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Corporate Governance Report

The Company realizes the importance of good corporate governance, and is committed to follow the Principles of Good Governance Guidelines provided by the Stock Exchange of Thailand for the transparency of the Company’s operations and efficiency for competition at the international level. The Company therefore would like to report the corporate governance issues as follows:

1. The Rights of Shareholders
2. The Equitable Treatment of Shareholders
3. The Role of Stakeholders
4. Disclosure and Transparency
5. Responsibilities of the Board of Directors

1. The Rights of Shareholders

The Company acknowledges the importance of all shareholders’ rights, including major and minority shareholders. Shareholders’ rights include basic rights of shareholders as investors and as owners of the Company, such as rights to buy, sell, transfer their shares; rights to receive dividends from the Company; rights in shareholders’ meetings; rights to express their opinions; rights to participate in making decisions on important issues, such as election of directors, approval of important transactions that affect direction of the business and operation of the Company, amendment of memorandum of association and articles of association of the Company.

In 2008, the Company has implemented the following to encourage and facilitate the exercise of shareholders’ rights in shareholders’ meeting:

1. The Company gives shareholders the right to propose important and appropriate issues for incorporation as an agenda in the Company’s annual general meeting and to nominate candidates with appropriate knowledge, abilities and qualifications to be considered for the position of the Company’s director before the annual general meeting of shareholders. Shareholders can find details of the criteria and guidelines on the Company’s website.
2. The Company sends invitation letters to shareholders in advance to inform them of the meeting agenda which includes opinion of the Board of Directors on each agenda item, together with supporting documents and information sufficient to facilitate shareholders in making their decisions. In addition, the invitation letter package includes details of required documents in order to protect shareholders’ rights to attend the shareholders’ meeting, together with their rights to vote. Moreover, the invitation letter to shareholders’ meeting is disclosed on the Company’s website. For the annual general meeting of shareholders, the invitation letter is posted on the website 30 days prior to the meeting date.
3. For those shareholders unable to attend the meeting, the shareholders have the right to authorize a person or an independent director as their proxy to attend the meeting and vote on their behalf, using one of the proxy forms sent with the invitation letter. Moreover, shareholders can download the proxy form from the Company’s website.
4. The Company implements the barcode system for registration and the voting process, including the production of voting cards. This helps accelerate and ensures the accuracy of the registration and vote counting process. Upon completion of the meeting, shareholders are able to verify the details.
5. Before going into each agenda, the Chairman of the Board of Directors, who acts as chairman of the meeting, informs the meeting of the voting process for each agenda. During the meeting, the chairman of the meeting gives all shareholders the opportunity to comment, ask questions or give opinions and suggestions on any agenda items. The Chairman and management see the importance of every question and give precise and clear answers.
6. The Company Secretary records minutes of the shareholders’ meetings which are correct and complete. In addition, the minutes are sent to the Stock Exchange of Thailand and posted on the Company’s website within 14 days after the meeting date, so that shareholders are promptly informed and are able to verify.

In addition, the Company also emphasizes on providing correct, timely, equal and transparent information sufficient for all shareholders and investors to make their investment decision.

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2. The Equitable Treatment of Shareholders

The Company is strongly committed to equitable treatment of every shareholder, whether they are major or minority shareholders, institutional investors, or foreign shareholders. To ensure equal treatment of all shareholders, the Company created various mechanisms, such as:

1. The Company provides a channel for minority shareholders to propose issues deemed important and appropriate to include in the agenda of the Company’s annual general meeting of shareholders and to nominate candidates with appropriate knowledge, abilities and qualifications to be considered for the position of the Company’s director. The announcement has been made through the Stock Exchange of Thailand and the Company’s website. Independent directors will consider and propose the matter to the Board of Directors to be included in the meeting agenda as appropriate.
2. The Company provides proxy forms for shareholders’ meetings. The proxy forms allow shareholders to specify their voting decision on each agenda, and are in accordance with the format provided by the Ministry of Commerce. The proxy forms are sent with the invitation letter. As an alternative for shareholders, the Company also proposes one independent director as the proxy.
3. The shareholders’ meetings proceed according to the order of the agenda, without adding new and uninformed agenda, in order to give the opportunity to shareholders to study the information on the given agenda before making decisions, and to ensure that there are no sudden changes to the important information in the shareholders’ meetings.
4. The Company sees the importance of the consideration of transactions which may have conflict of interest or may be connected or related transactions, and abides by good corporate governance principles, including rules and regulations of the authorities. In cases of these transactions, directors, management and those who are related persons do not participate in the consideration to approve such transactions.
5. The Company provides oversight and control to prevent improper use of inside information. Details can be found in section 5.2(5) Internal Control of Information. In addition, directors and management of the Company must report the purchase or sale of the Company’s securities to the Securities and Exchange Commission and the Company within three business days.

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3. The Role of Stakeholders

The Company recognizes its responsibilities towards each stakeholder, for sustainable mutual benefits, which will lead to stability of the business operations. The Company intends to interact with each party fairly. The important stakeholders of the Company are as follows:

Shareholders In addition to the basic rights, rights in accordance with the laws and the Company’s articles of association, such as rights to check number of shares, rights to receive share certificates, rights to attend and vote in shareholders’ meetings, rights to express opinions independently at shareholders’ meetings, including rights to receive fair returns, the Company also provides information to all shareholders equally and timely, and gives all shareholders the right to suggest and express their opinions independently on the Company’s business and operations in shareholders’ meetings, as the Company’s owners. Customers / Patients The Company provides patient care in an ethical manner, and at the best quality possible. The hospital’s Medical Ethics Committee protects patients’ rights. In addition, the Company has a department to monitor and improve the quality of the care provided to all patients, taking into consideration patients’ needs and suggestions. Suppliers / Contractors The Company abides by the contracts with all suppliers and contractors and ensures timely payment to all suppliers and contractors. Employees The Company believes that its employees are valuable resources and therefore gives all employees the equal opportunity in their employment. The Company has the policy to provide employees with appropriate compensation and appoints welfare committee as well as health and safety committee to administer well being of its employees. The Company also provides continuous education and regular training programs. Furthermore, the Company also provides opportunity for employees to voice their opinions or complain to management directly, and has a program to honor its employees to increase employees’ morale as the Company believes that work efficiency is a result of employees’ loyalty to the Company. Therefore, the Company focuses on building such loyalty continuously and has consistently performed surveys regarding the employees’ loyalty to improve the human resources management. Competitors The Company competes with competitors fairly and in accordance with the rules and regulations. The Company focuses on competition in the area of quality and efficiency of the service for the best benefit of customers and patients. Creditors The Company strictly abides by loan agreements, loan covenants and ensures timely payments. The Company believes that good relationship with creditors, including building credibility and trust, is a responsibility of the Company towards its creditors. Community The Company is committed to social responsibilities, including to the public and the environment. The important corporate social responsibilities programs of the Company in the past year are as follows: 500 Hearts Program: The program provides underprivileged cardiology patients with surgeries. The program is a 5-year program from 2008-2012 and is a collaboration between the Company, the Bumrungrad Hospital Foundation, the Children’s Heart Diseases Foundation, under the Royal Patronage of Her Highness Princess Kalayaniwattana, and the National Health Security Office. Scholarship programs: The Company sees the importance of human resources development and therefore initiated scholarship programs for the public and its employees. In the nine years of the programs, 437 scholarships have been granted. The programs are detailed as follows: 2.1 Youth Career Development Program (YCDP): In cooperation with UNICEF, the Company sponsors nurse aid certificate programs and practical nurse certificate programs for underprivileged girls graduated from high school from all over the country. Students have opportunities to become employees of the Company after graduation. 2.2 Nursing Degree Scholarship Program: The Company provides nurse aids with opportunities to continue their study for a Bachelor Degree in Nursing through its scholarship program. The Company also provides internship training programs during school holidays and will accept these nurses as employees once they receive their degree. 2.3 Practical Nurse Certificate Scholarship Program: The Company grants scholarships for practical nurse Thomson Mobile Clinic: Since 2001, the Company, together with the Thomson Foundation, provides free healthcare to underprivileged communities in Bangkok through its mobile units. In 2008, the Mobile Clinic Program has treated 22,730 patients and donated over 20 tons of rice. In the 8 years of this program, the Company, the Bumrungrad Hospital Foundation and the Thomson Foundation have treated over 150,000 patients and donated over 127 tons of rice. Medical Research Program: The Company and the Bumrungrad Hospital Foundation work with medical institutions, both local and abroad, to develop medical research, such as research on drugs related to AIDS, cancer and pneumonia. Environmental Policy: The Company has an environmental policy which the Company communicates to employees its views on preservation of the environment and natural resources. The Company also promotes activities relating to safety of the organization and neighboring communities and uses its natural resources efficiently.

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4. Disclosure and Transparency

The Company realizes the importance of disclosing information which is significant for shareholders and investors in making their decisions. The Company has a policy to disclose information which is transparent, complete, reliable, and timely through various channels which are easily accessible, in order for shareholders and investors to conveniently obtain the disclosures.

Information disclosed to the public includes both financial and non-financial information, such as financial statements, management discussions and analysis, reports of the accountability of the Board of Directors to the Company’s financial reports, connected transactions, structure, duties and responsibilities of the Board of Directors and committees, including statistics on meeting attendance and the corporate governance report.

The Company has many channels to communicate with shareholders and investors. These include those stipulated by rules and regulations, such as the 56-1 filing form, annual reports, the website of the Stock Exchange of Thailand and other communication channels, such as the Company’s website in both Thai and English, quarterly analyst meetings (4 times in 2008), roadshows and investor conferences, both in Thailand and overseas, including the United States of America, Singapore and Hong Kong (7 times in 2008) and investor meetings and conference calls (91 times in 2008).

Furthermore, the Company has set up a Company Secretary and Investor Relations Department to facilitate interested investors and shareholders. Interested investors and shareholders can request information by phone at 02-667-2010, by e-mail at ir@bumrungrad.com, or through the Company’s website, www.bumrungrad.com.

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5. Responsibilities of the Board of Directors

The Board of Directors is comprised of qualified directors with extensive experience in various fields. Every director participates in setting the Company’s vision, mission, strategies, goals, business plans and budgets. The Board of Directors also ensures that the plans are carried out efficiently and effectively by the management, to ensure the maximization of the Company’s value and stability to shareholders. The Board of Directors meets quarterly to review the management’s report on the Company’s operations. Details of duties and responsibilities of the Board of Directors can be found in Section 5.2 (1) Management Structure.

At present, there are 16 directors, including 9 non-executive directors, 4 executive directors, and 3 independent directors with qualifications as per the Securities and Exchange Commission.

At present, there are 16 directors, as follows:

1. Non-executive directors: 9 non-executive directors, which are Mr. Chai Sophonpanich, Dr. Chanvit Tanphiphat, MD, Mrs. Kulathida Sivayathorn, Dr. John Yangpichitt, MD, Dr. Khun Swanya Dej-Udom, MD, Dr. Anant Tejavej, MD, Mr. Chong Toh, Mr. Chatri Sophonpanich and Mr. Felix Herlihy.
2. Executive directors: 4 executive directors, including Mrs. Linda Lisahapanya, Dr. Dhanit Dheandhanoo, MD, Mr. Curtis John Schroeder and Dr. Sinn Anuras, MD.
3. Independent directors: 3 independent directors, comprising of Ms. Sophavadee Uttamobol, Mr. Soradis Vinyaratn and Mr. Boonpakorn Chokwathana.

The three independent directors account for 19% of total Board of Directors. The Company plans to increase the number of its independent directors to be more than one-third of the Board of Directors, to be in accordance with the Securities and Exchange Act (No. 4) B.E. 2551.

Segregration of duties:

The Company clearly separates duties and responsibilities of the Board of Directors and management. The Board of Directors is responsible for endorsing strategies and supervising management’s operations at the policy level, whereas management is responsible for managing the business to be in accordance with such strategies. Therefore, the Chairman of the Board of Directors is not the same person as the Managing Director.

Directorship Positions in other Listed Companies:

The Company realizes the values of experience that directors receive from being directors in other companies. The Company therefore has the policy that directors can hold board positions in not more than 8 companies listed on the Stock Exchange of Thailand, in order for the directors to be able to allocate sufficient time for each company. With regards to the management, other than board positions at the Company’s subsidiaries and affiliated companies, the Managing Director, the Group Chief Executive Officer and the Company’s management are allowed to hold director and/or independent director positions in not more than 3 other companies. In addition, such positions must be approved by the Board of Directors.

Company Secretary:

The Board of Directors appointed Mrs. Jutatip Adulbhan as the Company Secretary to be responsible for administering the Board of Directors’ meetings and shareholders’ meetings, for advising the Board of Directors and management regarding rules and regulations related to listed companies and corporate governance policies, and for safekeeping related documentation.

Committees

The Board of Directors has set up committees to assist with specific tasks and to propose assigned issues for consideration or acknowledgement. Details of committee members and their duties and responsibilities are listed in Section 5.2(1) Management Structure. Committees are as follows:

1. Audit Committee consists of 3 independent directors. In 2008, the Audit Committee held 4 meetings and reported their meeting results to the Board of Directors. Details of attendance of the Audit Committee members are in Section 5.2(3) Remuneration of Directors, Committees and Management.
2. Nomination and Remuneration Committee consists of 1 independent director, who is the chairman of the Nomination and Remuneration Committee, and 2 non-executive directors. In 2008, the Nomination and Remuneration Committee held 2 meetings and reported their meeting results to the Board of Directors. Details of attendance of the Nomination and Remuneration Committee members are in Section 5.2(3) Remuneration of Directors, Committees and Management.
3. Governing Board of Bumrungrad International Hospital, Bangkok consists of 3 directors, 2 management, 6 physicians and 1 member by invitation. In 2008, the Governing Board held 6 meetings.
4. Investment Committee consists of 1 independent director, 2 non-executive directors and 2 executive directors. In 2008, the Investment Committee held 2 meetings.

Roles, Duties and Responsibilities of the Board of Directors

The Board of Directors has responsibilities towards all shareholders, both major and minority shareholders, in ensuring that the Company conducts its business and implements corporate governance practices in accordance with its objectives and policies for the highest benefit of shareholders, under ethical business values, taking into account the interests of all stakeholders. Duties and responsibilities of the Board of Directors are in Section 5.2(1) Management Structure.

Internal control and internal audit systems:

The Company has given importance to internal control and internal audit systems, by establishing an internal audit unit, with the primary objective to support and develop effective internal control of the organization, in order to minimize operational risks, and to ensure quality of work processes and operations. Emphasis is on effectiveness and efficiency, appropriateness of expenses and costs, and the operations which are in accordance with the policy and/or requirements of the management.

To ensure the independence of the internal audit unit and the balance of power, the internal audit unit reports directly to the Audit Committee.

Conflict of interest:

To prevent any problems related to conflicts of interest, the Board of Directors considers transactions which may have conflicts of interest or which may be related parties transactions with caution, as well as strictly follows the rules and regulations of the Stock Exchange of Thailand and the Securities Exchange Commission, with pricing and other conditions on an arms-length basis. Details of the transactions, including amount, contracting party, and reasons for entering into the transactions are disclosed in financial statements, annual reports, and 56-1 filings.

Board of Directors’ Meetings

It is the duty of every director to attend Board of Directors’ meetings regularly, in order to acknowledge and make decisions relating to the operations of the Company. The Board of Directors holds 4 regular meetings every year (held quarterly), of which the schedule is set in advance for the entire year, and has extraordinary meetings as necessary. In 2008, there were 4 Board of Directors’ meetings. Details of the meeting attendance of each director are in the table in Section 5.2(3) Remuneration of Directors, Committees and Management.

For each meeting, agenda are clearly set in advance by the Chairman of the Board together with the Managing Director. Moreover, each director is given opportunities to propose issues as agendas. The Company Secretary prepares and sends invitation letters, agendas, and other supporting documents to the Board of Directors at least seven days in advance in order to allow directors sufficient time to research and study the information prior to each meeting.

Normally, each meeting takes two hours. For the consideration of various agenda, the Chairman of the meeting gives directors the opportunity to express their opinions in the meeting independently. In addition, senior management are invited to attend Board of Directors’ meetings to provide useful and important information, and to directly obtain business strategies from the Board of Directors to be implemented in the Company’s operations. In case a director has a personal conflict of interest, such director will leave the meeting and/or does not vote on that particular matter.

Upon completion of each meeting, the Company Secretary is responsible for documenting and distributing minutes for adoption at the next Board of Directors’ meeting. Directors are able to comment, amend and make additions so that the minutes are as accurate as possible. The Company Secretary keeps the adopted minutes along with supporting documents available for directors and relevant persons’ verification.

Remuneration of the Board of Directors and Management

The Company provides appropriate remuneration for the Board of Directors and management. The remuneration of the Board of Directors in the form of annual remuneration and meeting remuneration has been approved by shareholders’ meetings. The consideration of directors’ remuneration takes into account that of other comparable listed companies in the same industry. Committee members only receive remuneration in the form of meeting remuneration.

Management’s remuneration is in the form of salaries and bonuses, taking into consideration the responsibilities and performance of each person and the performance of the Company.

Details of 2008 remuneration of each individual director, which has been approved by the shareholders’ meeting, and the sum of management’s remuneration, are disclosed in Section 5.2(3) Remuneration of Directors, Committees and Management.

Development Programs for Directors and Management

The Company informs newly appointed directors of information which is important for fulfilling their duties as the Company’s directors. The information includes the Company’s background information, business strategy and rules and regulations related to the directorship position of the Company.

Moreover, the Company supports development programs for directors and management in various forms, such as training and seminars organized by the Thai Institute of Directors (IOD), the Stock Exchange of Thailand, and the Securities Exchange Commission.

A majority of the Board of Directors, 11 directors, have passed IOD training courses, as follows:

1. Chairman Program: Mr. Chai Sophonpanich and Ms. Sophavadee Uttamobol
2. Director Certification Program (DCP): Mr. Chai Sophonpanich, Mrs. Linda Lisahapanya, Mrs. Kulathida Sivayathorn, Mr. Boonpakorn Chokwathana, and Mr. Curtis John Schroeder
3. Director Accreditation Program (DAP): Mr. Chatri Sophonpanich, Dr. Anant Tejavej, MD, Dr. Khun Swanya Dej-Udom, MD, Mr. Chong Toh, Ms. Sophavadee Uttamobol, Mr. Soradis Vinyaratn, and Mr. Boonpakorn Chokwathana
4. Audit Committee Program (ACP): Mrs. Kulathida Sivayathorn and Ms. Sophavadee Uttamobol
5. Role of Compensation Committee (RCC): Mr. Boonpakorn Chokwathana
6. Chartered Director: Mrs. Kulathida Sivayathorn
7. Quality Financial Reporting: Mrs. Kulathida Sivayathorn

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