2.8 Internal Control

The Company’s Board of Directors and management continuously focus on
the internal control system by providing adequate and appropriate
internal control system for maximum efficiency of the Company’s
management, property maintenance, reduction of errors may occur,
financial management, risk management and compliance to rules &
regulations in order to rationally ensure that the Company's business
will achieve and generate maximum value in the long run. In addition,
the Board of Director and management have policies to promote and
advocate for the Company’s practice in complying with various rules and
regulations in order to prevent any damages to the Company.

The Company’s Board of Directors’ Meeting No. 1/2012 held on 20 January,
2012 evaluated and agreed that the Company had sufficient internal
control for the operations of the year 2011 which summarized as 5 main
categories as follows:

1.  Organization and environment

  The Board of Directors sets the Company’s business goals from past
  records and projections with prudence, clearness and feasibility,
  which are disclosed to the staffs as a guideline before starting the
  next fiscal year’s operation every year. And the management uses such
  direction as a monitoring and performance assessment guideline by
  comparing the actual with the budget and presents in the Board of
  Directors’ meeting each month. Moreover, for better achievement, the
  budgets are regularly revised whenever there is a significant factor
  affecting them. The Company’s organization chart has been classified
  by type of business and segregated the functions and chain of command
  between management of each business unit clearly. Moreover, the
  Company has segregated function and duties between back office and
  front office clearly in order to comply with good internal control and
  check and balance system. In addition, to reasonably achieve the
  goals, the Company organizes its structure to support the set goals
  including the rule regarding “Code of Ethics for the Company’s
  Director, Management and Staff” and punishment as a practice guideline
  in order to prevent the conflict of interest from utilizing inside
  information.

2.  Risk Management

The Company evaluates and categorizes the risks according to its type of
businesses, namely the risk as a securities broker, risk of granting
credit for securities purchasing, risk from securities dealing on debt
instrument, trading risk from underwriting and risks from other future
businesses including the operational risk. In this regard, the Executive
Committee and the Risk Management Committee were responsible for the
risk management controlling appropriately with the changing situations
while the Risk Management Department was responsible for the regular
monitoring, evaluating and risks reporting. In addition, the analyses on
both internal and external risk factors in terms of economic, politic,
legal and other concerned sectors, which affect the Company’s
operations, are also provided.

In addition to the mentioned above, the Company improved its procedures
and operational rules on the control of loan for securities, the
determination of securities list for loans and the examination of
customer’s financial status evidence to be more prudent. The Company has
strictly determined the measures to limit the credit granting for
trading of particular securities which are concentrated and has
increased the frequency of auditing the customers’ applications and
their supporting documents including the securities to be traded in
credit balance account, in accordance with the prescribed procedures and
operation rules. Furthermore, the Company informed the measures,
procedures and risk operation rules, both new and updated versions, to
all concerned employees to acknowledge in writing whenever there is any
amendment.

Furthermore, the Compliance and Internal Audit Department is responsible
for the monitoring and controlling of all Departments of the Company to
ensure the compliance with the risk management policy imposed.

3.  Management task of the Executives

The Company has determined the scope of duties and responsibilities as
well as the approval authority limit of the management in each level
clearly and in writing and its management obviously segregates the
responsibilities of agencies and staff to prevent conflict of interest
and create the checks and balances system.

Regarding the rules and procedures concerning connected transaction, to
comply to the Securities and Exchange Act (No.4) B.E. 2551, the Board of
Directors had approved in principle that it must be a transaction with
the same commercial terms as those an ordinary person would get from any
unrelated counterparty under the similar circumstances on the basis of
commercial negotiation and without any dependent interest resulted from
the status of the director. Therefore, the approval of the transactions
between the Company and its major shareholders, executives or any
parties involved with such persons, the Company will consider for its
own best interests and consider such actions as treating to other third
parties. And the directors or management having an interest in such case
are not entitled to vote.

Moreover, the Company has appointed the Compliance & Internal Audit
department which is an independent working unit to report the audit
result of the business operation in order to comply with the relevant
laws, also an advisor and trainer of the management and employee to
perform in compliance with the laws and regulations related to the
securities business. Moreover, the Compliance & Internal Audit
department shall take care of the clients’ complaint, verify the case
and propose to the investigation committee, then report the resolution
to the Executive Committee for the approval and inform the solution to
the client.

Furthermore, the Company has set up the procedures of check and balance
among the departments and assigned the Compliance & Internal Audit
department to review the operating procedure in accordance with the
relevant laws. In case the illegal practices were found, the Compliance
& Internal Audit department shall closely follow-up such matters to
ensure that they were in compliance with the regulations and establish
the working system for these matters and control to follow the system in
order to avoid the said incidents.

4.  Information System and Communications

Sufficient information is supplied to the Board of Directors to
facilitate decision making. The Company has sent financial information
together with agendas for consideration in the meeting to directors in
average 7 days prior to the meeting date. For the Shareholders’ Meeting,
the Company provides sufficient details for the shareholders to check
appropriateness of directors’ performance. The Company also provides
completed accounting and other documentation systems in accordance with
accounting policies generally accepted and appropriate for the business.

5.  Follow up System

The Company’s Board of Directors always follows up the management’s
operations and compares them to the set target. Should there be any out
of target, the marketing strategies will be adjusted while the follow up
system continues and adapted in accordance to the changing situation in
order that errors are corrected in time. In this regard, the Compliance
and Internal Audit Department reports the auditing result to the Audit
Committee every month and the Chairman of the Audit Committee presents
the report to the Board of Directors. When significant defect is found,
not waiting until the Audit Committee’s Meeting date, head of the
Compliance and Internal Audit Department as a secretary of the Audit
Committee will report to and ask opinion from all Audit Committee’s
members in order to inform the executives to solve the problem
immediately. The secretary of the Audit Committee is responsible for the
follow up and report the progress of the defect’s improvement to the
Audit Committee. Subsequently, the Chairman of the Audit Committee will
report such issue to the Board of Directors.

The Company also has policy to let the management report immediately to
the Board of Directors in case of fraud suspect or violation of laws or
any other malpractices which may affect the Company’s reputation and its
financial status.

The Board of Directors considered that the internal control system
concerning the above measures is sufficient and appropriate to the
Company’s business.