Policy for Supervision of Subsidiary Companies and Joint Ventures Supporting the Core Business

Policy for Supervision of Subsidiary Companies and Joint Ventures Supporting the Core Business

GMM Grammy Public Company Limited (“the Company”) has diversified its investments by holding shares in other companies (Holding Company). The focus is on the Integrated Entertainment business and the Technology & Platform business. For the Integrated Entertainment business, the Company has a policy to invest in subsidiaries and/or joint ventures that support the Company's business operations. Additionally, the Company invests in companies that align with its goals, vision, and growth strategy with the aim to increase the Company's revenue or profit. The Company also invests in businesses that provide synergy to the Company and its subsidiaries or associates in pursuit of enhanced competitiveness. This is in line with the Company's objective to become a leading player in its core-business field. In addition, subsidiaries and/or joint ventures may consider investing in other businesses if they have growth potential or can contribute to business expansion, providing benefits to the Company’s group. Such investments aim to generate a good return on investments.

In this regard, the Company has established a policy for overseeing subsidiaries and joint ventures that contribute to the core business. The Company has outlined measures and mechanisms, both direct and indirect, to enable effective supervision and management of subsidiaries’ and joint ventures’ operations, leading to a well-structured and transparent management system. Through the aforementioned measures and mechanisms, the Company can efficiently assess and set the operational direction of subsidiaries in which it has invested and may invest further. Additionally, they allow the monitoring of subsidiaries’ management and operations thus ensuring the maintenance and enhancement of the Company's investment benefits. This approach makes these subsidiary companies function like integral units or departments of the Company. The measures and mechanisms for overseeing their business activities increase value and confidence for stakeholders, assuring them that subsidiaries and joint ventures will operate continuously and sustainably. The implementations of those measures and mechanisms are also in accordance with the criteria related to the supervision of subsidiaries’ and joint ventures’ operations mentioned in the Securities and Exchange Commission's Announcement No. 39/2559, which concerns the application for and approval of the issuance of new shares (including amendments). The terms 'Subsidiaries' and 'Joint Ventures' refer to companies that engage in the core business, as defined in the aforementioned announcement. However, this policy is enforced only to the extent that it does not violate or conflict with any laws or regulations of any foreign jurisdiction applicable to the aforementioned subsidiaries and joint ventures. It is also implemented in a manner that does not compromise any rights or benefits that subsidiaries and joint ventures in foreign jurisdictions may be entitled to under applicable foreign laws.

The details of the measures and/or mechanisms for supervision and oversight are as follows:

  1. The Company shall oversee and require a prior approval for some transactions or operations of subsidiaries and/or joint ventures. In the following events, an approval from a meeting of the Company’s Board of Directors, the meeting of its Executive Committee, and/or its shareholders' meetings (whichever the case is) must be granted before subsidiaries and/or joint ventures can proceed further.
    1. (1) Matters requiring an approval from the meeting of the Group’s Executive Committee (Group Ex.com) before being presented to the Board of Directors' meeting for acknowledgement are:

      The appointment or nomination of directors for a subsidiary and/or joint venture based on the list submitted to the Board of Directors. Such appointment and nomination must be acknowledged at the Board of Directors' meeting and align with the Company’s shareholding percentage in the said subsidiary and/or joint venture.

      In addition, the directors of the subsidiary and/or joint venture proposed or appointed by the Company shall exercise their discretion in voting at the Board meeting of the subsidiary and/or joint venture within the scope of authority, duties, and responsibilities approved by the Company's Board of Directors. This should be done in the best interest of the Company, subsidiaries, and/or joint ventures (whichever the case is). If any director has a vested interest, directly or indirectly, in any matter, that director shall abstain from voting.

    2. (2) Matters requiring an approval from the meeting of the Group’s Executive Committee (Group Excom) before being presented to the Board of Directors for approval:
      1. (a) The appointment or nomination of directors for a subsidiary and/or joint venture with candidates not on the list presented to the Board of Directors’ meetings but endorsed by the Board of Directors, or with the Company’s limitations or necessities preventing the inclusion of certain individuals as directors in the subsidiary or joint venture. However, the Company can demonstrate a mechanism that as an assurance that it can oversee the management or decision-making in matters significantly affecting the operations and financial status of the subsidiary and/or joint venture, based on its shareholding percentage.
        In this context, the directors of the subsidiary and/or joint venture proposed or appointed by the company shall exercise their discretion in voting at the Board meetings of the subsidiary and/or joint venture within the scope of authority, duties, and responsibilities approved by the Company's Board of Directors. This should be done in the best interest of the Company, subsidiary, and/or joint venture (whichever the case is). If any director has a vested interest, directly or indirectly, in any matter, that director shall abstain from voting, both directly and indirectly.
      2. (b) The consideration and approval of annual dividends and interim dividends (if any) of subsidiaries, which shall be done based on the condition that each subsidiary shall pay dividends in an aggregate amount not less than the amount specified in its annual consolidated financial statements or in accordance with its dividend payment policy. This policy shall first be approved at its Board meeting, if applicable.
      3. (c) Any amendment to subsidiaries’ articles of association, except for amendments related to matters of significance as per Section 1(4)(a), must receive an approval from their shareholders' meeting.
      4. (d) The consideration and approval of the annual consolidated financial statements of all subsidiaries, except for cases mentioned in the Corporate Authority Index approved at a Board of Directors' meeting.
      5. (e) The appointment of subsidiaries’ auditors when the appointed auditors are not affiliated with audit firm or a full-time member in the same network as the Company’s auditor in spite of the policy requiring subsidiaries’ auditors to be affiliated with the same network.
    3. (3) Matters requiring an approval from the Board of Directors' meeting and/or the shareholders' meeting of the Company before subsidiaries can consider approving or proceed are listed below. They depend on the scale of involved transaction in comparison to the size of the Company and the criteria about the acquisition or disposal of assets and/or connected transactions (whichever the case is) prescribed by the Securities and Exchange Commission and the Stock Exchange of Thailand, as well as exemptions as follows:
      1. (a) The increase of subsidiaries’ capital, allocation of shares, as well as the reduction of registered capital and/or changes in fully paid-up capital that will not align with shareholders’ original shareholding percentage and will lead to shareholding-percentage change or decrease in shareholding percentage.
      2. (b) Subsidiaries’ transactions with their or the Company’s related parties or transactions related to the acquisition or disposal of subsidiaries’ assets including but not limited to:
        1. (1) Transferring or waiving rights, including waiving claims, held by subsidiaries to or against parties causing damage to subsidiaries.
        2. (2) Selling or transferring the entire or significant part of subsidiaries’ businesses to entities that are not the Company or subsidiary.
        3. (3) Purchasing or receiving the transfer of the business of other companies not affiliated with the Company, and/or subsidiary.
        4. (4) Entering into, amending, or terminating agreements related to leasing the entire or significant part of their business; appointing others to manage their business, or merging their business with entities that are not the Company or subsidiary, with the objective of sharing profits or losses.
        5. (5) Leasing, lease-purchasing, or lease-selling the entire business or significant parts thereof, or assets, or the parts with significant liabilities.
      3. (c) Subsidiaries’ move to take out a loan; lend money; provide credit or guarantees, engage in transactions that cause financial liabilities; or give financial assistance to others, except for loans between the Company and a subsidiary or between subsidiaries.
      4. (d) Ending their operations.
      5. (e) Any other action that is not subsidiaries’ normal business transaction and has a significant impact on the Company or subsidiaries.
    4. (4) Matters requiring an approval from a shareholders' meeting of the Company with the support from three out of four (3/4) shareholders’ eligible voting shares at the said meeting as follows:
      1. (a) Any amendment to subsidiaries’ articles of association in matters that may significantly affect their financial position / operating results or the supervision of the their management, including but not limited to, an amendment that may affect the Company’s right to appoint their directors to reflect its shareholding percentage, the voting of directors representing the Company at the subsidiary's Board meetings, the voting of the Company at shareholders’ meetings of the subsidiaries, and/or subsidiaries’ dividend payment.

      For any transaction or operation requiring an approval from the Company's Board of Directors and/or shareholders’ meeting (whichever the case is) under this policy, the Company's directors are responsible for organizing a Board meeting and/or shareholders’ meeting to consider and approve it before a relevant subsidiary convenes its own Board meeting and/or shareholders’ meeting to endorse the said transaction or operation. The Company is also required to disclose information, including compliance with criteria, conditions, and procedures related to the requested approval, under laws governing listed companies, commercial and securities laws, relevant regulations, and guidelines of the Securities and Exchange Commission, the Office of the Securities and Exchange Commission, and the Stock Exchange of Thailand, while complying with all other applicable laws and regulations.

  2. The Company shall oversee its subsidiaries to ensure that they have adequate, strict, and efficient internal control systems, risk management systems, anti-corruption systems, and other necessary and appropriate systems in place. As parts of such supervision, the Company shall prescribe appropriate, efficient, and adequate measures to monitor its subsidiaries' operations. Additionally, the Company shall set up mechanisms for auditing the aforementioned systems with direct access to subsidiaries’ information for the Company’s internal audit team, directors, and executives. Audit results shall be reported on a regular basis to the Company’s Board of Directors and executives as assurances that subsidiaries operate in line with the prescribed systems.
  3. The Company shall look into and ensure that directors proposed / appointed by the Company and the executives of subsidiaries representing the Company have been on the Securities and Exchange Commission's whitelist of company directors and executives, and have had the qualifications, roles, duties, and responsibilities as per applicable criteria and laws. Additionally, they must not exhibit characteristics of untrustworthiness as defined in the announcements of the Securities and Exchange Commission and the Stock Exchange of Thailand regarding the untrustworthy characteristics of company directors and executives.
  4. The Company’s Board of Directors shall oversee and ensure that directors of subsidiaries and/or joint ventures proposed or appointed by the Company have the following responsibilities:
    1. (1) Overseeing subsidiaries and/or joint ventures to ensure their compliance with applicable laws, regulations and rules, as well as effective management practices in accordance with the Company's policies.
    2. (2) Disclosing information regarding subsidiaries’ financial position and operating results, connected transactions, transactions with potential conflict of interest, significant acquisitions or disposals of substantial assets, and/or any other significant transactions to the Company in a complete, accurate, and timely manner as specified by the Company.
    3. (3) Disclosing information related to their personal interests and relationships, as well as transactions with the Company and/or its subsidiaries that may result in conflict of interest to the Company's Board of Directors within the timeframe set by the Company. The purpose of such disclosure is to provide comprehensive information for consideration and approval, taking into account the overall benefits of both the Company and its subsidiaries.
      In addition, subsidiaries’ directors and executives must not participate in the approval process of matters in which they have a direct or indirect financial interest or a conflict of interest.
    4. (4) Reporting business development plans, business expansion, large-scale investment projects approved by the Company, business downsizing, business cessation, cessation of the operations of any unit, as well as joint investments with other entrepreneurs to the Company through monthly or quarterly performance reports, and upon the Company’s request together with explanations and/or supporting documents.
    5. (5) Providing explanations and/or additional information / documents related to subsidiaries’ operations to the Company upon request and as deemed appropriate.
    6. (6) Submitting explanations and/or additional information / documents related to any significant issues identified by the Company during its audits.

Furthermore, the Company shall regularly review subsidiaries’ and joint ventures’ corporate governance policies to ensure their compliance with the Company's context and business operations. The review includes compliance with legal requirements, regulations, rules, and various guidelines that may be amended.

The subsidiaries’ and joint ventures’ corporate governance policies under the main business conduct policy were considered and approved by the Company's Board of Directors at its meeting on November 14, 2023. These policies have become effective from November 14, 2023 onward.