2.10 Internal Control

The Board of Directors’ Meeting No. 1/2009 held on 19 January, 2009 had
evaluated and agreed that the Company had had sufficient internal
control for the operations of the year 2008 which summarized under 5
main categories as follows:

1.  Organization and environment

  The Company set up sound organization structure and environment in
  order to facilitate the efficient internal control system by creating
  pleasant atmosphere or factors to encourage all staffs to realize the
  necessity of having internal control system and it was successful as
  expected. During the past year, 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 affect them.
  Regarding the structure of the Company, it had reorganized the Thai
  Marketing Department by establishing the Branch Coordination Division
  separated from the Marketing Dept. in order to create a clear
  commanding line as well as the efficient coordination between branches
  and head office.

Furthermore, the Company had arranged 12 additional rules for the
improvement of securities business and the operation manual for
derivatives business, which the Company had newly obtained the license
from the SEC. And the Ethical Practice of Management and Staff handbook
is under revision.

2.  Risk Management

The Risk Management Committee is responsible for risk monitoring and
regular evaluating of all types of the Company’s business both internal
and external risk factors such as economics, politics, law, etc.,
including their impact and possibility as well as the setting up of risk
prevention rules to minimize them to within the acceptable limit.

The Company 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 underwirting 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 monitoring,
evaluating and risks reporting. In 2008, the Company had credit balance
debtors undergoing the loss from securities trading which created debt
repayment problems. The Company had tried to improve its risk management
measures by being stricter in granting credit for securities trading and
by requesting the debtors to pledge their properties such as land with
structure as a guarantee for debts. However, since the value of
collaterals did not cover the outstanding debts, the Company had to set
up the allowance for doubtful accounts for the debt amounts which
exceeded the collaterals.

The Company informed regarding the measures and the risk management
operation rules, both new and updated versions, to all concerned
employees to acknowledge in writing whenever there is some amendments.
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.
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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