Connected Transactions

The Board of Directors emphasizes the importance of review and
consideration before granting approval for connected transactions or
related transactions or transactions that may cause conflict of
interest. The SCG Code of Conduct has set forth a policy regarding such
transactions, as follows:

Connected Transactions between the Company and its Subsidiaries

SCG comprises a large number of companies whose businesses are bound to
make transactions with one another in such ways as providing services,
trading raw materials and products, or providing financial support,
technical assistance, human resources, etc. In doing businesses or
performing duties related to such matters, all employees and parties
concerned are required to comply with the law, the rules and regulations
of government agencies, as well as the rules of SCG, in addition to any
criteria or conditions prescribed by local communities.

Transactions with External Entities

In undertaking transactions with outside entities or other companies,
the Company shall proceed by implementing fair methods and complying
with terms and conditions as agreed upon honestly. The Company shall
also avoid making transactions that may cause trouble or damage to
outside parties.

The Company has specified guidelines and procedures on how to consider
the granting of approval for connected transactions, related
transactions, or transactions with potential conflict of interest, to
ensure the Company’s best interest and in accordance with rules and
regulations as prescribed by law. The directors and management shall
disclose to the Company in advance whether they hold any stakes
involving potential conflict of interest. The Company, in turn, shall
consider the appropriateness of any transaction, and in cases where such
transactions need approval in accordance with the regulations and
procedures as prescribed by law, the management shall propose such
matters to the Board of Directors or at the Shareholders’ Meeting, and
shall disclose the information to investors in a transparent manner.
Under no circumstance shall directors or management concerned be allowed
to participate in the process of considering approval. In any case, the
SCG Code of Conduct and SCG Corporate Governance Policy allow the
Company to make transaction decisions based on a market price mechanism,
which is a standard and efficient tool used throughout the Company’s
business operations.

Future Connected Transaction

Connected transactions will in the future continue to be based on our
traditional business practices and will follow the policy of the market
determining prices in negotiated transactions, as in the past. No
special benefit will accrue either to companies or individuals from
connected transactions.

Report of Connected Transactions in 2010

Significant transactions with related parties for the year ended
December 31, 2010 are summarized as follows.

1. Asset transactions include

1.1 Investment

  1.1.1 A connected transaction between a subsidiary of the company and
  a subsidiary of the major shareholder of the company amounting to THB
  158.62 million:

  • Sale of shares in Nava 84 Co., Ltd. and 84 Co., Ltd. to CPB Equity
  Co., Ltd., a subsidiary of the Crown Property Bureau which is the
  major shareholder of the company

  1.1.2 A transaction with external entity amounting to THB 1,081
  million:

  • Purchase of Common Shares in Bangkok Synthetics Co., Ltd from the
  Siam Commercial Bank Public Company Limited whose major shareholder is
  the Crown Property Bureau group

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