Bangkok, 23 February 2017 ? The SEC has launched the Investment Governance Code (I Code) as a guideline for responsible and sustainable investment management of institutional investors. The seven core principles take into account environmental, social and governance (ESG) factors in the business practices of investee companies, offering institutional investors a balanced focus apart from seeking maximum returns and managing investment risks. The I Code aims to build institutional investors? long-term credibility, and protect the best interest of asset owners and the capital market at large.

As public and private organizations worldwide are pressing more emphasis on promoting investment for sustainable development, institutional investors have more roles to play as far as the ESG factors and proper investment management are concerned. To account for these concerns, international organizations and leading countries have laid out their own I Code. Furthermore, I Code is now one of the criteria internationally used in assessing corporate governance standards.

In conjunction with the I Code launch, the SEC and eight other regulatory bodies and institutional investors have officially declared mutual collaboration for practical application of the I Code among institutional investors. The eight signatories are (1) the Office of Insurance Commission, (2) the Thai Social Security Office, (3) the Thai Government Pension Fund, (4) the Federation of Thai Capital Market Organizations, (5) the Association of Provident Fund, (6) the Thai General Insurance Association, (7) the Thai Life Assurance Association, and (8) the Securities and Exchange Commission. Additionally, many asset management companies and insurance companies have jointly announced their intent to apply the I Code to their business practices. Such inclusive cooperation is creating the synergy for investment governance culture in the capital market.

SEC Secretary-General Rapee Sucharitakul said: ?It takes more than strict regulations to develop a sound capital market and promote sustainable growth; businesses must turn corporate governance principles into practice (CG in Substance) and see for themselves the benefits of compliance. Market force is also a key factor especially upon institutional investors. Hence, the I Code could be a booster of such market force and a robust ecosystem for corporate governance practices and responsible business operation in the Thai capital market.?

Adopting the global trend of ethical and responsible investment management and protection of clients? interest, the I Code consists of seven principles, two of which have already been applied by most institutional investors, i.e., (1) managing conflicts of interest properly, and (2) disclosing voting policy and voting results. Five other core principles are (3) adopting a clear written investment governance policy, (4) making informed investment decisions and monitoring investee companies regularly, (5) escalating monitoring of and engagement with the investee companies in case of questionable corporate governance issues that could lead to a conflict of interest. (Normally, institutional investors may use several measures such as seeking clarification in writing, meeting with independent directors or the audit committee, or consulting with other institutional investors before exercising the voting right), (6) collaborating with other investors and stakeholders, and (7) disclosing investment governance policy and complying with such policy on a regular basis.

Institutional investors may adopt the I Code on a voluntary basis, and may adjust the principles in line with the business nature of each company as seen appropriate, or clarify the reasons for inability to comply with the I Code, or implement a substitute measure. The I Code principle application and results should be disclosed on institutional investors? websites and their annual report (if any). The I Code and the Signatory Form are available for download at www.cgthailand.org. The list of institutional investor signatories will be disclosed at www.sec.or.th.

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Notes:
1. Institutional investors include:
 (1) Asset managers under the SEC's supervision, e.g., asset management companies, private funds and provident funds;
 (2) Asset owners such as the Government Pension Fund, the Social Security Office and insurance companies;
 (3) Related service providers such as fund supervisor, custodian and investment consultant. Institutional investors should ensure that the third parties perform the assigned functions in accordance with the investment governance policy.

2. The I Code comprises seven principles as follows: 
Principle 1: Institutional investors should adopt a clear written investment governance policy suitable for their business nature, including measures and procedures for clear duty performance at all levels, from the board of directors (including the investment committee) to the management and staff of relevant business units; 
Principle 2: Institutional investors should prevent and manage conflicts of interest properly, and prioritize advancing the best interest of clients by identifying potential conflicts of interest in various areas such as the management structure, work system, control and risk management, and monitoring measures, control and review of compliance and work system;
Principle 3: Institutional investors should make informed investment decisions and engage in active ongoing monitoring of investee companies to ensure that they become promptly aware of factors relevant to the value of the investee companies, and capable of problem solving at an early stage. Sustainable growth of the investee companies should be taken into account as well;
Principle 4: Institutional investors should apply enhanced monitoring of and engagement with the investee companies if monitoring pursuant to Principle 3 is considered insufficient by, for example, seeking a written clarification or holding meetings with independent directors or the audit committee;  
Principle 5: Institutional investors should have a clear policy on exercising voting rights and disclosure of voting results to reaffirm transparency and strict duty performance for the clients? best interest; 
Principle 6: Institutional investors should act collectively and appropriately with other investors and stakeholders in case the investee companies ignore or fail to solve problems even after the monitoring has been escalated to stress the level of concerns identified by institutional investors; 
Principle 7: Institutional investors should regularly disclose the investment governance policy and compliance with the policy to ensure transparency, and by extension, protect and improve corporate reputations. Additionally, an effective record-keeping system should be maintained to ensure that the information disclosed to the clients and the public is accurate.