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 3 consecutive terms and not more than 9 years in total. The Board of Directors may consider the extension of the term for Independent Directors as deem appropriate. In the year that the Independent Director will retire, the Board could propose the retiring Director to the Annual General Meeting of Shareholders, for reelection to be an Independent Director for another term. 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 Sub-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 and in compliance to the business strategies, as well as the defined Board skill matrix which determines the required qualifications and other related criteria. 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 and Executive Management

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).

1) The policy and criteria of the remuneration for the Company Directors

The director remuneration policy and criteria is established by the Board of Directors. Currently, the form of remuneration of the directors comprises of 2 types; the meeting allowance and yearly bonus, which considers the tasks, responsibilities and performance of directors, including a comparison to the remuneration of other similar companies in the same industry. The remuneration criteria is application to all directors, including the executive directors.

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 2021 and 2022 remuneration of directors was approved by AGM No. 38/2021 on April 22, 2021 and AGM No. 39/2022 on April 21, 2022 respectively.

Remuneration of Board of Directors

Remuneration of Audit Committee

Remuneration of Nomination and Remuneration Committee

Remuneration of Enterprise Risk Policy Committee

Remuneration of Environmental, Social, Governance and Sustainability Development Committee

2) The policy and criteria of the remuneration for the Executive management

The Board determines the policy and criteria of the remuneration for the Executive management, which is proposed by the Nomination & Remuneration Committee to consider and approve. Such remuneration is appropriately determined and based on the remuneration structure of the Company, taken into account of a reference to the survey of remuneration by a recognized institute, inflation rates, the Company’s operating results, as well as the individual's performance, and in line with the assigned duties and responsibilities. The Company contributes remuneration in form of salary, annual bonus and contribution to provident fund.

Remuneration of Executive Management

Other remunerations of Directors and Management

On April 25, 2019, the meeting of Shareholders approved the issuance and offering of the warrants to purchase ordinary shares of the Company (ESOP-W6), 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, 2022, the outstanding warrant is amounted to 828,000 units.

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

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:

1. Rights of Shareholders
2. Equitable Treatment of Shareholders
3. Roles of Stakeholders
4. Disclosure and Transparency
5. Roles and Responsibilities of the Board

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

1. Minor shareholders can propose agenda items for consideration at the shareholders’ meeting and nominate qualified people for election as directors ahead of the meeting as stipulated by the company.
2. The company sends meeting invitations in both Thai and English to the shareholders, containing complete and clear agenda details.
3. The company posts meeting invitations, containing agenda details, at least 30 days ahead of the meeting on www.kce.co.th and via the Stock Exchange of Thailand’s web portal.
4. The company sends meeting invitations with agenda details to the shareholders at least 21 days ahead of the meeting so that they may have enough time to study the details before voting on each agenda item.
5. Shareholders can send queries about agenda items at the shareholders’ meeting ahead of the meeting by email to the company secretary tanyarat@kce.co.th or by mail to the following address:

The Executive Office
KCE Electronics Public Company Limited
72 - 72/1-3 Soi Chalongkrung 31
Kwang Lumplatew, LatKrabang
Bangkok 10520 Thailand

The Meeting

6. The company sets the date, time, and venue of the shareholders’ meeting taking into account the convenience with which the shareholders can attend the meeting.
7. The company provides computers and barcodes to facilitate the registration and vote counting in view of convenience, speediness, accuracy, and reliability of the information.
8. The company provides voting ballots for each agenda item.
9. Shareholders are entitled to authorize the company’s independent directors or other people deemed appropriate to attend the shareholders’ meeting and exercise their rights to vote on their behalf.
10. The company clearly informs the shareholders of the regulations controlling the shareholders’ meeting and the voting procedures at the beginning of the meeting.
11. No addition can be made to the agenda item as listed in the invitation letter and no amendment to significant information can be made without notifying shareholders in advance.
12. The company’s directors and executives attend the shareholders’ meeting and allow the shareholders to ask and present their views, as well as to seek clarification from the directors, executives, and the auditors during applicable agenda items.
13. The company allows shareholders to vote for individual directors.
14. The company counts the vote and discloses the results of the vote for each agenda item in the meeting with clarity and transparency.

Post Meeting

15. The company disseminates the resolutions of the meeting and the results of the vote for each agenda item via the Stock Exchange of Thailand’s news channels.
16. The company prepares correct and complete minutes of the meeting to the Stock Exchange of Thailand and posts them on the company’s website within 14 days after the meeting.
17. The company disseminates the minutes of the meeting on the company’s website and via the Stock Exchange of Thailand’s news channels.
18. The company disseminates the filming of the meeting via the company’s website or as VCDs.

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

• Shareholders: Stimulate growth with quality and sustainable benefit for shareholders with good operating performance and efficiency; maintain effective internal control system and risk management system: respect the shareholders’ equal rights to receive necessary information; disclose correct and actual information; conduct business based on honesty, transparency and fairness.
• Employees: Treat employees at all level fairly and appropriately; regarding the opportunity in career advancement, compensation, welfares, appointment and transfer and potential development. Ensure that the work environment is safe and healthy to employees and their properties. Pay attention to comment and suggestions from the employees. Respect human right principles.
• Customers: Satisfy the customers by producing quality product and provide good service; treat customers fairly and properly; provide complete, correct, and actual information; undertake customer satisfaction surveys, the results of which are used to continuously improve the service.
• Business partners: Provide fair treatment of business partners based on joint benefit; create and maintain sustainable relationship with business partners; create trust, by which the company adheres to the clear procurement procedures and practices in order to ensure independency between the company and business partners in the transparent sourcing; comply with trade term and agreements
• Creditors: Treat all creditors equitably and fairly; strictly respect agreements with creditors; provide assistance in a manner of mutual benefits to both businesses; provide the company’s data with integrity, including potential risk; ensure timely repayment of loans and interests; thoroughly honor loan conditions as agreed, as well as observe conditions given to the creditor equally.
• Business competitors: Conduct business with fairness; refrain from dishonestly or improperly seeking competitors’ confidential information of business competitors; refrain from abusing the intellectual property rights of others or those of competitors.
• Society, communities, and environment: Respect the relevant law, and/or regulations; monitor the operation of the company and prevent it from damaging the quality of life of society, communities, and the environment; develop society in its quality of life, education, energy saving, and environmental protection for the benefit of society at large.

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

• Emphasize in correct, complete, transparent, thorough and timely disclosure of information, whether financial or non-financial, so that investors and all stakeholders may regularly receive reliable and sufficient information for their decision.
• Disseminate the company’s information and news that are useful to minor investors, institutional investors, analysts, and the general public, whether in or outside the country, on a fair and extensive basis via assorted media such as the company’s website, the Stock Exchange of Thailand’s news channels, quarterly reports, business action plans, and annual reports.
• Material information disclosed to the public, such as the annual information form (form 56-1), annual report (form 56-2), financial information, information on major shareholders and voting rights, information of directors and members of sub-committees, information sent to the Stock Exchange of Thailand, dividend policy, corporate governance principles, business code of conduct, and company activities and action plans.

2. Responsible persons for disclosure of information

• The Chairman is responsible for the disclosure of the company’s information, the press release or the public relations regarding important data of the company. The Chairman may designate the President & CEO, the Company Director or the executives to disclose information or handle the press release to investors, financial analyst or the media, in adherence to correctness, completeness, timeliness, and fairness.
• The company secretary is responsible for disclosing key information to the Stock Exchange of Thailand, the Securities and Exchange Commission, shareholders, and investors.
• Top executives responsible for finance and investor relations are responsible for disclosing information and answering queries of shareholders, investors, stock exchange analysts, and the general public. The information covers financial statements, performance, nature of business, company policy, operational plans and investment, development projects, shareholding structure, and key factors impacting performance.
• Those not responsible for disclosing company information or those not assigned by the Chairman or the CEO must not disclose inside information that may affect the company’s reputation and image, including the information that may affect the change in price and volume of the company’s stock transactions.

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

• The board consists of at least five directors. At least one-third must be independent directors, the number of whom must be at least three. At least half of the directors must be permanent residents of the kingdom.
• The directors elect one of them as chairman. When deemed appropriate, the directors may elect one or several directors as vice chairman. The vice chairman is responsible for assignments by the chairman under the company’s regulations.
• The chairman and the President & CEO are two separate persons for the sake of clear-cut segregation of roles and balance in the operation.
• The appointment of the directors must follow relevant law, rules, and regulations based on transparency and clarity.
  1. If a director resigns upon term expiration, the shareholders’ meeting may elect his/her replacement through the decision of the majority of votes of the present shareholders. If there are equal votes among the directors, the chairman of the meeting must cast the decisive vote.
  2. If a director’s post becomes vacant for reasons other than term expiration, the board may elect a qualified candidate to replace him/her in the next board of directors’ meeting. If the remaining term of directorship is shorter than two months, the newly elected one is to stay in office for the remaining term. The resolution of the board on this matter must consist of no less than three-quarter votes of the remaining directors.
   
• The Directors of the Board possesses a diversified qualifications and knowledge and capability, which experience and skills are useful for conducting the business. The board member is regardless of sex, nationality, religion, age or professional.

2. Qualifications

• Directors must be ordinary citizens with the following qualifications:
  1. Are of legal age
  2. Are not bankrupt, incompetent, or equivalent
  3. Have not served prison terms for fraud
  4. Have not been dismissed from the government, organizations, or government agencies for fraud.
   
• Directors must possess knowledge, ability, and experience beneficial to the business operation with ethics, honesty, and sufficient time to devote to their work.
• Directors may hold directorships in other companies, but must not let them affect their work as the company’s directors. The company stipulates that directors may hold directorships in no more than five listed companies.
• Directors must not manage other activities opposing the company’s interest or provide interest to other people/entities, whether for their own benefit or the benefit of others.

3. Terms

• The Company set the term for service for each directorship is three years.
• At every annual general meeting, one-third of the directors must resign from office. If the number is not a multiple of three, the number closest to one-third must be adopted.
• A director whose term has expired may be re-elected.
• Apart from normal term expiration, the directorship is to be considered terminated due to the following reasons:
  1. Death
  2. Resignation
  3. Disqualifications or qualifications contrary to the law and the company’s regulations
  4. Shareholders’ resolution to remove him/her with no less than three-quarters of the votes of the present shareholders who are eligible to vote and with no less than half of the shares held by the present shareholders who are eligible to vote.
  5. Removal by court order.
   
• A director who wishes to resign must submit a resignation to the company.

4. Selection

• The Nomination and Remuneration Committee selects and screens eligible people for the consideration of the board.
• The selection procedures must be transparent, accountable, and fair in compliance with the Securities and Exchange Law, the Public Limited Company Law, charter of the board of directors, corporate governance principles, and related criteria (see more detail in “Nomination & Remuneration of Directors).

5. Duties and Responsibilities

1. Acting in the best interest of shareholders (Fiduciary Duty) by observing the following four main practices:
   1. Performing its duties with all circumspection and caution (Duty of Care)
   2. Performing its duties with faithfulness and honesty (Duty of Loyalty)
   3. Performing its duties in compliance with laws, objectives, Articles of Association, and resolutions of shareholders’ Meetings (Duty of Obedience)
   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
2. 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.
3. Nomination and Remuneration Committee
4. 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:
5. 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.
6. 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.
7. Risk Management Committee
8. 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.
9. Corporate Governance Committee
10. 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.
11. Chief Executive Officer
12. 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

• The directors must regularly hold meetings once a month by setting meeting dates in advance all year round and may convene an extraordinary session if necessary.
• At least two directors are entitled to call for a meeting. The chairman or the assigned person must set the date of the meeting within 14 days after receiving the request.
• The chairman or the assigned person sends meeting invitations specifying the date, time, venue, and agenda details to all directors at least seven days ahead of the meeting. Except for the urgent case to protect the company’s interest, notification of the meeting can be given through other means and the meeting can be convened earlier.
• In the directors’ meeting, at least half of the directors must be present. The chairman of the board acts as chairman of the meeting. If the chairman cannot attend the meeting or cannot perform the duty, the attending directors will elect one among themselves as chairman.
• The resolution of the meeting will take into account the majority of votes, with one director having one vote. If the number of votes is equal, the chairman will cast the decisive vote. Each director with vested interest(s) in any agenda item must abstain from voting on that item.
• The board is authorized to invite the management, executives, or other relevant people to give opinions, attend the meeting, or present information for consideration.
• Non-executive directors must meet in the absence of the management at least once every year to share views on the topics relevant to their responsibilities.
• The company secretary or the assigned person is responsible for preparing the minutes of the 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:

1. Preparing and keeping these documents;
   1. Directors’ Profile
   2. Invitation Letter to the Meeting and Minutes of Directors Meeting and the Company’s Annual Report
   3. Invitation letter to shareholders and Minutes of the Shareholders’ Meeting.
    
2. Keeping the reports of the company’s connected transactions disclosure, reported by Directors or management
3. Submit a copy of the connected transactions disclosure of the Directors, management or connected persons to the Chairman and the Chairman of the Audit Committee within 7 business days from the date of receipt
4. Perform other duties as assigned by the Board of Directors
5. Organize the Shareholders’ Meetings and the Board of Directors’ Meetings in accordance with the laws, the Company’s Articles of Association and other relevant requirements
6. Draft the management policies
7. Record the Minutes of Shareholders’ Meeting and the Minutes of the Board of Directors Meeting, and follow up the compliance under the resolutions of the Shareholders Meetings and the Board of Directors meeting
8. Ensure the disclosure of data and information under its responsibility to the authorized supervising the Company under the regulations and requirements of such authorities
9. Ensure the Company’s and the Board of Directors’ compliance with the laws and requirements of SEC/ SET
10. Promote and standardize Good Corporate Governance in the company
11. Communicate with the shareholders to ensure that the shareholders obtain their entitlement and the information of the Company
12. Manage the activities of the Board of Directors.

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?

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

Definitions

• Company means KCE Electronics Public Company Limited (KCE) and its subsidiary companies
• Sister companies means two or more subsidiary companies with the same parent company
• Company’s employees means directors, executives, and rank-and-file employees
• Directors means the Company’s Directors
• Independent directors means director who is independent from controlling of executives and of major shareholder as well as not related to or has interest in any executives’ decision. Qualifications of the independent directors are as follows:
  • Shall not hold shares exceeding 0.5% of the voting shares of KCE, its subsidiaries, associated or related companies (including the shares held by connect parties under Section 258 of Securities and Exchange laws).
  • Have not been or are not involved in the company as any of the following:
  • - The management
  • - Employees, or former employees of the current external auditor
  • - Former wage earners including an audit advisors, legal or other advisors of KCE
  • - Employed by KCE, or
  • - Have control over KCE, its subsidiaries and associates
  • - Juristic persons that could pose conflicts of interest, except when such qualifications have ended for more than two years.
  • - Have had business relationship with the company in the past two years.
  • Have absolutely no vested interests in KCE, its subsidiaries, associates or related companies, or juristic persons with possible conflicts of interest hampering independent exercise of discretion including customers, business partners, and trade or loan creditors/debtors.
  • Are not close relation related by blood or by registration or have other relationship that could deprive independence with the management, major shareholders of KCE, KCE Group companies, associated companies, or juristic persons that could pose conflicts of interest.
  • Not being appointed as an agent to preserve the interests of directors or major shareholders.
• Executives means the company’s management from Manager-Level upwards
• Employees means employees from the level of executives downwards, whether permanent employees, contracted employees or temporary employees
• Business partners means suppliers of goods and services to the company, contractors and sub-contractors
• Customers means those who buy the company’s products or services
• Stakeholders means shareholders, customers, trade partners, creditors, employees, business competitors, the public sector, organizations and other related people in society
• Connected persons means directors, executives, major shareholders, controllers, or the person to be recommended as the authorized controllers for the company or its subsidiary companies, including their relevant persons and close relatives
• Major shareholders means direct or indirect shareholders in the company with more than 10 percent of all the shares with the right to vote, including shares held by related persons.

• Related persons means those with the following relationships:
  1. The controllers of the company; in case of a juristic person, it will include the directors of that company
  2. Spouses, children or adopted children under the legal age of the directors, executives, or persons mentioned under 1.
  3. The company that the persons under 1 and 2, are authorized to control
  4. Other persons as specified by the Capital Market Supervisory Board
• Close relatives means blood relations or through lawful registration as follows:
  1. Spouses
  2. Fathers, mothers, siblings, and children/adopted children, including the spouses of the children/adopted children

• Inside information means the information that is not yet disclosed to the public and is used for the sole purpose of the company and not of personal use, the information that company keeps temporarily, including the information about strategies, policies, business plans, objectives, business performance, and the company’s income

Risk Management Policy and Plan

The Board of Directors and the Audit Committee are the auditors of various internal control systems such as financial management systems, the measurement of actual performance against strategy & goals, and the compliances with laws and regulations. There is the internal auditor department that will audit the accuracy of the information, monitor the maintenance and utilization of the assets, assess the adequacy and efficiency of the internal control systems of various work systems along with audit planning and monitoring the implementation of the plans to assure company's operations efficiency and effectiveness, as well as to help prevent and manage various risks that might occur to the company and stakeholders.

The Board of Directors is responsible for the financial statements, financial information and annual reporting of the company & its subsidiaries. The financial statements will be audited by the auditor to ensure the correct significant contents respectively to acceptable accounting standards in Thailand, along with sufficient disclosure of important information and notes to the financial statements in the company’s annual report.

The Board of Directors is also responsible for maintaining effective internal systems to reasonably ensure the accuracy and completion of financial statements recording along with supervising the assets utilization and preservation to prevent misconducts or corruptions. The Board of Directors has appointed an Audit Committee consists of 3 independent directors to supervise and ensure availability of appropriate financial reporting and auditing system.

The internal control sufficiency assessment form by Securities and Exchange Commission (SEC) has been utilized as a guideline for self-assessment of the sufficiency of the company's internal control systems. The management and the Internal Audit Department conducted annual assessments and had been reviewed by the Audit Committee follows by the Board of Directors regularly.

The Company’s head of internal audit is Miss Chayanee Chaidetkhajorn (Assist Vice President – Internal Audit) appointed by the Audit Committee.

At present, the Board of Directors has concluded that the Company's internal control system, risk management, information & communication systems, and monitoring system are sufficient and appropriate.

Risk Factors and Risk Management

KCE Electronics Public Company Limited is committed in achieving our goal of becoming the world's major PCB manufacturer and realized that risk management is an important component in every process of business operations. The Company has established multiple risk management committees to look after risks in all areas, in order to ensure that the risk management process & methodology is clearly aligned with business strategies & goals under the Good Regulatory Framework. The major risk management is classified as following:

1. Strategic Risk

   The company envisions becoming the world's major PCB manufacturer and aim to produce PCBs as electronic components for products in all technological fields including auto parts, which is currently the company's largest production proportion, which keeps growing every year. The company is also attempting to increase the customer base outside of auto parts segment to broaden marketing opportunities. At the same time, the company has been continuously improving production capacity and efficiency to support the growing demand of PCB in the market by planning to build the new PCB plant at Rojana Industrial Park, Ayutthaya, while maintaining the low manufacturing costs in order to maintain competitiveness. The risks associated with the company's strategies setting include:

   1.1 Raw material sourcing risk

   In 2022, the global COVID-19 epidemic situation had improved, thus the delayed delivery of the goods from vendors was expected to also be improved. Unfortunately, according to the Russia-Ukraine conflict situation, the company had to face the transportation problem especially in Europe and also raw materials price incremental especially price of copper, which is the main raw material, was continuously increased by the affects of world’s energy price raising. However, the company was able to overcome the problems with good planning and coordination. The Company has also performed new vendors sourcing activities to mitigate the risk of raw materials & manufacturing supplies shortage.

   1.2 Market Risk & Competition Risk

   After the global COVID-19 epidemic situation had improved, many countries have relaxed their lock-down measures accordingly. Higher spending found all over the world, including automotive market. Therefore, the order was increasing from automotive customers at early of the year, unfortunately the consequence of Russia-Ukraine conflict situation caused the slow-down orders from automotive customers during the Q3-Q4 2022. Anyhow, the company had backlog order therefore the negative impact was not so significant.

   1.3 Technology Changes Risk

   The electronics industry has rapid changes in production technology, so it might be a risk of competitiveness. Therefore, the company has been continuously investing to support technology changing since 2021 up until now. In addition, we have continuously developed products and manufacturing process to support the increasing products varieties as well as focusing in quality control process to serve customers’ expectation, especially the HDI (High Density Interconnect) which is a product group that produced by advance manufacturing technology.

2. Operation Risk

   2.1 Production Risk

   In 2022, there was an increase in orders at the beginning of the year, unfortunately the consequence of Russia-Ukraine conflict situation caused the slow-down orders from automotive customers during the Q3-Q4 2022 due to the global economy recession. Therefore, the company had to adjust the production plan according to the purchase order, improve production processes to match with new technologies in order to reduce defects rates and production cycle time as well as intensify preventive maintenance to reduce machine downtime, to finally maintain the manufacturing cost at acceptable level.

   2.2 Human Resources Management Risk

   Major factors to be considered in human resource management risk in 2022 are the surveillance and taking care of employees in preventing COVID-19 spreading, where the company has defined measures to control which to be adjusted accordingly and timely upon situation. Therefore, the production can be carried out continuously and normally. Moreover, the company has taken steps to mitigate the risk of employee resignation such as establishing high compensation policy providing higher minimum wage rate than the legal minimum wage, or paying for special skills at the job site which require highly skilled etc., to increase motivation and reduce turnover rate and prevent labor shortage

   2.3 Information Security Management Risk

   The company's information and information systems are the most important resource. The protection against external threats and systematic standardized supervision are top priorities of the company. The risks and the likelihood of risks are protected as follows:

   • Installed and updated computer firewall to prevent malicious attacks from outside as well as installing antivirus software to prevent any potential damages to the Company’s computer network.
   • Installed the data backup system to prevent data loss in case of irreparable damages to th operating systems or main servers. The server storage room were built to withstand fires for about 10 hours and has equipped with emergency power supply systems to continuously supply electricity in case of power outage.
   • Established robust service contracts to the computer equipment and software suppliers to handle maintenances & services those important systems.
   • Developed and improved information technology management in accordance with the requirements of the Trusted Information Security Assessment Exchange (TISAX) for the Automotive industry, because it is the main industry of the company's businesses & products. The information security systems were set on both internal and external, which is expected to be certified under TISAX within 2023.
   • Set up Disaster Recovery Site outside the company's location to be an alternate source for storing data and the main work systems, which can be enabled and recovered at any time in case the main computer center is not functioned, whether by natural disasters or man-made. It helps to ensure that there will be no damage to any important data and allows the business to continue without interruption.
   • Vulnerability Assessment applied, which is a checking process that identifies risks of vulnerabilities discovered in the operating systems, software, or network/security equipment, as well as their severity levels so that they are addressed & properly solved by the system control administrators.

3. Financial Risk

   3.1 Foreign Exchange Loss Risk

   Because most of the Company's revenue and cost of sales are mainly in USD, the company benefited during 2022 when THB was greatly depreciated against USD compared to 2021’s. However, the Company continues to implement hedging policies to help mitigate the burden of exchange rate fluctuations by using natural hedge methods to balance the company's assets and liabilities in foreign exchange. In addition, the Company continues to apply forward contracts for the difference in foreign exchange between assets versus liabilities, which can also leverage the protection of risks by exchange rate fluctuations.

   3.2 Interest Rate Risk

   The company received support from financial institutions in 2021 for a long-term credit line for factory improvement and additional machinery purchases and drawdown the credit line in 2022 to accommodate production and technology changes. However, the original long-term debt is gradually decreasing according to the installment returned. The Company also has some short-term borrowings for working capital for a short period of time, with low interest rate, and this keeps the interest rate risk low.

4. Hazard Risk

   Fires and natural disasters can have a significant impact on the Company's operations. The Company and all its subsidiaries have managed to reduce the risk by applying all-risks-insurance and business interruption insurance with the insurance providers who has a strong financial position. The insurance packages are being reviewed on yearly basis to ensure that it is adequate and cover damages of all cases.

   4.1 Floods Risk

   The manufacturing facilities are located in Lat Krabang Industrial Estate, Bangkok, and high-tech industrial estates, Phra Nakhon Sri Ayutthaya province, therefore, there are floods preventive measures already in-place by industrial estates themselves at a standard level, such as building floods walls, etc. However, the company always keeps monitoring floods information, well-prepared contingency plan, having good building design by considering advance preparation such as hi-raised building floor beyond flooding level which is even higher than other surrounding area of the industrial estate to prevent potential impacts on machinery and production processes that could causes by floods.

   4.2 Fire Accident Risk

   The company has standardized fire prevention and suppression plans, divided into inspection plans, training plans, fire prevention campaign plans, firefighting plans, evacuation plans, and relief plans. The company will educate all employees on fire prevention and basic fire extinguish. The Emergency Response Team has also been appointed from trained specialists in firefighting. Firefighting equipment is always checked in readily available, and fire-prone machinery and equipment are inspected according to the inspection cycle of each device. The electrical system and equipment to be also inspected according to the audit plan by a certified third party that has been registered as a service provider for inspecting and certifying electrical systems, thus, the official inspection reports will be submitted to the Department of Labor Protection and Welfare.

5. Environmental Regulation Compliances Risk

   The company has a policy to strictly comply with environmental laws, and since the company has factories in the industrial estates which already has standard control measures including water treatment which has been certified by both the Industrial Estate and the Department of Industrial Works. There is regular inspection and submission of reports according to regulations. Other waste management and air pollution elimination are also being managed and controlled in compliance with environmental laws as well. The waste disposal equipment is well-maintained, the system is monitored on regular intervals thus enabling the wastes treatment to be under controlled according to the specified criteria.

6. Emerging Risk

   6.1 COVID-19 Pandemic

   In 2022, the internal epidemic within the company has significantly decreased compared to the previous year. Most of the patients got infected from outside of the company, so it does not affect the company’s production, and can operate normally.

   6.2 Effects of the Russia-Ukraine conflict situation

   The effect of the Russia-Ukraine conflict situation is an indirect effect because the company does not have trading partners from these 2 countries. Anyhow, the transportation cost and related production costs have increased, as energy prices increased. This results global inflation and partly causing global economic recession. Consequently, consumer's consumptions all around the world is reduced.

The Company achieved a score of “Excellent”, for the sixth consecutive year, in the 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 dedication to integrate sound ethics and the principles of good Corporate Governance into its business practices continuously.

Company Secretary

Mrs.Wasara Chotithammarat

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:	wasara.c@kce.co.th