Management Structure & Scope of responsibility

Management Structure

The Company’s management structure consists of six boards and sub-committees comprising the Board of Directors, the Executive Board, the Audit Committee, the Nomination and Remuneration Committee, the Corporate Governance Committee, and the Risk Management Committee. The details of each committee and their scope, duties and responsibilities are as follows:

1) BOARD OF DIRECTORS

The Chairman, who is a different person from the President and Chief Executive Officer, so there is a clear segregation of roles, duties and a balance of power in operations.

The names and positions of the Board of Directors are as follows:

1. Mr. Bancha Ongkosit (1) Chairman of the Board of Directors, Chairman of the Executive Board
2. Lt. Gen. Dr. Suprija Mokkhavesa Independent Director, Audit Committee member Chairman of the Nomination & Remuneration Committee
3. Mr. Paitoon Taveebhol Independent Director, Chairman of the Audit Committee
4. Mr. Panja Senadisai Director, Nomination & Remuneration Committee member
5. Dr. Chantima Ongkosit Director, Chairperson of the CG Committee
6. Mrs. Voraluksana Ongkosit (1) Director, Executive Vice Chairperson
7. Mrs. Siriphan Suntanaphan Director
8. Mr. Pitharn Ongkosit (1) Director, Chief Executive Officer Chairman of the Risk Committee
9. Mr. Kanchit Bunajinda Independent Director, Audit Committee member Chairman of the Enterprise Risk Policy Committee

Remark: (1)Executive Director

THE AUTHORIZED DIRECTORS

The directors with company signatory rights are Mr. Bancha Ongkosit, Mr. Panja Senadisai, Dr. Chantima Ongkosit, Mrs. Voraluksana Ongkosit, Mrs. Siriphan Suntanaphan and Mr. Pitharn Ongkosit. Two directors are empowered to jointly sign on behalf of the Company with the company seal.

Duties and Responsibilities of the Board of Directors:

  1. Acting in the best interests of shareholders (fiduciary duty) by adhering to the following four main practices:
    1.1 Performing duties with all circumspection and caution (duty of care)
    1.2 Performing duties with faithfulness and honesty (duty of loyalty)
    1.3 Performing duties in compliance with laws, objectives, Articles of Association, and resolutions of Shareholders’ Meetings (duty of obedience)
    1.4 Disclosing information to shareholders accurately, completely, and transparently (duty of disclosure)
  2. Approving and reviewing the Company’s vision, mandate, policy, operational and budget plan, and supervising the performance of top executives to ensure they efficiently and effectively comply with policies for the security and balanced and sustainable interest of all stakeholders.
  3. Undertake management in compliance with the law, the Company’s objectives and Articles of Association and the resolutions of Shareholders’Meetings with integrity and in good faith, to protect the Company interest.
  4. In supervising the Company's business, the Board has determined the following matters to be the authority and responsibility of the Board, who shall consider for the approval:
    1) Policy, strategic management, targets, plans and annual budget of the company and subsidiaries
    2) The Company's monthly and quarterly performance, compare to the plan and budget
    3) Investment projects that were not included in the annual capital budget, and approving any regular trade transactions which exceed the CEO's authorization limit.
    4) The purchase or sale of assets, the acquisition of business and the participation in joint- venture that complies to the SET's criteria, and the value do not exceeding the President's authority
    5) Any transactions or actions that will result in a major impact to the Company's financial status, debt burden, business operational strategy and reputation
    6) Any contract execution that is not related to the usual business operations, as well as any important contract on the usual business activities
    7) Opening and closing a Company's bank account with any financial institutes
    8) Related Transactions between the Company, subsidiaries, associate company and related persons, which do not meet with the requirements of the SET and SEC.
    9) Payment of the interim dividend
    10) The change of policy and procedure that significantly affect accounting, risk management or internal control.
    11) Determination and change of the approval authority conferred to CEO and executive management
    12) The proposed appointment and the termination of the Company's directorship and the Company secretary status
    13) Empowerment to either Chairman of the Board, CEO or Director, including the revision, change, amendment of the said empowerment, where the action does not contradict to the criteria and regulations of SET or SEC
    14) The appointment and determination of the sub-committee's duties and responsibilities
    15) The appointment of the Director in subsidiaries
    16) The change or reorganizing the Company structure, for the Executive VP position up
    17) Any other actions to comply with laws, the Company's objectives, the Articles of Association and the resolutions of the Board
  5. Supervising and examining the financial reporting system for accuracy, transparency and adequacy.
  6. Complying strictly with the Company’s good corporate governance policy.
  7. Reviewing resolutions on director and executive remuneration for the best andsustainable interest of the Company and its shareholders.
  8. Supervising the process of appointment and election of directors for the purpose of transparency and clarity.
  9. Monitoring and managing any conflict of interest that may occur. Promoting awareness ofthe importance of the internal control system and internal audits to reduce the risk of fraud, abuse of authority and to prevent any illegal acts.
  10. Protecting the rights of all shareholders and stakeholders. Monitoring and supervising the disclosure of information and communications in an accurate, complete and transparent manner.
  11. Reviewing the recruitment and nomination of executives as needed.
  12. Policy placement, the administration of Company and including the auditing of the company's performance
  13. Overseeing and developing the risk management system, and corporate governance to achieve internationally accepted standards.
  14. Assessing the performance of the Board and its committees annually (in addition, each individual director performs a self-assessment).
  15. Attending all meetings of the Board of Directors and shareholder meetings except in unavoidable circumstances with advance notification to the Board or the secretary to the Board.

The Company has defined the role and qualifications of the Independent Directors in compliance with the Securities and Exchange Commission’s and the Stock Exchange of Thailand’s criteria, as follows:

Roles and Duties of the Chairman of the Board

The Chairman functions as the leader of the board. He has the responsibility of setting the board agenda, providing information to directors, and to lead open boardroom discussions, enabling the directors to engage in constructive debate and effective discussionsthat are beneficial to the Company.

The Chairman works to create and maintain a culture of openness and constructive challenge which allows for a diversity of views to be expressed.The Chairman should also be available to shareholders for dialogue on key matters of Company governance, particularly in areas where shareholders have concerns.

Even though the Chairman is not an independent director, the Nomination and Remuneration Committee is of the opinion that this management structure is suitable to the nature of KCE’s business, and that his talents have been instrumental in the success and continued growth of the business. As the Chairman was the first person to bring PCB production technology to Thailand, he therefore has many years of expertise in the PCB business and is capable of performing his duties with an accountability to the benefit of all stakeholders, particularly minor shareholders.

The Chairman of the Board has neither absolute nor superior powers. The Public Company Act describes the additional responsibilities and duties of the Chairman as:

In addition tohis roles and responsibilities as director, the Chairman must strictly comply with the ethics and good corporate governance practices and act as a role model for the directors, and all employees of the Company.

2) EXECUTIVE BOARD

The Board of Directors appoints the Executive Committee, which comprises the directors and senior executive managementas follows:

The names and positions of the members of the Executive Committee are as follows:

1) Mr. Bancha Ongkosit Chairman of the Executive Committee
2) Mrs. Voraluksana Ongkosit Executive Vice Chairperson
3) Mr. Pitharn Ongkosit President & CEO
4) Mr. Fredrick Gharapet Ohanian   Executive Vice President of Operations
5) Mrs. Tanyarat Tessalee Executive Vice President of Finance & Administration

Duties and Responsibilities of the Executive Committee:

  1. Review the policy, direction, strategic plan to conduct the business, Management structure and the annual budget of the Company and Subsidiaries, all investment projects and Manpower plan
  2. Approving the nomination and selection of a new executive of EVP position, and determine compensation in line with the Nomination & Remuneration Committee's criteria
  3. Supervising the performance of Management in accordance with Company policy, having overall responsibility for and taking control of the expenses and investment funds as outlined in the Company’s Annual Plan as approved by the Board of Directors.
  4. Reviewing the performance results in line with management policy and determining the positioning, strategic and operational plans in order to achieve the Company’s ultimate goals.
  5. Taking responsibility for the performance results of management and providing troubleshooting advice in order to ensure the Company’s goals are efficiently achieved.
  6. Taking control of the Company’s expense budget as assigned by the Board of Directors or as outlined in the Company’s Annual Plan.
  7. Providing information and advice to the Board of Directors in support of any decision-making for the Company.
  8. Solving problems or conflicts that have an impact on the organization of the Company.
  9. Maintaining efficient communications with stakeholders.
  10. Reviewing the Company’s fundraising plans for further submission to the Board of Directors.
  11. Approving the appointment of advisors for specific areas, as required by the Company’s business operations.

3) AUDIT COMMITTEE

The Board of Directors appointed the Audit Committee, whose qualifications are fully compliant with the criteria of the Stock Exchange of Thailand, to review business operations, financial reports and internal control systems, to select independent auditors, and to review conflicts of interest. The members of the Audit Committee have the necessary qualifications and experience to ensure the reliability of the financial statements.

The Audit Committee consists of three directors who meet the following the criteria:

The names and positions of the members of the Audit Committee are as follows:

1) Mr. Paitoon Taveebhol Chairman
2) Lt. Gen. Dr. Suprija Mokkhavesa Committee member
3) Mr. Kanchit Bunajinda Committee member

Mrs. Eua-Aree Kankomol was appointed as the Audit Committee's secretary.

Duties and Responsibilities of the Audit Committee:

  1. Conducting audits to ensure that the Company has prepared accurate and adequate financial reportsand ensure the auditor attendsthe committee meetingson a quarterly basis
  2. Conducting audits to ensure that the Company complies with the Securities and Exchange Act, the requirements of the Stock Exchange of Thailand and other laws relating to the Company’s business
  3. Reviewing the disclosure of Company information in instances of connected transactions or transactions that may cause conflicts of interest, to ensure that such reported transactions are accurate and complete
  4. Conducting audits to ensure that the Company has proper and effective systems of internal control, including reviews of the internal audit report, the auditing procedures, and assessing the review of Company operations in accordance with generally accepted procedures and standards and coordinating with the Company’s auditor
  5. Reviewing, selecting, nominating or terminate the Company’s auditor, as well as deciding on a suitable auditing fee, and meeting with the auditor at least once a year, in absent of management
  6. Making assessments of the Company’s major risks and giving advice to minimize such risks
  7. Approving the nomination, transfer or dismissal, and rewards to the chief of the Company Internal Audit Unit
  8. Approving the audit plan of the Internal Audit Unit; reviewing the budget plan and the manpower needs of the Internal Audit Unit
  9. Reviewing and making an assessment of the supervisory performance of the Audit Committee and preparing the report of the Audit Committee to be disclosed in the Company annual report
    1)  Accuracy and reliability of the financial report
    2)  Adequacy of the internal control
    3)  Compliance with the law on securities, SET requirements and applicable law
    4)  Auditor's suitability
    5)  Transactions with potential conflict of interests
    6)  Audit Committee's meetings and the attendance of individual member
    7)  Opinion or notice arising out of performing duties
    8)  Any other matters the shareholders and general investor should know
  10. The Chairman or the members of the Audit Committee shall attend Shareholders’ Meetings in order to provide explanations on matters relating to the Audit Committee or the appointment of the Company’s auditor
  11. Reviewing and revising updates of the Charter of the Audit Committee annually (if deemed appropriate)
  12. Ensuring the risk management systems to be in appropriated standard, conferring with the Risk Committee regarding the main policy related to risk management and risk assessment in all areas, including the risk of corruption
  13. Taking any other action as assigned by the Board of Directors, including the appointment of the chief of the Internal Audit Unit or the appointment of the senior manager from the Company Secretariat as secretary of the Audit Committee.

4) NOMINATION AND REMUNERATION COMMITTEE

The Board of Directors is responsible for the appointment of the Nomination and Remuneration Committee, which comprises three directors as follows:

The names and positions of the members of the Nomination and Remuneration Committee are as follows:

1) Lt. Gen. Dr. Suprija Mokkhavesa Chairman
2) Mr. Panja Senadisai Member
3) Mr. Paitoon Taveebhol Member

Duties Related to Nomination Tasks

  1. Considering the criteria for selecting a director and specifying the qualifications of any person to be nominated for a directorship as well as stipulating the nomination process in the event of a director’s retirement to ensure a diverse field of candidates with the appropriate skills, experience, and expertiseis nominated
  2. Considering the appropriate structure and the composition of the Board to suit the organization
  3. Identifying qualified candidates to replace directors retiring at the end of their term or whatever the case may be, and submitting a list of nominees to the Board of Directors and/or the Shareholders’ Meeting for resolution
  4. Providing minority shareholders with an opportunity to propose qualified persons for selection as directors, by providing advanced notice to allow sufficient time prior to the Shareholders’ Meeting being held
  5. Recommending a succession plan for the Company’s CEO and nominating top executives to the Board of Directors for consideration, and regularly reviewing the plan to ensure it is appropriate
  6. Performing other duties as assigned by the Board of Directors.
  7. Regularly report its performance to the Board at least twice a year

Duties Related to Remuneration Tasks

  1. Considering clear compensation methodologies and standards for directors, members of the subcommittees, as well as for the President & CEO, so that remuneration is equitable and appropriately corresponds to respective assigned duties and responsibilities. Proposed compensation plans should also be comparable to those of other companies within the same or similar industry and business sector as the Company. The directors’ remuneration should be adequate to provide incentives for the directors to perform their duties to ensure the Company’s success and achievement of the desired business direction. The remuneration should be considered with transparency to ensure shareholder confidence.
  2. Considering compensation for directors and members of the subcommittees; and proposing it to the Board for endorsement, and proposing the same for the approval at shareholdermeetings.
  3. Defining goals and evaluating the performance of the President & CEO to set reasonable compensation and proposing these to the Board for consideration.
  4. Determining remuneration for management executives according to reported performance results and proposing the same for the approval of the Board.
  5. Reporting to the Board of Directors after every meeting of the remuneration committee.
  6. Complying with duties assigned by the Board of Directors.

5) CORPORATE GOVERNANCE COMMITTEE

The Board of Directors is responsible for the appointment of the Corporate Governance Committee, which comprises 2 directors and 2 senior executive managements as follows:

The names and positions of the members of the Corporate Governance Committee are as follows:

1) Dr. Chantima Ongkosit Chairperson
2) Mrs. Voraluksana Ongkosit Member
3) Mrs. Tanyarat Tessalee Member/ Secretary
4) Mr. Viboon Sunthornwiwath Member

Mr. Paitoon Taveebhol was appointed as the advisor to the Committee

Duties and Responsibilities of the Corporate Governance Committee:

  1. Proposing appropriate and practical guidance to the Company’s Board of Directors
  2. Managing and controlling Company operations in accordance with the Company’s good corporate governance standards, policies, and related laws
  3. Defining and reviewing important policies and procedures and revising them to be more appropriate on a regular basis
  4. Reporting to the Board of Directors on the results of good corporate governance including comments and for further proposed improvements
  5. Covering the scope of CSR activities
  6. The CG Committee is obliged to conduct at least two meetings a year, depending on the necessity and appropriateness. The results of the meetingsare reported to the Board of Directors.

6) ENTERPRISE RISK POLICY COMMITTEE

On October 11, 2016, the Board of Directors passed a resolution approving an establishment of the Enterprise Risk Policy Committee and appointing the Company Director and the CEO to be member of the Committee.

The names and positions of the members of the Corporate Governance Committee are as follows:

1) Mr. Kanchit Bunajinda Chairman
2) Mr. Paitoon Taveebhol Member
3) Mr. Panja Senadisai Member
4) Mr. Pitharn Ongkosit Member
5) Mrs. Siriphan Suntanaphan Member
   Mr. Somchai Artruksa Secretary

Duties and Responsibilities of the Enterprise Risk Policy Committee:

  1. To determine the scope of duty of the Enterprise Risk Policy Committee and to specify the process and procedure of Enterprise Risk management
  2. To consider the risk factors affecting the achievement of the company's strategic target and to provide necessary suggestions to prevent and watch out the risk in current situation
  3. To provide recommendations, monitoring and make assessment to support the operational activities of the Risk Management Committee to ensure continued success in the engagement
  4. To report its performance to the Board at least twice a year

RISK MANAGEMENT COMMITTEE

The Board of Directors has established a Risk Management Committee and appointed the following members, who come from the senior executive management of operations.

The names and positions of the members of the Risk Management Committee are as follows:

1) Mr. Pitharn Ongkosit Chairman
2) Mr. Fredrick Gharapet Ohanian Member
3) Mrs. TanyaratTessalee Member
4) Mr. Athasidh Ongkosi Member
5) Mr. Viboon Sunthornwiwath Member
   Mr. Somchai Artruksa Secretary

Duties and Responsibilities of the Risk Management Committee:

  1. Defining potential risk factors that could impact the Company’s business, and oversee the operations in line with the Risk Policy Committee's plan .
  2. Defining risk management policies to keep risk at an acceptable level.
  3. Defining the risk-management process according to risk-management policies, and following up to check on the effectiveness of the practice compared with the predefined process.
  4. Reviewing and ensuring that the practices of risk management are adequate, appropriate and practiced continuously so that risks can be maintained at an acceptable level.  
  5. Presenting the overall risks facing the Company including the management process, and the results of performance to the Board of Directors on a quarterly basis.

Summary of the appointment of directors to subcommittees

Directors Board of Director Audit Committee Nomination / Remuneration Committee Corporate Governance Committee Enterprise Risk Policy Committee
Mr. Bancha Ongkosit C - - - -
Lt. Gen. Dr. Suprija Mokkhavesa M M C - -
Mr. Paitoon Taveebhol M C M - M
Mr. Panja Senadisai M - M - M
Dr. Chantima Ongkosit M - - C -
Mrs. Voraluksana Ongkosit M - - M -
Mrs. Siriphan Suntanaphan M - - - M
Mr. Pitharn Ongkosit M - - - M
Mr. Pitharn Ongkosit M - - - M
Mr. Kanchit Bunajinda M M - - C

Remark :
C – Chairman/ Chairperson
M – Member

Summary of meeting attendance of the Board of Directors in 2016




Directors
Attendance (Meeting)
Board of Director Audit Committee Nomination & Remuneration Committee Corporate Governance Committee Risk Management Committee
Mr. Bancha Ongkosit 12 / 12 - - - -
Lt. Gen. Dr. Suprija Mokkhavesa 11 / 12 4 / 4 2 / 2 - -
Mr. Paitoon Taveebhol 12 / 12 4 / 4 2 / 2 - 2 / 2
Mr. Panja Senadisai 12 / 12 - 2 / 2 - 2 / 2
Dr. Chantima Ongkosit 12 / 12 - - 4 / 4 -
Mrs. Voraluksana Ongkosit 12 / 12 - - 4 / 4 -
Mrs. Siriphan Suntanaphan 12 / 12 - - - 2 / 2
Mr. Pitharn Ongkosit 12 / 12 - - - 2 / 2
Mr. Kanchit Bunajinda * 8 / 12 3 / 4 - - 2 / 2

Mr. Kanchit Bunajinda was appointed as a Director since April 28, 2016.

EXECUTIVE MANAGEMENT

As at December 31, 2016, the names of 9 executive managements are as follows:

1) Mr. Bancha Ongkosit Chairman of the Executive Board
2) Mrs. Voraluksana Ongkosit Executive Vice Chairperson/Dir. of the Executive Office
3) Mr. Pitharn Ongkosit President and Chief Executive Officer
4) Mr. Fredrick Gharapet Ohanian Executive Vice President of Operations
5) Mrs. Tanyarat Tessalee Executive Vice President of Finance & Administration
6) Mr. Athasidh Ongkosit Senior Vice President of Information Technology
7) Mr. Teeraporn Jaisuedee Vice President of Maintenance
8) Mr. Pairoj Tarawatcharasart Vice President of Engineering
9) Mr. Sunan Sripetch Vice President of Operations

The Chief Executive Officer has the authority and duties in respect to the management of the Company as assigned by the Board of Directors and shall manage the Company by strictly complying with the plan and budget as approved by the Board of Directors honestly, faithfully and carefully, and to protect the interests of the Company and shareholders.

The authority and duties of the Chief Executive Officer include the following:

  1. Supervising the business operations and/or general management of the Company.
  2. Employing, appointing, removing, transferring, promoting, demoting, reducing salaries or wages, or taking disciplinary action against staff and employees, and, as required, summarily dismissing staff and employees except for the position of head of department or equivalent for which the dismissal requires the approval of the Board of Directors, as stipulated in the Working Rules.
  3. Being authorized to approve the employment of executive management; Sr. Vice President, Vice President and Manager
  4. Being authorized to direct, contact, instruct, take action, enter into legal acts, agreements, directives, notices or any letters in order to communicate with government agencies, state enterprises and other persons, as well as taking any necessary and appropriate action to complete the aforementioned interactions
  5. Giving approval or authorizing sub-agents to grant approval for the payment for the procurement of property and services for the Company’s benefit. The Managing Director’s authority to approve paymentis limited to Bt800 million for normal commercial transactions and Bt400 million for procurement of other property. Payment exceeding the limit of the Managing Director’s approval shall be proposed for the approval of the Board of Directors. 
  6. Being authorized to approve the salary adjustment, bonus payment and adjust annual compensation for Management and employee
  7. Directing the preparation and submission of the Company’s business policy, as well as business and budget plans for the approval of the Board of Directors, and reportingon the progress under the approved business and budget plans to the Board of Directors quarterly.
  8. Managing or undertaking business in accordance with the policy, business and budget plans approved by the Board of Directors and/or the Executive Committee. 
  9. Being eligible to authorize sub-agents and/or assign other persons to perform certain duties. Such authorization and/or assignments shall be subject to the extent of authorization under this Power of Attorney and/or in accordance with the regulations, rules or directives stipulated by the Board of Directors and/or the Company.  
  10. Approving the appointment of the authorized signatory for checks or money-ordering documents of the Company, as well as agreements, accounting and financial documents and general documents.
  11. Acting as management advisor in respect of the financial, marketing, human resources and other operational policiesthat involve the Company’s business operations.
  12. Approving the appointment of advisors for specific tasks as required for the Company’s business operations.
  13. Acting as the authorized person in managing the Company’s business, in all respects, in accordance with the Company’s objectives, rules, policies, regulations, codes of conduct, directives, resolutions of shareholder meetings and/or resolutions of the Board of Directors or Executive Committee.  

COMPANY SECRETARY

To comply with good governance practice, the Board of Directors appointed Mrs. Tanyarat Tessalee, whom currently is the EVP of Finance and Administration (her educational background and work experience profile is available in the Form 56-1: Attachment No. 1 - Details of Directors, Management, Controlled person and Company Secretary), to be the Company Secretary, assisting the directors in ensuring that the Company has an appropriate, efficient and transparent operation. On behalf of the Company or the Board, the Company Secretary’s responsibilities are as follows;

  1. Preparing and keeping the following documents:
    1.1 Directors’ Profiles
    1.2 Invitation letters to meetings and minutes of Board meetings and the Company’s annual report
    1.3 Invitation letters to shareholders and minutes of shareholder meetings.
  2. Keeping track of the company’s connected transaction disclosures, as reported by directors or members of management
  3. Performing other duties as assigned by the Board of Directors
  4. Organizing Shareholders’ Meetings and Board of Directors’ meetings in accordance with the laws, the Company’s Articles of Association and other relevant requirements
  5. Drafting management policies
  6. Recording the minutes of Shareholder and Board meetings, and following up to ensure compliance of the resolutions of these meetings
  7. Ensuring the disclosure of Company data and information to the authorized supervising bodies in accordance with the regulations and requirements of the Government authorities
  8. Ensuring Company and Board compliance with the laws and requirements of the SEC/SET
  9. Promoting and standardizing good corporate governance in the company
  10. Communicating with the shareholders to ensure that they receive their entitlements and information from the Company
  11. Managing the activities of the Board of Directors

Biographies of the Company Secretary

Tanyarat Tessalee

Nomination & Remuneration of Directors

Nomination of the Directors

Term of Directorship

The term for all Directors is 3 years. There is a restriction to the number of terms of Independent Directors of not more than 9 years, which was effective on January 1, 2014, but is not retroactive for Independent Directors who were appointed as a Director in 2013. In accordance with the Public Company Limited Act and the Company’s articles of association, one-third of the Company’s Directors are required to end their term at each AGM. If the number of Directors cannot be divided evenly into three parts, the number of Directors to end their Directorship must be closest to a ratio of 1/3 as much as possible. The order of retirement is based on the length of time a Director has served in his/her current term, so that Directors who have served the longest on the Board are the most eligible to retire. Nevertheless, a retiring Director is eligible for reelection. The policy of the Board of Directors is that the term of Directorship of the Audit Committee is in line with the term of Directorship of the Company’s Directors.

Criteria to Nominate Directors

The Board institutes a policy, criteria and procedures for nominating Directors by which it assigns the Nomination and Remuneration Committee to search for and select persons it deems qualified to act as a Director. The Committee proposes the appropriate selection criteria to the Board according to the present circumstances of the Company. The Committee allows various channels, such as major shareholders, minor shareholders and current Directors, to nominate potential candidates. It also considers the Director Pool of the Thai Institute of Directors (IOD) as well as other channels as it deems appropriate.

The Nomination and Remuneration Committee is responsible for selecting and screening candidates to hold the position of Director, with qualifications of candidates prescribed in the Company’s regulations. The name of a candidate is proposing to the Board of Directors for consideration and approval before being submitted to the Shareholders’ Meeting for a vote in accordance with the following criteria and procedures:

  1. Each Shareholder shall have one vote per one share.
  2. Each Shareholder may exercise all votes as stated in item 1 for voting for one or several      persons to be a Director or Directors.
  3. Persons who receive the highest vote sequencing from higher to lower are elected to be a Director of the Company per the number required that year. In the case where the a vote is even for the last required Director making the number of Directors more than that required, the Chairman of the Meeting will cast the deciding vote.
  4. When there is a vacancy for a Director due to other conditions rather than by rotation, the Board of Directors appoints a qualified person who meets the criteria as required by the Company’s articles of association to fill the position and attend the next Board of Director’s Meeting. The appointed Director will remain in office for the remaining term of the replaced Director.
  5. The Company has implemented a policy to limit the number of listed companies in which a Director can hold the position of Director to not exceeding five listed companies.

Nomination of Management

Nomination of the CEO

The Executive Board primarily considers the selection of qualified persons who are deemed highly knowledgeable and capable and who possess a high degree of experience and understanding of the business. The Executive Board then proposes the candidate to the Nomination and Remuneration Committee to be put forward to the Board for approval.

Nomination of Executive management

The Board of Directors authorizes the Chief Executive Officer to select and appoint candidates with the qualifications, knowledge, skills and experience suitable for each executive position. The recruitment will be processed under the Company’s human resources procedure.

Remuneration of Directors

The Nomination and Remuneration Committee has considered the principle and the form of the remuneration of directors and executive management, taking into account the fairness which reflects the extent of their duties and responsibilities and the suitability against the achievements, the Company’s operating performance and other related factors, including a comparison to the remuneration of other similar companies in the same industry. The company also made a reference to the survey of remuneration of directors which was jointly undertaken by the Stock Exchange of Thailand and the Thai Institute of Directors Association (IOD).

Currently, the form of remuneration of the directors comprises of 2 types; the meeting allowance and yearly bonus. The Nomination and Remuneration Committee has reviewed and proposed the remuneration of directors to the Board of Directors for consideration and concurrence in submitting it to the Annual General Meeting each year. The 2015 and 2016 remuneration of directors was approved by AGM No.32/2015 on April 29, 2015 and AGM No.33/2016 on April 28, 2016 respectively.

Board of Directors

No. Name Position Remuneration (Baht) Meeting allowance (Baht)
ปี 2559 ปี 2558 ปี 2559 ปี 2558
1 Mr. Bancha Ongkosit Chairman 1,600,000 1,600,000 420,000 420,000
2 Lt.. Gen. Dr. Suprija Mokkhavesa Director 800,000 800,000 360,000 360,000
3 Mr. Paitoon Taveebhol Director 800,000 800,000 360,000 360,000
* Mrs. Ubol Chiramongkol Director 0 800,000 120,000 360,000
4 Mr. Panja Senadisai Director 800,000 800,000 360,000 360,000
5 Dr. Chantima Ongkosit Director 800,000 800,000 360,000 360,000
6 Mrs. Voraluksana Ongkosit Director 800,000 800,000 360,000 360,000
7 Mrs. Siriphan Suntanaphan Director 800,000 800,000 360,000 360,000
8 Mr. Pitharn Ongkosit Director 800,000 800,000 360,000 360,000
9 Mr. Kanchit Bunajinda Director 800,000 0 240,000 0
  Total   8,000,000 8,000,000 3,300,000 3,300,000

Audit Committee

No. Name Position Remuneration (Baht) Meeting allowance (Baht)
2016 2015 2016 2015
1 Mr. Paitoon Taveebhol Chairman 460,000 600,000 105,000 0
2 Lt. Gen. Dr. Suprija Mokkhavesa Member 380,000 500,000  90,000 0
* Mrs. Ubol Chiramongkol Member 0 500,000 0 0
3 Mr. Kanchit Bunajinda Member 380,000 0 90,000 0
Total 1,220,000 1,600,000 285,000 3,300,000

Remuneration of Management

The Nomination and Remuneration Committee will consider and review the CEO’s remuneration, in accordance with the Board's principle and policy and propose it to the Board of Directors for consideration and approval. Such remuneration, for long term, will be appropriately based on the remuneration structure of the Company and compared to the surveyed information about remuneration payment by recognized institutes, while for short term, the remuneration in form of monthly salary and annual bonus is based on inflation rate, the Company's operating performance and including his performance and consistency with the duties and responsibilities assigned.

The CEO will consider the suitability of determining remunerations and adjusting yearly wages of the management, with consideration of his performance and his attainment to the pre-defined goals, including the Company operating results (Plant KPIs) .

The Company contributes remuneration in form of salary, annual bonus and contribution to provident fund.

Type of remuneration 2016 2015
Number Amount (Baht) Number Amount (Baht)
Salary 7 21,605,384 8 23,679,660
Bonus/ Contribution to Provident fund 7 5,451,349 8 5,097,514

Other remunerations of Directors and Management

On April 28, 2011, The meeting of Shareholders approved the issuance and offering of the warrants to purchase ordinary shares of the Company (ESOP-W4), in the amount of not exceeding 10,000,000 units, to directors, managements and employees of the Company and/or its subsidiaries. As of December 31, 2014, there is no outstanding warrant.

On April 29, 2014, The meeting of Shareholders approved the issuance and offering of the warrants to purchase ordinary shares of the Company (ESOP-W5), in the amount of not exceeding 10,000,000 units, to directors, managements and employees of the Company and/or its subsidiaries. As of December 31, 2016, the outstanding warrant is amounted to 337,000 units.

Good Corporate Governance

Good Corporate Governance

Good corporate governance means establishing a management structure and mechanism within the organization to create relations between the Company’s Board of Directors, the management, staffs and shareholders, taking into account the interests of all stakeholders.

Good corporate governance will enhance the company’s competitive edge both in short term and long term, which will lead to adding values to the shareholders, as well as create benefits for all concerned parties. KCE stipulates corporate governance policy for use as practical guideline for the directors, management and all employees, in order to support KCE’s efficient operation, the best corporate governance and administration, and to conduct business with fairness, transparency and accountable.

The mentioned management structure reflects key principles of good corporate governance as follows:

  1. Honesty
    Conduct business by taking into account the company’s benefit; adhere to honesty towards one’s own responsibility and all stakeholders; do not take any advantage, and be aware that dishonesty is unacceptable.
  2. Open-mindedness and transparency
    Conduct business with transparency; be ready to disclose the company’s key information in a correct, complete, timely, and accountable manner; be open-minded to the views of all stakeholders for continuous improvement.
  3. Equitable treatment
    Conduct business and treat shareholders, customers, business partners, creditors, employees, and all concerned with equality and respect for human rights principles.
  4. Fairness
    Conduct business and treat shareholders, customers, business partners, creditors, employees, and all concerned with fairness to reach common balanced benefit.
  5. Commitment to agreement
    Conduct business with responsibility towards shareholders, customers, business partners, creditors, employees, and all concerned so that work will be accomplished according to the policy, good system, and agreement committed to all stakeholders.
  6. Responsibility towards society
    Conduct business by dealing with stakeholders, communities, and society according to their rights; conduct the company’s activities by taking into account the environment and society for sustainable development and growth.
Corporate Governance Principle

Corporate Governance Principle

The Board of Directors of KCE Electronics Public Company firmly believes in the importance of good corporate governance, that it will promote the Company’s competitive potential both in short term and long term. Additionally, it is the crucial factor in supplementing values, supporting best return to the shareholders and creates a fair benefit among all stakeholders in long term. The Board of Directors has stipulated the corporate governance policy, which adheres to the Principles of Good Corporate Governance of the Stock Exchange of Thailand’s guidelines. The Directors, Management and all employees are to observe and routinely apply the Company’s corporate governance principles to all areas of business management, which covers 5 categories as follows:

Category 1: Rights of Shareholders

1. Rights of Shareholders

The Company protects the rights and the interests of the shareholders, both as investors and owners of the company, whether it’s majority, minority, foreign or institutional shareholders. The Company facilitates the needs of its shareholders and ensures equitable and fair treatment, complying with applicable laws and guidelines protecting shareholders’ basic rights, as follows:.

  1. Rights of share ownership registration
  2. Rights of share transfer
  3. Rights to regularly and sufficiently receive the company’s important and material information
  4. Rights to attend and vote in the company’s shareholders meeting
  5. Rights to elect or terminate board members
  6. Rights to consider the Board’s remuneration
  7. Rights to receive the share of the company’s profit
  8. Rights to jointly make decision and be aware of the results of the company’s decisions on the company’s fundamental changes, such as
    - Sale or transfer of the company’s business, whether in whole or in important parts, to the third party
    - Purchase or acceptance of transfer of other companies or other private entities
    - Execution, amendment, or cancellation of contracts of the company’s leasing whether in whole or in important parts, the assignment of other person(s) to manage the company’s business or the acquisition of other company with the objective of profit and loss sharing
    - Amendment of the company’s memorandum of association, rules, and other similar regulations
    - Increase or decrease of capital
    - Company acquisitions or dissolutions
    - Issuance of debentures
    - Extraordinary transactions

2. Shareholders’ meeting

Shareholders have an ample opportunity to attend and vote in shareholders’ meetings. The company will provide fair treatment to all shareholders and will in no way restrict the rights of access to its information system or the participation in the shareholders’ meeting. The company will perform duties relevant to the shareholders’ meeting as follows:

Prior to the Meeting

The Meeting

Post Meeting

Category 2: Equitable treatment of shareholders

The Company recognizes the importance of all shareholders and adheres to corporate governance practice to ensure the equitable treatment of all shareholders. There is no discrimination of shareholders whether major or minor, foreign or institutional. The shareholders are protected from abusive action by, or in the interest of controlling shareholders acting directly or indirectly. The Company’s guideline to foster equitable treatment of shareholders includes the following.

1. Designation of proxies to the Annual General Meeting of Shareholders

To ensure equitable treatment, in the event that the shareholders cannot present in the Meeting in person, shareholders have the right to assign proxy and may also delegate their votes to any of the Company independent directors. Conditions to assigning proxies are provided in the AGM invitation notice. All documents sent to foreign shareholders were translated into English.

2. Facilitation for the shareholders to attend AGM

The Company ensures the equitable treatment of all shareholders, including minority and foreign shareholders. All shareholders have the right to fair practice without discrimination. All shareholders have the right to attend AGM from the meeting commences until the end.

Adequate time is allocated for Meeting and is sufficient for each agenda. Equal opportunity is provided for shareholders to express their opinion, ask questions and exercise their right to elect individual directors.

3. Monitoring of inside information

The Company stipulate a policy to monitor the use of inside information and the company’s stock transactions on the basis of equality and fairness of all shareholders and for the prevention of relevant directors and executives from undertaking dishonest stock transactions for their own benefit or the benefit of others. To prevent conflicts of interest, the directors and executives are prohibited from buying, selling, transferring or accepting transfer of the company’s stocks one month before the disclosure of the financial statements to the public and 3 days after the announcement. The Directors and Executives are responsible for disclosing shareholding and the changes in shareholding to the company secretary and report to the Board regularly. In the event that the directors or executives violate the corporate governance principles on the use of inside information, they will be considered guilty of the company’s rules and may be punished by law.

4. Monitoring of conflicts of interest

The Company’s policy does not allow any directors, executives and employees to take advantages from its directorship or being executives or employees of the company for their own benefits. The company forbids its directors, executives, and employees to compete with the company, avoid making connected transactions relating to them or people/entities that may cause conflicts of interest with the company. The board ensures that the company strictly performs duties according to criteria, method, and disclosure of connected transactions as specified by law or the monitoring agency.

If it is necessary to undertake connected transactions, they must be in line with general business conditions as specified and approved by the board, base on transparency and fairness, as if the transactions were undertaken with other parties, taking into account the company’s maximum benefit. If the connected transactions are not in line with general business conditions as specified and approved by the board and may cause conflicts of interest, the transaction must be submitted to the Audit Committee for opinions before submitting to the board or shareholders for approval.

Category 3: Roles of stakeholders

The Company is aware of the responsibilities to all stakeholders. The company conducts business with fairness and adheres to the joint benefit between the company and its stakeholders. The Company sets a clear policy on fair treatment for each and every stakeholder and prohibits any actions that can be considered in violation of stakeholders’ right.

3.1 Roles to stakeholders

3.2 Human Rights

The Company recognizes the human rights of people, irrespective of difference. The Company respects all the rights of the employees in any form, as stated by law or constitution, and will not create any obstruction or prevent the employees achieving their rights. The company has a clear policy in supporting the rights of people and will not support any violation to the human rights.

3.3 Policy on Intellectual Property

The Company acknowledges the importance of intellectual property created from an individual’s knowledge and ability. The Company, therefore, always makes sure that the information used in the Company will not violate the intellectual property of others. The Company does not permit nor encourage its employees to use illegal software for any Company business. Employees who use the company’s computers must strictly follow the rules and conditions of the manufacturer and only with the permission of the Company.

The company must provide channels and procedures for suggestions and complaints relating to the company’s business operation with speed, fairness, and transparency.

Category 4: Disclosure of information and transparency

1. Disclosure of information

2. Responsible persons for disclosure of information

3. Auditor and financial statements

The financial statements of the company and the subsidiary companies are audited by an independent auditor with knowledge, skill, and qualifications as specified to ensure the board and the shareholders that such financial statements reflect its actual financial status and operation. It is the company’s policy to change its auditors every five years to ensure complete independence.

The Board values and takes responsibility for the financial statements of the company and the subsidiary companies in line with general standards and practices. The company devises a policy of proper accounting based on caution, correctness, and completeness to reflect its performance. The board ensures that performance is reported and material information is transparently and sufficiently disclosed by regularly reporting to relevant agencies, such as the Securities and Exchange Commission and the Stock Exchange of Thailand, for the benefit of shareholders and investors. Moreover, the board appoints the Audit Committee to be responsible for checking the reliability and accuracy of the financial statements as well as the internal control system in a sufficient and proper manner to ensure the reliability of the company’s financial statements.

Category 5: Responsibilities of the board of directors

1. The Board structure

2. Qualifications

3. Terms

4. Selection

5. Duties and Responsibilities

  1. Acting in the best interest of shareholders (Fiduciary Duty) by observing the following four main practices:
    1.1 Performing its duties with all circumspection and caution (Duty of Care)
    1.2 Performing its duties with faithfulness and honesty (Duty of Loyalty)
    1.3 Performing its duties in compliance with laws, objectives, Articles of Association, and resolutions of shareholders’ Meetings (Duty of Obedience)
    1.4 Disclosing information to shareholders accurately, completely, and transparently ((Duty of Disclosure)
  2. Establish the vision, mandate, policy, operational and budget plan, and supervise the performance of top executives to efficiently and effectively comply with the policy for the security, the balanced and sustainable interest of all stakeholders.
  3. Supervise and examine the financial report system for accuracy, transparency and adequacy.
  4. Comply strictly with the Company’s Good Governance policy.
  5. Review the determination of directors and executives remuneration for the best and sustainable interest of the Company and the shareholders.
  6. Supervise the process of appointment and election of directors for the purpose of transparency and clarity.
  7. Set Good Corporate Governance policies and practice and develop the company’s corporate governance to reach the standard accepted internationally.
  8. Approve key transactions under the scope of authority of the Directors and under the law and the company’s regulation, as well as approving investment budget exceeding Baht 400 million.
  9. Appoint the sub-committees to support the work of the Directors as deemed appropriate and necessary with regular monitoring of their performance.
  10. Set up an Internal Audit unit, having efficient and effective internal control systems.
  11. Devise a proper and effective risk management system that can assess, monitor and manage key risks.
  12. Appoint a Company Secretary to assist the directors’ activities and to ensure compliance to the relevant laws and regulations.
  13. Develop a code of business conduct for directors, executives and employees to be the standard practices and guideline in conducting business.
  14. Prepare corporate governance principle and encourage communication to employee at all level and ensure acknowledgement and acceptance in compliance.
  15. Ensure clear procedure and transparency regarding entering a connected transaction.
  16. Arrange for proper procedure in preventing fraud and corruption.
  17. Prepare the succession plan for the company’s executives.
  18. Regularly review and update key policies and business plans in accordance to prevailing circumstance.
  19. Review and rectify the Charter of the Board as appropriated.
  20. Conduct self assess of the Board’s and its committee performance annually and of each individual director performance.
  21. Attend all meetings of the Board of Directors and Shareholders’ Meetings, except in unavoidable circumstances with advance notification to the Board or the Secretary to the Board.
  22. Perform other duties as assigned by the shareholders.

6. Appointment of Sub-committee

The board of directors appoints subcommittees to assist in the monitoring and screening of key work and requires that the performance should be regularly reported back to the board. The subcommittees consist of the following:

  1. Audit Committee
    The Audit Committee is appointed by the board, consisting of at least three independent directors, at least one of whom has sufficient knowledge and experience to check the reliability of financial statements. The Audit Committee, responsible for ensuring that the company correctly, completely, sufficiently, reliably, and timely reports financial statements, ensures that the connected transactions or the transactions that may cause conflicts of interest are in line with the law so that transactions may be reasonable and provide maximum benefit to the company by revealing the information with accuracy and completeness. They also ensure that there are proper and efficient internal control and internal audit systems, select the auditor and check financial statements prepared by the auditor, ensure the adherence to the relevant regulations and law, as well as encouraging the company to have corporate governance principles and systematic and efficient risk management procedures.
  2. Nomination and Remuneration Committee
    The Nomination and Remuneration Committee is elected by the board, consisting of at least three directors, with independent directors accounting for more than half of all directors. Its chairman must be an independent director. Below are its responsibilities:

    Nomination: Ensure that the structure, size, and composition of the board suit the company and the changing atmosphere; devise a policy on recruiting directors and top executives; recruit, select, submit names of people with eligible qualifications, morality, and ethics to be nominated as directors and/or executives; allow minor shareholders to nominate a person(s) name as director(s); ensure that there is a specific succession plan for top executives as well as performing other works as assigned by the Board.

    Remuneration: Determine the methods and criteria of paying remuneration and other profits to the board of directors, subcommittees, and the President & CEO on the basis of clarity, fairness, appropriate to the responsibilities and other related factors; determine the remuneration of the directors and the subcommittees and submit it to the board and the shareholders’ meeting for approval, and determining objectives and assessing the performance of the President & CEO to submit to the board for consideration, as well as performing other works as assigned by the Board.
  3. Risk Management Committee
    The Corporate Risk Management Committee, elected by the board, consists of directors representing the management, and chaired by the CEO. The committee considers the policy, strategy, structure, and framework of the corporate risk management system, supports the work of top executives by determining the structure of the risk management to cover the whole company, considers risk factors that may affect the business in all dimensions, checks the risk, monitor and assesses the sufficiency, efficiency, and effectiveness of overall, strategic risk management, assesses risk that may seriously affect the company, ensures appropriate action to manage the risk and provide recommendations and approvals of the company’s risk management.
  4. Corporate Governance Committee
    The Corporate Governance Committee consists of directors and executives, under guidance of an independent Director, in charged of determining and reviewing the policy, regulations, and methods of operation in line with corporate governance principles; devising a policy and plan activities relating to social responsibility; holding meetings to follow up plans on corporate governance and social responsibility; providing advice and support to the Corporate Governance Working Group; undertaking internal assessment based on corporate governance criteria to recommend improvement; and representing the company to communicate with and participate in corporate governance activities with executives, employees and outside agencies.
  5. Chief Executive Officer
    The President & CEO is the top-ranking executive appointed by the Board, charged with managing the company so that it may operate under the strategies, vision, and mission with the scope of authority under the law, objectives, and regulations of the company as agreed by the directors and at the shareholders’ meeting. The President & CEO may hold directorships in another company, but such action must not affect the work as the company’s President & CEO and must not be in the same business or in competition with the company. Approval of the board must first be sought before accepting directorship in another company.

7. Board meetings

8. The Company Secretary

To support and manage the activities of the directors in an efficient and effective manner, the company secretary has the following responsibilities:

9. The Board of director’s Performance Evaluation

The Board has established a self-assessment for the overall performance of the Board of Directors. It serves as a tool to reflect the operational efficiency of the Board in accordance with Good Corporate Governance principles and to facilitate a regular review of the performance of the Board. The performance assessment is conducted on an annual basis and led by the Chairman of the Board. The assessment result is reviewed and considered for improvement.

10. Directors’ Remuneration

The board explicitly sets the forms and criteria of remuneration and other benefits for the directors and submits them to the shareholders for approval. The Nomination and Remuneration Committee screens yearly remuneration figures transparently and fairly as fit the authorities, responsibilities as well as relevant factors and benefit derived from each director, and comparable to the rate in the same industry.

11. Professional development for Directors

Newly appointed directors receive information on the company, rules, regulations, business information critical to the work of directors, minutes of the directors’ meetings, and minutes of past meetings of the Audit Committee, and introduction to directors and executives. Moreover, directors are encouraged to undergo training and participate in trainings and seminars to improve their knowledge necessary for the work of directors.

12. Succession plan

Directors set a succession plan for the CEO and top executives to maintain the confidence of investors, the company, and employees on its continuous operation. They also prepare the annual review of the succession plan.

13. Anti-corruption Policy

The Company launched the “Anti-corruption” Policy to be accounted for as a clear practice guideline in business operation, which will led to a sustainable organization. The directors, executives and employees are prohibited to proceed or accept any form of corruption, directly or indirectly, concerning all business operation, in all countries and all related business sections. Review on the compliance to the policy is regularly performed, including revising the practice guideline and the code of conduct, in accordance to the changes in the business, regulations and the law.

Policy Enforcement

The directors, executives, and employees must strictly respect the company’s code of conduct and corporate governance principles with understanding, commitment, and acceptance as part of their working discipline, while ensuring that they and their colleagues observe the code of business conduct and corporate governance principles. Monitoring of compliance with corporate governance is as follows:

Directors and Executives

  1. Encourage the implementation of the code of conduct and corporate governance principles.
  2. Cultivate a working culture in line with the code of conduct and corporate governance principles by acting as a role model.
  3. Listen to views and recommendations of the employees in order to develop and improve the company’s policies, rules, and regulations.
  4. Monitor and ensure that the operation is in line with the code of conduct and corporate governance principles.

Corporate Governance Committee

  1. Communicate and organize activities concerning the code of conduct and corporate governance principles for the directors, executives, and employees in a complete, thorough, and efficient manner.
  2. Prepare internal assessment under the corporate governance criteria to identify issues that need to be improved.
  3. Regularly assess the sufficiency and appropriateness of the code of conduct and corporate governance principles in line with the prevailing business conditions and circumstances.

Human Resources

  1. Deliberate and advise employees about their duty to comply with the code of conduct and corporate governance principles.
  2. Arrange for new employees to receive the code of conduct and corporate governance principles.
  3. Follow up and file the form of acknowledgment and compliance with the code of conduct and corporate governance principles once the employees sign their names in acknowledgment.

Internal Audit

  1. Undertake a preliminary check if there is ground to believe that there may be an abuse of the code of conduct and corporate governance principles, and report it to the Audit Committee.
  2. Follow up and coordinate swift rectification of the abuse of the code of business conduct and corporate governance principles, and report it to the Audit Committee.

Discipline

The code of business conduct and corporate governance principles are considered part of the discipline that all employees must adhere to and implement as follows:

  1. Thoroughly and regularly study, understand, and review the code of conduct and corporate governance principles.
  2. Strictly implement the code of conduct and corporate governance principles.
  3. Promote, support, and ensure that the subordinates respect the code of conduct and corporate governance principles.
  4. For violation or omission of the code of conduct and corporate governance principles, employees must be investigated and punished under disciplinary rules.
  5. Cooperate with agencies responsible for investigating violations or negligence of the code of conduct and corporate governance principles.
  6. If there is any doubt whether an act, involvement or future involvement violates the code of conduct and corporate governance principles, employees must ask themselves the following questions:
    • Does the act violate the law, peace, and morality?
    • Does the act violate the company’s policies, values, corporate governance principles, or image?
    • Does the act cause damage to the company’s stakeholders?
    • Does the act set precedent of an inappropriate practice?

    If the act violates the above criteria, it must be stopped.

Definitions

Risk Management

Risk Factors and Risk Management

The Company manages risk with a view that it is an important and deeply connected consideration for all business processes. The Board of Directors has appointed the Risk Management Committee to oversee this issue for the organization. The prime responsibility of the Risk Management Committee is to set policies and parameters for risk management that are aligned with the Company's mission and vision, including enhancing procedures to cover all internal and external risk factors that could affect the Company's operation and business growth opportunities. A comprehensive risk assessment has identified the following key risk factors:

Operational Risk

Production Risk

The manufactureof electronic equipment requires certain engineering processes and complicated production techniques. Furthermore, the technology used in the industry is constantly evolving. As a result, the company must keep learning new technologies and adjusting its production processes to meet the demands for new production methods and in response to customers’changing requirements. To deal with this, the Company has an engineering team that does R&D and works closely with the product development teams of customers. This has resulted in knowledge sharing, technology transfer and continued development of the technologies used at KCE. Furthermore, the Company regularly acquires new and modern machinery to replace older equipment and increase production efficiency.

Labor shortage Risk

The Company faces a risk related to the sourcing of production line personnel who have specific and necessary skills. A knowledgeable and skilled labor force is crucial to the Company’s success. Labor shortages or any labor-related problems would directly result in lower productivity and hurt product quality. Continuous technical training and proper education are provided to ensure the effectiveness and skill development of KCE’s workers. The Company has shown a strong commitment to its workforce and provides appropriate incentives and benefits to employees to ensure a long-term and rewarding mutual relationship.

Supplied Materials Risk

Raw material risk is associated with possible shortages of key materials that could lead to an unplanned shutdown of the production line, the usage of materials that don’t meet specifications or that are of sub-standard quality, as well as inflated material costs. KCE has invested in a subsidiary, Thai Laminate Manufacture Co., Ltd. (TLM) to produce laminate and supply it to all of KCE’s PCB plants. This helps to ensure the availability of some key raw materials and allows for the optimized usage of such materials, as TLM can supply laminates of a specific size or type to better fit the Company’s production processes.

The acquisition in 2012 of Chemtronic, a PCB ink producer and chemical recycling operation, has lowered the risk of raw material shortages and reduced the waste-treatment burden on KCE’s factories while also giving the Company the capability to recycle used chemicals. In the same year, the Company entered into a joint venture with KCE Taiwan with an aim to enhance its sourcing of raw materials and equipment. The arrangement has also boosted the Company’s bargaining and negotiating power, further minimizing supply risk.

Materials price Risk

The price of materials that contain copper or gold – such as laminate, copper foil, copper anode and gold salt— fluctuate according to commodity prices inthe global market. Due to the volatility of these markets, the Company must closely monitor prices and use derivative contracts to hedge risk, which is in keeping with the Company’s policy on price risk management. In addition, the Company must maintain an appropriate level of stocks to support production through certain periods.

KCE sources raw materials and supplies from at least three main sources for each item from an approved vender list and regularly acquires new quotations to get the most competitive price. The Company has forged good relationships with its major suppliers, supported by its long track record.

Technology Risk

As PCBs remain the basic, irreplaceable component of all electronic products, KCE’s exposure to technological risk is mainly related to detailed changes in design, production techniques or raw material type. KCE thus invests in necessary, up-to-date equipment so that it can manage such changes effectively. As the trend in the electronics industry is toward smaller, more efficient and more complicated designs, PCBs are consequently shrinking while also becoming more intricate with higher layer counts. This necessitates regular changes in production technology to boost efficiency and reliability. Moreover, as environmental concerns grow, there are more demands for manufacturers to use “green” raw materials such as halogen-free laminates and lead-free PCBs or for high performance materials that can cope with environments of sharply varying temperatures.

The previously mentioned technological changes may affect production capacity, sales and operating profit. However, KCE is prepared to meet such technological challenges through continuous research and development to advance its products and manufacturing processes and to increase production capacity to meet the needs of customers. As the Company focuses on producing medium- to high-quality PCBs, its already advanced machinery and processes are less affected by changes in technology. The Company’s policy, which is aimed at ensuring quality control, on-time delivery and assistance to customers, has sustained long-term working relationships with leading international customers, and helps KCE cope effectively with evolving technology.

Strategic Risks

World Economy Risk

The growth of the electronics industry corresponds closely to fluctuations in the world economy and the growth of industries that require electronic components such as the telecommunication, computer, automobile, industrial equipment, high-technology instrument and peripherals sectors. Thus, cyclical changesin the economy and the electronics industry can result in undesirable changes in sales volumes and prices.

The company’s strategy is to focus on growing end markets, which tend to be more stable than other sectors, and in particular on the fast-growing automotive sector. Buyers in the automotive sector tend to give priority to product quality, which is a strong point of KCE. However, to diversify risk, the Company has also become involved in other sectors including Industrial, telecommunication, medical equipment, computer and high-end consumer products.

Market Risk & Competition Risk

Many factors affect market risk, ranging from the origin of customers — i.e. the economic and political situations in their home countries, international trade policies, war, unrest and terrorism, etc. — to factors arising at the customer level, such as mergers or takeovers of companies and changes in buying policies. In order to decrease market risk, KCE has diversified its sales across many industries, even though its largest market is the automotive sector, and across different regions throughout the world, including Europe, the U.S. and Asia.

Competitive risk in the PCB industry comes in two main forms: price competition, with the main competitors being Taiwanese and Chinese manufacturers, and from perceptions of quality. Even though KCE and Chinese manufacturers do not directly compete, as they serve different customer groups, KCE cannot avoid the impact of indirect pricing pressure. At the same time, the Company faces competition from local PCB manufacturers in Europe and the U.S. PCBs produced in Europe are perceived to be of better quality than PCBs made in Thailand (in addition to the issue of proximity, which makes transportation more convenient). However, price pressures are driving most electronic equipment manufacturers to turn to Asia for lower-priced products. As a result, migration of PCB production from Europe and the U.S. has accelerated, and it is expected that PCB plants in Europe and the U.S.will continue to downsize or close their operations.

Dependency on a Product or Market Risk

PCBs for automotive electronic equipment represent about 70% of the Company’s production, with most exported to Europe, which accounts for 55% of total sales. Dependency on the automotive industry and European markets could be a riskto the Company in the event of a major change in product demand in this category or in a particular market. However, the automotive industry is considered reasonably stable, compared to the consumer or telecommunication markets, which the Company does not target. Furthermore, the Company has a marketing plan to expand its business in the Asia region and start production of PCBs for high-end consumer and industrial products, which will minimize its dependency on the automotive sector and the European market.

Natural Disaster Risk

The Company’s plants could be exposed to risk from fire or natural disasters; as such incidents might interrupt production, resulting in the loss of customers to competitors. In addition, there are additional costs related to the start-up production lines after such interruptions. Therefore, the Company and its subsidiaries have taken out insurance to protect themselves from possible damage caused by fire and business interruptions as a result of a forced plant shutdown. An annual review is conducted to ensure that proper coverage is maintained for all eventualities.

After the severe flooding in 2011, the Hi-tech Industrial Estate in Ayutthaya constructed a permanent water barrier around its boundaries. The estate’s management is confident that the new protection system will be effective, given it matches the highest water levels ever recorded at the site. As for the new plant construction at Latkrabang Industrial Estate, the design incorporates features to help the plant deal with flooding, such as a raised production floor.

Financial Risks

Interest rate risk

The Company and its subsidiaries are exposed to risks from interest-rate fluctuations for their deposits, overdraft accounts and bank loans. The risk to cash deposits stems from the THB interest rate, while its interest-bearing debts, both short and long-term, are in THB, USD and EUR. Most of the Company’s and its subsidiaries’ loans have floating rates, which are currently at record low levels. It appears that the interest rate for EUR and USD loans will remain at the current low levels for some time, while THB interest rates may potentially increase in the next coming year. Consequently, the Group is exposed to risk from an interest rate increase. To reduce this risk, the Company closely monitors financial market movements and trends and also has a policy to finance its liquidity requirements in currencies where the outlook is for rates to remain at their current low levels. In addition, the Company can enter into financial derivative products such as interest rate swap (IRSs) and cross-currency swaps (CCSs) to manage the interest-rate risk arising from long-term loans. Currently, the cost of hedging and negative carry are reasonable and the interest hedging percentage is flexible enough to effectively manage excess cash for the best benefit of the Group.

Foreign exchange rate

The Company is exposed to foreign exchange rate risk as approximately 75% of its sales and 50% of payments for raw materials along with investments in imported machinery and a portion of its debts are denominated in foreign currencies (mostly USD).The fluctuation of exchange rates can thus directly affect the Company's earnings. To mitigate the foreign exchange rate risk, the Company has done the following: i) developed a treasury programto provide regular, up-to-date reports on the status of the Company’s foreign exchange exposure to individual currencies, so that exchange rate movements, trends and related factors can be closely monitored; ii) fully applied a natural hedge concept in which the Company uses its foreign currency revenues to settle its obligations from raw material purchases, investments, and debts denominated in the same foreign currency to lower the risk from currency fluctuations; and iii) proactively prepared financial strategies to deal with unexpected situations by utilizing derivative products such as forward contracts, swaps and options. The Company manages its risks, based on conservative principles and strictly for hedging purposes only, and not for speculation.

Risk on Non-payment from Sales Representatives and Customers

Fifty percent of the total sales of the KCE group are transacted through KCE’s sales representatives, while the remaining are shipped directly to customers. Sales representatives also collect the payments from customers on behalf of KCE and remit the money to KCE on an agreed schedule. This could impose a risk of non-payment or delayed payment from representatives or from customers, which would affect the Company’s liquidity and operations. However, such non-payment occurs infrequently. Most sales representatives are KCE associate companies, while many of the independent representatives have had relationships with KCE that go back more than 25 years. Moreover, the majority of KCE’s customers are world-leading companies with a strong financial status. All these factors help eliminate the risk of non-payment from representatives and customers. To reduce delayed payment risk, the Company assigns a group of staff to closely monitor and systematically follow up on outstanding payments.

Charter (Thai version only)
Code of Conduct

Code of Conduct

To comply with the company’s good governance practice, the code of conduct is defined. The company’s directors, management and employee must follow the code and treat it as corporate value and culture; to enable effective management, fairness and transparency in the operation. As a result, this will boost the confidence of shareholders and all stakeholders, and will be the ground for firm and sustainable development.

The code of conduct is a good practice for operating and is a standard behavior that all KCE’s personnel must follow, to assure that management in all business sectors is going forward in the same direction, morally, transparent, and accountably. The Company’s Board of Directors has defined the code of conduct for guideline as follows:

Code of conduct for the Directors and Executives

Being the role model in behavior and performing their duties with honesty and maintain equitable interest of all stakeholders, the directors, executives must strictly adhere to the core code of conduct as listed below:

Employees

Stakeholders

To promote KCE to be an efficient company and accountable for stakeholders, the directors, executives, and all employees must adhere to the code of conduct towards the stakeholders and follow practice guideline as below:

Policies & Practice Guidelines

Policies concerning treatment of company

1. Policy on respect of law and principles of human rights

2. Policy on maintaining and using inside information

3. Policy on responsibility for the company’s assets

4. Policy on intellectual properties

5. Policy on information security

Policies concerning the conflict of interest

6. Policy on managing conflicts of interest

7. Policy against fraud and corruption

Policies concerning Safety, Health and Environment

8. Policy on society, communities, and the environment

9. Policy on energy conservation

10. Policy on safety and occupational health

Others important policies

11. Policy on internal control and internal audit

12. Policy on political participation

13. Policy on Training and Development

Whistle-blowing and Complaints

1. Whistle-blowing and complaints

In order to encourage stakeholders, both internal and outside the company, to participate in the corporate governance principles, should employees or stakeholders suspect any unlawful activities or those in violation of the law, rules, regulations, code of business conduct, or corporate governance principles, they can undertake whistle-blowing or file complaints with detailed evidence to the company or relevant agencies via the following channels:

Audit Committee

Email : information@kce.co.th
Audit Committee
KCE Electronics Public Company Limited
Mail : 72-72/1-3 Soi Chalong Krung 31, Kwang Lumplatew,
Lat Krabang, Bangkok 10520

2. Conditions of whistle-blowing and complaints

  1. The details of whistle-blowing or complaints must be factual, clear, or sufficient to lead to investigation.
  2. The whistle-blower or the complainant may choose not to reveal his/her name, address, and telephone number(s) if the disclosure will cause danger or damage. But if the person chooses to reveal himself/herself, the investigation will proceed with speed, with additional useful information, factual revelation, or alleviation of the damage in a more convenient way and shorter time.
  3. The information received is considered confidential, and no disclosure of the name of the whistle-blower or the complainant will be made public without consent.
  4. The rights of the whistle-blower or the complainant will be protected whether he/she is an employee or an outsider.
  5. The time required to process each complaint depends on the complexity of the case, document sufficiency, proofs received from the complainant, as well as documents, proofs, and explanations of the person complained against.
  6. The person who receives the complaint and the person involved in the investigation must keep the filed information confidential. If necessary, they may disclose it taking into account the safety of and the damage to the complainant or any person who cooperates in the investigation, the information sources, or relevant persons.
  7. If the complainant or the person who cooperates in the investigation thinks that he/she is unsafe or threatened, he/she may ask the company for appropriate protective measures, or the company may proactively provide protective measures if there is potential damage or danger.
  8. The damaged person will be assisted by proper and just procedures.

3. Protection of rights of employees, temporary employees, and outsourced persons

The company will not unfairly treat employees, temporary employees, or outsourced persons, whether through changes in position, nature of work, or locations of work, suspension, threats, obstruction of work, termination of work, or any unfair act to these people because they:

  1. Provide information, cooperation, assistance to the directors, executives, the public sector, or the monitoring agency if there is sufficient proof that those people violated or abused law, rules, regulations, the code of business conduct, or corporate governance principles
  2. Give testimony, submit evidence, or provide assistance to the directors, executives, the public sector, or the monitoring agency useful to the consideration or investigation if there is doubt of the violation or abuse of law, rules, code of business conduct, or corporate governance
Corporate Governance rating

The Company achieved a score of “Excellent” in the 2015 and 2016 annual surveys conducted by the Thai Institute of Directors Association (IOD) in collaboration with the Stock Exchange of Thailand and the Securities and Exchange Commission. Surveys of the IOD assess the level of Corporate Governance of each company. The consistently high rating for the past years reflects the Company’s management and all employees' dedication to integrate sound ethics and the principles of good Corporate Governance into its business practices continuously.

 

Company Secretary Contact

Company Secretary

Ms. Tanyarat Tessalee
Address: KCE Electronics Public Company Limited
72-72/1-3, Lat Krabang Industrial Estate,
Kwang Lumplatew, Lat Krabang,
Bangkok 10520, Thailand
Tel: +66 (0) 2326-0196-9 ext. 1201
Fax: +66 (0) 2326-0300
E-mail: tanyarat@kce.co.th
Collective Action Coalition
Anti-Fraud and Corruption Policy & Procedure
CG Handbook
CG Handbook
File Size: 1.80 MB.