Management 

(1) Management Structure

 

Names of Management or Controlling Persons

Board of Directors comprises

  ----- -------------------- ------------------- ---------------------------
  1.    Mr. Chirayu          Isarangkun Na       Chairman
                             Ayuthaya            

  2.    Air Chief Marshal    Sindhvananda        Independent Director
        Kamthon                                  

  3.    Mr. Snoh             Unakul              Director

  4.    Mr. Sumet            Tantivejkul         Independent Director

  5.    Mr. Pricha           Attavipach          Independent Director

  6.    Mr. Panas            Simasathien         Director

  7.    Mr. Yos              Euarchukiati        Director

  8.    Mr. Arsa             Sarasin             Independent Director

  9.    Mr. Chumpol          NaLamlieng          Director

  10.   Mr. Tarrin           Nimmanahaeminda     Independent Director

  11.   Mr. Pramon*          Sutivong            Director

  12.   Mr. Kan              Trakulhoon          Director, President & CEO

        Mr. Worapol          Jennapar            Secretary to the Board
  ----- -------------------- ------------------- ---------------------------

  Remark: * Mr. Pramon Sutivong was nominated as a director of the
  company on April 29, 2009, to replace
  Mr. Sivavong Changkasiri.

Top Executives of Siam Cement Group (SCG) comprises

  ---- -------------------- ------------------- ---------------------------
  1.   Mr. Kan              Trakulhoon          Director, President & CEO,
                                                SCG

  2.   Mr. Roongrote        Rangsiyopash        Vice President & CFO, SCG

  3.   Mr. Cholanat         Yanaranop           President, SCG Chemicals

  4.   Mr. Chaovalit        Ekabut              President, SCG Paper

  5.   Mr. Pramote          Techasupatkul       President, SCG Cement

  6.   Mr. Pichit           Maipoom             President, SCG Building
                                                Materials

  7.   Mr. Kajohndet        Sangsuban           President, SCG Distribution

  8.   Mr. Damri            Tunshevavong        President, SCG Investment
  ---- -------------------- ------------------- ---------------------------

The Attendance of the Directors in Relevant Committee Meetings in 2009
(number of times)

+---+----------------+---------+--------+---------+--------+----------+
| D |                | Board   | The    | The     | The    | The 2009 |
| i |                | of      | Audit  | Gov     | Remune | Annual   |
| r |                | Di      | Com    | ernance | ration | General  |
| e |                | rectors | mittee | and     | Com    | Meeting  |
| c |                |         |        | Nom     | mittee | of       |
| t |                |         |        | ination |        | Shar     |
| o |                |         |        | Co      |        | eholders |
| r |                |         |        | mmittee |        |          |
| s |                |         |        |         |        |          |
+---+----------------+---------+--------+---------+--------+----------+
|   |                | (Total  | (Total | (Total  | (Total | (Total   |
|   |                | 12      | 4      | 5       | 3      | 12       |
|   |                | Dir     | Me     | M       | Me     | Di       |
|   |                | ectors) | mbers) | embers) | mbers) | rectors) |
|   |                |         |        |         |        |          |
|   |                | Total   | Total  | Total 4 | Total  | on March |
|   |                | 12      | 9      | Tim     | 6      | 25, 2009 |
|   |                | Tim     | Time   | es/Year | Time   |          |
|   |                | es/Year | s/Year |         | s/Year |          |
+---+----------------+---------+--------+---------+--------+----------+
| 1 | Mr. Chirayu    | 12/12   |        |         |        | 1/1      |
| . | Isarangkun Na  |         |        |         |        |          |
|   | Ayuthaya       |         |        |         |        |          |
+---+----------------+---------+--------+---------+--------+----------+
| 2 | ACM Kamthon    | 12/12   | 9/9    |         |        | 1/1      |
| . | Sindhvananda   |         |        |         |        |          |
+---+----------------+---------+--------+---------+--------+----------+
| 3 | Mr. Snoh       | 12/12   |        | 4/4     |        | 1/1      |
| . | Unakul         |         |        |         |        |          |
+---+----------------+---------+--------+---------+--------+----------+
| 4 | Mr. Sumet      | 11/12   | 8/9    | 4/4     |        | 1/1      |
| . | Tantivejkul    |         |        |         |        |          |
+---+----------------+---------+--------+---------+--------+----------+
| 5 | Mr. Pricha     | 12/12   | 9/9    |         |        | 1/1      |
| . | Attavipach     |         |        |         |        |          |
+---+----------------+---------+--------+---------+--------+----------+
| 6 | Mr. Panas      | 12/12   |        | 4/4     |        | 1/1      |
| . | Simasathien    |         |        |         |        |          |
+---+----------------+---------+--------+---------+--------+----------+
| 7 | Mr. Yos        | 11/12   |        |         | 6/6    | 1/1      |
| . | Euarchukiati   |         |        |         |        |          |
+---+----------------+---------+--------+---------+--------+----------+
| 8 | Mr. Arsa       | 12/12   |        | 3/4     |        | 1/1      |
| . | Sarasin        |         |        |         |        |          |
+---+----------------+---------+--------+---------+--------+----------+
| 9 | Mr. Chumpol    | 10/12   |        |         | 6/6    | 0/1      |
| . | NaLamlieng     |         |        |         |        |          |
+---+----------------+---------+--------+---------+--------+----------+
| 1 | Mr. Tarrin     | 11/12   | 8/9    | 2/4     |        | 1/1      |
| 0 | N              |         |        |         |        |          |
| . | immanahaeminda |         |        |         |        |          |
+---+----------------+---------+--------+---------+--------+----------+
| 1 | Mr. Pramon     | 9/9     |        |         | 4/4    | -        |
| 1 | Sutivong       |         |        |         |        |          |
| . |                |         |        |         |        |          |
+---+----------------+---------+--------+---------+--------+----------+
| 1 | Mr. Kan        | 12/12   |        |         |        | 1/1      |
| 2 | Trakulhoon     |         |        |         |        |          |
| . |                |         |        |         |        |          |
+---+----------------+---------+--------+---------+--------+----------+

Notes : 1.The five independent directors are number 2, 4, 5, 8 and 10.

2. The four Audit Committee members are number 2, 4, 5 and 10.

3. The five Governance and Nomination Committee members are number
3,4,6,8 and 10.

4. The three Remuneration Committee members are number 7, 9 and 11.

5. Mr. Pramon Sutivong has been elected as the company’s director since
April 29, 2009, replacing Mr. Sivavong Changkasiri who passed away.

Independent Directors’ Training

Conducted by Thai Institute of Directors Association (IOD)

+-----------------------+--------------+--------------+---------------+
| Independent Dir       | Trai         |              |               |
| ectors of the company | ning Courses |              |               |
+-----------------------+--------------+--------------+---------------+
|                       | Directors    | Directors    | Audit         |
|                       | C            | A            |               |
|                       | ertification | ccreditation | Committee     |
|                       | Program      | Program      |               |
|                       |              |              | Program       |
|                       | (DCP)        | (DAP)        |               |
|                       |              |              | (ACP)         |
+-----------------------+--------------+--------------+---------------+
|                       |              |              |               |
+-----------------------+--------------+--------------+---------------+
| 1. ACM Kamthon        | -            | Class 18 /   | -             |
| Sindhavananda         |              | 2004         |               |
+-----------------------+--------------+--------------+---------------+
| 2. Mr. Sumet          | Class 30 /   | -            | Class 11 /    |
| Tantivejkul           | 2003         |              | 2006          |
+-----------------------+--------------+--------------+---------------+
| 3. Mr. Pricha         | Class 39 /   | -            | Class 11 /    |
| Attavipach            | 2004         |              | 2006          |
+-----------------------+--------------+--------------+---------------+
| 4. Mr. Arsa Sarasin   | -            | Class 5 /    | Class 11 /    |
|                       |              | 2003         | 2006          |
+-----------------------+--------------+--------------+---------------+
| 5. Mr. Tarrin         | -            | -            | -             |
| Nimmanahaeminda       |              |              |               |
+-----------------------+--------------+--------------+---------------+

The Board of Directors and Top Executives of SCG

The Board of Directors

  Authorized directors whose signatures shall bind the company

Two of the five directors, namely, Mr. Snoh Unakul, or Mr. Yos Euarchukiati, or Mr. Panas Simasathien, or Mr. Pramon Sutivong, or Mr. Kan Trakulhoon jointly signed their names.

  Directors' term of office

The number of years in position during each term of office

The Articles of Association of the company has specified the number of years each director can serve in each term of office according to Public Limited Companies Act. At an annual general meeting of shareholders, one- third of the directors shall retire. However, if the number of directors is not a multiple of three, the number of directors closest to one-third shall retire. The director who has held office longest shall retire. Currently, the board consists of 12 directors, each of which shall hold office for a three-year term. However, the director who vacates office maybe re-elected again.

Number of terms served as director

The company believes that every director of the company elected at the general meeting of shareholders are highly qualified and possessing knowledge and capabilities at the forefront of Thailand. More importantly, they have strong track records in corporate governance, morale & ethics, and strong performance in overseeing the development and progress of SCG. As a result, if the shareholders are confident of their trustfulness and elect them for another term, the company shall respect the shareholders’ right and decision. With the aforementioned reasons, the company, therefore, does not limit the number of consecutive terms of office of the directors.

  Scope of Authority of the Board of Directors

  The Board of Directors has the following authorities:

1.  Fiduciary Duty: act in a fiduciary capacity to administer the
    corporate affairs for the best interests of the shareholders by
    closely observing the following duties:

    1.  Duty of Care: cautiously and carefully perform its duties.

    2.  Duty of Loyalty: perform its duties with faithfulness and
        honesty.

    3.  Duty of Obedience: strictly observe the laws, the objectives,
        the Articles of Association and the resolution of shareholders’
        meeting.

  1.4 Duty of Disclosure: disclose accurate, complete and transparent
  information to the shareholders.

2.  The Board is responsible for establishing corporate vision, the
    mission statement as well as the policy and strategy to align and
    sustain the interests of all stakeholders and create long-term
    shareholders’ value.

3.  The Board is responsible for reviewing the operating plan and
    ensuring maximum competitiveness in global level.

4.  The Board shall oversee and review the performance of SCG as well as
    evaluate the performance of the top executives.

5.  The Board maintains proactive risk management systems as well as
    oversees and review corporate governance to ensure compliance with
    internationally accepted practice.

6.  The Board must devote their time and efforts to the company without
    seeking benefits for themselves or others, and shall not act in a
    conflict of interests or in competition with the company or SCG.

7.  The Board directs the company’s operations in compliance with laws,
    the objectives, the Articles of Association and the resolutions of
    shareholders’ meetings in good faith and with care to preserve the
    interests of the company.

8.  The Board conducts their duty in line with SCG Corporate Governance
    as well as the Stock Exchange of Thailand’s Code of Best Practice
    for Directors of Listed Companies and Guidelines of Securities and
    Exchange Commission.

9.  The Board is responsible for overseeing and monitoring the
    performance of each business unit and overall performance of SCG by
    conducting performance report periodically. The Board also gives
    policies to improve the company’s operations and employee
    development.

10. The Board promotes awareness of the importance of morale and ethics
    among employees at all levels. It also promotes internal control and
    internal audit to ensure that corporate integrity is maintained and
    to prevent any fraudulent practice and illegal act.

11. The Board treats all shareholders, both major and minor
    shareholders, equally with regard to the right equitably.
    Shareholders can actively exercise their rights and access to
    corporate information with correctness, full disclosure,
    transparency and auditability.

12. Being fully aware of its duties and responsibilities, the Board
    shall respect the rights of shareholders, fairly and equally treat
    the shareholders and stakeholders, transparently manage the
    business, and disclose accurate and adequate information.

13. The Board’s performance shall be annually assessed in two
    categories: assessment of the entire Board as a whole and
    self-assessment of each individual director. The results of both
    shall be reviewed by the Board.

14. Directors must attend all meetings of the Board and shareholders.
    Under the unavoidable circumstances that the directors are not able
    to attend the meeting, they must notify the Chairman of the Board or
    the Secretary to the Board in advance.

The Board may seek external consultation or professional advice from
independent consultants or specialists, as deemed necessary and
appropriate.

Definitions of Independent Director of the Company

Independent director must be independent from the major shareholder, the
management and those with a relationship with the company, in addition
to possession the following qualifications:

1.  Holding not more than 1% of the total outstanding voting shares of
    the company, the company’s major shareholder, a subsidiary or an
    associate or in any juristic person with a conflict of interests,
    including shares held by a person related to independent director.

2.  Not being a director having management authority, employee, staff,
    advisor having fixed salary, controlling authority of the company,
    the company’s major shareholder, a subsidiary, an associate, a
    subsidiary of the same tier (sister company), or any juristic person
    with a conflict of interests, both in the present and at least two
    years prior to taking the independent directorship.

3.  Having no relationship in the following business with the company,
    the company’s major shareholder, a subsidiary, an associate, or any
    juristic person with conflict of interests in a nature which may
    obstruct his independent judgment, both in the present and at least
    two years prior to taking the independent directorship.

    1.  Being neither an auditor nor major shareholder, non-independent
        director, management, and the managing partner of the company’s
        audit firm.

    2.  Being neither professional service provider such as legal or
        financial advisor nor asset appraiser, whose service fees exceed
        2 Million Baht per year, for the company, the company’s major
        shareholder, a subsidiary, an associate, or any juristic person
        with a conflict of interests and is neither major shareholder,
        non-independent director, management nor the managing partner of
        such service providing firm.

    3.  Receiving no benefit directly or indirectly from commercial
        transactions or businesses namely, normal trading activities,
        rent or lease of property, transactions related to assets or
        services nor provide financial support to the company, the
        company’s major shareholder, a subsidiary, an associate, having
        the value from o 20 Million Baht or 3% of the net tangible
        assets of the company, whichever is lower. The term is
        applicable to total transactions occurred within one year prior
        to the date of business relationship and the independent
        director must not be major shareholder, non-independent
        director, management nor the managing partner of such firms.

4.  Having no relationship by blood or legal registration, in a nature
    that makes the independent director a parent, spouse, brothers and
    sisters, children nor spouse of children of management, major
    shareholders, controlling authorities or nominees for management and
    controlling authorities of the company or a subsidiary.

5.  Not being a director appointed as a representative of the company’s
    director, major shareholders or shareholders who are related to the
    major shareholders of the company.

6.  Being able to look after the interests of all shareholders equally.

7.  Being able to prevent conflicts of interest.

8.  Being able to attend the Board meetings and make independent
    decisions.

9.  Not being a person whom SET has determined inappropriate to serve as
    an executive, according to SET regulations.

10. Having never been convicted of violating security or stock exchange
    laws, nor laws governing the financial institution business, , or
    life or general insurance laws, or money laundering laws, or any
    other law concerning financial business of a similar nature, whether
    Thai or foreign, and is guilty of wrongful acts relating to trading
    in shares or the perpetration of deceptions, fraud, or dishonesty.

11. No other impediments or impairments to express independent opinions
    concerning the operations of the company.

12. If qualified for the item 1-11, the independent director may be
    assigned by the Board of Directors to make decisions relating to
    business operations of the company, the company’s major shareholder,
    a subsidiary, an associate, a subsidiary of the same tier (sister
    company) or any juristic person with a conflict of interests, on the
    basis of collective decision, whereby such actions are not deemed
    partaking of management.

In 2009, all five independent directors did not have a business relation
or provide a professional service valued over the regulation announced
by Capital Market Supervisory Board on the permission and approval on
buying new shares.

The Audit Committee

The Audit Committee comprises the following four members:

  ---- -------------------- ------------------- ---------------------------
  1.   ACM Kamthon          Sindhvananda        Chairman

  2.   Mr. Sumet            Tantivejkul         Member

  3.   Mr. Pricha           Attavipach          Member

  4.   Mr. Tarrin           Nimmanahaeminda     Member
  ---- -------------------- ------------------- ---------------------------

The Audit Committee’s term of office

The Audit Committee is subject to a three-year term. Nevertheless, a
retiring director is eligible for re-election.

Scope of Authority of the Audit Committee

  The Audit Committee is authorized to fulfill the following duties:

1.  Review that the company has appropriate financial reporting system
    and the company regularly disclosed its financial statements in
    accordance with the legally defined accounting principle with
    transparency, correctness, and adequacy.

2.  Support the establishment of financial report development in
    compliance with the international accounting standards.

3.  Review that the company has appropriate and effective internal
    control and internal audit systems, which comply with the
    international accepted approaches and standards.

4.  Review that company has in place preventive operation systems to
    enhance operating effectiveness and efficiency.

5.  Review corporate risk management system.

6.  Review that the company is in full compliance with the laws on
    Securities and the Stock Exchange, and other laws relating to the
    company’s business.

7.  Review the report on dishonesty and establish preventive measures.

8.  Review the correctness and effectiveness of the information
    technology system relating to internal control, financial reports,
    and risk management and suggest an up-to-date improvement
    occasionally.

9.  Consider the connected transactions or those of possible conflict of
    interests to ensure compliance with all pertinent laws and
    requirements of SET.

10. Review that the assessment of the entire Audit Committee’s
    performance and the self-assessment of each individual member’s
    performance take place annually.

11. Review and comment on the operation of the audit office and
    coordinate with the company’s auditor.

12. Prepare reports on the supervision of activities of the Audit
    Committee with disclosure in the company’s annual report which is
    duly signed by the chairman of the Audit Committee and contains
    opinions as required by SET.

13. Consider, select, propose the appointment, remuneration, and assess
    the performance of the company’s auditor.

14. Set up meetings with the company’s auditor, which exclude the
    management, at least once a year.

15. Review that the evaluation of the audit office is in compliance with
    international standards.

16. Consider the budgets and manpower of the audit office.

17. Give a comment to appoint, remove, transfer or terminate of
    employment of the director of the audit office.

18. Consider the independence of the internal audit office based on the
    scope of works, reports and line of command.

19. Take other actions in compliance with the law or assigned by the
    Board of Directors.

To fulfill its duties under the scope of authority, the Audit Committee
is authorized to call for and order management, heads of offices, or
employees concerned to present opinions, attend meetings or submit the
necessary documents. In addition, the committee may seek external
consultations and professional advice from independent consultants or
specialists, as deemed appropriate, at the company’s expenses.

The Audit Committee performs duties within the authority and
responsibility under the order of the Board of Directors. The Board is
responsible for the company’s operations and is directly accountable to
shareholders, stakeholders and the public.

Responsibilities of the Audit Committee

1.  In the case that the Audit Committee is informed by the auditor
    about suspicious behaviors of directors, managers or persons
    responsible for business operation of the company, which may violate
    the paragraph 2 of Section 281/2, the Section 305, 306, 308, 309,
    310, 311, 312 or 313 of the Securities and Exchange Act, it is to
    investigate the case and submit preliminary report to the Stock
    Exchange Commission (SEC) and the auditor within 30 days of the date
    it is informed.

2.  Upon finding or having doubt about the following actions or
    transactions, which may significantly affect the financial position
    and performance of the company, the Audit Committee is to report
    such events to the Board of Directors in order to find remedy within
    a period deemed appropriate by the Audit Committee.

    (1) Transactions which may cause conflict of interest

    (2) Frauds or irregular events or material flaws to the internal
    control system

    (3) Violation of law pertaining to SEC, the regulations of SET, or
    other laws relating to business operation of the company.

    Should the Board of Directors or management fail to remedy the
    issues within a timeline as specified by the Audit Committee; a
    member of the Audit Committee may report the issue to SEC or SET.

    The Governance and Nomination Committee

    The Governance and Nomination Committee of the company comprises the
    following five members:

  ---- -------------------- ------------------- ---------------------------
  1.   Mr. Sumet            Tantivejkul         Chairman

  2.   Mr. Snoh             Unakul              Member

  3.   Mr. Panas            Simasathien         Member

  4.   Mr. Arsa             Sarasin             Member

  5.   Mr. Tarrin           Nimmanahaeminda     Member
  ---- -------------------- ------------------- ---------------------------

The Governance and Nomination Committee’s term of office

  The Governance and Nomination Committee is subject to a three-year
  term. Nevertheless, a retiring director is eligible for re-election.

Scope of Authority of the Governance and Nomination Committee

The Governance and Nomination Committee is authorized to fulfill the
following duties:

  Corporate Governance

1.  Draw up a framework and policy on SCG Corporate Governance and
    present it to the Board of Directors.

2.  Make recommendations and give advices to the Board of Directors
    regarding the best practices in corporate governance.

3.  Oversee and monitor the effectiveness of the company’s Board and
    management with reference to SCG Corporate Governance.

4.  Review the company’s corporate governance affairs and compare them
    with those of leading international companies. The committee also
    recommends plans for further improvement of the company’s corporate
    governance from time to time.

5.  Review independency of the Board of Directors and the issues of
    conflict of interests.

6.  Should there be any alteration made to the Directors’
    qualifications, the committee shall review the appropriateness for
    directorship.

7.  Recommend a process of assessing the performance of the Board of
    Directors and the committees and report the assessment results to
    the Board of Directors for the improvement of performance
    efficiency.

8.  Annually review the process of assessing the performance of the
    Board of Directors and the committees.

9.  Regularly make a progress report on the results of performance and
    submit it to the Board of Directors after the meetings of the
    Governance and Nomination Committee.

10. Review and give advices on the structure, roles and responsibilities
    and practices of the Board of Directors and the committees. Should
    there be any alteration to the Charter of the Board of Directors and
    the committees, the Governance and Nomination Committee shall review
    and make appropriate recommendations in keeping it up-to-date.

11. Perform other duties as assigned by the Board of Directors.

  Nomination of Directors and Top Executives

1.  Specify qualifications of a person to be nominated for directorship
    and lay down the director nomination process to replace the retiring
    director, considering diversified candidates with skills,
    experiences and expertise.

2.  Identify qualified candidates to replace directors retiring at the
    end of their terms, or whatever the case maybe, and submit a list of
    nominees to the Board of Directors’ and/or shareholders’ meeting for
    resolution.

3.  Recommend a plan for the succession of the company’s president and
    top executives to the Board.

4.  Perform other duties as assigned by the Board of Directors.

  To fulfill its duties under the scope of authority, the Governance and
  Nomination Committee is authorized to call for and order the
  management, head of offices or employees concerned to give opinions,
  attend the meetings or submit the necessary documents. In addition,
  the committee may seek external consultations and professional advice
  from independent consultants or specialists, as deemed appropriate, at
  the company’s expenses.

The Remuneration Committee

The Remuneration Committee of the company comprises the following three
members:

  ---- -------------------- ------------------- ---------------------------
  1.   Mr. Chumpol          Na Lamlieng         Chairman

  2.   Mr. Yos              Euarchukiati        Member

  3.   Mr. Pramon           Sutivong            Member
  ---- -------------------- ------------------- ---------------------------

The Remuneration Committee’s term of office

  The Remuneration Committee is subject to a three-year term.
  Nevertheless, a retiring director is eligible for re-election.

Scope of Authority of the Remuneration Committee

The Remuneration Committee is authorized to fulfill the following
duties:

1.  Propose guidelines and methods of payment of remuneration, including
    annual bonus and attendance fee, to the Board of Directors and the
    committees appointed by the Board.

2.  Propose policy on management incentives, including salary and annual
    bonus, in line with the company’s operating results, and the
    performance of each executive. Whenever it deems appropriate, the
    committee shall consider the hiring of consulting firms to advise on
    project implementation.

3.  Prior to the submission of the President’s remuneration for the
    Board of Directors’ approval, the Remuneration Committee shall
    assess the President’s performance on an annual basis.

4.  Prior to the submission of remuneration of each top executive for
    the Board of Directors’ approval, the Remuneration Committee shall
    assess the performance of each top executive on an annual basis,
    based on the president & CEO’s recommendations.

5.  Consider, before presenting to the Board of Directors, the budget
    for the salary increase, change of wage/ remuneration and annual
    bonus of the top executives.

6.  Regularly review, study and track the changes and trends in
    remuneration for the Board of Directors and top executives and
    report its findings to the Board for approval.

7.  Consider the remuneration for the Board of Directors and top
    executives, as compared to the remuneration offered by other listed
    companies operating in the same business, to ensure that SCG retains
    its leadership in that industry and to motivate them to foster the
    continuing development of the company.

8.  Regularly make a progress report on the results of performance and
    submit it to the Board of Directors after the meetings of the
    Remuneration Committee.

9.  Assess the Remuneration Committee’s performance and report the
    results to the Board of Directors.

10. Should there be any alteration to the Charter, the Remuneration
    Committee shall review and recommend appropriate improvements or
    revisions to the Board of Directors for its resolution in keeping it
    up-to-date and applicable.

11. Perform other duties as assigned by the Board of Directors.

    To fulfill its duties under the scope of authority, the Remuneration
    Committee is authorized to call for and order the management, head
    of offices or employees concerned to give opinions, attend the
    meetings or submit the necessary documents. In addition, the
    committee may seek external consultations and professional advice
    from independent consultants or specialists, as deemed appropriate,
    at the company’s expenses.

The twelve members of the Board of Directors have no forbidden
qualification as follows:

1.  Never dishonestly committed and offence against property

2.  Never entered into any transaction which may cause conflicts of
    interest against SCG during the year.

SCG Top Executives

SCG top executives are empowered with an authority to operate business
under the policy, strategies and goals directed by the Board of
Directors, which approves a clear and definite scope of responsibilities
to ensure transparency and flexibility of operation.

The eight members of top executives have no forbidden qualification as
follows:

1.  Never dishonestly committed an offence against property.

2.  Never entered into any transaction which may cause conflicts of
    interest against SCG during the year.

    (2) Nomination of Directors and Executives

Rules and Procedures for the Election of Directors are as follows:

1.  The Governance and Nomination Committee proposes the names of
    persons to replace directors who are due to retire by rotation to
    the Board for consideration prior to the annual general meeting of
    shareholders for election. All shareholders have an equal right to
    propose other candidates. The authority to select directors rests
    with the shareholders.

2.  In case the number of candidates nominated for directors does not
    exceed the number of directors required for that election, the
    general meeting of shareholders shall elect all of them as
    directors.

3.  In case the number of candidates nominated for directors exceeds the
    number of directors required for that election, it shall be decided
    by vote at the shareholder’s meeting. The shareholders may elect the
    candidates nominated for director, but not exceeding the number of
    directors required for that election and the directors shall be
    individually elected. Each shareholder or proxy shall have one vote
    for each share he/she holds or represents for the election of each
    director. The candidates shall be ranked in descending order from
    the highest number of votes received to the lowest, and shall be
    appointed as directors in that order until all of the director
    positions are filled. If the votes cast for candidates in descending
    order are tied, which would otherwise cause the number of directors
    to be exceeded, the remaining appointment shall be made by the
    chairman of the meeting who shall cast the deciding vote.

  At the 2009 annual general meeting of shareholders, the four Board
  members who due to retire by rotation were 1) Mr. Snoh Unakul 2) Mr.
  Panas Simasathien 3) Mr. Arsa Sarasin and 4) Mr. Chumpol NaLamlieng.
  According to the company’s Articles of Association, one-third of the
  directors must retire from the office and the director who has longest
  serving shall retire. In nomination process, each director has
  proposed appropriate persons to the Governance and Nomination
  Committee. The Committee, which excluded Mr. Snoh Unakul, Mr. Panas
  Simasathien, and Mr. Arsa Sarasin who have a conflict of interests as
  they have to retire by rotation in 2009, has selected five qualified
  persons, four of which were former directors and the other is the
  outsider. The Governance and Nomination Committee nominated four
  qualified nominees namely, 1) Mr. Snoh Unakul 2) Mr. Panas Simasathien
  3) Mr. Arsa Sarasin and 4) Mr. Chumpol NaLamlieng, all of which were
  elected by the majority votes as per the resolution passed in the
  annual general meeting of shareholders held on March 25, 2009.

Selecting Top Executive Replacement

  The top executive nomination process for SCG starts with selecting
  talented and ethical people. The Group seeks young talent with the
  potential to develop into senior management through the high potential
  employee assessment. Each employee will have an individual development
  plan that includes challenging job assignments and job rotation
  throughout the organization to ensure they gain a broad knowledge and
  skills as a result they are properly prepared to replace the positions
  at all level that may become vacant. The Board of Directors will
  select employees who show the high potential and have the appropriate
  credentials for the placement in top executive positions.

(3) Director and Executive Remuneration

  Director Remuneration

  In the 11th annual general meeting of shareholders held on March 24,
  2004, a resolution passed concerning the remuneration and bonus of
  directors. Monthly remuneration for all directors was set at 1,800,000
  Baht and shall be distributed amongst the directors in such manner
  they may themselves consider appropriately. Regarding bonuses,
  permission was granted that the Board itself would determine the
  appropriate amount, but that amount shall not exceed 0.5% of total
  dividends paid to shareholders and shall be distributed amongst the
  directors in such manner they may themselves consider appropriately.
  This would be in effect from the day the resolution was passed by a
  vote of the shareholders onwards until the shareholders’ meeting
  determined otherwise.

  The Apportionment of Board Remuneration and Bonuses

  Monthly Remuneration

  The Board of Directors passed a resolution to pay the Chairman a
  remuneration of 1.5 portion, or 216,000 Baht per month, and the other
  11 board members of one portion, or 144,000 Baht per month.

Director Bonuses

The Board of Directors passed a resolution to pay the Chairman a bonus
of 1.5 portion and each of the other 11 board members bonuses of one
portion of total bonuses as approved in the shareholders’ meeting.

  Remuneration for the Committees

  The Board of Directors passed a resolution to remunerate members of
  the committees on the basis of fixed fee and attendance fee, as
  follows:

  Unit: Baht

+----------------------------------+-----------------+-----------------+
|                                  | Annual fixed    | Attendance fee  |
|                                  | fee             |                 |
+----------------------------------+-----------------+-----------------+
| The Audit Committee              | 96,000          | 24,000          |
|                                  |                 |                 |
|   Chairman                       | 64,000          | 16,000          |
|                                  |                 |                 |
|   Director                       |                 |                 |
+----------------------------------+-----------------+-----------------+
| The Governance and Nomination    | 72,000          | 18,000          |
| Committee                        |                 |                 |
|                                  | 48,000          | 12,000          |
|   Chairman                       |                 |                 |
|                                  |                 |                 |
|   Director                       |                 |                 |
+----------------------------------+-----------------+-----------------+
| The Remuneration Committee       | 72,000          | 18,000          |
|                                  |                 |                 |
|   Chairman                       | 48,000          | 12,000          |
|                                  |                 |                 |
|   Director                       |                 |                 |
+----------------------------------+-----------------+-----------------+

The Chairman of the committees’ remuneration gets 1.5 portion while each
member of the committees get 1 portion.

The Remuneration for the Board of Directors and the Committees paid in
2009

Unit: Baht

+---+----------------+-------+------+--------+-------+-------+------+
| D |                | Re    |      |        |       | Direc | T    |
| i |                | muner |      |        |       | tors’ | otal |
| r |                | ation |      |        |       | bonus |      |
| e |                |       |      |        |       | paid  |      |
| c |                |       |      |        |       | in    |      |
| t |                |       |      |        |       | 2009  |      |
| o |                |       |      |        |       |       |      |
| r |                |       |      |        |       |       |      |
| s |                |       |      |        |       |       |      |
+---+----------------+-------+------+--------+-------+-------+------+
|   |                | The   | The  | The    | The   |       |      |
|   |                | Board | A    | Gove   | Re    |       |      |
|   |                | of    | udit | rnance | muner |       |      |
|   |                | Dire  | C    | and    | ation |       |      |
|   |                | ctors | ommi | Nomi   |       |       |      |
|   |                |       | ttee | nation | Comm  |       |      |
|   |                |       |      | Com    | ittee |       |      |
|   |                |       |      | mittee |       |       |      |
+---+----------------+-------+------+--------+-------+-------+------+
| 1 | Mr. Chirayu    | 2,59  | -    | -      | -     | 5,16  | 7    |
| . | Isarangkun Na  | 2,000 |      |        |       | 0,000 | ,752 |
|   | Ayuthaya ¹     |       |      |        |       |       | ,000 |
+---+----------------+-------+------+--------+-------+-------+------+
| 2 | ACM Kamthon    | 1,72  | 312  | -      | -     | 3,44  | 5    |
| . | Sindhvananda ² | 8,000 | ,000 |        |       | 0,000 | ,480 |
|   |                |       |      |        |       |       | ,000 |
+---+----------------+-------+------+--------+-------+-------+------+
| 3 | Mr. Snoh       | 1,72  | -    | 96,000 | -     | 3,44  | 5    |
| . | Unakul         | 8,000 |      |        |       | 0,000 | ,264 |
|   |                |       |      |        |       |       | ,000 |
+---+----------------+-------+------+--------+-------+-------+------+
| 4 | Mr. Sumet      | 1,72  | 192  | 1      | -     | 3,44  | 5    |
| . | Tantivejkul ³  | 8,000 | ,000 | 44,000 |       | 0,000 | ,504 |
|   |                |       |      |        |       |       | ,000 |
+---+----------------+-------+------+--------+-------+-------+------+
| 5 | Mr. Pricha     | 1,72  | 208  | -      | -     | 3,44  | 5    |
| . | Attavipach     | 8,000 | ,000 |        |       | 0,000 | ,376 |
|   |                |       |      |        |       |       | ,000 |
+---+----------------+-------+------+--------+-------+-------+------+
| 6 | Mr. Panas      | 1,72  | -    | 96,000 | -     | 3,44  | 5    |
| . | Simasathien    | 8,000 |      |        |       | 0,000 | ,264 |
|   |                |       |      |        |       |       | ,000 |
+---+----------------+-------+------+--------+-------+-------+------+
| 7 | Mr. Yos        | 1,72  | -    | -      | 12    | 3,44  | 5    |
| . | Euarchukiati   | 8,000 |      |        | 0,000 | 0,000 | ,288 |
|   |                |       |      |        |       |       | ,000 |
+---+----------------+-------+------+--------+-------+-------+------+
| 8 | Mr. Arsa       | 1,72  | -    | 84,000 | -     | 3,44  | 5    |
| . | Sarasin        | 8,000 |      |        |       | 0,000 | ,252 |
|   |                |       |      |        |       |       | ,000 |
+---+----------------+-------+------+--------+-------+-------+------+
| 9 | Mr. Chumpol    | 1,72  | -    | -      | 15    | 3,44  | 5    |
| . | NaLamlieng ⁴   | 8,000 |      |        | 8,323 | 0,000 | ,326 |
|   |                |       |      |        |       |       | ,323 |
+---+----------------+-------+------+--------+-------+-------+------+
| 1 | Mr. Tarrin     | 1,72  | 192  | 72,000 | -     | 3,44  | 5    |
| 0 | N              | 8,000 | ,000 |        |       | 0,000 | ,432 |
| . | immanahaeminda |       |      |        |       |       | ,000 |
+---+----------------+-------+------+--------+-------+-------+------+
| 1 | Mr. Pramon     | 1,16  | -    | -      | 8     | 58    | 1    |
| 1 | Sutivong ⁵     | 1,600 |      |        | 0,267 | 4,752 | ,826 |
| . |                |       |      |        |       |       | ,619 |
+---+----------------+-------+------+--------+-------+-------+------+
| 1 | Mr. Kan        | 1,72  | -    | -      | -     | 3,44  | 5    |
| 2 | Trakulhoon     | 8,000 |      |        |       | 0,000 | ,168 |
| . |                |       |      |        |       |       | ,000 |
+---+----------------+-------+------+--------+-------+-------+------+
|   | Total          | 21,03 | 904  | 4      | 35    | 40,14 | 62   |
|   |                | 3,600 | ,000 | 92,000 | 8,590 | 4,752 | ,932 |
|   |                |       |      |        |       |       | ,942 |
+---+----------------+-------+------+--------+-------+-------+------+
| D |                |       |      |        |       |       |      |
| i |                |       |      |        |       |       |      |
| r |                |       |      |        |       |       |      |
| e |                |       |      |        |       |       |      |
| c |                |       |      |        |       |       |      |
| t |                |       |      |        |       |       |      |
| o |                |       |      |        |       |       |      |
| r |                |       |      |        |       |       |      |
| v |                |       |      |        |       |       |      |
| a |                |       |      |        |       |       |      |
| c |                |       |      |        |       |       |      |
| a |                |       |      |        |       |       |      |
| t |                |       |      |        |       |       |      |
| e |                |       |      |        |       |       |      |
| d |                |       |      |        |       |       |      |
| o |                |       |      |        |       |       |      |
| f |                |       |      |        |       |       |      |
| f |                |       |      |        |       |       |      |
| i |                |       |      |        |       |       |      |
| c |                |       |      |        |       |       |      |
| e |                |       |      |        |       |       |      |
| d |                |       |      |        |       |       |      |
| u |                |       |      |        |       |       |      |
| r |                |       |      |        |       |       |      |
| i |                |       |      |        |       |       |      |
| n |                |       |      |        |       |       |      |
| g |                |       |      |        |       |       |      |
| t |                |       |      |        |       |       |      |
| h |                |       |      |        |       |       |      |
| e |                |       |      |        |       |       |      |
| y |                |       |      |        |       |       |      |
| e |                |       |      |        |       |       |      |
| a |                |       |      |        |       |       |      |
| r |                |       |      |        |       |       |      |
+---+----------------+-------+------+--------+-------+-------+------+
| 1 | Mr. Sivavong   | 32    | -    | -      | 3     | 2,38  | 2    |
| . | Changkasiri ⁶  | 5,162 |      |        | 1,549 | 1,879 | ,738 |
|   |                |       |      |        |       |       | ,590 |
+---+----------------+-------+------+--------+-------+-------+------+
|   | Total          | 21,35 | 904  | 4      | 39    | 42,52 | 65   |
|   |                | 8,762 | ,000 | 92,000 | 0,139 | 6,631 | ,671 |
|   |                |       |      |        |       |       | ,532 |
+---+----------------+-------+------+--------+-------+-------+------+

Remark: 1. Chairman of the Board of Directors

2. Chairman of the Audit Committee

3. Chairman of the Governance and Nomination Committee

4. Chairman of the Committee Remuneration Committee

5. Mr. Pramol Sutivong was nominated as a director of the company on
April 29, 2009.

6. Mr. Sivavong Changkasiri passed away on March 8, 2009.

* The directors’ bonus paid in 2009 consisted of the bonus payment based
on the final dividend of the year 2008 paid to shareholders on April 22,
2009 and the interim dividend of the year 2009 paid to shareholders on
August 27, 2009 as represented in the item of “Directors’ remuneration”
on the consolidated statements of income.

  Executive Remuneration

The total remuneration for eight executives in the form of salaries,
bonus, variable pay and other compensation amounted to 135,470,800 Baht.
For 2009, the company made the contributions of 7,305,100 Baht to the
provident fund for the executives, being the company’s employees.

1. The Remuneration for the directors and executives of subsidiaries,
which are SCG’s core business (as at the year ended December 31, 2009)

1.  Director Remuneration listed according to the core business

  Directors of the core businesses, which encompass SCG Chemicals, SCG
  Paper, SCG Cement, SCG Building Materials and SCG Distribution, are
  the executives who are not subjected to remuneration paid for being
  the directors. Names of the directors in each business are listed
  here.

  ----------- --------------------------- ------------- -------------- -----------------------
  SCG                                                   SCG Building   
  Chemicals                                             Materials Co., 
  Co., Ltd.                                             Ltd.           

  1)          Mr. Kan Trakulhoon *                      1)             Mr. Kan Trakulhoon *

  2)          Mr. Pramote Techasupatkul                 2)             Mr. Kajohndet Sangsuban

  3)          Mr. Roongrote Rangsiyopash                3)             Mr. Pramote
                                                                       Techasupatkul

  4)          Mr. Cholanat Yanaranop **                 4)             Mr. Roongrote
                                                                       Rangsiyopash

                                                        5)             Mr. Pichit Maipoom **

                                                                       

  SCG Paper                                             SCG            
  Public                                                Distribution   
  Company                                               Co., Ltd.      
  Limited                                                              

  1)          Mr. Kan Trakulhoon *                      1)             Mr. Kan Trakulhoon *

  2)          Mr. Kajohndet Sangsuban                   2)             Mr. Pramote
                                                                       Techasupatkul

  3)          Mr. Pramote Techasupatkul                 3)             Mr. Damri Tunshevavong

  4)          Mr. Damri Tunshevavong                    4)             Mr. Cholanat Yanaranop

  5)          Mr. Pichit Maipoom                        5)             Mr. Pichit Maipoom

  6)          Mr. Cholanat Yanaranop                    6)             Mr. Roongrote
                                                                       Rangsiyopash

  7)          Mr. Roongrote Rangsiyopash                7)             Mr. Kajohndet Sangsuban
                                                                       **

  8)          Mr. Chaovalit Ekabut **                                  

                                                                       

  SCG Cement                                                           
  Co., Ltd.                                                            

  1)          Mr. Kan Trakulhoon *                                     

  2)          Mr. Kajohndet Sangsuban                                  

  3)          Mr. Pichit Maipoom                                       

  4)          Mr. Damri Tunshevavong                                   

  5)          Mr. Roongrote Rangsiyopash                               Remark * Chairman

  6)          Mr. Pramote Techasupatkul                                ** President
              **                                                       
  ----------- --------------------------- ------------- -------------- -----------------------

2.  The total remuneration for executives of subsidiaries which are
    SCG’s core business

  1) Remuneration paid as money such as monthly salary, bonus and
  Variable Pay

  2) Other compensation such as provident fund contributions.

  Details of remuneration are as follows:

  Unit : Baht

  ---- ------------------------- ------------ ------------------ --------------
       Subsidiaries which are    Number of    Total Remuneration Other
       core businesses           executives   in the form of     compensation
                                              money              

  1.   SCG Chemicals Co., Ltd.   8            25,425,719         1,733,640

  2.   SCG Paper PLC.            8            25,753,700         1,890,240

  3.   SCG Cement Co., Ltd.      6            31,324,200         2,029,800

  4.   SCG Building Materials    7            19,433,325         1,386,000
       Co., Ltd.                                                 

  5.   SCG Distribution Co.,     7            18,759,900         1,371,960
       Ltd.                                                      
  ---- ------------------------- ------------ ------------------ --------------

 Therefore, number of executives and remuneration for the above-mentioned executives, exclude the presidents of subsidiaries that are the SCG’s core businesses because they have been already included in the number and remuneration of the top executives of The Siam Cement Public Company Limited, as appeared under section 3 - Executive Remuneration.

(4) Principles of Corporate Governance

SCG conducts business with responsibility and fairness, adheres to the
long-practiced principles defined by the ethical framework, and
constantly improves appropriately with changes in the economy and
society, while balancing the sustainable benefits of all stakeholders.

SCG considers corporate governance to be a part of its business policy
which the Board of Directors has agreed to review and evaluate on an
annual basis. Also, improvements, amendments and changes have been made
in accordance with the changing economic and social situation. The Board
of Directors has assigned the Governance and Nomination Committee to
take charge of corporate governance matters as well as to consider
trends and movements at the international level. For example, the rules
and practices of the world’s leading companies and stock exchanges are
compared with those of SCG in order to find areas for improvement. The
Board of Directors, moreover, specifies corporate governance as one of
the main items on the agenda at the Board of Directors’ meeting. The
company also publishes and distributes booklets of SCG Corporate
Governance policies and SCG Code of Conduct to its employees featuring
activities to create clear understanding about the corporate governance
guidelines to ensure effective practice. Those interested are welcome to
study the content and details shown on SCG’s website, www.scg.co.th

In 2007, SCG updated SCG Code of Conduct by adding guidelines of each
business, examples, clearer practices, and setting up the Whistleblower
Policy, in order to protect an employee who files a complaint or reports
improprieties or suspected violations of laws, SCG rules, regulations,
and code of conduct. Moreover, a working team responsible for devising
the policies and providing consultancy regarding SCG Code of Conduct has
been formed, chaired by SCG Vice President & CFO, while top management
from functions responsible for matters regarding to ethics and top
management from the business units act as a team member. The working
team will monitor the performance and give an advice on concerning
issues. Moreover, the internal audit office is also responsible for
channels to receive any complaints and the Whistleblower Policy.

In 2009, the working team has monitored the performances, knowledge
sharing and promotion of the SCG Code of Conduct to its employees as
well as the provision of related consultancies via the “SCG Code of
Conduct Website”, “SCG Code of Conduct Guidance System” and
“Whistleblower Policy System”. The results were reported to the
Governance and Nomination Committee on a regular basis to ensure that
all practices are correct and in compliance with the code. The record
shows that in 2009, SCG employees visited the SCG Code of Conduct
website for 7,665 times and filed eleven complaint issues through the
Whistleblower Policy System, which nine of them have been concluded
while the rest two are on the investigation process.

SCG sees its corporate governance and code of conduct as essential
guidelines for the organization; therefore, the emphasis is strongly
laid upon principles and practices concerning responsibility and
fairness towards all stakeholders. The principles include a clear
outline of the structure, components, duties, independence and the
performance of the Board of Directors, transparency of information
disclosure, a strict auditing system and risk management policies. These
build trust and create additional value among the shareholders. SCG has
disclosed related information through various media, for example, the
annual report, 56-1 form, websites of the Stock Exchange of Thailand
(SET) and of SCG to allow easy access to the information through a
greater variety of channels for the stakeholders.

In addition, the stakeholders have the opportunity to participate in
improving the company’s operating results through communications with
the Investor Relations Department via e-mail, invest@scg.co.th. All
suggestions will be carefully considered prior to reporting to SCG top
executives and the Board of Directors for acknowledgement and
consideration.

Guidelines to SCG Corporate Governance

The Rights of Shareholders

SCG ensures that shareholders, both as investors and owners of the
company, are entitled to all basic rights at acceptable and trusted
standards, which include the right to freely trade or transfer their own
shares, the right to receive dividends from the company, the right to
attend the shareholders’ meeting, the right to propose the agenda of the
meeting, the right to nominate a person to be a director, the right to
express opinions independently, the right to make decisions on important
affairs of the company e.g. the election of directors, approval of
significant transactions influencing the direction of the company,
amendment of Memorandum of Association, Articles of Association and
regulations of the company, etc. Shareholders have the right to vote at
meetings according to the number of shares owned by each shareholder,
whereby one share is for one vote and no particular share allows them
privilege to limit the rights of other shareholders.

Apart from the above mentioned rights of the shareholders, SCG has
carried out additional tasks to encourage and facilitate shareholders in
the exercising of their rights as follows:

1.  Provide essential, clear and up-to-date information for shareholders
    regarding the company’s business. Even though some information is
    not required to be disclosed by law, if SCG considers that it is of
    significance to the shareholders, the company will notify the
    shareholders of the information through SCG’s website and SET.

2.  All shareholders will receive significant and sufficient detailed
    information concerning the date and the agendas prior to the date of
    shareholders’ meeting. Such information will be posted on SCG’s
    website around two months before the related documents are submitted
    to shareholders not less than 14 days prior to the meeting. The
    shareholders’ right to attend the meetings and the right to vote on
    resolutions will be clearly stated in the notice of the meeting
    submitted by the company.

3.  In a case where shareholders are unable to attend a meeting, they
    are entitled to appoint a representative e.g. an independent
    director or a person to act as their proxy, using any proxy form
    attached to the notice of the meeting. The company has prepared the
    proxy forms in compliance with the specifications defined by the
    Ministry of Commerce in which the shareholders can exercise their
    voting rights as wished. These forms can also be downloaded from
    SCG’s website. In addition, SCG provides to shareholders the duty
    stamp to be sealed on the proxy form for their convenience.

  Shareholders who arrive after the meeting has commenced are able to
  vote on the agenda item being considered provided that a resolution is
  not yet made. They shall constitute part of the quorum starting from
  the agenda item that they are in attendance and exercise their voting
  rights unless the meeting states otherwise.

4.  Prior to the meeting, one or several shareholders holding in
    aggregate of at least 5% of all the issued shares of the company
    have the right to suggest issues to be included in the agenda of the
    annual general meeting of shareholders for the year 2010.
    Shareholders were allowed to exercise such right from November 2 to
    December 1, 2009 so that the Governance and Nomination Committee
    could screen the issues before presenting them to the Board of
    Directors for consideration. Should the proposed issue be included
    on the meeting agenda, the company shall specify in the notice of
    the meeting that such agenda was proposed by a shareholder. However,
    in case the proposed issue is rejected, the company shall inform
    shareholders of the reasons at the annual general meeting of
    shareholders.

  Moreover, any shareholder is entitled to nominate any qualified
  candidates for the election of the Board member in advance. The
  Governance and Nomination Committee shall consider the proposed
  nominees together with other nominated persons according to the
  company’s criteria for the nomination of directors. The committee then
  presents the nominees to the Board for consideration before proposing
  them to the shareholders’ meeting for approval.

  However, there was no agenda nor candidate proposed by any shareholder
  prior to the meeting.

5.  On the date of the meetings, the company uses the barcode system for
    registration to ensure convenience of shareholders as each reference
    number is already included in the registration form and proxy form.
    In addition, for each agenda, the company will collect the ballot
    paper from the shareholders who vote “disapprove” or “abstain” in
    order to deduct the votes from the total entitled voting rights. The
    company applies the e-voting system to perform the calculation with
    the use of PDA (Personal Digital Assistant) and socket scanner in
    order to ensure immediate voting results prompt for announcement
    right after the end of each agenda. Shareholders are entitled to
    verify each voting result after the meeting.

6.  One-third of the directors must retire from office on a rotational
    basis in each annual general meeting of shareholders and the
    election of directors to replace the retired directors takes place
    during the meeting. Shareholders will be informed that in a case
    where the nominated persons do not exceed the number of directors
    required for that election, all of them shall be elected as
    directors. However, if the numbers of candidates exceed the number
    of directors required, each candidate is then elected individually.
    During the meeting, shareholders are entitled to freely propose the
    name of an individual for directorship of the company.

7.  At the meetings, shareholders are allowed to freely express their
    opinions, give suggestions, and raise questions on any agenda item
    before casting votes to ensure that shareholders have sufficient
    detailed information on the matters. Should shareholders have
    questions or inquiries, specialists in specific fields are available
    to answer queries under the responsibility of the Board.

8.  For any item on the agenda at the shareholders’ meeting, the
    shareholders can call for vote casting by secret ballots if one
    shareholder makes such request with the approval of five other
    shareholders. The shareholders’ meeting shall resolve to approve the
    vote casting by secret ballots with a majority of votes.

9.  An agenda on the Board’s remuneration is included to inform the
    shareholders of the amount and type of remuneration received by each
    director including meeting allowance and the Board’s bonus. The
    detailed information can be found in the company’s annual report on
    page 62-63.

The Equitable Treatment of Shareholders

The company is aware and shall provide equitable treatment to every
individual shareholder, major or minor, as well as institutional or
foreign investors. To that effect, SCG strives to find tools to ensure
equality especially for minor shareholders which are:

Assigning Independent Directors to Take Care of Minor Shareholders

The minority shareholders can contact the independent directors directly
to give suggestions, express opinions or file complaints through e-mail:
ind_dir@scg.co.th. The independent directors are responsible for
handling each matter appropriately. For example, in case of a complaint,
the independent directors will investigate and seek proper solutions to
complaints. On the other hand, if there is a suggestion that is
considered to affect the stakeholders or the business, the independent
directors will report it to the Board of Directors meetings for
consideration and include it in the agenda of the shareholders meeting.

Internal Information Control

The Board of Directors has established measures to control the usage and
prevent the misuse of internal information (insider trading) for the
personal benefit of the concerned person, namely the Board of Directors,
SCG top executives and employees working in related departments
(including their spouses and children who are minors).

-   All concerned persons are prohibited from trading the company shares
    for a two-week period prior to and a 24-hour period after the
    release of the company’s quarterly and annual financial statements
    (blackout period).

-   Should they have knowledge of confidential information that could
    have any impact on the company’s share price; they are prohibited
    from trading the company shares until after a 24- hour period from
    the public disclosure.

The Secretary to the Board and the Corporate Secretary will inform the
directors, SCG top executives, and related employees, of the prohibition
period at not less than one week prior to such period.

In addition, the Board of Directors will monitor all required actions in
accordance with the related standards. Any changes in shareholding of
directors must be reported in the Board of Directors’ meetings. In this
regard, it will be included in the agendas of the Board of Directors
meeting on a quarterly basis.

Conflict of Interest Prevention

The Board has established policies and measures as follows:

-   SCG has a clear and transparent shareholder structure. There is no
    cross-holding of major shareholders, thereby, preventing any
    conflict of interests or transfer of benefits to one party or
    another. The shareholder structure of SCG and its subsidiaries is
    published in the company’s annual report, as well as the disclosure
    of shares hold by the Board members.

-   There is a clear separation of duties and responsibilities of the
    Board, the management, and shareholders, thereby, ensuring no
    overlapping of their duties and responsibilities. The directors or
    executives who may have interests in any agenda under consideration
    must not attend the meeting nor vote on such agenda. This is to
    ensure that the Board and executives make decisions in a fair manner
    for the utmost benefits of shareholders.

-   The company has an established policy governing the use of internal
    information and has incorporated it into employee regulations with
    penalties for the executives or employees in the event the internal
    information is disclosed to the public or used for personal benefit.

-   Directors, top executives, employees responsible for related
    functions as well as their spouses and minors are prohibited from
    trading stock futures with reference to the SCC ordinary shares in
    order to ensure compliance with the SCG Corporate Governance.

-   SCG Code of Conduct includes the additional guidelines that prohibit
    employees from using the company’s assets or spending working hours
    to search, contact or conduct share-trading activities on a regular
    basis for personal gains or for others without justifiable reasons
    and not for SCG’s interests.

The Role of Stakeholders in Corporate Governance

SCG conducts business with the highest responsibility to ensure
sustainable and mutual benefits to all related parties. The Board of
Directors oversees the management system to ensure that the company
acknowledges the right of stakeholders, both as stated by law and as
clearly written in SCG Corporate Governance and SCG Code of Conduct. The
company also ensures that those rights are protected and the
shareholders, employees, customers and business partners are treated
equally.

Shareholders: Besides the basic rights of shareholders and the rights
stipulated by the law and the company’s regulations, such as the right
to request a verification of the number of shares, the right to receive
share certificates, the right to attend the shareholders’ meetings, the
right to vote at the meetings, the right to freely express opinions at
the shareholders’ meetings, and the right to receive a fair return, SCG
also gives shareholders the right, as the owner of the company, to make
suggestions and comments on the company’s affairs to the independent
directors. Each comment and suggestion will be carefully considered and
presented to the Board of Directors.

Employees: SCG truly believes that employees are the most valuable
assets and is determined to ensure that every employee is proud of and
confident in the organization. In the previous year, SCG organized
activities to promote a collaborative working environment to drive
innovations and enhance the competence of employees, readying them for
working overseas and coping with volatile economic situations.
Furthermore, the company focuses on promoting employees’ health, safety,
as well as excellent working conditions and competitive remuneration.

Customers: It is of great concern to SCG that customers be provided with
the maximum benefits in terms of quality and price, and the company is
determined to develop and maintain sustainable relationships with
customers. It has set up a support office to provide product
information, solve problems and receive complaints in order to ensure
total satisfaction for customers.

Business partners: SCG operates its business within a competitive
context by strictly upholds promises, SCG Code of Conduct and
commitments to trading partners including quality products and on-time
delivery.

Competitors: SCG operates its business within a competitive context by
being fair and strictly following the laws and SCG Code of Conduct. No
dispute with competitors arose during 2009.

Creditors: SCG practices under the terms of loans and obligations of its
creditors such as business creditors and depositors. The company,
moreover, organizes various projects in order to keep good relations
with creditors such as debenture relations.

Society: SCG ensures that its business operation is fair to related
parties according to its business philosophy. SCG supports activities
which develop the quality of life and create happiness to community and
society in which SCG operates both in Thailand and ASEAN countries. SCG
has organized many CSR activities continuously, especially those
focusing on the development of youth’s potential in respect of
education, science, technology, sports, and arts through a variety of
activities. These include the financial supports provided to charitable
organizations and foundations, provision of scholarships to students
with good academic results, provision of “SCG Sharing the Dream”
scholarships for youth in ASEAN, provision of the summer internship in
the “SCG Excellent Internship Program” and establishment of the “SCG
Badminton Academy”, which is the first international standard badminton
academy in Thailand with the aim to elevate the skills of young
badminton players. "The Thailand Rescue Robot Championships" is also
held to encourage the potential of youth in respect of innovation and
technology. The Thai youth team won the World Rescue Robot for the
4^(th) consecutive year, the victory that brought about the fame and
pride to Thailand.

Furthermore, SCG encourages its employees and related parties to partake
in activities that are beneficial to the community and society in order
to achieve sustainable growth. SCG also supports its employees to come
up with constructive activities for the community and society on a
regular basis. Even amid the economic downturn, SCG continues to devote
its creativity, knowledge and capability to enhance the efficiency of
these projects to maximize the benefits of the community and society.

Environment: SCG sets the guidelines for sustainable development which
are applied to the operations of all its businesses, aiming to set
exemplary examples in respect of the environmental management and
conservation. The green technology represents the dedication and
determination of SCG that never stop creating and improving every
business process for the better and sustainable environment. The concept
is integrated in the designs of the plants, improvement and development
of the production process, machinery and technology to make them more
eco-friendly and to minimize the impact to the community. SCG ensures
that a systematic management is in place for its production process,
products and services, restoration and improvement of natural resources,
and environmental conservation under the concept of 3Rs (Reduce,
Reuse/Recycle, Replenish). Additionally, the company constantly raises
awareness regarding environmental conservation and encourages its
employees and related parties to participate in saving the environment.

In 2009, SCG has introduced SCG eco value label for eco-friendly
products and services. The products and services that are certified by
this label must be produced using special processes which have the
minimum effect on the environment and must be better than the normal
ones, based on the ISO 14021 standards.

Moreover, all business units of SCG continuously attempt to reduce the
emission of carbon dioxide or the greenhouse gases in the production of
such products and services.

SCG continues its focus on water conservation. The “SCG Conserving Water
for Tomorrow” project is held for the 4^(th) consecutive year. The
company provides support to the community for check dam building, which
can help maintaining the balance of nature and leading to sustainable
growth of the community. At the end of 2009, SCG, together with
communities and networks, have built more than 16,000 check dams.
Moreover, the company also strives to build a check dam in people’s mind
to raise awareness of the public and the community about water and
environment conservation in order to achieve the sustainable growth.
Details of SCG’s environmental and social activities are available in
the Sustainability Report, which has been published since 2001, through
www.scg.co.th

Disclosure and Transparency

SCG realizes the importance of information disclosure as it greatly
affects the decision-making of investors and stakeholders. It is,
therefore, necessary to control and define measures concerning the
disclosure of information, both financial and non-financial. Information
disclosed via the SET Community Portal and SCG’s website shall be
complete, sufficient, reliable and up-to-date, written in both Thai and
English. SCG is committed to obeying the law, regulations and
obligations mandated by the Securities and Exchange Commission (SEC),
SET and other related government sectors. Regular amendment takes place
to ensure that the law, regulations and obligations SCG abided by are
up-to-date and to guarantee transparency in conducting business, for
example:

1.  Disclose accurate, complete and timely financial information and
    non-financial information.

2.  Prepare the report of the Board’s responsibility for financial
    statements and present it along with the Audit Committee’s report in
    an annual report.

3.  Require the company’s directors and executives report the interests
    of themselves and related persons which are vested interests
    relating to management of the company or subsidiaries through the
    Corporate Secretary, who will gather, store and submit the documents
    to the Chairman of the Board of Directors and the Chairman of the
    Audit Committee for acknowledgement within 7 working days the
    company receives the documents.

4.  Disclose procedures about Board selection and its performance
    assessment.

5.  Disclose the performance and attendance record of each member of the
    committees.

6.  Disclose detailed information on the operation and investment
    structure in subsidiaries and associate companies.

7.  Disclose information on the remuneration each director receives as a
    member of the committees.

8.  Disclose the policy on the remuneration for the directors and the
    top executives, including forms, types and amount of remuneration
    for each member of the committees.

9.  Disclose the policy on environmental and social responsibilities and
    related performance.

10. Report on corporate governance policies and related performance.

11. Reveal significant investment projects and relevant effects to the
    projects. For example, in 2009, the company disclosed information
    about the investment in petrochemical projects in Vietnam with Qatar
    Petroleum International, the investment in New Asia Industries, a
    corrugated containers business in Vietnam, and the order of the
    Administrative Court regarding the halt of the investment in
    petrochemical projects in Map Ta Phut area.

Moreover, in 2009, the Board of Directors still upheld the guidelines on
the disclosure of information related to SCG so as to systematize the
company’s information disclosure and avert any damage caused by improper
disclosure. This reassures shareholders, investors, the general public,
and all stakeholders that SCG is committed to disclosing information
clearly, equitably, and in compliance with the law. To that effect, the
existing practices have been compiled and formulated into SCG’s
Disclosure Policy set out in 2008. The company has designated the
persons responsible for disclosing non-public information as well as
establishing guidelines on disclosure of different types of information
to the public and setting up critical periods in which extreme caution
should be taken prior to the disclosure of information to the public.
The detail of the guideline is available for the stakeholders and the
general public on SCG’s website.

The Investor Relations Department of SCG is responsible for
communications with institutional investors, shareholders, analysts, and
related government sectors on an equal and fair basis. Should the
shareholders require additional information, they can contact the
Investor Relations Department directly via invest@scg.co.th. In 2009,
SCG has arranged activities such as analyst conference on a quarterly
basis, road show in America, Europe, and Asia, and company visit that
enabled President and Vice President to meet investors and analysts to
present the operating results, financial reports and status, management
discussion & analysis, and industry trends. Besides, SCG regularly
responds to inquiries from investors through email and telephone. In
2009, SCG was recognized by the Securities Analyst Association as it was
awarded the Investor Relations Award and the Favorite Analyst Award for
its transparency in disclosing information to investors and analysts.

The Responsibilities of the Board of Directors, Structure, and Committee

The Structure of the Board of Directors

The Board of Directors comprises nationally accepted knowledgeable and
competent persons who are responsible for drawing up corporate policy
and collaborating with the top executives in making the operating plans
both short-term and long-term plans, including financial policy, risk
management policy and the organization overview. The Board shall play an
important role in overseeing, monitoring and assessing the performance
of the company and the top executives on an independent basis.

The number of directors is currently limited to twelve, comprises eleven
non-executive directors, and one executive director, being the Company’s
President & CEO. The five independent directors who have qualifications
as stated in the Company’s regulation which is stricter than SEC’s.

The Board has further established the following committees, Audit
Committee, Governance and Nomination Committee, and Remuneration
Committee, to be responsible to their specific areas and report directly
to the Board for its consideration or acknowledgement.

Non-executive directors hold a meeting among them to evaluate the
performance of the President & CEO on an annual basis. The President&
CEO will not attend this meeting in order to ensure that the
non-executive directors can express their opinions independently.

In addition, for the months which the Board of Directors meeting is not
held, all directors will be continuously informed of the operating
results, since the company will submit to the directors the related
documents, together with information about significant movements
occurred during the month in order to keep them informed of any
progress.

The Audit Committee

The Audit Committee comprises four independent directors, all of which
are well accepted and have a full understanding of and experience in
accounting or finance. Mr. Tarrin Nimmanahaeminda, with his extensive
knowledge and experience, is responsible for the review of the
trustworthy of the financial statements. The committee members’ duties
include a review to ensure that the operation has been carried out in
accordance with the company’s regulations as well as the laws and
regulations of the compliance–related agencies. Moreover, they are
committed to promote the development of the financial and accounting
report system to meet the international standards and to ensure that the
company has a prudence, appropriate, modern and efficient internal
control system, internal audit system, and risk management system.

The Audit Committee acts and expresses opinions independently, with the
internal audit office acting as an operation unit directly reporting to
the Audit Committee. The Audit Committee also works regularly with
external auditors, consultants and specialists in law and accounting
areas. The Audit Committee must set up meetings with the company’s
external auditor, which exclude the management, at least once a year in
order to get their comments. In addition, the committee may seek
external consultations and professional advice from independent
consultants or specialists, as deemed appropriate, at the company’s
expenses.

The Governance and Nomination Committee

The Governance and Nomination Committee comprises five of the company’s
directors, all of which are non-executive directors. The Chairman of the
Governance and Nomination Committee is an independent director. The
committee is responsible for proposing, revising and supervising the
company’s corporate governance matters. The committee is also in charge
of the nomination of persons qualified as directors to replace those who
are retired by rotation, or whatever the case maybe. In addition, they
revise the performance evaluation system of the Board of Directors and
other committees and the succession plan of the President & CEO.

The Remuneration Committee

The Remuneration Committee comprises three of the company’s directors.
The committee is responsible for monitoring and studying changes and
trends in the remuneration of the Board of Directors and SCG top
executives and suggesting remuneration policies that can motivate SCG
top executives to lead the company towards prosperity as well as to
retain smart and ethical employees with the organization.

In this regard, each committee has the rights and duties as specified by
each committee’s regulations. An evaluation of performance and a
revision of the operation results of committees are conducted at least
once a year. The Board of Directors, moreover, is entitled to form other
committees to handle any particular situations as seen appropriate.

Limitation of Numbers of Listed Companies which Each Director Can Hold
Directorship

In 2009, the Board of Directors set a policy to limit the number of
listed companies in which each director can hold directorship. This
policy aims to ensure maximum interest of the company, since it allows
directors to manage the time dedicated to these duties in an efficient
manner. The Board of Directors agrees that each director should hold
directorship for a maximum of five listed companies, except being
assigned otherwise by the Company.

In addition, SCG has a guideline for the President & CEO in case of
being appointed as a director of other company. The matter will be
proposed to the Board of Directors for approval. In 2009, the Board of
Directors endorsed the appointment of the President & CEO as an outside
director of Kubota Corporation, Japan.

Separation of the Roles of the Board of Directors and the Management

SCG defines clear roles and responsibilities of the Board of Directors
and the management. The Board shall be responsible for establishing the
policies and overseeing the management’s implementation of those
policies. The top executives, on the other hand, shall be responsible
for implementing the policies formulated by the Board, and ensuring that
these are carried out as planned. Therefore, the Chairman and the
President & CEO of the company shall not be the same person, providing
that both are nominated and elected by the Board. Furthermore, the Board
is responsible for establishing a succession plan of the top executives,
which is subjected to annually reviewing.

The Chairman shall not be the management and shall not participate in
the management of SCG’s business nor shall the Chairman be authorized to
sign to bind the company. This is to clearly define separate roles
between supervision of the company’s overall policy and management of
the business.

SCG top executives comprise eight executives including SCG President &
CEO, SCG Vice President & CFO, and President of each business: SCG
Chemicals, SCG Paper, SCG Cement, SCG Building Materials, SCG
Distribution, and SCG Investment who report directly to SCG President.
The eight executives are authorized to manage the company’s operations
in accordance with the policies set by the Board, take responsibility
for the company’s operating results, control expenses and capital
expenditures as approved by the Board in the annual operating plan,
manage human resources in line with the prescribed policy, resolve
problems or conflicts that affect the company, and maintain effective
communication with the stakeholders.

Board of Directors’ Meetings

It is the duty of a member of the Board to constantly attend the Board’s
meetings to acknowledge and make decisions on SCG’s businesses. The
Board holds at least eight scheduled meetings per year, providing that
the agendas are set clearly in advance prior to each meeting. In
addition, special meetings to consider and determine on the urgent
matters can be organized.

At the meetings, the Chairman and the President & CEO of the company
jointly determine which items on the agendas are relevant to the
meetings. Every individual member of the Board is entitled to propose
the agenda items.

In 2009, the Board held twelve meetings, eight scheduled meetings and
four special meetings. Prior to each meeting, all members received the
agendas and supporting documents well in advance to allow adequate time
for preparation.

When considering the matters presented to the Board, the Chairman of the
Board presides over and duly conducts the meetings. All members of the
Board are allowed to express their opinions independently. Resolutions
are passed with a majority vote, providing that one director is eligible
for one vote. A director with any interest in the issue under
consideration is excused and/or is absent during voting. In case of a
tied vote, the chairman of the meeting will cast his vote to reach a
resolution.

SCG executives are allowed to attend the Board’s meetings to provide
useful information to the Board, and to learn directly about the Board’s
initiatives and policies for effective implementation. However, the
executives are not allowed to attend the meeting for certain agendas
which are reserved only for the Board of Directors or for non-executive
directors in order to ensure independence of such consideration.

In addition, the Board attaches significance to managing conflict of
interests of the concerned parties with prudence, fairness, and
transparency. The information shall also be fully disclosed. Any
director with vested interests in the matter under consideration must
not be involved in the decisions process.

After the meeting, the Corporate Secretary is responsible for preparing
the minutes for all directors. The minutes must then be approved at the
first agenda of the following Board’s meeting which is duly signed by
the Chairman. Directors may make comments, corrections, or additions to
ensure the greatest accuracy and completeness. After approval, minutes
of the meeting are stored securely in the corporate secretary office
together with all related documents backed up electronically to
facilitate data searches.

The Secretary to the Board of Directors and the Corporate Secretary

The Secretary to the Board

The Board appointed Mr. Worapol Jennapar as the Secretary to the Board
of Directors responsible for providing advice to the Board regarding the
performance of duties in compliance with the law, preparing the minutes
of the Board’s meetings and attending every Board’s meeting. The
appointed Secretary to the Board is deemed by the Board to be highly
knowledgeable and experienced, especially in laws, allowing him to
provide appropriated advice to the Board in laws, rules, regulations,
and SCG Corporate Governance.

The Corporate Secretary

The Board appointed Mr. Amnuay Apichainun as the Corporate Secretary
responsible for organizing the meetings of the Board, committees, and
shareholders. The Corporate Secretary is also in charge of preparing the
minutes of the Board’s meetings, the minutes of shareholders’ meetings,
and annual reports as well as filing documents as stipulated by law. The
appointed Corporate Secretary is deemed by the Board to be appropriate
as he is knowledgeable in managing corporate secretarial work, having
served as the director of the corporate secretary office which supports
the corporate secretarial work to comply with the laws, rules,
regulations, and SCG Corporate Governance.

Remuneration for the Board and the Top Executives

SCG sets appropriate remuneration for members of the Board and the top
executives at rates comparable to those of leading listed companies in
SET and other top companies in the same industries. Remuneration for the
Board is also being considered based on SCG’s operating results before
being proposed for approval in the shareholders’ meeting. Remuneration
for the top executives is set by the Board of Directors, based on their
responsibilities, performance, and the operating results of each
business.

Apart from the ordinary remuneration, the shareholder meeting on March
24, 2004, passed a resolution approving the company to pay a bonus to
Board of Directors for the amount not exceeding 0.5% of total dividends
paid to shareholders. The Board of Directors is responsible for
consideration of the appropriate amount of bonus and the amount to be
paid to each director. The resolution is effective from the date of
approval until there are any future resolutions. The bonus of directors
will be considered based on the growth of profit the company, while the
bonus of top executives is considered based on performance of each
business and individual performance.

Details of remuneration for the Board of Directors, both monthly payment
and annual bonus, as approved by the shareholders’ meeting, including
the remuneration for members of the committees in 2009 are reported
individually on page 61 of the annual report.

Performance Appraisal and Knowledge Enhancement

Performance Appraisal of the Board

In 2009, the performance evaluation form of the Chairman was introduced
to directors. The directors are required to appraise the performance of
the Chairman, since his role in defining the policy and ensuring good
corporate governance is essential to the company. In addition, both
existing evaluation forms for directors, as a whole and self-assessment
forms are improved by re-categorizing as well as adding and removing
certain topics to ensure appropriate coverage of each evaluation area.
The results of assessment are reviewed with the intention of finding
ways for the continual improvement of the Board’s performance.

SCG improved the handbook for directors, which includes the summary of
laws, rules and regulations related to the directors in order to ensure
that the information is clear, up to date and in compliance with the
current practice. The handbook is distributed to all directors for use
as reference in respect of basic information.

For new directors, the Director Induction Program was established to
facilitate the prompt performance of the duty of the new directors. SCG
has commissioned the Corporate Secretary coordinates the work in three
areas:

1.  To compile the necessary information for directors to ensure their
    compliance with law, rules, and regulations related to the
    directors.

2.  To provide important information essential for the directors’
    performance of duty such as the Articles of Association, the
    director handbook, the handbook for directors of listed companies,
    summary of operating results for use as quick reference.

3.  To arrange for a meeting with the Chairman, directors, the
    executives or head of each function to acknowledge and make queries
    about the SCG business in depth.

Moreover, SCG encourages all members of the Board and the top executives
to attend various seminars and courses beneficial to their
responsibilities, allowing them to constantly meet and exchange opinions
with directors and the top executives of different organizations. Some
of these courses are organized by SCG Academy, and some are by
governmental agencies or by independent organizations, such as Thai
Institute of Directors Association. SEC requires directors of all listed
companies to complete at least one of the following training courses:
Directors Certification Program (DCP), Directors Accreditation Program
(DAP) or Audit Committee Program (ACP). Experiences gained from these
courses are useful for SCG’s development.

To support the Board’s responsibilities, SCG has appointed the Secretary
to the Board and Corporate Secretary to work in coordination with the
Board and the top executives. In addition, the corporate secretary
office is responsible for overseeing legal matters, relevant standard
practices and activities of the Board to ensure the implementation of
the Board’s resolutions.

Performance Assessment of SCG President and Top Executives

The Board and the Remuneration Committee assess the performance of the
President based on the company’s operating results, implementation of
the Board’s policies, and the overall socio-economic circumstances. The
Remuneration Committee will then consider the appropriate remuneration
for the President and top executives of SCG and propose such amount to
the Board for approval, taking into account the following factors from
the information of the current and previous years.

1.  The business units’ operating results based on the percentage of
    EBITDA on Operating Assets. The target EBITDA percentage for each
    business unit of SCG shall be set forth every year for the
    assessment and comparison purposes.

2.  The operating results of the business unit compared to those of
    other companies in the same industry, both locally and
    internationally.

3.  Business development capability.

In addition, a survey on manager-level employees’ opinions to the
president & CEO and the top executives has been included into the
consideration of the Remuneration Committee.

Nomination of Board Members

The Governance and Nomination Committee is responsible for selecting
qualified candidates to replace the directors who are retiring on
rotation at the end of their terms, or whatever the case maybe, and
proposing a list of nominees to the Board for resolution at the
shareholders’ meeting. The Governance and Nomination Committee selects
the candidates with credentials in a wide range of professions, great
leadership, breadth of vision, a proven record of ethical and integrity,
and able to share their opinions independently.

Furthermore, the Governance and Nomination Committee shall consider the
personal qualifications of the candidates for the Board members as
follows:

-   Integrity and accountability

-   Informed judgment

-   Maturity and stability, being a good listener and capable of
    expressing opinions differently and independently

-   Commitment to work principles and professionalism

    Special expertise and certain knowledge required for the Board are
    also taken into consideration so that the Board can formulate
    strategies and policies and oversee implementation of the strategies
    effectively.

    Internal Control and Audit System

    1. Internal Control

The internal control is an essential part of the business operation. SCG
sees the importance of the internal control system so development has
been made to ensure it is compatible to the internationally accepted
standards of the Committee Sponsoring Organization of the Tread way
Commission (COSO) in respect of the environment, control, risk
assessment, control activities, information technology, internal
communications, monitoring and evaluation. Moreover, SCG ensures that
its organization is structured in a suitable nature for the business
plan and that appropriate segregation of duties is applied to all
functions. The Group recruits and develops its staff to thrive in the
changing business conditions and encourages them to adhere to the
corporate governance and SCG Code of Conduct. SCG raises awareness of
the risk assessment and cultivates the idea throughout the organization
that risk management is the responsibility of all employees. The Group
also develops tools for the effective and timely internal communications
and applies information technology to manage various internal control
procedures such as gathering, processing, filing and reporting the
information using the modern and appropriate computer system for its
current business operation. In addition, SCG puts emphasis on
development of the internal control assessment in terms of finance,
operation and compliance with related laws, rules and regulations ensure
the effectiveness and efficiency. The Group monitors the internal
control system in order to ensure constant compliance that leads to the
sustainable development. In 2009, the activities are summarized as
follows:-

1.  Internal Control Instruction and Practice Guidelines

  The internal control instruction is put in place as the reference for
  all SCG businesses to ensure effective and efficient operations at the
  same standards. It contains the key internal control issues which
  covers practices of all significant business activities. This creates
  prudent business operations, since it was developed and improved
  through corporation of all related functions in order to enable
  coordination in their operation, leading to achievements as per the
  business plan and goals. The internal control instruction also ensures
  the efficient, transparent and verifiable corporate governance system
  of SCG, which builds confidence of shareholders, investors and
  stakeholders in line with corporate governance principles.
  Furthermore, in 2009 the guidelines for practice of related functions
  were revised to suit the current business environment and
  international standards.

2.  The Internal Control Report System

  The internal control system is an important tool in the business
  operation. Apart from the establishment and development of the
  internal control system that meets the COSO standards, SCG also
  stipulates that top executives are directly accountable for the
  effectiveness and efficiency of the internal control system of the
  organization, especially the correctness of the financial reports as
  defined by the accounting standards and adequacy of information
  disclosure in the financial statements. This means top executives
  responsible for finance and accounting are to prepare a report on the
  assessment of internal control, which has impact on the financial
  reports of the Group, and present it to the Audit Committee on an
  annual basis. In November 2009, the mentioned report was submitted to
  the Audit Committee, which included the execution and follow-up on the
  evaluation of internal control compliance relating to the credibility
  of the financial information, the existence of the continuous
  monitoring process for the internal control self evaluation of related
  functions, measures applied to eliminate weaknesses or obstructions
  occurred during the year and the assessment on adequacy and efficiency
  of the material internal control systems of each function. The audit
  office reports the evaluation results of each unit as per the annual
  audit plan to the Audit Committee on a monthly basis and presents the
  report to the Audit Committee Meeting on a quarterly basis.

3.  Internal Control under the Concept of Total Quality Management

  SCG has applied the Total Quality Management (TQM) concept for many
  years and it concurred with the internal control system to ensure
  prudent business operations in compliance with the laws, rules and
  regulations. The principles are based on the reasonable quantitative
  and qualitative data verification, provable by scientific methods in
  order to improve the quality of works and to achieve customer
  satisfaction, or customer centricity. Therefore, TQM is to learn to
  see problems from different angles and to think outside the box in
  order to reach new solutions. It is also about constantly trying to
  improve the better way of work while maintaining compliance with the
  internal control system. In 2009, corporate functions were entrusted
  to apply TQM to their routine operations with appropriate and
  continuous internal control system in place. Customers are placed in
  the center and strategies are set out to achieve total satisfaction
  and maximum benefits of both internal and external customers.

4.  Electronics-Control Self Assessment: eCSA

  In the past, the internal control assessment was carried out manually.
  However, to provide supervisors with the mechanism that enables
  assessment of performance and compliance with the regulations in a
  timely manner, SCG switched to the Electronics-Control Self Assessment
  (eCSA). This computer system allows users to track progress with
  convenience and yields quick and accurate results, which enables the
  Group to revise its strategies and to solve any problems or obstacles
  in a timely manner. The system was initially developed for key
  business transactions i.e. procurement, sales and marketing, inventory
  management.

2. The Internal Audit

The Audit Committee is responsible for supervision of the internal audit
office to ensure independence, fairness and sound corporate governance
and code of conduct. The Committee assesses the efficiency of the
internal control system, the correctness of the financial statements,
the adequacy and transparency of the information disclosure, the
assessment of risk management activities and trustworthy IT systems to
ensure that everything goes in the same direction with the business plan
and the constant changes of the business environment. The objective is
to enable employees at all levels to perform their duties with
competency and efficiency that meet the standards of the good corporate
governance principle.

1.  Medium-term and Annual Audit Plan

  In 2009, the medium-term audit plan was reviewed with the vision to
  “ensure preventive audit which are creatively and up-to-date with the
  current situations, adherence to corporate governance and code of
  conduct, and lead to the sustainable development”. The mission was
  incorporated in the annual audit planning, which includes promoting
  and improving preventive audit facilitated by modern technology,
  communicating the result to related parties, independent and fair
  consultations, fostering participation by all parties to add value to
  the organization, strictly adhering to the audit ethics, continuous
  development of knowledge, skills and quality of the audit in line with
  the change of environment and technology, providing support to staff
  in respect of internal audit scholarship, encouraging our internal
  auditors to complete the requirements of international standard for
  internal audit certifications, putting in place the assessment process
  and receiving recommendations from the audited functions.
  Additionally, strategies revised in alignment with the vision, mission
  and business environment of SCG with emphasis on proactively creating
  value-added activities for each business, planning the audit in time
  and ensuring that communications regarding preventive measures are
  made in a timely manner.

2.  Setting the Key Performance Indicators (KPI)

  In 2009, SCG has set and improved the key performance indicators (KPI)
  to ensure alignment with the vision, strategies, mission and changes
  of the business operations, especially in the area where changes are
  made to enhance effectiveness and efficiency of audit work and to
  improve the audit process to cover changes. Moreover, the KPIs are the
  tool for the follow-up on performance of auditors at all levels in
  order to ensure that the quality of work meet the international
  standards. Also introduced was the audit competency evaluation, which
  is applied to the evaluation and development of our auditors at all
  levels in order to enhance the skills they need to improve their
  performance. The internal auditors are encouraged to acquire
  additional knowledge and skills needed in applying for certifications
  and to meet the international standards.

3.  Development of IT Audit System

  In 2009, a website was developed as the communication portal to give
  knowledge and advices on internal audit system, risk management,
  internal control self assessment, the scope of authority, and correct
  practice, all of which minimized errors and enabled the Group to cope
  with any incidents in a timely manner. As a result, the audit was
  carried out with higher efficiency and required less manpower. The IT
  internal control self-assessment manual is also issued for each
  business to use as reference in order to ensure reliable IT systems
  with sound control and security as required by the SCG e-policy.
  Efficient tools and filing systems are provided to create a learning
  database which facilitates improvement of the electronic system for
  audit work, since it is the reference source for the auditors when
  they carry out the audit of the IT services and the web applications
  of SCG’s subsidiaries.

4.  Development of Website Consultancy System

  One problem identified in the audit is that the wrongdoer does not
  have intention to commit wrong deeds and some break rules simply
  because they are not aware of its existence. Therefore, a website
  consultancy system was developed to provide advice and answers for
  employees so that they can make inquiries about rules, regulations,
  the internal control and the scope of authority etc. Providing timely
  recommendations leads to correct practice, which is in line with our
  policy to minimize errors and to perform the preventive audit. This is
  very helpful for all businesses, since it helps reducing operational
  weaknesses and flaws. Moreover, questions are categorized to make it
  more convenient for employees to study and communicate with their
  colleague, which enhances the efficiency of the preventive audit.

(5) Internal Information Controls (page 100)

(6) Human Resource

With a solid foundation that continues for over nine decades, SCG is one
of the nation's leading organizations; constantly deliver good returns
to shareholders. The main strategies to drive business success in the
next five years are being the market leader in ASEAN region and creating
value-added products and services to the business.

In the past year, all over the world confronted the economic recession;
therefore SCG has coped with the conditions by the four crisis
strategies as follows:

1. Liquidity and working capital management

2. High value products and services development

3. Effective cost control

4. Export and new market expansion

According to the strategies, human resource is critical factor in the
organizational success. Therefore, SCG has improved the human resource
management in correspondence with the business strategy. The Company
draw up tactics to foster the success by planning for the next 5 years
as following:

  1. Human resource preparedness to support the future investment

1.  Arrange manpower to serve an expansion

  Other than the readiness in the terms of expatriate staffs and the
  allocation of local staffs to support the oversea business’s
  expansion, SCG also builds the brand to be recognized as employer of
  choice by generating the campus recruitment in leading education
  institutions, offering scholarships to students and local staffs for
  graduate to doctorial degree, and building strong relationship with
  the government, private sector, community, and leading corporate of
  the invested countries. Moreover, SCG arranges quarterly meeting with
  SCG coordinator of each country to make sure that the company’s policy
  on human resource management has been applying accordingly. Such
  meeting opens up additional information exchange channel in terms of
  business and human resource as a way of employee’s care of both local
  and expatriate staffs.

2.  Employee capability development

  SCG focuses on creating atmosphere that allows employees to be
  inspired and learned through training sessions, knowledge sharing
  activities, knowledge improvement programs, and in-work experience.
  Employees would have attitude and behavior that suits the company as
  well as broaden their knowledge, skills and visions that enable them
  to adapt to constant changing environment both local and oversea. As a
  preparation for oversea expansion, SCG improves staff’s ability in
  working at international stage by teaching them language, culture, and
  business norms of each country through Cross-Cultural Exclusive
  Development programs and international business practice program.
  Furthermore, SCG has developed SCG Orientation International Program
  for local staffs to understand the SCG’s business strategy and
  promoting the proud of being SCG employees and building working
  network. For top managements, SCG has a policy that requires them to
  have working experience in foreign countries.

3.  Modification on human resource management to encourage for working
    overseas

  Aims to have same standard of human resource management with SCG and
  also suitable for different cultures, the overseas companies have
  implemented e-HR management software. SCG brings best practices, such
  as introducing SCG Career Camp projects, monitoring employees through
  HR committee, and applying HR development methods e.g. TQM, TPM,
  Safety to the overseas companies in order to illustrate its intention
  of sustainable and long-term investment and boost working
  effectiveness. Also, the intentioned programs allow local staffs to
  have career growth opportunity in the same playing field with others
  throughout SCG. The HR system platform is a key that allows HR system
  to be applied in foreign countries much more effectively.

  2. Encourage new culture lead to innovative organization

  2.1 Change the culture into innovative organization

  Through diverse activities, SCG aims to promote and alter working
  culture to be known as innovative organization as well as changing its
  employee’s working behavior. Every employees is required to adhere to
  SCG Business Philosophy and Code of Conduct which are guidelines for
  practices and also courageous to think and talk as well as having
  opened-mind and ability to change in order to create Innovative
  Workplace environment. SCG also initiated various activities such as
  Inno Award, Inno Idea Tank, Book Brief, and Eager to Learn. In
  addition, SCG sees the importance of adding number of researchers in
  subjects which are related to business direction because these staffs
  are the critical mass in driving innovation policy to be in effect
  rapidly.

2.  Develop employees’ competency who support innovative culture

  To develop employees’ competency in supporting innovative culture, SCG
  has arranged number of programs to develop them in each level. These
  programs are, for instance, Thinking Skills for Innovation, Coaching
  for Innovation, Leadership Development Program, and Inno Executive
  Coaching. In the mean time, SCG has developed SCG Inno Facilitators in
  every business to act as promoters of innovative culture within the
  organization.

3.  Modify human resource management to enhance innovative organization

  Human resource management is an importance tool in sustainability
  achieving innovation goal. The HR systems that support the mentioned
  policy are listed below:

-   Improve Recruitment Process by developing internal recruiting
    procedure to serve career part of employees via SCG Career Click.

-   Review Performance Management System to motivate employees and teams
    both output and working procedures in driving innovation

-   Define wage management and career development for researchers and
    specialists in each business.

-   Cooperate with external institutions for R&D such as AIT,
    Chulalongkorn University as well as develop skills for technicians
    in mechanical technology by cooperating with King Mongkut’s
    University of Technology North Bangkok and Model School Project , in
    cooperation with Vocational Education Committee to support SCG’ s
    future technology improvement.

    SCG believes that its focus on HR development in knowledge, skill,
    and ethic will allow the Company to achieve the goal of becoming
    international company of innovation. Such adherence will lead the
    Company to experience sustainable growth both local and in Southeast
    Asia.

    As at December 31, 2009, The Siam Cement Public Company Limited had
    459 employees with a compensation of Baht 615 million. Total
    employees of the Group were 28,515 with a compensation of Baht
    17,165 million. (Compensation includes salary, bonuses, provident
    fund, and welfare)

    Number of Employees in Each Business of the Siam Cement Group

    As at December 31, 2009

  -------------------------------------------- --------------------------
  Company / Business Unit                      Number of Employees

                                               2009

  The Siam Cement Public Company Limited       459

  SCG Chemicals                                4,461

  SCG Paper                                    7,619

  SCG Cement                                   4,913

  SCG Building Materials                       8,664

  SCG Distribution                             1,573

  Others                                       826

  Total                                        28,515
  -------------------------------------------- --------------------------