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Principal Asset Management Co., Ltd.

Investment Governance Policy

Objective

During the past decade, global organizations, corporations, and civil society organizations have strengthened focus on measures to address and resolve social exclusion and environmental degradation, which significantly impact sustainable development, inclusive growth, and the collective well-being and prosperity of economies, societies, people and the planet. Institutional Investors play a key role in this regard. They have important investment management responsibilities to ensure delivery of sustainable long-term value to their investment owners and beneficiaries. These responsibilities include consideration of the risk profiles of Investee Companies. Institutional

Investors should ensure to invest in companies that integrate Environment, Social and Governance (ESG) factors in their business practices. Furthermore, in the event that an Investee Company fails to implement ESG principles, the Institutional Investor should engage with the Investee Company to improve the company’s ESG performance. Leading international organizations and countries have promulgated principles for investment governance. Adoption of investment governance practices by Institutional Investors will not only promote sustainable growth and development, but also secure the best returns to their Asset Owners and beneficiaries, and provide durable benefits for Institutional Investors in the long term.

The Securities and Exchange Commission (SEC) has joined this global trend by adopting the Investment Governance Code 2017 (I Code). The I Code contains investment governance principles and guidance reflecting current international standards and best practices for responsible and effective stewardship over investments by Institutional Investors. Implementation of the I Code by Institutional Investors will enhance confidence by domestic and global markets clients and trust that investment decisions and management are done in their best interest. Moreover, the I Code promotes and contributes to a good corporate governance ecosystem, stimulates responsible and sustainable practices by listed companies, and fosters growth and development of the Thai capital market and the wider economy.

This Policy is the primary reference document on matters relating to Investment Division of CIMB- Principal Asset management Co., Ltd. and serves as a reference for staff in handling related tasks.

 

The principle of the Investment Governance Policy

Principle 1: Adopt a clear Investment Government Policy

The company should adopt a clear and written Investment Governance Policy that created and strengthens an investment governance culture through all levels of the company, from the Board of Directors and its committees (including the Investment Committee), to management , and staff in relevant business units.

Guideline

  • Be commensurate with the Institutional Investor’s business profile (including size and structure) and its role in the investment chain.
  • Require the Institutional Investor to perform its investment duties and stewardship responsibilities in the best interest of clients, by making sound investment decisions, and effectively monitoring the investments, business and ESG performance of Investee Companies.

Company will perform our duties in compliance with applicable laws, regulations, client agreements, in the best interest of our clients, and with the application of sound investment governance practices in relation to the following topics:

  • Inclusion of an Investee Company’s ESG performance in the Institutional Investor’s investment consideration.
  • Anti-corruption measures of both the Institutional Investor and Investee Companies with reference to legal and industry requirements.
  • Management and use of non-public information about or related to Investee Companies and their securities which may have a material effect on the price of an Investee Company’s securities.
  • Prevention of unfair securities trading practices in violation of applicable laws and regulations.
  • Prevention of money laundering and terrorist financing.

Principle 2: Properly Prevent and Manage Conflicts of Interest and Prioritise Advancing the Best Interest of Clients.

  • To ensure that investments are managed in the best interest of clients, that conflicts of interest are prevented, identified, minimized and properly managed, and that the interests of clients are prioritised over the interests of the Institutional Investor and its shareholders and business group companies.
  • To ensure that adequate measures to prevent, identify, minimize and manage conflicts of interest are in place, for an example
    • Written policies for the prevention, identification, minimization and management of conflicts of interests.
    • Procedures to sufficiently prevent, identify, minimize and manage conflicts of interest.
    • Staff communication and training to ensure understanding and effective application of conflict of interest procedures.
    • Compliance control and audit measures for the application of the conflict of interest policies and procedures.
    • An effective whistle-blowing policy.
    • Regular review of the appropriateness and effectiveness of conflict of interest measures.

Principal 3: Make Informed Investment Decisions and Engage in Active Ongoing Monitoring of Investee Companies.

  • To ensure the appropriate in place processes and procedures for active ongoing monitoring of the performance of Investee Companies to ensure that they become promptly aware of factors relevant to the value of the Investee Companies
  • Actively monitor the performance of Investee Companies with the nature of their investments in order to become promptly aware of factors relevant to the value of the Investee companies and the investments. The example of the monitoring are as follow:
    • News and research analysis related to the Investee Companies and information disclosures by Investee Companies.
    • Effective engagement with the Board of Directors and the Executives of the Investee Companies.
    • Attending and exercising voting rights at the Investee Companies’ Annual General Meeting and Extraordinary General Meeting

Principal 4: Apply Enhanced Monitoring of and Engagement with the Investee Companies if Monitoring pursuant to Principle 3 is Considered Insufficient.

Early intervention by Institutional Investors should assist in preserving and restoring the value of investment in the relevant Investee Companies. Events that warrant enhanced monitoring by Institutional Investors include investment value concerns resulting from:

  • Corporate strategies, business performance, and risk management.
  • The Investee Company’s implementation of corporate governance principles.
  • The Investee Company’s approach to social responsibilities and environmental governance principles.

For the further action, company will consider the appropriate action according to the severity of each incident that might arise for an example

  • Formally notifying the Board of Directors of the Institutional Investors’ concerns.
  • Engaging with the Chairman of the Board of Directors or other (independent) directors.
  • Attend the Annual General Meeting or Extraordinary General Meeting and subsequently exercising such voting rights at the relevant meetings.

Principal 5: Have a Clear Policy on Exercising Voting Rights and Disclosure of Voting Results.

Company will carefully exercise their voting rights in each Investee Company. Voting decisions should be made after careful consideration of all relevant information according the Company Proxy Voting Policy.

Principal 6: Act Collectively with Other Investors and Stakeholders as Appropriate

Collaboration with other investors and stakeholders may be the most effective way to resolve concern about business or ESG performance identified by the Institutional Investors that have not been resolved through the Institutional Investor’s engagement with Investee Companies. Company will provide a reasonable coordination with other institutional investors.

Principal 7: Regularly Disclose the Investment Governance Policy and Compliance with the Policy

Company will regularly review and disclose the Investment Governance Policy in the company website and the annual financial statement of the company.


Product Governance Policy & Fair Dealing Principle

Objectives

CIMB-Principal Asset Management Company Limited (“Company”) has the objective to launch and offer its product of the Mutual Fund (“Fund”) by taking into account the demand and benefit of the investors in accordance with the Product Governance and Fair Dealing Principle. Further, the Company intends to cause its working system in connection with the launch and offering of the Fund’s product to be appropriate, adequate and efficient. Therefore, the Board of Directors of CIMB-Principal Asset Management Company Limited (“Board of Directors”) has approved to impose the working procedure in connection with the Product Governance including the Company’s strategic plan regarding the above-mentioned matter on 8 June 2017, in order to express the importance in operating business by taking into account the demand and benefit of the investors in accordance with the Product Governance and Fair Dealing Principle.

CIMB-Principal Asset Management Company Limited has imposed the policy, strategic plan, working system and the operating procedure regarding the launch and offering of the Fund’s product, as follows:

1. Organization Chart, Role of the Board of Directors and Duties of High Level Executives

The Company has imposed its management structure, working system including appropriate and adequate personnel in order that their operation will be efficient in accordance with the Product Governance Policy and Fair Dealing Principle and to achieve the objectives as follows:

1) The Company’s design and offering of product fulfill the investors’ need by taking into account their benefit in terms of product, providing of service as well as relevant risk;

2) The investment advisor really understands the Fund’s characteristics and risk;

3) The Fund has been offered to the target group of investors via appropriate channel;

4) The sellers and distributors understand the main characteristics of Fund and the Fund’s target group of investors;

5) The investors really understands the Fund’s main characteristics and risk before making decision on investment;

6) The Company continuously monitors the appropriateness of the Fund’s product and performing of duties of the distributors in offering the investment units.

In this regard, the Board of Directors has assigned the Product Committee where the Company’s CEO is the Chairman and the High Level Executives from various working units are the directors of the Product Committee. The Product Committee has the duties and responsibilities to take care of the launch and offering of the Fund in order that the product offering will be appropriate with the group of investors. The Product Committee must be able to monitor, check and evaluate the overview including business risk completely and further makes the report of such matter to the Board of Directors.

The Board of Directors and the High Level Executives have given importance and supported the business operation according to the Product Governance Principle as the core of organizational culture which will help the business to grow sustainably. Further, the Company will be confident on the quality of product launched and offered by the Fund and it will reduce the risk of mis-selling and mis-buying.

2.The Fund’s Product Development

 The Company has established the appropriate procedure of the Fund’s product development in order that the design and offering of the Company’s product will meet the investors’ need. Moreover, the Company also takes into account the investors’ benefit in terms of product and providing of service. The Company has prescribed the level of the Fund’s risk and complexity, accordingly, the Company will use such information to consider and prescribe the guideline in offering the investment units appropriately. In this connection, the Company has prescribed the target group of investors to whom the Company will launch and offer its investment units as well as the investors who will be considered and approved by the Company. In addition, the Company has prescribed the risk of the new offered fund, for instance, the category of investors, level of acceptable risk, financial status, form of yield, financial limit or condition, investors’ age, investment experience, etc.

 The Company has provided the Fund’s Product Testing prior to the offering of investment units under various scenarios (Scenario Analysis/Stress tests) which will help the Company to really understand the characteristics and risk of such fund before offering it. In this regard, the Company will be confident that the target group of investors will receive the Fund’s product which can fulfill their need appropriately;

 The Company has prescribed the appropriate selling channel of each product.

3.The Selection of Distributor of Investment Units Offering and Communication of Information relating to the Fund’s Product

 The Company has imposed the rule in considering and selecting the distributors and independent selling agents in investment units offering in order to ensure that the distributors will be able to perform their duty in investment units offering appropriately. In this regard, the Company has assigned its Retail Business Development Unit to consider and propose the matter to the Management Committee for consideration and approval;

 The Company has conducted the distributors due diligence in order to evaluate the readiness and qualifications of the distributors in order to ensure that the distributors will be able to perform their duty in investment units offering and rendering of service appropriately;

 Retail Business Development Unit has responsibility for the communication process and for giving knowledge to the sellers and distributors in order to ensure that the sellers or distributors will understand the characteristics and risk of the offered fund, as a result, the sellers or distributors will offer the fund to the target group of investors correctly;

 The Company has its method of communication with the investors where the Company is confident that the investors will have adequate information and they can understand the fund before making the decision on investment, for instance, the preparation of factsheet, prospectus, sale supporting document or any other relevant information in the form which the investors can easily understand, etc.

4.The Monitoring of Appropriateness of the Fund’s Product and Performing of Duties of the Distributors in Investment Units Offering

 The Company has conducted the review of the Fund’s product in order to ensure that the product is in line with the details of risk, yield, the target group of investors (Product Review);

 The Company has continuously monitored the situation, it has also analyzed the impact against the Fund and it also rectified the situation or took any action as appropriate;

 The Company has monitored performing of duties of the distributors in investment units offering in order to ensure that the product has been sold according to the need of the target group of investors and such investors understand the product before making the decision on investment;

 If there is any doubt or it is found that the distributors have inappropriate method of investment units offering or the channel of investment units offering to the target group of investors is inappropriate, the Company will search for the cause and to rectify or to take any action as appropriate;

 The Company has launched the channel to receive the complaint and it has established the procedure in resolving the complaint by monitoring the progress of the action for resolving the customers’ complaint including the analysis on problem, cause of such complaint.


iCODE

 

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