Investment and Operational Governance of Subsidiaries and Associated Companies Policy
Investment Policy
1. Objective
Thai Nondestructive Testing Public Company Limited (the "Company") is engaged in the business of providing safety testing, inspection, and certification services for various equipment, tools, and structures using Nondestructive Testing (NDT) techniques. The acquired data is compared against standardized acceptance criteria using scientific instruments and tools based on chemistry, physics, radiation, magnetic fields, sound waves, etc. The Company also provides irradiation services for industrial, agricultural, consumer goods, medical, health, and herbal sectors to ensure sterilization, food preservation, shelf-life extension, and value creation through quality improvement (qualification). Furthermore, the Company has expanded into the energy sector by providing solar power plant installation services and solar energy production for trading, and plans to further expand into the trading of consumer goods.
To ensure that management across diverse industrial sectors runs smoothly, flexibly, and establishes clarity in the management structure, the Company has established a policy to invest in subsidiaries and associated companies that engage in businesses aligned with the Company’s goals, vision, and strategic plans to strengthen or support the Company’s business. The Company, its subsidiaries, and/or associated companies may consider additional investments in other businesses if they possess growth potential, can create business synergy, benefit the group’s businesses, or generate favorable investment returns.
Prior to making any investment decision, the Company will analyze and evaluate investment feasibility, shareholding proportions, expected returns, potential risks, and the Company’s financial status. Significant investment approvals must be considered by the Board of Directors' meeting and/or the shareholders' meeting of the Company in accordance with the prescribed approval authority limits, relevant rules, the Articles of Association of the Company and its subsidiaries (if any), other equivalent internal regulations, and the regulations and criteria of the Capital Market Supervisory Board, the Office of the Securities and Exchange Commission (SEC), and the Stock Exchange of Thailand (SET), including regulations concerning the acquisition or disposition of assets, connected transactions, and information disclosure.
2. Definition
Investment means investment in enterprises, projects, or the acquisition of assets or businesses that support or relate to the core business of the Company's business group, or new businesses outside the current core business that possess growth potential and can generate stable and sustainable long-term revenue and returns for the Company's business group.
3. Investment Consideration Criteria
The organization is driven by accelerating the development of all factors that promote stable business growth, including personnel, processes, and business expansion with partners in AEC countries, adhering strictly to business ethics, integrity, and good morals, alongside responsibility toward communities, society, and the environment, as consistently practiced.
3.1 All types of investments must be considered and approved by the Executive Committee, the Investment Consideration Committee, the Board of Directors, or the shareholders' meeting, as the case may be, in accordance with the operational approval authority limits and relevant regulations.
3.2 When deemed appropriate, senior management and/or the Executive Committee may engage consultants—such as technical engineering consultants, financial, accounting, and tax consultants, and legal consultants—within authorized budget limits, to prepare information supporting the investment project presentation for the Board of Directors' consideration and approval.
3.3 Investment consideration must comprise at least the following information according to the type of investment:
1) Investment objectives, budget, and/or investment expenses, funding sources, and the shareholding structure of the target entity.
2) Business synergy aligned with the strategic plan of the Company's business group, pre-feasibility study results, return on investment (ROI), payback period, risk factors and risk management/mitigation guidelines, as well as relevant legal and cautionary issues.
3) Potential conflicts of interest arising from the investment.
4) In the case of business acquisition, merger and acquisition (M&A), share acquisition, or business purchase, senior management and/or the Executive Committee shall consider engaging consultants to conduct Due Diligence on various aspects, including ultimate shareholders, technical, accounting, financial, and relevant legal issues.
3.4 For investments in companies that will attain the status of subsidiaries or associated companies, the following additional criteria must be considered:
1) Investments in subsidiaries/associated companies must comply with the criteria regarding the governance of subsidiaries and associated companies under the Notification of the Capital Market Supervisory Board No. TorChor. 39/2559 Re: Application for and Approval of Offer for Sale of Newly Issued Shares, as well as the good corporate governance guidelines of the Stock Exchange of Thailand.
2) Investments in subsidiaries/associated companies to support the Company's business operations must align with the goals, vision, and growth strategic plan of the Company's business group. Such investments must increase operational performance or profits, provide business synergy, enhance growth potential, create business extensions, benefit the group's business, and generate favorable investment returns through appropriate investment analysis procedures prior to decision-making. Such investment decisions must be approved by the Board of Directors' meeting or the shareholders' meeting (as the case may be).
4. Control and Monitoring of Investments within the Company's Business Group
4.1 Investment status reports must be submitted to the Board of Directors for acknowledgment at least once a quarter, and approval must be sought when investment plans change.
4.2 Compliance with laws, regulations, and rules of regulatory agencies is mandatory, including:
1) Business-related laws and regulations
2) Financial Reporting Standards
3) Policy on governance of subsidiaries/associated companies
4) Shareholders’ Agreement (if any)
5) Anti-corruption measures
6) Corporate Governance Policy
7) Policies and operational guidelines promulgated by the Board of Directors, etc.
5. Cancellation of Investment
In the event that any one or a combination of the following characteristics occurs:
5.1 The subsidiary or associated company fails to achieve its performance targets.
5.2 The subsidiary or associated company yields a rate of return significantly lower than projected.
5.3 The subsidiary or associated company alters its core business operations from the time of the investment decision or changes its investment plan without approval from the Company’s Board of Directors.
5.4 The subsidiary or associated company engages in operations with significant risks concerning corporate governance and/or relevant laws.
5.5 The Company undergoes strategic or operational changes.
The Company may consider cancelling or revoking its investment in the subsidiary or associated company if it is determined that such investment will directly and negatively impact the Company's business operations. Such transactions must be considered by the Board of Directors' meeting and/or the shareholders' meeting of the Company (as the case may be), in accordance with prescribed approval authority limits and relevant rules.
Policy on Operational Governance of Subsidiaries and Associated Companies
"Subsidiaries" and "Associated Companies" under this Policy on Operational Governance of Subsidiaries and Associated Companies shall mean subsidiaries or associated companies that engage in core businesses as specified in the Notification of the Capital Market Supervisory Board regarding the application for and approval of offers for sale of newly issued shares.
The Company has established this Policy on Operational Governance of Subsidiaries and Associated Companies, incorporating both direct and indirect measures and mechanisms, to enable the Company to exercise appropriate and efficient control, management, and responsibility over the operations of subsidiaries and associated companies. This ensures that their management can be monitored and directed to comply with established measures and mechanisms as if they were a department of the Company, thereby safeguarding the Company's investment and instilling confidence in its shareholders.
Where any transaction or action by a subsidiary and/or associated company requires approval from the Board of Directors' meeting and/or the shareholders' meeting of the Company (as the case may be), the Company's Board of Directors shall arrange for a meeting of the Board of Directors and/or a meeting of shareholders of the Company to consider and approve such matters before the subsidiary and/or associated company holds its own board meeting or shareholders' meeting to approve the transaction or action. The Company shall also disclose information and comply with relevant rules, conditions, and procedures governing such subsidiary transactions as prescribed by applicable laws.
Notwithstanding the foregoing, this policy shall apply to the extent that it does not conflict with any foreign laws or regulations applicable to such foreign subsidiaries and associated companies, and does not deprive foreign subsidiaries and associated companies of any statutory rights and benefits under foreign laws. To safeguard the Company’s investment interests, the governance mechanisms for subsidiaries and/or associated companies are prescribed as follows:
(1) The Company shall appoint persons to serve as directors and/or executives in subsidiaries and/or associated companies in proportion to the Company’s shareholding in such subsidiaries and/or associated companies, except where restricted or required by contractual obligations binding upon the Company. This is to ensure the governance and management of the subsidiary and/or associated company, guaranteeing that they effectively comply with the policies, goals, vision, and growth strategic plans of the Company. Directors and executives of subsidiaries nominated by the Company must possess qualifications, roles, duties, and responsibilities in accordance with relevant laws and must not possess untrustworthy characteristics under the notifications of the Securities and Exchange Commission concerning untrustworthy characteristics of company directors and executives.
(2) Any transaction or action undertaken by a subsidiary and/or associated company (as the case may be) in the following matters must be approved by the Company's Board of Directors prior to entering into such transaction:
(2.1) Appointing or nominating persons as directors or executives in subsidiaries and/or associated companies.
(2.2) Approving the dividend payout of a subsidiary at a rate lower than specified in the dividend policy.
(2.3) Amending the subsidiary’s Articles of Association, except for major amendments under item (3) below, which require approval from the Company’s shareholders' meeting with the required voting quorum.
(2.4) Approving the subsidiary’s annual budget, unless already stipulated in the Delegation of Authority (DOA) of the subsidiary approved by the Company's Board of Directors.
(3) Amending the Articles of Association of a subsidiary in matters that may significantly impact the financial status, operating results of the Company, the governance or management of the subsidiary, or change control power—including but not limited to amendments affecting the Company's right to appoint directors and/or executives in proportion to its shareholding, voting rights of the Company’s representative directors at subsidiary board meetings, voting rights of the Company at subsidiary shareholder meetings, and/or dividend payments of the subsidiary—must be approved by the Board of Directors and shareholders of the Company before the subsidiary proceeds.
(4) Any transaction or action undertaken by a subsidiary in the following matters must be approved by the Board of Directors' meeting and/or the shareholders' meeting of the Company prior to entering into the transaction, depending on the transaction size compared to the Company pursuant to the notifications of the Capital Market Supervisory Board and the Stock Exchange of Thailand regarding the Acquisition or Disposition of Assets and/or Connected Transactions (mutatis mutandis):
(4.1) Capital increase, share allocation, capital reduction, and/or change in paid-up capital of the subsidiary not in proportion to existing shareholding.
(4.2) Entering into transactions between the subsidiary and connected persons of the Company or the subsidiary, or transactions relating to the acquisition or disposition of the subsidiary's assets.
(4.3) Transferring or waiving benefits, including the waiver of claims against persons causing damage to the subsidiary.
(4.4) Selling or transferring the whole or substantial part of the subsidiary's business to other persons.
(4.5) Purchasing or accepting the transfer of significant businesses of other companies to the subsidiary.
(4.6) Entering into, amending, or terminating contracts concerning the lease of the subsidiary's business in whole or in substantial part, assigning other persons to manage the subsidiary's business, or merging the subsidiary's business with other persons.
(4.7) Leasing, hire-purchasing, or letting out on hire-purchase the business or significant assets of the subsidiary.
(4.8) Borrowing, lending, extending credit, guaranteeing, executing legal acts binding the subsidiary to additional financial burdens, or providing financial assistance in any other form to non-affiliated third parties, except in the ordinary course of business of the subsidiary.
(4.9) Dissolution of the subsidiary.
(4.10) Any other transactions that are not in the ordinary course of business of the subsidiary and which significantly impact the Company.
(5) Directors and executives of a subsidiary or associated company who are appointed as representatives of the Company shall have the discretion to vote at meetings of the board of directors of the subsidiary and/or associated company regarding general management and normal business operations as they deem appropriate for the utmost benefit of the Company and the subsidiary or associated company (as the case may be), except for matters where this policy dictates otherwise. They shall have the following duties:
(5.1) Supervise the subsidiary's business operations to ensure efficiency and appropriately manage the return on investment of the Company in the subsidiary.
(5.2) Ensure that the subsidiary maintains appropriate and robust internal control systems to prevent potential fraud, including clear workflows demonstrating that the subsidiary has adequate systems for continuous and reliable disclosure of significant transactions. This includes establishing channels for the Company's directors and executives to access subsidiary information to monitor operational performance, financial status, related-party transactions between the subsidiary and its connected persons, and significant subsidiary transactions efficiently. Furthermore, audit mechanisms must be established through the internal audit team of the Company or the subsidiary to examine internal control systems according to audit plans approved by the Audit Committee. Independent directors of the Company must be able to directly access information or audit reports to report to the Company's directors and executives, ensuring consistent compliance with established workflows.
(5.3) Cause the subsidiary to disclose information regarding its financial status, operating results, connected transactions, and significant acquisition or disposition of assets to the Company fully, accurately, and within the timeframes specified by the Company.
(5.4) Disclose and submit their interests and those of related persons to the boards of directors of both the Company and the subsidiary regarding relationships and transactions that may cause conflicts of interest, and avoid entering into transactions that may trigger conflicts of interest. Such matters must be reported to the boards of directors of the Company and the subsidiary at least once a quarter, or immediately upon the occurrence of events that may affect the financial status and operating results of the Company and the subsidiary, serving as information for decision-making or approval, with paramount consideration given to the overall benefit of the Company and the subsidiary. Directors and executives of the subsidiary shall not participate in approving matters in which they have direct or indirect personal interests or conflicts of interest.
(5.5) Report business plans, business expansions, major investment projects, and joint ventures with other operators to the Company via monthly or quarterly performance reports, and clarify or submit supporting documents upon the Company’s request.
(5.6) Clarify, submit information, or provide operational documents to the Company upon request.
(6) The Company’s Board of Directors shall supervise directors and executives of subsidiaries and associated companies acting as the Company's representatives to perform their duties within the scope of their authorities, duties, and responsibilities, ensuring that business operations comply with laws, regulations, and the Company’s policies. They must also attend meetings and cast votes as stipulated by the Company at meetings of the board of directors of subsidiaries and associated companies when considering agenda items material to their business operations.
(7) The Company’s Board of Directors shall continuously monitor the operational performance of subsidiaries and associated companies against plans. Subsidiaries shall report their business plans for the following year during the final quarter's board meeting of the Company, and shall disclose financial status, operating results, plan progress, connected transactions, and/or asset acquisition or disposition at least once a quarter, except when significant events affecting the Company occur, which may prompt a special meeting of the Company's Board of Directors. All actions must fully and accurately comply with relevant notifications of the Capital Market Supervisory Board and the Stock Exchange of Thailand (as the case may be).