Lessee

The company has placed significant emphasis on corporate governance, seen as a system to ensure transparency in the leadership, management and oversight structure of a business. It will also enhance competitiveness, which will retain capital and increase value to shareholders in the long run, under a Business Code of Conduct, with due attention to other stakeholders and society in general. The company has appointed an Audit Committee, comprising experts and independent directors, under an independent administrative structure from the company’s management. The Audit Committee holds its meeting on a quarterly basis, in order to ensure regular audits of the company’s business, based on transparency, integrity, accountability and competitiveness.

In addition, the company recognizes that it would be of great necessary for foreign joint ventures and shareholders to acquire accurate and timely data, and corporate governance has been perceived as a main vehicle to handle this task. Investors would be assured of accurate and timely information for their investment decisions in the company. The company has, therefore, adopted the modern IT, accounting and management systems to provide the accurate and timely financial reports, together with an investors’ relations unit to ensure cordial relationships with investors.

Under the 15-Item CG Checklist as enforced by the Stock Exchange of Thailand (SET), Sansiri would hereby report its actions categorized by the checklist, as below:

To promote transparency in operations, while enhancing competitiveness and confidence among shareholders, investors and all related parties, the Board of Directors has enforced the Corporate Governance Promotion Policy, covering some key issues, as follows:

• Equal and fair treatment to shareholders and stakeholders
• The Board’ s commitment to long-term business value, through prudent and careful management, as well as sufficient capability and efficiency for the highest benefits to shareholders, avoidance of conflict of interest, and accountability.
• Transparent actions, with sufficient disclosure of information to all involved parties
• Sound and appropriate management and control of risks
  
  

The company organized one Annual General Meeting of Shareholders in 2006. It dispatched a notice for the meeting, including related documents according to the meeting’s agenda, to all shareholders, 7-10 days in advance before the meeting. The company also provided comments by the Board for each item on the agenda, and the meeting discussion had been recorded completely in the Minutes, for examination by shareholders. Since 2002, the company has provided an alternative for its shareholders, by assigning independent directors to act as proxies for any shareholders unable to attend the Annual General Meeting of Shareholders in person.

At present, the company has set a policy to provide more complete information in supplementary documents for the Annual General Meeting (AGM), recognizing the right of shareholders to gain access to the company’s information. More information was provided for issues to be raised for consideration at the Meeting, including rationale and necessities, as well as positive and negative impacts for some key issues on the Meeting agenda.

               

The company has recognized the importance of rights of all stakeholders, either internal stakeholders, i.e., employees and managers of the company and its subsidiaries, or external stakeholders, i.e., peers, creditors, government agencies and all involved units. The company has realized supports by all stakeholders, which would enhance its competitiveness and profitability, considered as long-term success of the company.

At the Annual General Meeting (AGM) in 2006, four directors participated in the meeting, i.e., Chairman of the Board of Directors, and Chairman of the Audit Committee, Chairman of the Executive Committee, and Managing Director (per detail as disclosed in the Meeting Minutes). Chairman of the Meeting provided equal opportunity for all shareholders at the Meeting to examine the company’s business, or raise some questions and express some useful comments and recommendations to the Meeting, which have been included in the Meeting Minutes.

The Board of Directors has designated the distinctive role, duties and responsibility between the Board of Directors, Sub-committee and the management, per detail as shown in the topic of “Management”, under the sub-topic of “Management Structure”. There is regular communication of role, duties and responsibilities to the Board of Directors, Sub-committees, the management and all employees of the company.

To avoid any conflict of interest, the Board of Directors pays its prudent attention to any issues, likely to have conflict of interest, by designating a policy and procedure in writing for approval of all related issues. In 2002, the company amended the Articles of Association of the company and its subsidiaries. In cases where the company and its subsidiaries agree to enter any related transactions, or acquisition or sale of assets of the company or subsidiaries, defined under the criteria , enforced in the Announcement of the Stock Exchange of Thailand, governing connected transactions among listed companies, including acquisition or distribution of assets among listed companies, as the case may be, they must act in compliance with the criteria and procedures, specified under announcements of SET for particular issues. This includes a policy and procedure to prevent misuse of inside information by the management and related persons for their personal benefits.

• Transactions likely to have conflict of interest
  The Board of Directors has realized some possible conflict of interest from any connected transaction, all of which have been handled under prudent consideration.  These include actions in accordance with the criteria of SET, using the pricing and conditions as applied to customers in the normal course of business (Arm’s Length Basis).  All these transactions, values, counterparties, rationales and necessities have been disclosed in the Annual Report and the 56-1 Reporting Form.
• Use of Inside Information:
  For more detail, please view at the topic of “Management”, under the sub-topic of “Management of Inside Information”.

7. Business Code of Conduct

The Board of Directors comprises 10 members, i.e.,

Executive Directors	5 persons
Non-Executive Directors	2 persons (one independent director)
Audit Committee	3 persons

There are four independent directors, equal to 40 percent of the Board of Directors. One Non-Executive Director, as above, is considered as a renowned and highly experienced expert. He is a professional and neutral manager, not under influence of the company’s management. As a result, the company’s operation and management are under oversight by the Non-Executive Director and Audit Committee, considered as sufficient for Checks and Balances in the company’s point of view.

• Chairman of the Board of Directors acts as Chairman of the Audit Committee, being independent of the management, as specified by SET, without any relationship with the management.
• Chairman of the Board of Directors is not the same person as the Managing Director, for separation of policy and oversight from the routine management functions.

10. Remuneration of Directors and Senior Managers

Remark : Mr. Kovit Poshyanon resigned from the position of Chairman of the Audit Committee, and Chairman of the Remuneration Committee on August 4, 2006.

 

• Internal Control and Audit System
  The company has emphasized the significance of an effective internal control system for both management and operational functions. It designates authority of both operational and management officers clearly in writing, under sound control over use of the company’s assets, under separation of the operational, controlling and evaluating functions, for the appropriate checks and balances. This includes a sound internal control for its financial systems, assigning relevant parties to provide a financial reports to the responsible managers.
  
  The company also checks and ascertains that some key operational and financial activities have been carried out under the procedures and efficiency as specified, including audit of actions in compliance with applicable laws and regulations (Compliance Control). There is an independent internal audit function to fully audit and ensure balances of authority. The Board of Directors has specified that an internal audit report be submitted direct to the Audit Committee for consideration, which will be also under assessment by the Audit Committee.
  
  
• Risk Management
  The Board of Directors has placed considerable emphasis on risk management, by enforcing a procedure for identification and assessment of risks, including proper prevention and management. Due attention has been paid to some key risk factors, likely to impact the company’s operations, by assigning the management to assess risks and impacts from the changing situation, especially in the economy, society and legal enforcements. These include some key risks incurred from competition in the industry. Proper remedies have been specified regularly, as deemed appropriate.

14. Reports by the Board of Directors