2.10 Internal Control

The Board of Directors’ Meeting No. 1/2010 held on 15 January, 2010 had
evaluated and agreed that the Company had had sufficient internal
control for the operations of the year 2009 which summarized as 5 main
categories as follows:

1.  Organization and environment

  The Board of Directors had set the Company’s directors from past
  records and projections which were also disclosed to the staffs as a
  guideline before starting the new year’s operation every year. And the
  management had used such direction as a monitoring and performance
  assessment guideline by comparing the actual with the budget and
  presented in the Board of Directors’ meeting each month. Moreover, for
  better achievement, the budgets were regularly revised whenever there
  was a significant factor affecting them. In addition, the Company has
  rule regarding “Code of Ethics for the Company’s Director, Management
  and Staff” as a practice guideline in order to prevent the conflict of
  interest from utilizing inside information.

Furthermore, in the year 2009, the Company has improved 8 rules
regarding the securities business and the operation practice to be more
prudent and efficient.

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 are responsible for the risk
management controlling appropriately with the changing situations while
the Risk Management Department is 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.

However, the Company found that its control of the credit granting for
securities trading, the determination of securities to be traded in
credit balance account and the verification of customer’s financial
evidence for trading line calculation, were not strict enough,
therefore, the Company improved its procedures and operation rules on
such issues 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.

Additionally, 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 set up authority and ranking for approving transactions.
Responsibilities were segregated clearly to prevent conflict of
interest. And in order to create the checks and balances system as well
as to prevent the fraud or damages to the customers’ assets, the Company
had imposed the rules regarding the segregation of duties between front
office (Marketing) and back office (Operations).

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, executive or related person. The Compliance
and Internal Audit Department, responsible for the controlling of the
Company’s operation to comply with the relevant laws, giving consultant
and training to the executives and staffs regarding the compliance and
regulations pertinent to the business as well as receiving complaints
from the customers, is independent and it reports directly to the Audit
Committee.

4.  Information System and Communications

Sufficient information is supplied to the Board of Directors to
facilitate decision making and usually contains sufficient details so
that the shareholders are able to evaluate the efficiency of the Board
of Directors. Accounting documents are carefully kept in proper
categories.

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

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