the Company participated in the “Opportunity Day” program organized by SET that provides an opportunity for listed companies to present their business, operating results, and give updates on their current and future projects to investors, analysts, and the press.
For foreign investors, the company collaborated with securities companies and financial analysts to prepare for various road shows presenting its operating results and project progress. In the previous year, the company attended conferences presenting corporate operating results and progress in Singapore in conjunction with the Stock Exchange of Thailand. Visits to the company have been arranged for domestic and foreign investors. Appointments can be made in advance with the company’s investor relations team.
Responsibilities of the Board of Directors
- The structure of the Board consisted of 21 directors. 7 out of 21 are independent directors of which one, who is not the Managing Director, is the Chairman of the Board. The company’s Board of Directors possesses skills and expertise in various fields, such as accounting, finance, law, governance, production technology, personnel, purchasing, marketing, real estate, internal audit, and information technology.
- It is required that during the annual general meeting, one third (1/3) or close to one third of corporate directors resign. Each director’s term is three years. In case that the Board serves until the end of its term and the new Board has not yet been appointed, the former Board still continues to work until the new Board has been appointed. The company has not determined the total terms the Board can consecutively serve. The Nomination and Remuneration Committee is considering this matter in relation to feasibility of selecting personnel with experience specific to the company’s business to serve in the Board.
- The Board of Directors has established the following committees: the Audit Committee, the Nomination and Remuneration Committee, the Risk Management Committee, and the Corporate Governance Committee, as well as defined their functions and responsibilities. For transparency and independence in the work, the majority of the committee members are independent directors, and chairs of the committees are independent directors. To maintain true independence of the corporate committees, the Chair of the Board is not the chair or a member of those committees. The committees serve 3 years. In case that a committee serves until the end of its term and a new committee has not yet been appointed, the former committee still continues to work until a new committee has been appointed. At the end of their term, if a director is not re-elected, their position in their current committee shall end automatically. If there is a new director in a committee, that director shall remain in the position as long as the committee’s term.
- The board requires that a director must not operate or have any position in any ordinary partnership, or be a general partner in limited partnership, or be a director in any other limited company or public company limited that operates businesses of the same nature and that is the company’s direct and indirect competition, unless the information about their positions is disclosed in the annual general meeting before the appointment. The requirement is applied to corporate executives as well.
- The company’s vision, missions, strategies, goals, business plans, budgets, internal control, internal audit, and risk management have been governed with effectiveness and efficiency. The current corporate vision has been reshaped from being a sugar manufacturer to a producer of alternative energy which is environmentally friendly. The new vision is based on the idea that sugar is an energy source for human beings. Ethanol fuels automobiles. Fertilizer nourishes plants. Electricity energizes appliances. Corporate investments are in line with such vision.
- The board has established corporate governance policy as follows: “The company is committed to corporate governance to build trust among shareholders, employees, and customers, as well as to create sustainable competitive advantage. It emphasizes internal control, internal audit, and risk management, as well as ensures that managements implement policies effectively in compliance with legislation and business ethics.” The policy has been communicated throughout the Company. The company ensures that its personnel understand and comply with the corporate governance. The work and corporate policies are always evaluated and reviewed annually.
- The board has set a written ethics and codes of business conduct for the company’s directors and employees, which cover key matters, such as honesty, integrity, conflicts of interest, and compliance with laws. Compliance to the codes is monitored, and penalties are defined. Each year the Corporate Governance Committee evaluates, reviews, and revises the codes of conduct.
- Prevention of Conflicts of Interest, The Board of Directors thoroughly considers and deals with transactions with (potential) conflicts of interest. The Audit Committee considers related-party transactions according to the SET legislation and procedure. Stakeholders in the related transactions are not allowed to decide on those particular transactions, which are fully and accurately disclosed in annual reports and from 56-1.
- Efficient Administrations and Internal Control, the company’s internal control unit has been formed to ensure effective operations, accurate and reliable information, compliance with legislation, efficient and effective use of corporate resources, and protection and corporate assets. The corporate internal audit provides analyses, audits, evaluations, advice, and recommendations to support corporate activities. The audit committee independently reviews and audits adequacy and efficiency of the company’s internal control and internal audit once a year. The opinions on the corporate internal control system are included in the annual report.
- Risk Management. The Risk Management Committee engages in establishing the total risk management. Adequacy and efficiency of the company’s risk management system will be reviewed at least once a year. The early warning system will be in place for irregularity scanning.
- The Company sets the Board of Directors meeting dates and notifies the directors of those date in advance. The Board of Directors shall hold at least 6 meetings per year. For the flow of the company’s operations, there are monthly executive meetings where the board entitles the meeting to make decisions. In every board meetings, the board of directors is informed about matters that have been approved by the Company’s executive meeting to ensure that the board is able to supervise, control, and monitor the work of managements on a regular basis.
In board meetings, the chairman, managing director, and company secretary consider agendas. This is to ensure that the agendas cover important matters. Each director may propose agendas independently.
Office of Company Secretary and Legal sent meeting documents to each director in advance at least 7 days before the meeting date with supporting documents.
In a board of directors meeting, the chairman of the board allocates adequate meeting time for managements’ presentations and comprehensive directors’ discussions. The chairman encourages careful consideration in the meeting. Directors pay attention to each issue presented in the meeting, including issues concerning governance of the company. Top executives from different departments attend the board meeting to present details on the issues that they are responsible for in order to facilitate the Board’s decision-making. The Board also has a chance to know more about the top executives, as well as has access to important additional information through the top executives. Directors may request more information about issues in the meeting from the company’s secretary.
Minutes of the board of directors’ meetings include such important matters as dates, times, names of directors who are present and absent, summaries of proposals, summaries of discussions and remarks, resolutions, opinions from directors who disagree, names of people preparing minutes, and names of those approving minutes. The minutes are bound and easy to retrieve. They cannot be changed. Numbers of the board meetings and attendance are disclosed. The board sets a meeting every 3 months in a year, and the executive committee has monthly meetings concerning the company’s operating results. Information from the executive committee meetings is presented to the corporate board of directors.
Each year the board evaluated its works according to the applicable SET evaluation criteria. Also, there were evaluations of directors in groups and individually including the sub committe. The board considered the evaluation results and put forward recommendations for improvement.
On 26 September 2014, Chairman of the Board of Directors signed a letter of intent and acknowledged the commitment terms set by the Private Sector Collective Action Coalition Against Corruption (CAC) to act against all types of corruption activities within the private sector.
At present, Khon Kaen Sugar Industry PLC has been certified a member of the CAC since 9 March 2017.
The responsibilities of the Risk Management Committee of the Company are to define, analyze, evaluate and construct adequate structure. The leading risk factors concerning are the internal factors and external factors. The risk management team provides the management clear plan of setting up control points within the organization, eventually establish appropriate and acceptable risk control top the organization.
During the year 2016, the risk management committee has envisioned implementation and development as follow:
- To emphasis more clear operation structure of the plant manager of the overall organization (seven locations including headquarter) with clear written job description (Job Description) and steps to perform tasks (Work Instruction). The plant managers understand practices of the various responsibilities and operations with the basis for each segment operations and procedures performed continuously with effectiveness.
- Charter Review Committee; establish the duties and responsibilities of the Office of Risk Management, Risk Management Guide and operation guide of the Office of Risk Management for the year 2016/2017.
- Prepare adequate material for appropriate training process. Establish control, compliance and audit compliance (Compliance and Compliance Audit) Risk management organization with re-checking systems of the management to ensure continuous operation effectiveness (Business Continuity Management System: BCMS) and in alignment with against fraud and corruption, along guidance using policy governance. Revised Annual 2016 is the basis for the preparation of the content.
- Training managers and employees in seven enterprise locations including headquarter according to the content mentioned above, which the attendants will be evaluated to ensure understanding of the content which they are trained.
- Prepare necessary practice accordance to the laws and regulations based on COSO - ERM is the process of governance. Control environment, risk control activities, information and communication, which including monitoring and evaluation of the overall process in the seven enterprise locations including headquarter. The company will be responsible for controlling compliance (Compliance), the company used as the basis for monitoring compliance with such terms.
- The process of evaluating the risks of fraud and corrupt. As a tool to monitor and control the risk of fraud (FRA Tool: Fraud Risk Assessment Tool), which also set guidelines on the supervision and control of the organization. The purpose is to monitor the potential risks of fraud and corrupt and protect the company from such risk. The company has the responsibilities to prevent such incident occurrences. To designated personals to be responsible for the coordinating, monitoring and evaluating of the overall activities within the operation of the company. Furthermore, the internal auditors of the company are monitoring and reviewing the information provided by the process whose responsibility is to provide risk action plan and the policies of anti- corruption.
- Establishment of the campaign and training session with strategic partners and the company’s customers to combat corruption. Such establishment was carried out on September 12, 2016 at KSL Tower, 17th floor. The Company is emphasis on operational transparency and fairness. The campaign illustrates partners and customers to understand and the importance of fight against corruption as a whole team in the future.
- Define the risk definition and risk base lines for each risk factor for the year 2016/2017, which have been reviewed and approved by the Board Risk Management Committee.
- Plan to support the analysis and evaluation of new risk factors for the year 2016/2017 and provide guidelines and measures in response to the potential risk. To serve as guidelines for the preparation of a joint report risk status at 4/2017.
- The initial meeting for the Office of Risk Management to carry out the operation and necessary actions.
- Support the preparation of the annual report risk status in 2016 according to the work of seven enterprises including headquarter.
- The risk status report for the year 2016 was reported to the Group's Board of Directors. The data shows that the existing risk categories reduced risks categories and increased risk categories. The detailed information is presented for the management to take necessary corrective action plans.
Role of Stakeholders
- Rights of Stakeholders
The Company abides by the Corporate Governance Policy and guidelines regarding shareholders and equal treatment to shareholders and prescribes consistent Business Ethics.
- Rights of Employees
The Company prescribes the Corporate Governance Policy and guidelines regarding employees in the Chapter on Roles of Stakeholders and provides the conforming Business Ethics. Apart from respecting the employees’ legal rights according to the Labour Protection Act and the related laws, the Company commits to the importance of employees at all levels without discrimination on race, religion and gender. All employees are equal and are treated equally. They are entitled to welfare without discrimination. The promotion is done by a committee which consists of executives from different units to ensure transparency and fairness. Besides, the Company encourages the acquisition of knowledge through internal and external trainings so as to cope the future growth. The Company establishes a provident fund for employees and abides by the announced Thai labor Standard 8001-2553 which the Company is certified at the highest level from the Department of Welfare and Labour Protection, Ministry of Labour.
- Rights of Customers
The Company has the Corporate Governance Policy and guidelines regarding customers in the Chapter on Roles of Stakeholders saying that the Company applies international quality control system, e.g., ISO 9001:2008, FSSC 22000, GMP, HACCP, HALAL, KOSHER, etc. so as to create the utmost satisfaction to the customers in terms of quality and product standard, timely delivery and international standard service and strict confidentiality keeping and provides consistent business ethics to ensure responsibility and long-term relationship with the customers.
The Company regularly communicates with the customers through various channels and visits the customers to know the need of the customers as well as to give useful information to the customers. The Company invites the customers to visit and audit the work system of the Company and the factories so that the customers can consider potential and readiness of the Company as a seller in accordance with the customers’ standard. The Company provides the customers’ satisfaction yearly survey as a part of ISO 9001 and takes into account the Customers’ observation to improve its service and production, e.g. delivery, quality, after sale service, etc. Besides, the Company provides customers with channels for complaints and recommendations as deemed appropriate by the customers. By average, the Company receives approximately 40-50 complaints and recommendations per year regarding the operation of 5 sugar factories.
The Company extends full cooperation with the customers when they need certification form the Company that the latter complies with the principles of corporate governance and other significant standards. By the same token, the Company informs the customers of its corporate governance policy and anti-corruption policy as well as its implementation of the policies to ensure that the business dealing with the Company shall not conflict with any standard adopted by the customer. The Company commissions an external firm to evaluate the operation and to certify its compliance with the Thai labour standard.
- Rights of Suppliers
The Suppliers hereby include, apart from contracting parties in sales and service of work, joint investors in some specific business. The Company acknowledges the legal rights and contractual rights pursuant to the joint investment by adhering to principles of honesty, equality and right to return of investment.
The Company has the Corporate Governance Policy and guidelines regarding customers in the Chapter on Roles of Stakeholders saying that it supports fair and free competition, equality in doing business and mutual benefits, transparent and fair procurement. The Company prescribes the qualifications of the customers who are entitled to offer bidding as well as announces openly and equally to the rightful bidders of the complete information and conditions regarding the procurement. The Company keeps confidential the bidding prices from the suppliers and does not disclose to other bidders. The Company shall not demand any benefit from the suppliers in exchange of executing contracts with the Company as well as prescribes in the Business Ethics of such practices. As for the service of work in the Company’s sites, the Company provides safe working conditions for the contractors and emphasizes that the contractors must strictly abide by the Company’s rules of safety. Upon completion of the work, the Company has a process of transparent and fair acceptance of work and shall pay the contractors in due time.
The Company through the procurement department communicates with the suppliers through various channels of important matters and provides channels for the suppliers to send their complaints or information. In 2016, the Company held a meeting with major supplies to inform them of the implementation of the corporate governance policy and anti-corruption policy on 12 September 2016 in two sessions. 94 suppliers (75.20% of the 125 invited) attended the meeting. Besides, between late August and the beginning of September 2016, the Company sends letters to large and small suppliers by informing them of the policies together with copes of relevant policies. 91 from 125 suppliers (72.0%) acknowledge the information in writing. The procurement policy also announces the policy in front of its office for viewing by visitors. In 2017, the central procurement unit shall request all factories to extend anti-corruption policy to local suppliers so that acknowledgement of the information shall be as much as possible.
- Rights of Creditors
The Company has the Corporate Governance Policy and guidelines regarding creditors in the Chapter on Roles of Stakeholders saying that shall abide by the agreement made with the creditors regarding the timely payment, appropriate use of financial service, providing and keeping collateral and other conditions such as correct financial reports for the use of credit analysis, debt-equity ratio. The Company has gained trust from the creditors through ethical operation and facilitates information for the understanding of the Company’s business through the Annual Report and the Annual Statement (Form 56-1) and the financial status through financial reports which are made and audited in accordance with the generally accepted standard. The Company prescribes these practices in the Business Ethics consistently.
- Rights of Community and Environment
The Company has the corporate social responsibilities policy (Section 10.) and corporate governance policy and guidelines relating to community treatment under the roles of stakeholders (Chapter 3). The Company shall support and participate in charitable and community development activities to create good relationships and improve quality of life for communities surrounding our business operations. The Company collaborates with the government sector and agencies, helps developing public infrastructure, provides financial supports, and promotes social activities that bring understanding and sustainable development to the community. Projects supported and developed by KSL in 2017 are as follows:
1. The Company invests in the Philanthropic Fund under the concept of Thai Pat Institute to establish an investment that can creates return to use for public interest and to be an alternative for listed companies, foundations or family business to plan an allocation of fund to help society in a continual manner. The Fund is managed by TISCO Securities. The Company has invested in this Fund for a second year. The Fund suggests that the Company maintains the return for a number of years before withdrawal for use in the Company’s activities for corporate social responsibility.
2. The Company participated in many activities as shown and provided in Sustainability Report: Activities on Corporate Social Responsibilities.
- Rights of Human Rights
Human Rights: The Company has the policy not to involve in human right violation by providing in the corporate governance policy saying that the Company promotes and respects human rights as well as operates its business in line with the principles and intent of the United Nations Declaration on Human rights and other international agreements that Thailand is a party and shall not participate in any act that is against the human right principles.
In respect of environment, Company has the Corporate Governance Policy and guidelines regarding environment in the Chapter on Roles of Stakeholders saying that the Company uses natural resources and energy as necessary and supports the reuse and recycling of raw materials and waste in production process. Bagasses left after cane crushing shall be made fuel for boilers in production process of sugar and electricity; Carbon dioxide derived from burning process shall be used in the carbonation process of syrup,; water from ethanol production process shall be used in fermenting biogas which is further used in factories. Each factory shall emphasize on the protection of environment by not releasing waste or pollutants to the community. The factory uses modern dust collector to prevent emission. The water treatment system is developed to ensure that the used water shall be clean enough for reuse or for discharge to natural source. As for any project that may have adverse effect to either community or environment, the Company shall conduct a study and ask for opinions of the would-be impacted group and shall prepare for the reduction of impact. The Company prescribes criteria for studying environmental and social factors and reduction of impact along with the feasibility of the new project. The Company strictly complies with the laws on environment.
The Board of Directors set a policy and guidelines as to no infringement of intellectual property by providing clearly in the corporate governance policy and the Business Ethics.
The company has focused on internal control covering its finance compliance to relevant laws and regulations with appropriate risk management measures in order to protect the company. The Company has focused on the anti- corruption measures with internal control system designed to work with all parties involved to prevent risks which may arise. The company has entrusted the Audit Committee, which consists of independent director, is assigned to review and assess the internal control system thoroughly whereas the internal audit department acts and operates independently from the executives and management who reports directly to the Audit Committee. The Company's assessment of internal controls is under the structure of the internal control standards of Committee of Sponsoring Organizations of the Treadway Commission (COSO) is as follows.
1. Control Organization
The company is focusing on business and operational transparency. The goal of the company is to review and illustrate actual performance in comparison to targets within the organization. The organizational control consists of clear structure and management to ensure clear responsibilities to achieve the objectives under the supervision of the Commission; moreover, the company also imposes ethics policy on corporate governance, the anti-corruption and conflicts of interest in relate to the operation of the company. Focusing and demonstrating adherence to the values of integrity and appropriate ethics as the new key focus for the company established by the management and leaderships of the company.
The Board of Directors is acting independently from management and operational teams who oversees the development and implementation of internal controls. The company is committed to developing and retaining talents which is considered as valuable asset of the company, in order to establish organizations to enforce control and monitor. In the field of anti-corruption, the Company has initiated and provided a detailed assessment if potential risks associated with fraud within the Company; in conclusion, the company is dedicated to fight against corruption overall.
2. Risk Assessment
The Company's objectives on risk assessment are clearly identified and evaluated with relation to achieve the objectives of the organization. The Audit Committee has engaged with the Risk Management Committee of the company in the evaluation of risk factors, both internal and external to affect the business operation of the Company. The Risk Management Committee is to identify and analyze the risks of all aspects. Including the risk of fraud and corrupt that may affect the achievement of the objectives set for an entire organization and the level of risk that the impact and potential of each business process. To determine the risk management plan.
3. Operational Control
The company has established a significant business operations in its core business; furthermore establish a more systematic and effective operation to achieve the objectives and operation targets. Operation control measures the organization stays in the same benchmark which we have set by developing activities, selecting tools and explore new technologies to assist the achievement of overall corporate objectives. The company emphasis control through strict governed rules and policies, this has set clear stage for employees and operations clearly understand and perform under the vision of the company. With understanding authorities and responsibilities by clearly written policies, parties which involved with the operation control may execute within the range of their authorities to incorporating anti-corruption with the applicable policies. Moreover, to establish clearly instruction and level of approval flow such as separating the accounting records with the actual inventory allocations as well as monitoring the compliance with laws and regulations are strictly enforced throughout every stage of the operational control.
4. Information and Communication
The Company has provided advanced and detailed information systems, including the provision of adequate information from internal and external of the company to provide accurate, timely, and efficiency. The company encourages local control can be carried out on the timely basis. Operational objectives and the preparation of reports can be executed with every department to offer immediate decisions. Reports can be prepared with analytical purposes by the operation and management team. Actual data, transactions, communication and financial information are recorded to ensure transparency and traceability. The Audit Committee has carefully established a structure with the auditors from the internal audit team with those associated with the preparation of its financial statements on a quarterly basis providing measures of accuracy and transparency; in additional to the standard confirmation of the company's accounting policies are in accordance with generally accepted accounting principles.
Other than information systems, the company also provides an appropriate channel of communication to clearly illustrate responsibilities as well as various employee issues within the organizations. The company is proud to establishing a secure channel for potential violations or complaints regarding corruption. Overall communication within or outside of the organization are consist of important aspect for the company’s view on the overall internal control.
5. Monitoring System
The company has always monitor and track the performance to meets the goals and targets of the operation to provide the Board of Directors, Executive Committee and administrators oversee the implementation relate to the development of the company and continuously implement additional programs and projects in accordance with annual business plan. Immediate adjustments can be executed if issues arise with various circumstances or economic changes. Establish a practice of comparing actual results against projections continuously due to actual operating environment and results may be different from the forecast and projections. The monitoring system could make each departments and managers a clear management tool and determine ways to improve operational efficiency. Clarity of the responsibilities and monitoring system present immediate and analysis to discover the causes and envision direction of the potential solutions. In the same time, all of the activities, details are being recorded to ensure integrity, transparency and lower the risk of potential anti-corruption actions.
The monitoring and tracking system also provide the management to clearly carry out the control to provide proper evaluation of organizational responsibilities. In the aspect of the internal control, the monitoring system assist the company to have a clear view of the responsibilities, performance accordance to the Internal Audit Department to audit and report independently to the Audit Committee in the year 2016 by the Audit Committee.
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