Guidelines on Good Corporate Governance. PT Semen Indonesia (Persero) Tbk.

Transcription

1 Guidelines on Good Corporate Governance PT Semen Indonesia (Persero) Tbk.

2 TABLE OF CONTENT CHAPTER I INTRODUCTION BACKGROUND PURPOSE AND OBJECTIVE SCOPE LEGAL BASIS AND DOCUMENT HIERARCHY Legal Basis of GCG Guidelines Preparation Document Hierarchy USABLE TERMS GCG PRINCIPLES CORPORATE VISION, MISSION AND CULTURE Vision of PT Semen Indonesia (Persero) Tbk Mission of PT Semen Indonesia (Persero) Tbk Culture of PT Semen Indonesia (Persero) Tbk CHAPTER 2 STRUCTURE OF CORPORATE GOVERNANCE CHAPTER 3 INTERNAL DOCUMENTS OF THE COMPANY COMPANY'S ARTICLES OF ASSOCIATION INTERNAL COMPANY REGULATIONS COMPANY ETHICAL GUIDELINE CHAPTER 4 BOARD OF COMMISSIONERS THE AUTHORITY OF BOARD OF COMMISSIONERS Authority and Rights of the Board of Commissioners APPOINTMENT AND DISMISSAL OF THE BOARD OF COMMISSIONERS Appointment Dismissal REQUIREMENTS OF THE MEMBERS OF THE BOARD OF COMMISSIONERS COMPOSITION OF THE BOARD OF COMMISSIONERS President Commissioner Independent Commissioner THE SUPPORTING ORGAN OF BOARD OF COMMISSIONERS Audit Committee Committee of Nomination and Remuneration Committee of Strategy, Risk Management and Investment Secretariat of the Board of Commissioners THE BOARD OF COMMISSIONERS MEETING TASKS AND RESPONSIBILITIES OF THE BOARD OF COMMISSIONERS Tasks of the Board of Commissioners Responsibilities of the Board of Commissioners ORIENTATION PROGRAM AND CAPABILITY IMPROVEMENT PROGRAM Orientation Program Capability Improvement Program EVALUATION OF PERFORMANCE AND REPORTING REMUNERATION CHAPTER 5 BOARD OF DIRECTORS TASKS, RESPONSIBILITIES AND AUTHORITIES Tasks and Responsibilities of the Board of Directors Authority of the Board of Directors... 41

3 5.2. COMPOSITION APPOINTMENT AND DISMISSAL Appointment Dismissal REQUIREMENTS OF THE MEMBERS OF THE BOARD OF DIRECTORS BOARD OF DIRECTORS MEETING ORIENTATION PROGRAM AND CAPABILITY IMPROVEMENT PROGRAM Orientation Program Capability Improvement Program PERFORMANCE EVALUATION REMUNERATION CHAPTER 6 COMPANY SECRETARY CHAPTER 7 SHAREHOLDERS SHAREHOLDER RIGHTS CONTROLLING SHAREHOLDER CORPORATE RESPONSIBILITY CHAPTER 8 GENERAL MEETING OF SHAREHOLDERS TYPES OF GENERAL MEETING OF SHAREHOLDERS Annual General Meeting of Shareholders Extraordinary General Meeting of Shareholders THE AUTHORITY OF THE GENERAL MEETING OF SHAREHOLDERS Authority related to the Structure of Company Organ, Board of Commissioners and the Board of Directors Authority related to the Control of the Company Operation Authority related to the capital and Company's Article of Association Authority to the Reorganization and Liquidation Authority to the Material Transaction of the Company Approval to the use of Net Profit including the determination of reserve and dividend for the shareholders THE ORGANIZATION OF THE GENERAL MEETING OF SHAREHOLDERS Preparation of the General Meeting of Shareholders The organization of General Meeting of Shareholders CHAPTER 9 MATERIAL TRANSCATION OF THE COMPANY MATERIAL TRANSACTION Material transaction of the Company includes all the followings: Stipulating the Transaction Value Approval from the General Meeting of Shareholders Disclosure of Information AFFILIATED TRANSACTION Disclosure TRANSACTION WHICH POSES THE CONFLICT OF INTEREST CHPTER 10 DISCLOSURE OF INFORMATION PRINCIPLES OF DISCLOSURE OF INFORMATION POINTS IN THE DISCLOSURE OF INFORMATION VOLUNTARY DISCLOSURE Company Website CHAPTER 11 PROCEDURE OF CONTROL AND AUDIT... 73

4 11.1 PUBLIC ACCOUNTANT (EXTERNAL AUDITOR) INTERNAL CONTROL FUNCTION Internal Control Principles Internal Auditor CHAPTER 12 RELATIONSHIP OF THE COMPANY AND THE STAKEHODLERS CHAPTER 13 MEASUREMENT OF GCG IMPLEMENTATION CHAPTER 14 CLOSING... 78

5 CHAPTER I INTRODUCTION 1.1. Background PT Semen Indonesia (Persero) Tbk. ( The Company ) is committed to always implement healthy and ethical business practices in running the business and business activities, and to implement Good Corporate Governance ( GCG ) consistently based on the high business ethics standards. Implementation of GGC for the Company is not only viewed as part of the fulfillment or compliance to regulation, but also as the necessity in improving the Company performance into well-governed company. The Company views the importance of preparing GCG Guidelines which is implemented consistently in all lines and aspects of business management of the Company as its basis of operation. Therefore, the values of the stakeholders can be empowered and improved optimally and results in a mutually beneficial relationship. The Company has a culture which contains a philosophy of "Achiever", "Competitive", and "Accountable" as the basis of company management to keep improving the quality, price, best services, and company values which are the moral basis in achieving the vision and mission of the Company. To achieve the vision and mission, the Company prepares GCG Guidelines which are derived from the Company Culture. GCG is a basis to ensure that each Company policy conforms to the GCG Principles, while the implementation of GCG will be included in the Company Policy, Board Manual, Guidelines on Company Ethics, and other guidelines related to the implementation of GCG. 1.2 Purpose and Objective The purpose of GCG Guidelines preparation, among others, is as follows: 1. Optimizing Company values for the Shareholders by still considering the Stakeholders interests and encouraging the creation of business continuity based on the principles of transparency, accountability, responsibility, independence, and fairness and equality; 2. Encouraging that the Company Organ, which is RUPS (General Meeting of Shareholders), Board of Commissioners, and Board of Directors, in making decision C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 1

6 and taking action always starts from high morale and compliance to the Articles of Association and applicable rules and legislation; 3. Encouraging more professional, transparent and efficient Company management, and empowering the function and improving the independence of Company Organ; 4. Encouraging and supporting the development, management of Company resources and management of Company business risks by implementing the principles of prudent, accountability and responsibility in line with the principles of GCG; 5. Encouraging the increasing awareness and corporate social responsibility to the community and preservation of environment around the company; 6. Providing the guidelines for all Company individuals to implement the Company management professionally, transparently, and efficiently and to empower the function and improve the independence based on the moral values and compliance to the rules and legislation and awareness to the corporate social responsibility to the Stakeholders and environment. 7. Improving the company competitiveness both nationally and internationally to gain market trust in order to encourage the flow of investment and continuous national economic development. 1.3 Scope GCG Guidelines is prepared as the guidelines and to provide the direction in the Company management for: 1. Shareholders, Board of Commissioners, and Board of Directors 2. The supporting organ of Board of Commissioners 3. Company Shareholders 1.4 Legal Basis and Document Hierarchy Legal Basis of GCG Guidelines Preparation 1. Law No. 19 Year 2003 on State Owned Enterprises; 2. Law No. 40 Year 2007 on Limited Company Liabilities; C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 2

7 3. Regulation of Minister of State Owned Enterprises Number Per- 01/MBU/2011 on Good Corporate Governance of the State Owned Enterprises, as amended by the Regulation of Minister of State Owned Enterprises Number PER-09/MBU/2012 on the Amendment of the Regulation of Minister of State Owned Enterprises Number Per- 01/MBU/2011 on Good Corporate Governance of the State Owned Enterprises. 4. Regulation of Minister of State Owned Enterprises Number Per- 12/MBU/2012 on Supporting Organ of Board of Commissioners/Board of Supervisor of the State Owned Enterprises. 5. Regulation of Minister of State Owned Enterprises No. PER- 02/MBU/02/2015 on Requirements and Procedure of Appointment and Dismissal of the Members of Board of Commissioners and Board of Supervisor of State Owned Enterprises. 6. Regulation of Minister of State Owned Enterprises No. PER- 03/MBU/02/2015 on Requirements and Procedure of Appointment and Dismissal of the Members of Board of Directors of State Owned Enterprises. 7. Decree of the Minister of State Owned Enterprises Number Kep- 09/MBU/2005 on the Fit and Proper Test of the Candidate Members of the Board of Director of State Owned Enterprises. 8. Decree of Secretary of Ministry of State Owned Enterprises No. SK- 16/S.MBU/2012 on the Indicators/Parameters of and Evaluation to the Implementation of Good Corporate Governance on the State Owned Enterprises. 9. Decision of the Chairman of the Capital Market Supervisory Agency Number: Kep- 412/BL/2009 on the Affiliates Transaction and Conflict of Interest of Certain Transactions. 10. Decision of the Chairman of the Capital Market and Financial Institution Supervisory Agency Number: Kep-431/Bl/2012 on the Submission of the Annual Report of Issuers or Public Company. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 3

8 11. Decision of the Chairman of the Capital Market and Financial Institution Supervisory Agency Number: Kep-431/Bl/2012 on the Presentation and Disclosure of Financial Statement of Issuers or Public Company. 12. Regulation of Financial Service Authority No. 32/POJK.04/2014 on the Plan and Implementation of Open General Meeting of Shareholders of Public Limited Company. 13. Regulation of the Financial Service Authority No. 33/POJK.04/2014 on the Board of Directors and Board of Commissioners of the Issuers or Public Company. 14. Regulation of the Financial Service Authority No. 34/POJK.04/2014 on the Committee of Nomination and Remuneration of Issuers or Public Company. 15. Regulation of the Financial Service Authority No. 35/POJK.04/2014 on the Secretary of Issuers Company or Public Company. 16. Regulation of the Financial Service Authority No. 8/POJK.04/2015 on the Website of Issuers or Public Company. 17. Regulation of the Financial Service Authority No. 21/POJK.04/2015 on the Implementation of Corporate Governance of the Public Limited Company. 18. Regulation of the Financial Service Authority No. 31/POJK.04/2015 on the Transparency of Information or Material Facts by Issuers or Public Company. 19. Regulation of the Financial Service Authority No. 55/POJK.04/2015 on the Establishment and Working Guidelines of Audit Committee. 20. Regulation of the Financial Service Authority No. 56/POJK.04/2015 on the Establishment and Guidelines on the Preparation of Internal Audit Unit Charter. 21. Circular of the Financial Service Authority No. 32/SEOJK.04/2015 on the Guidelines of Corporate Governance of the Public Limited Company. 22. The Indonesian Corporate Governance Manual, Financial Services Authority (OJK), C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 4

9 23. Roadmap on Good Corporate Governance of Indonesian Companies, Financial Service Authority (OJK), Deed of Public Notary Leolin Jayanti SH, Number 70, dated April 22, 2015 on the Company Articles of Association Document Hierarchy Undang-Undang Peraturan Menteri Keputusan Menteri Peraturan Bapepam/OJK Anggaran Dasar Perusahaan Blueprint Pedoman GCG Board Manual Pedoman Etika Whistleblowing System Document Hierarchy of GCG of PT semen Indonesia (Persero) Tbk. 1.5 Usable Terms a. Subsidiaries are the Limited Company of which more than 50% shares owned by the Company and/or Limited Companies controlled by the Company. b. Assets are all fixed assets both movables and immovables owned by the Company. c. External Auditor is the Office of Public Accountant appointed to conduct audit to the Financial Statement to give independent and objective opinion regarding the fairness, principles-obedience, and conformance of the Company Financial Statement to the Indonesian Financial Accounting Standard and applicable rules and legislation. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 5

10 d. Conflict of Interest is a situation where Company Individuals, due to its position and authority in the Company, have different economy interest to the Company which directly and indirectly influences the implementation of tasks assigned by the Company. e. Specific List is a list containing the record of shares ownership of the Members of the Board of Directors, Board of Commissioners and their family in the Company and/or other company including the date of the shares were acquired. f. Board of Commissioners is a Company Organ which is charge of implementing the supervision to the policy of management, implementation of management in general, and giving advice to the Board of Directors. Board of Commissioners consists of all members of Board of Commissioners as a unit of Board. g. Board of Directors is a Company Organ which is authorized and fully responsible to the management of the Company for the interest and goal of the Company and is a representative of the Company, both in and outside the court, according to the stipulations in the Articles of Association. Board of Directors consists of all Directors as a unit of Board. h. Good Corporate Governance (GCG) is principles which underlies the process and mechanism of company management based on the rules and legislation and business ethics. 1 i. Individuals of the Company are the Board of Commissioners, Supporting Organs of the Board of Commissioners, Board of Directors and Employees of the Company and its Subsidiaries. j. Independent Commissioner is a member of Board of Commissioners not affiliated with the Board of Directors, other Members of Board of Commissioners, and controlling Shareholder, and free from any business 1 Article 1 of the Regulation of Minister of Stated Owned Enterprises No. Per-01/MBU/2011 on the Implementation of Good Corporate Governance (GCG) on Stated Owned Enterprises (BUMN). C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 6

11 relation and other relation which can influence its capability to act independently or to act solely for the sake of the company. k. Working Partner is a company which is the Company's partner in any activities such as, but not limited to, Joint Operation Contract, Joint Venture and other working partners. l. Company Organ is the General Meeting of Shareholders (RUPS), Board of Commissioners, and Board of Directors. m. Employee is the employee which fulfills the requirements, appointed as the permanent Employee by Company decision, which has the rights and obligations according to the applicable provision in the Company. n. Company is PT Semen Indonesia (Persero) Tbk. o. General Meeting of Shareholders (RUPS) is an Organ of the Company having the authority not given by the Board of Commissioners and Board of Directors as limited by the Laws on Limited Company Liabilities and/or Company's Article of Association. p. Remuneration is salary, allowance, and other facilities given b the Company and received by the Company Individuals. q. Company Work Plan and Budget (RKAP) is a annual description of Long- Term Plan (RJP) of the Company. r. Company Long-Term Plan (RJPP) is a strategic plan which covers the formulation of the purposes and objectives to be achieved by the Company within the period of 5 (five) years. s. Semen Indonesia Group (SIG) is PT Semen Indonesia (Persero) Tbk. and is Subsidiaries. t. Stakeholders are any parties having interest to the Company and any parties directly affected by the strategic decision of the Company operation. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 7

12 1.6 GCG Principles 2 Implementation of GCG in the Company environment is based on the principles of: 1. Transparency, is the openness in implementing the decision making process and openness in the disclosure of information which is relevant to the Company. 2. Accountability, is a distinctness of function, implementation and accountability of Organ so that the company management is implemented effectively. 3. Responsibility, is a conformance in the company management to the rules and regulation and principles of healthy corporate. 4. Independence, is a condition where the company is managed professionally without conflict of interest and influence/pressure from any parties which does not conform to the rules and legislation and principles of healthy corporate. 5. Fairness, is a justice and equality in fulfilling the rights of stakeholders which resulted from the agreement and rules and legislations. 1.7 Corporate Vision, Mission and Culture Vision of PT Semen Indonesia (Persero) Tbk. To be an international cement Company famous in Southeast Asia Mission of PT Semen Indonesia (Persero) Tbk. To produce, trade cement and its derivative products with the orientation of consumer satisfaction and using environmental friendly technology. To realize the international standard management which upholds high business ethics and spirit of togetherness and innovative. 2 Article 3 of the Regulation of Minister of Stated Owned Enterprises No. Per-01/MBU/2011 on the Implementation of Good Corporate Governance (GCG) on Stated Owned Enterprises (BUMN). C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 8

13 To improve the competitive advantage both domestic and internationally. To empower and synergize resources to continuously improve addedvalues. To contribute in the improvement of stakeholders Culture of PT Semen Indonesia (Persero) Tbk. The Corporate cultures are prepared in an acronym of "CHAMPS" which contains the following values: - Compete with synergized and clear vision - Having spirit of Continuous Learning - Act with high accountability - Meet Customer Expectation - Perform ethically with high integrity - Strengthening Teamwork C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 9

14 CHAPTER 2 STRUCTURE OF CORPORATE GOVERNANCE Company is a business entity of Limited Company Liabilities (PT) of which the majority is owned by the government of Indonesia via the ministry of State Owned Enterprises (BUMN), therefore, in conducting its activities, the Company shall comply and be subject to the laws, rules and policies as defined by the Shareholders (Ministry of State Owned Enterprises). Related to its position as the public limited company, of which the capital is also derived from the community, the Company shall also comply and be subject to Rules and Policies issued by Financial Service Authority ( OJK ). Referring to the above condition, the structure of Corporate governance is prepared by referring to Law No. 19 Year 2003 on State Owned Enterprises, Law No. 40 Year 2007 on Limited Company Liabilities, and provision/regulation of OJK. Structure of corporate governance of the Company is as follows: 1. Company Organ consists of the General Meeting of Shareholders (RUPS), Board of Commissioners, and Board of Directors. 2. Internal auditor 3. External Auditor 4. Audit Committee 5. Company Secretary As the addition of the above governance structure, the company also establishes the board of committee such as: 1. Committee of Risk Management; 2. GCG Committee; 3. Committee of Nomination and Remuneration; 4. and other Committee. The Company shall have Board Manual as the infrastructure required to regulate the work procedure for the Board of Commissioners and Board of Directors and the supporting organ below. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 10

15 CHAPTER 3 INTERNAL DOCUMENTS OF THE COMPANY In conducting business activities, the Company always implements the GCG principles in line with the corporate vision, mission and values in order to achieve the purposes by means of improving Company performance. The continuous improvement of performance can be obtained by means of business integrity supported by the arrangement of all operational function of the company effectively and efficiently. Therefore, the Company must have internal documents, 3 such as: 3.1 Company's Articles of Association Company's Articles of Association and its mechanism and procedure of amendment including the implementation shall refer to the Law No. 19 Year 2003 on the State Owned Enterprises, Law No. 40 Year 2007 on Limited Company Liabilities, and regulations/provisions of OJK. 3.2 Internal Company Regulations Internal Company Regulations are the guidelines for the internal shareholders in implementing Company's Articles of Association. The form and content shall not in conflict with the content of Company's Articles of Association, and shall any conflict arise, then the regulation to prevail shall be the Company's Articles of Association. The form of Internal Company Regulations could be in form of: a) Regulation for Employees concerning Working Procedure. The Company, in regulating the working procedure of the employees may establish Collective Bargaining Agreement, of which the content shall at least refer to the Law No. 13 Year 2003 on Labor. The period of Collective Bargaining Agreement is 2 (two) years, and can be renewed for at most 1 (one) year based on written agreement between the Company and the Employee's Trade Union. The Company considers the Employees as the primary asset which plays important role in the company development. Therefore, human resources are managed optimally by the Company in order to ensure that the Company always has superior Employees in 3 The Indonesian Corporate Governance Manual (ICGM), Financial Services Authority (OJK), C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 11

16 its arsenal to be directed to achieve the Company purposes. In a planned manner, the Company conduct the fulfillment of Employees need to ensure the availability according to the needs and as a process of regeneration in order to maintain the sustainability of the Company business activities. Employee recruitment is conducted by transparent and objective selection process. The Company will not practice discrimination in the Employees recruitment process which differentiates the background of tribe, religion, gender and others. The Employees placement is conducted according to the employees competence and Company needs. Career development of the Employees is primary part of the development process in the company which is implemented consistently and continuously to give the greatest benefits to the Employees and Company. Promotion and rotation is conducted by considering the career development of the Employees and the Company needs. The Company guarantees that each Employee has the same opportunity for selection and appointment for any promotion as long as the respective employee meets the stipulated requirements. Whereas, demotion is conducted by considering the element of disciplinary measures and assertiveness in implementing the punishment by still promoting the principle of justice. The Company provides debriefing program to any Employees entering the retirement period at the Company expense. b) Policy on performance assessment and remuneration system. The Company stipulates the performance assessment system which is used to evaluate and analyze as well as to be used as the basis of reward and punishment to the performance achievement. Company stipulates the performance targets based on the realistic and accurate assumption and analysis which gives motivation to achieve them. Performance assessment is conducted fairly, transparently and independently using the key performance indicator stipulated by considering the relevant, measureable, comparable, comprehensive and reasonable aspects. Performance indicator for the Board of Directors is stipulated together by the Shareholders, Board of Directors, and Board of Commissioners and is included in the Management Contract. Board of Commissioners evaluates the performance of C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 12

17 the Board of Directors based on the performance indicators and stipulated targets to be reported to the Shareholders. Whereas, the performance assessment to the Board of Commissioners is conducted by evaluation to the work plan achievement stipulated by self-assessment using criteria already approved with the Board of Commissioners. Performance assessment to the Workers is conducted based on the work result and Employees competence. The result of the performance assessment is used as the basis of consideration for remuneration, transfer, and employees development and other rewards and punishments. The Company has the remuneration system which is established fairly and transparently. The Company conducts periodic review to the remuneration system by considering the inflation factor, rules and legislation, especially in the field of labor and other important factors. c) The policy and regulation related to the management of finance and accounting. Company manages the company finance professionally and openly based on the prudent principle. Company guarantees that the accounting policy of the company reflects each financial transaction and asset movement and that all financial transactions are recorded accurately according to the applicable general accounting principles. The company financial management is conducted by considering the principles of accountability by separating the function and tasks distinctly between verification function, recording and reporting function, storage and deposit as well as authorization function. The Company also stipulates clear policy in terms of delegation of authority and authorization of related financial management so that the implementation of financial management can be done accountably. The Company financial statement is prepared according to the applicable general accounting standard. The Company does not tolerate manipulation in the preparation of financial statement. d) Policy related to implementation of Integrated Governance, Risk and Compliance ( Integrated GRC ). The company realizes that the corporate management practices in a professional and accountable manner by means of implementing integrated Good Corporate Governance (GCG), Enterprise Risk C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 13

18 Management (ERM), and Corporate Compliance System (CCS) should also be developed. By implementing integrated governance, risk and compliance ("Integrated GRC ), the management of assurance function is implemented effectively and efficiently and is supported with the monitoring and reporting system in all Semen Indonesia Group and its Subsidiaries using Integrated GRC Single Platform of Information and Communication Technology System. For this purpose, the Company stipulated the Implementation Guidelines for Integrated GRC as a commitment and Company policy to the professional and accountable corporate management and used as a basis in developing the system, structure and infrastructure of Integrated GRC which applies to the Company and its Subsidiaries. e) Policy related to the implementation of quality management. The Company is committed to implement the quality management system consistently and in integrated manner in all functions and levels by paying attention to the effectiveness of entire business process and company performance in order to improve the productiveness and competitiveness. The Company encourages the implementation of quality management system continuously, pro-actively, systematically and makes it as the work culture. The Company stipulates the policy that quality management system must be implemented by all workers in all level based on the principles of prioritizing Company interest, focus on the customers and Stakeholders satisfaction and environmental consideration. The Company will continue to seek for continuous improvement of quality. f) Policy on information technology governance. The Company stipulates the information technology governance which is in line with the strategy and purposes of the Company by considering the capability of the Company resources. The implementation of information technology governance is conducted according to the Guidelines on ICT (Information & Communication Technology) Governance, which is prepared to ensure that data/information published by the Company is accurate, accessible, usable, easy reporting, reliable and safe. The C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 14

19 Company utilizes information system and technology to produce accurate, rapid and reliable information so that it creates optimal added values to the Company. To keep improving the effectiveness of the information technology governance, the Company prepares the blue print or master plan of information technology development and its stages by considering the needs, availability of resources and development of business environment condition. g) Policy on assets management. The Company implements assets management based on the principle of highest and best uses to each Company asset in a prudent manner. The Company views that the Company assets includes not only tangible assets but also intellectual property. The Company protects intellectual property owned by the company and will not do any harm to its values. The Company respects the intellectual property rights of the Company or other individuals. The Company will not deliberately violate any patent rights, trade mark, or copyrights of other parties or to disclose any trade secrets of other parties. The Company will implement assets management appropriately so that all information relation to the asset can be known quickly and easily to facilitate the decision making process, especially in the utilization and optimization of assets. The Company will secure all Company assets physically. The Company will always maintain that each Company asset has the legal document to prove the legitimate ownership of the asset. h) Policy on the business expansion. The Company views that business expansion is a strategic function to be implemented in order to maintain the business sustainability and improve the growth and competitiveness of the company. In the business expansion activities, the Company relies on the principles: Prudent, that is the planning and implementation is based on the principle of prudent and implementation of risk management. Professional, that is the planning and implementation prioritizes the expertise, independence, and stipulations of applicable rules and legislations. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 15

20 Confidential, that is the information in the planning of Company expansion shall not be misused for any interest outside the Company. Every business expansion activity shall be done by the Company based on the consideration and analysis on the industrial and business aspect, legal and compliance aspect, risk management aspect, strategic and environment and social aspects. i) Policy on the relation with Subsidiaries. The Company always maintains the good relationship with the Subsidiaries in order to establish synergy and improve the Company image, according to the GCG principles and applicable stipulations of legislations. j) Policy on Work Safety, Health, and Environment ( WSHE ). The Company always promotes WSHE. The Company holds the principle that the prime management of work health and safety and the responsibility to the environment is very important to the success of the Company in the long run. The Company is committed to implement WSHE aspects in every activity consistently to minimize the potential of negative impact and seek for zero accident to the human and environment. The Company provides safe and healthy working environment by ensuring that the business location and its facilities, other means and infrastructures have met the applicable rules and legislations related to work safety and health. The Company seeks the preventive efforts in order to prevent work accident. Therefore, the Company will periodically evaluate all means including the resources, equipment and detection system to ensure the readiness in encountering any possibilities of work accident. k) Policy related to procurement of goods and services. In implementing the business activities, the Company always maintains the healthy competition by promoting principles of effective and efficient, open, fair, non-discriminative and accountable The Company implements the procurement of goods and services C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 16

21 based on the GCG principles by considering the principles of openness, cost efficiency and competitiveness according to the applicable rules and legislations. This is to ensure that the Company obtains goods and services with competitive price and best quality. The Company always comply the standard of ethics in implementing the procurement process of goods and services. The Company seeks to improve the capability of supplier/vendor to ensure that the supply chain runs effectively and efficiently, because it will affect the quality of the Company output. The documents of procurement of goods and services must be kept confidential to prevent any deviation in the procurement of goods and services. The Company always maintains process independence in the procurement of goods and services. The Company always evaluates and review the the policy on procurement according to the various applicable regulations. The commitment between the Company and the Providers of Goods and Services is materialized into the work contract by considering the principle of equality of mutually beneficial business relation. The Company is committed to always fully responsible to fulfill the obligation as stated in the work contract. l) Policy related to the implementation of internal control. The Company stipulates an effective internal control system to secure the investment and assets of the company which, among others, covers the control environment, review, risk management to the control activities, information and communication system and monitoring. The implementation of internal control system is conducted by Company individuals and Internal Audit unit of the Company which has the primary tasks of evaluating the control to operational activities, risk management and Corporate governance in order to ensure the effectiveness of the achievement of Company purposes. The supervisory function to the implementation of internal control system in the Company is taken by the Audit Committee by assessment to the implementation of activities and audit result submitted by the Internal Audit and External Auditor, and giving recommendation to the refinement of internal control system and ensuring that the satisfactory review procedure to any information published by the Company is already in place. Functionally, Internal C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 17

22 Audit and Audit Committee has distinct and standard relation as included in the Internal Audit Charter and Audit Committee Charter. The Company establishes a positive atmosphere and environment by upholding integrity, values and standard of ethics in order to maintain effectiveness of the internal control system. The Company conducts continuous supervision to the effectiveness of the internal control in relation with the change in internal and external condition. m) Policy on the implementation of corporate social responsibility. The Company realizes that the Company has the obligation and responsibility in terms of legal, social, moral and ethics to the interest of the surrounding community considering the success of the company cannot be separated from the harmonic, dynamic and mutually beneficial relationship with the surrounding community. Therefore, the Company stipulates the Corporate Social Responsibility program as the strategic effort in the vision and mission of the Company in order to sustain and improve the harmonic relation between the Company and the surrounding community to establish a conducive condition to support the business development and Company development. The implementation of corporate social responsibility is based on the principles of participative, accountability, partnership, community development and sustainable. In implementing the program related to the corporate social responsibility, the Company prepare a design as such that it will not trigger dependency of the community. n) Policy of communication with shareholders or investors. The purpose of the policy is to give better understanding to the shareholders/investors on the information published to the community, so that they can give inputs to the company, as regulate in the Policy of Corporate Communication. The policy is brought on line to the Company website, which aims to give the equal exposure to all shareholders/investor and to increase participation and role of the shareholders/investor in the implementation of the corporate communication program. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 18

23 o) Policy related to the fulfillment of creditor rights. The policy is used as the guidelines in obtaining loan from the creditor, which aims to maintain the fulfillment of rights and the trust of creditor to the Company, as regulated in the Guidelines on Company Ethics. p) Policy related to the Disclosure of Information. The Company initiates a policy on the disclosure of Company Information which is prepared to guarantee the security and confidentiality of information and ensure that the Company has disclosed and conveyed the information as the information and material facts which should be disclosed to public in fair and distributive manner to any interested parties without any privilege to any parties. q) Policy related to the prevention of insider trading. The Company seeks to minimize the insider trading by stipulating the standard of ethics to be adhered to by the Company Individuals, as regulated in the Guidelines of the Company Ethics. r) Policy to protect company secrets. In implementing the principles of information disclosure, the Company relies on the provision of confidentiality as stipulated in the Articles of Association, rules and legislations and Company Guidelines on Ethics, including, but not limited to: The Board of Directors and Board of Commissioners is responsible to keep confidential the Company information: Internal auditor, external auditor, members of committee under the Board of Commissioners and Employees shall keep the confidentiality of information obtained during the course of duty. s) Policy related to the conflict of interest. The Company forbids every Company Individual to be involved in any situation that results in a conflict of interest. The Company identifies the conflict of interest as the conflict of economic interest between individual and the company which affects the objectiveness and commercial consideration. The Company stipulates a policy that every decision C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 19

24 by each Company Individual is solely for the sake of the Company's best interest. If, for any condition that causes the conflict of interest, the Company shall require the respective individual to disclose the conflict and the Company will forbid the respective individual to participate in any decision making process. The Company shall require the Members of Board of Commissioners and Board of Directors to disclose the share ownership in the company and/or other company in the Special List as required by applicable rules and legislations. For the shareholders, the Company forbids the intervention in the Company operation which is the responsibility of the Board of Directors according to the provision in the Company's Articles of Association and applicable rules and legislations. The Company obliges the Members of Board of Comissioners and Board of Directors to comply with the rules stipulated by the company regarding the prohibition for the Members of Board of Commissioners and Board of Directors to take double positions according to the applicable rules and legislation to avoid the potential conflict of interest. t) Policy related to the practice of anti-corruption, gratification and fraud. The policy of anti-corruption, gratification and fraud is beneficial to ensure that the business activities of the Company are conducted in legal, prudent manner according to the GCG principles. The policy is also one of the preventive measures of the Company against the corruption practice, both as the giver to and recipient of other parties, as regulated in the Guidelines on Company Ethics, Guidelines on Gratification Control, and other related guidelines. u) Policy related to the implementation of Whistle blowing System. In order to improve the compliance of the Company individuals to the applicable Company regulations and standard of ethics, and to prevent any violations, the Company stipulates and implements the Guidelines on Whistle blowing system in the Company environment. The Whistle blowing system is a system to accomodate, process and follows up the reporting of information submitted by the reporter regarding any violation that occurs in the Company environment. The reporting C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 20

25 by the Whistle blowing system mechanism shall be responded and followed up, including the appropriate sanctioning and punishment to give deterrrant effect to the violators and those who have intention to do so. Effective Whistle blowing system will encourage participation of Employees and stakeholders outside Company for courage to act to prevent any violations b reporting them to the Company. This means that Whistle blowing system is expected to change the "silent" culture towards "honesty and openness" culture. 3.3 Company Ethical Guideline The implementation GCG shall be based on the high integrity, that it requires Guidelines on Ethics as reference for the Company Individuals. The Company Guidelines on Ethics is a set of commitment for the behavioral ethics in running the business of the Company for the Board of Commissioners, Board of Directors and Employees, which are prepared and used as the guidelines to influence, shape, regulate and implement behavior consistently based on the principles of ethical sensibility, ethical reasoning, and ethical conduct. CHAPTER 4 BOARD OF COMMISSIONERS Board of Commissioners is a Company Organ which is charge of implementing the supervision to the policy of management, implementation of management in general, both concerning the Company and Individuals, and giving advice to the Board of Directors. Code of conduct and guidelines on the tasks of Board of Commissioners are presented in the Board Manual to ensure that the tasks can be implemented objectively and effectively. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 21

26 4.1 The Authority of Board of Commissioners Authority and Rights of the Board of Commissioners In order to implement the tasks, the Board of Commissioners is authorized and has the right to: 1. Enter the building and premise or other place used or controlled by the Company and is entitled to inspect all books, letters and other evidence, examine and match the position of cash and others as well as the right to inquire any action that has been conducted by the Board of Directors. 2. Request and ask for explanation on any matters related to the management of the Company to the Board of Directors and the Board of Directors must provide the explanation. 3. Have access and obtain information of the Company in a timely manner and complete. 4. With majority of votes, at anytime has the right to dismiss temporarily one or more Members of the Board of Directors, if she/she (they) acts in violation to the Articles of Association and other regulations or to disregard the obligation or due to any urgent reason to the Company. Temporary dismissal is conducted according to the rules and legislations and Company's Article of Association. 5. Accept honorarium, incentive, insurance, gift, facilities and other allowance according to the applicable provisions of which the amount will be determined by General Meeting of Shareholders Appointment and Dismissal of the Board of Commissioners Appointment 5 1. The members of the Board of Commissioners are appointed by General Meeting of Shareholders in a tansparent process. 4 Chapter 4. The Board of Commissioners, The Indonesian Corporate Governance Manual (ICGM), Financial Services Authority (OJK), Law No. 40 Year 2007 on Labor, Article 111. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 22

27 2. The members of the Board of Commissioners are appointed for a certain period of time and can be reappointed as the Articles of Association regulates the procedure of appointment, replacement, and dismissal of the the members of the Board of Commissioners as well as the nomination of the members of the Board of Commissioners Dismissal The Members of the Board of Commissioners may be dismissed at any time necessary by General Meeting of Shareholders by giving reasonable explanation and the respective member of the Board of Commissioners has the right to defend him/herself. The dismissal procedure of the Members of the Boards of Commissioners shall refer to the following regulations: 1. Law No. 19 Year 2003 on State Owned Enterprises. 2. Law No. 40 Year 2007 on Limited Liability Company; 3. Regulation of Minister of State Owned Enterprises No. PER- 02/MBU/2015 on Requirements and Procedure of Appointment and Dismissal of the Members of Board of Commissioners and Board of Supervisor of State Owned Enterprises. 4. Regulation of Financial Service Authority No. 33/POJK.04/2014 on the Board of Directors and Board of Commissioners of the Issuers or Public Company Requirements of the Members of the Board of Commissioners Requirements for the appointment of the Members of the Board of Commissioners are described in the Company's Articles of Association or shall refer to the following regulations: 1. Law No. 19 Year 2003 on State Owned Enterprises. 2. Law No. 40 Year 2007 on Limited Liability Company; 3. Regulation of Minister of State Owned Enterprises No. PER- 02/MBU/2015 on Requirements and Procedure of Appointment and C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 23

28 Dismissal of the Members of Board of Commissioners and Board of Supervisor of State Owned Enterprises. 4. Regulation of Financial Service Authority No. 33/POJK.04/2014 on the Board of Directors and Board of Commissioners of the Issuers or Public Company Composition of the Board of Commissioners 6 Composition of the Board of Commissioners is adapted to the complexity of the Company that it allows effective, appropriate and rapid decision making and it may acts independently President Commissioner President Commissioner is appointed from 1 (one) of the members of Board of Commissioners. President Commissioner has the same position as other Commissioners. The task of President Commissioner of the Board of Commissioners, as primus inter pares, is to coordinate the Board of Commissioners Independent Commissioner Independent Commissioner is the member of Board of Commissioners from outside of the Company which, in addition to meeting the general and specific requirement as the member of the Board of Commissioners, shall meet the following requirements: a. He/she is not a person who is working or having authority and responsibility to plan, lead, control, or supervise the Company activities within the last 6 (six) months, except for reappointment as Independent Commissioner for the following period; b. He/she has no share both directly and indirectly on the Company; 6 Chapter 4.The Board of Commissioners, Section C.The Composition of the Board of Commissioners, The Indonesian Corporate Governance Manual (ICGM), Financial Service Authority (OJK), C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 24

29 c. He/she has no Affiliation with the Company, Member of the Board of Commissioners, Members of the Board of Directors, or majority shareholders of the Company; and d. He/she has no direct and indirect business relation with the Company business activities. The appointment of Independent Commissioner shall refer to the regulation from the Ministry of State Owned Enterprises and Regulation of Financial Service Authority (OJK) No. 33/POJK.04/2014 on the Board of Directors and Board of Commissioners of the Issuers or Public Company. The number of Independent Commissioners is at least 30% (thirty percent) of total number of the members of the Board of Commissioners. Independent Commissioner has a mission to promote the creation of more objective climate and create fairness between various interests, including company and stakeholders interest as the primary principle in the decision making by the Board of Commissioners. Independent Commissioner has the primary responsibility to encourage the implementation of principles of good corporate governance in the Company by means of empowering the Board of Commissioners in order to execute the task of supervision and advisory to the Board of Directors effectively and to provide added values to the company. 4.4 The Supporting Organ of Board of Commissioners 7 The Board of Commissioners may establish committees as the support to assist the Board of Commissioners in order to execute tasks and obligations, and to formulate the policy of the Board of Commissioners according to the scope of tasks of the respective committee. The stipulation on the establishment of committees is conducted by the Decree of the Board of Commissioners. Every committee is chaired by one Member of the Board of Commissioners appointed by the Board of the Commissioners. 7 Chapter 4.The Board of Commissioners, Section D.The Structure and Committees of The Board of Commissioners, Committees Established by a Board of Commissioners, The Indonesian Corporate Governance Manual (ICGM), Financial Service Authority (OJK), C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 25

30 4.4.1 Audit Committee The Audit Committee is a committee established by and is responsible to the Board of Commissioners in executing the function and tasks of the Board of Commissioners related to the financial information issued by the Company and the internal control system of the Company. The Audit Committee is in charge of assisting the Board of Commissioners in: i. Ensuring the review of financial information before released by the Company to the public and/or any authoritative parties such as financial statement, projection, and other reports related to the financial information of the Company; ii. Review on the compliance to the rules and legislation related to the Company activities; iii. The provision of independent opinion in case there is different opinion between management and Accountant on the provided service. iv. The provision of recommendation to the Board of Commissioners regarding the appointment of Accountant based on the independence, scope of tasks and fee; v. The review to the implementation of investigation by the internal auditor and supervision of the further implementation by the Board of Directors to the internal auditor findings; vi. The review to the complaint related to the accounting process and financial statement of the Company; vii. The review and provision of suggestion to the Board of Commissioners related to the potential conflict of interest of the Company; and viii. Protection of confidentiality of the Company document, data and information. The members of the Audit Committee are appointed and dismissed by the Board of Commissioners. The members of the Audit Committee is at least consisting of 3 people and is chaired by the Independent Commissioner. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 26

31 4.4.2 Committee of Nomination and Remuneration The Committee of Nomination and Remuneration is a committee established by and is responsible to the Board of Commissioners in assisting the implementation of tasks and function of the Board of Commissioners related to the Nomination and Remuneration to the members of the Board of Directors and the members of the Board of Commissioners. The Committee of Nomination and Remuneration is at least in charge and responsible of the followings 8 : a. On the function of Nomination: 1. Providing the recommendation to the Board of Commissioners regarding: a) Composition of the position of the members of the Board of Directors and/or the members of the Board of Commissioners; b) Policy and criteria required in the Nomination process; and c) Policy on performance evaluation of the members of the Board of Directors and/or the members of the Board of Commissioners. 2. Assisting the Board of Commissioners in the performance assessment of the members of the Board of Directors and/or the members of the Board of Commissioners based on the benchmark prepared for the evaluation materials; 3. Providing recommendation to the Board of Commissioners on the capacity development program of the of the Board of Directors and/or the members of the Board of Commissioners; and 4. Providing the proposal of nomination meeting the requirements as the members of the Board of Directors and/or the members of the 8 POJK No 34 Year C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 27

32 Board of Commissioners to the Board of Commissioners to be submitted to the General Meeting of Shareholders. b. On the function of Remuneration: 1. Providing the recommendation to the Board of Commissioners regarding: a) Structure of remuneration; b) Policy of remuneration; and c) Amount of remuneration. 2. Assisting the Board of Commissioners in the performance assessment to the appropriateness of the Remuneration received by each member of the Board of Directors and/or the members of the Board of Commissioners. Committee of Nomination and Remuneration is chaired by the Independent Commissioner. The Meeting of the Committee of Nomination and Remuneration is held periodically for at least once in 4 (four) months Committee of Strategy, Risk Management and Investment Committee of Strategy, Risk Management and Investment is in charge of assisting the Board of Commissioners in: a. Reviewing the implementation of strategy, risk management and investment. The task of the strategy section is: - Reviewing the policy and procedure of RKAP, RPJP, and/or policy on business strategy; - Reviewing the proposal of RKAP, RJPP, and business strategy; - Reviewing the implementation of RKAP, RJPP, and business strategy; The task of the risk management section is: - Obtaining understanding of the Company risk management which covers various risks faced by the Company, Company internal control, including the policy on methodology and infrastructure; - Evaluating the various models of risk assessment used by the Company and providing recommendation for further improvement; C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 28

33 - Monitoring the conformity of various policies and implementation of risk management including monitoring the implementation of tasks of any division responsible in the risk management and monitoring the implementation of risk management; - Monitoring various risk potential faced by the Company; - Evaluating various risk management policies upon request from the Board of Commissioners; - Monitoring and providing recommendation in relation with the plan for continuous education for the personnel in the risk management section; - Coordinating the implementation and supervision of the existence and level of effectiveness of each component in the Enterprise Risk Management (ERM) in the Company; - Measuring the effectiveness of each component of ERM stipulated by the Company. The task of the investment section is: - Reviewing the policy and procedure of Company investment; - Reviewing the proposal of investment or capex proposed by the Board of Directors according to the authority of the Board of Commissioners; - Monitoring the implementation of investment/capex approved by the Board of Commissioners in a sampling method. b. Implementing specif tasks given by the commissioner t review certain issues; c. Preparing the plan and budget for the committee to be submitted to the Board of Commissioners. 9 Composition of the members of Committee of Strategy, Risk Management and Investment consists of one or more Members of the Board of Commissioners and/or independent outside parties having the expertise and experience in the field of strategy, risk Management and investment and understanding the related rules and legislations. Committee of Strategy, Risk Management and Investment must execute the tasks objectively and independently. Organization, tasks and responsibility and governance of the Committee of Strategy, Risk Management and 9 Charter of the Committee of Strategy, Risk Management and Investment of Semen Gresik Year C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 29

34 Investment is further regulated in the Charter of Committee of Strategy, Risk Management and Investment Secretariat of the Board of Commissioners Secretariat of the Board of Commissioners is established by and responsible to the Board of Commissioners to assist the the Board of Commissioners with the primary function to assist the Board of Commissioners in executing the tasks and functions. General policies related to the implementation of function of the Secretariat of the Board of Commissioners are as follows: a. The Secretariat of the Board of Commissioners is led by a Secretary of the Board of Commissioners from outside of the Company, assisted by a staff of Secretariat of the Board of Commissioners. 10 b. Primary Function of the Secretary of the Board of Commissioners and the staff of the Board of Commissioners is to organize the administrative and secretarial tasks related to all activities of the Board of Commissioners, including preparing the minutes of Commissioners Meeting. c. Secretary of the Board of Commissioners and staff of the Secretariat of the Board of Commissioners is appointed and dismissed by the Board of Commissioners. 4.5 The Board of Commissioners Meeting 11 The Board of Commissioners Meeting shall be organized at least once in a month 12 and if considered necessary by the President Commissioner or upon the proposition from 1/3 (one third) of total members of the Board of Commissioners or upon the written request of the Board of Directors Meeting. The Board of Commissioners shall organize a meeting 10 Article 3 Sub article (1) of the Regulation of the Minister of State Owned Enterprises Number Per- 12/MBU/2012 on the Supporting Organ of the Board of Commissioners/Supervisory Board of State Owned Enterprises. 11 Chapter 3. The Internal Corporate Documents, Section C. Company Codes of Corporate Governance, The Indonesian Corporate Governance Manual (ICGM), Financial Services Authority (OJK), Article 14 Sub article (1) Regulation of Minister of State Owned Enterprises No. Per-01/MBU/2011 on the Implementation of Good Corporate Governance to the State Owned Enterprises. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 30

35 of with the Board of Directors periodically for at least once in 4 (four) months. 13 Several matters to be the guidelines in the implementation of the Board of Commissioners Meeting are as follows: a. The Calling of the Board of Commissioners Meeting is delivered in written by the President Commissioner or by a Member of the Board of Commissioners appointed by the President Commissioner at least 3 (three) days before the meeting is held. The written calling of the meeting shall include agenda, date, time and place of the meeting. b. The Board of Commissioners Meeting can be held if attended by majority of all Members of the Board of Commissioners. 14 c. A Member of the Board of Commissioners can only represent one other Member of the Board of Commissioners in the Board of Commissioners Meeting based on written power of attorney. d. Every presenting Member of Board of Commissioners has the right of 1 (one) vote and additional 1 (one) vote for other Member of the Board of Commissioners he/she represents. e. Anything discussed and decided in the the Board of Commissioners Meeting must be included in the Minutes of Meeting. Minutes of Meeting is signed by the Chairman of the Meeting and one of the presenting Members of the Board of Commissioners. If the minute of meeting is made by a Notary, then the signature is not required. f. The Board of Commissioners may also make legal decisions without arranging the Board of Commissioners Meeting, provided that all Members of the Board of Commissioners has been notified in written and all the Members of the Board of Directors give a written approval on the proposal by signing the approval (circular decision). The decision taken in this manner has the same power with legitimate decisions taken with the Board of Commissioners Meeting POJK No 33 Year PJOK No. 33 Year 2014 Article Article 16 Sub article (15) of the Articles of Association of PT Semen Indonesia (Persero) Tbk. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 31

36 4.6 Tasks and Responsibilities of the Board of Commissioners Tasks of the Board of Commissioners Mechanism of the implementation of tasks and responsibilities of the Board of Commissioners is regulated in the Board Manual, however, in executing the supervisory and advisory task, the the Board of Commissioners follows the following principles: 1. Supervision and advising is given for the Company interest and according to the purpose and objectives of the Company. 2. Board of Commissioners is in charge of implementing the supervision and is responsible for the supervision to the policy of management, implementation of management in general, both concerning the Company and Company business, and giving advice to the Board of Directors Executing the tasks as regulated in the Company's Articles of Association and the decision of the General Meeting of Shareholders. 4. Executing the tasks based on the GCG principles, by prioritizing the Company interest above the personal interest (The Duty of Loyalty), and therefore the the Board of Commissioners is forbidden to: Participate in the competitor's company; Be in part in the Company transaction without previously disclosing the transaction and obtaining the approval from the the Board of Commissioners or General Meeting of Shareholders; Using the property and facilities of the Company for the personal needs; Disclosing confidential/non-public information; Using Company information or business opportunities for the personal advantages. 16 POJK No 33 Year C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 32

37 5. The decision made by the Board of Commissioners is collegial (assembly). 6. The supervision by the Board of Commissioners is not only by receiving the information from the Board of Directors and/or General Meeting of Shareholders but also by taking any other actions based on information from other sources. 7. Supervision by the Board of Commissioners covers all business and corporate aspects of the Company and not only to any actions by the Board of Directors that require the approval from the Board of Commissioners based on the provision of the Company's Articles of Association. 8. The Board of Commissioners may not participate in the decision making regarding the operational activities under the tasks and responsibilities of the Board of Directors In case any vacant of Board of Director or any situation as regulated in the Laws and Articles of Association, the Board of Commissioners may execute the function of the Board of Director temporarily with the approval from the General Meeting of Shareholders. 10. The execution of supervisory function of the the Board of Commissioners may also be assisted by the Committees of the the Board of Commissioners or other experts which give professional recommendation independently at the the Company's expense Responsibilities of the Board of Commissioners 1. The Board of Commissioners is a Company Organ which is responsible to the General Meeting of Shareholders. 2. Every Member of the Board of Commissioners is responsible to use the rights and implement the obligation in good faith, carefully and professionally (The Duty of Care). 17 Chapter 4. The Board of Commissioners, The Indonesian Corporate Governance Manual (ICGM), Financial Services Authority (OJK), C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 33

38 3. The Board of Commissioners has the tasks and responsibilities collectively to conduct supervision and give advice to the Board of Directors. 4. Every Member of the Board of Commissioners is also responsible personally to the loss suffered by the Company if the respective members are found guilty or failed to do the tasks. 5. The Member of the Board of Commissioners shall resign involved in any financial crime. Which is, the entitlement of convict status to the Member of the Board of Commissioners by the authorized institution. The financial crime includes, but not limited to, manipulation and various acts of embezzlement in the financial services as well as money laundering crime In executing the supervisory function, the Board of Commissioners shall submit the accountability report related to the supervision implementation to the Board of Directors in order to give the release and discharge (acuit et decharge) from the General Meeting of Shareholders. 4.7 Orientation Program and Capability Improvement Program Orientation Program Orientation Program must be conducted to the Members of the Board of Commissioners who is appointed for the first time and is conducted at the time of appointment of the Members of the Board of Commissioners so that the Members of the Board of Commissioners have the same understanding on the Company operation and business including the opportunity and challenges. Implementation of Orientation Program may includes the followings: a. Orientation Program can be in form of presentation, meeting or site visit to the Company facilities. Orientation Program may be in form of other programs adapted to the Company needs. 18 POJK No. 21 Year 2015 on the Implementation of Guidelines on Public Limited Company Governance. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 34

39 b. Secretary of the Company is responsible for the implementation of Orientation Program Capability Improvement Program It is a program that allows the Board of Commissioners to always updates the information on the latest progress of the industry and Company business and other knowledge that is related to the implementation of the tasks of the Board of Commissioners. The Company regularly organizes a continuous Learning Program for the Board of Commissioners with the agenda and materials according to the needs of the Board of Commissioners. 4.8 Evaluation of Performance and Reporting The Board of Commissioners shall be evaluated annually by the shareholders in the General Meeting of Shareholders. Th result of evaluation to the the Board of Commissioners may be used for: 1.1. The basis of remuneration and incentive Consideration for the shareholders to dismiss the Members of the Board of Commissioners at any time necessary if fails to execute the tasks properly The means of effective assessment to the performance of the Board of Commissioners and basis of release and discharge (acquit et de charge). 21 Performance evaluation of the the Board of Commissioners is conducted based on the principles 22 : a. Performance of the Board of Commissioners is evaluated by the shareholders in the General Meeting of Shareholder by referring to the Key Performance 19 Article 43 Sub article (2 )Regulation of Minister of Stated Owned Enterprises No. Per-01/MBU/2011 on the Implementation of Good Corporate Governance (GCG) on Stated Owned Enterprises (BUMN). 20 Regulation of the Minister of State Owned Enterprises No. Per-02/MBU/02/2015 on the Requirements and Procedures of Appointment and Dismissal of the Members of the Board of Commissioners and Supervisory Board of the State Owned Enterprises. 21 Chapter 4.The Board of Commissioners, Section G. Evaluation and Education of the Board of Commissioners, The Indonesian Corporate Governance Manual (ICGM), Financial Service Authority (OJK), Article 15 of the Regulation of Minister of Stated Owned Enterprises No. Per-01/MBU/2011 on the Implementation of Good Corporate Governance (GCG) on Stated Owned Enterprises (BUMN). C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 35

40 Indicators stipulated by the General Meeting of Shareholders based on the proposal of the Board of Commissioners. b. Key Performance Indicators are the success indicators of the execution of tasks and responsibilities on the supervision and advising by the Board of Commissioners according to the stipulation of rules and legislation and/or Company's Articles of Association. In relation with the reporting, the Board of Commissioners has the obligation to 23 : a. Report to the Company regarding the share ownership and/or ownership by the families to the Company and other Companies including any changes to the ownership. b. Submit the report on the supervisory tasks being executed for the last accounting year to the General Meeting of Shareholders. Performance Evaluation and training to the Board of Commissioners may be conducted internally or by any third parties to ensure the independence. 4.9 Remuneration 24 The Members of the Board of Commissioners are given honorarium including facilities and/or other allowances, and pension benefit in amount decided by the General Meeting of Shareholders. The details of remuneration policy for the commissioners are expressed in the annual financial statement of the Company. Details such as annual salary and bonus for the Board of Commissioners are also published in the annual financial statement. This is one of the points of discussion in the agenda of the Annual General Meeting of Shareholders. 23 Article 116 Law No. 40 Year 2007 on Limited Liability Company. 24 Chapter 4.The Board of Commissioners, Section H. The Remuneration of Commissioners, The Indonesian Corporate Governance Manual, Financial Service Authority (OJK), C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 36

41 CHAPTER 5 BOARD OF DIRECTORS Board of Directors is the Company Organ which is authorized and fully responsible to the management of the Company for the Company interest, according to the purposes and objectives and to represent the Company both inside and outside the court according to the Articles of Association Tasks, Responsibilities and Authorities The division of tasks and authorities of the Board of Directors is decided by the General Meeting of Shareholders. If the General Meeting of Shareholders decided the division of tasks and authorities of the Board of Directors, the division of tasks and authorities of each member of the Board of Directors is decided by the Board of Directors meeting Tasks and Responsibilities of the Board of Directors 1. To organize annual General Meeting of Shareholders and extraordinary General Meeting of Shareholders as regulated in the rules and legislations and Articles of Association. 2. The Board of Directors executes and is fully responsible for the company management for the company interest according to the purposes and objectives of the company as stipulated in the Articles of Association Prepares the list of shareholders, special list, minutes of General Meeting of Shareholders and minutes of Board of Directors meeting, Annual Report, financial documents and maintains all lists, minutes and financial documents of the Company according to the applicable rules and legislations. 4. Executes the tasks of company management of at least 5 (five) primary tasks of management, risk management, internal control, communication, and social responsibility as follows: a. Management 25 POJK No 33 Year C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 37

42 - Board of Directors must prepare vision, mission and values and Long Term Plan and Work Plan and Company Annual Budget to be discussed and approved by the Board of Commissioners. - Board of Directors may control resources owned by the Company effectively and efficiently. - Board of Directors must consider fair interest of the stakeholders. - Board of Directors may give the power of attorney to the supporting organ established to support the implementation of tasks or to any employees of the Company to implement certain tasks, however, the primary responsibilities are still on the Board of Directors. - Board of Directors must have code of conduct and work guidelines in form of Charter (Law on Limited Company Liabilities, Board Manual and Articles of Association) to ensure that the tasks are implemented objectively and effectively. The Charter is also used as one of the instruments to assess the performance. b. Risk Management - Board of Directors must prepare and implement the Risk Management System of the Company which covers all aspect of the Company activities. - Every strategic decision, including the introduction of new product and service, must be made carefully by considering the risk exposure, and ensuring the appropriate balance between the benefits and risks. - Board of Directors should establish work unit or function which is responsible in the implementation of Risk Management System to ensure the risk management to be executed well. c. Internal Control - Board of Directors must prepare and implement reliable internal control system of the Company in order to maintain the wealth and C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 38

43 performance of the Company and as the compliance to the rules and legislations. - Board of directors must establish unit or function of internal supervision which is responsible to the Managing Director and has functional relationship with the Board of Commissioners via Audit Committee. - Board of Directors must periodically submit the report on the implementation of internal supervision function to the Board of Commissioners. - Board of Directors must maintain and evaluate the quality of the internal supervision function in the Company. d. Communication - Board of Directors must ensure the flow of communication between the Company and the stakeholders by empowering the function of Company Secretary. - Board of Directors must establish a unit of Company Secretary which functions to ensure the flow of communication between the Company and the stakeholders and guarantee the availability of information accessible by the stakeholders according to the fair necessity of the stakeholders and to participate in the investor relation. e. Social Responsibility - The Board of Directors must ensure the fulfillment of Corporate social responsibility in order to maintain the Company's business continuity. - The Board of Directors must have clear and focused written plan in implementing the Corporate social responsibility. 5. Every Member of the Board of Directors must execute the tasks and responsibilities in a good faith, full responsibility, and prudent. 6. Every Member of the Board of Directors must take actions for the sake of Company interest, and therefore: C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 39

44 a. Except the Board of Directors, any other parties are forbidden to take part in or intervene to the Company management. b. The Board of Directors may make decision objectively, without any conflict of interest and free from any pressures from any parties. 7. Executing the tasks based on the GCG principles, by prioritizing the Company interest above the personal interest (The Duty of Loyalty), and therefore the the Board of Directors is forbidden to: a. Participate in the competitor's company; b. Using the property and facilities of the Company for the personal needs; c. Disclosing confidential/non-public information; d. Using Company information or business opportunities for the personal advantages. 8. Every Member of the Board of Directors may execute the tasks and make any decision according to the tasks and authorities, however all Members of the Board of Directors are responsible collectively. 9. The implementation of Company management which potentially affect the Company performance must first be communicated to the Board of Commissioners. 10. In case any conditions where the tasks and Company interest and personal interest are in conflict, the respective Board of Directors must disclose the conflict or potential conflict of interest to the Board of Commissioners and the General Meeting of Shareholders. 11. The Members of the Board of Directors having the conflict of interest have no authority to represent the Company and must be replaced by other Members of the Board of Directors having no conflict or potential conflict of interest. 12. If all Members the Board of Directors have conflict or potential conflict of interest, then the Company interest will be represented by the Board of Commissioners or any individual appointed by the Board of Commissioners. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 40

45 13. The Members of the Board of Directors shall resign involved in any financial crime. Which is, the entitlement of convict status to the Member of the Board of Directors by the authorized institution. The financial crime includes, but not limited to, manipulation and various acts of embezzlement in the financial services as well as money laundering crime Authority of the Board of Directors a. To represent the Company inside and outside the Court. However, the Board of Directors has no right to represent the Company 27, if: i) There is a casein the Court between the Company and the respective Member the Board of Directors; and ii) The respective Member of the Board of Directors has conflict of interest with the Company. b. To execute the Company management according to the appropriate policy, in line with the purposes and objectives as stated in the Articles of Association Composition 28 Composition of the Board of Directors is adapted to the complexity of the Company that it allows effective, appropriate and rapid decision making and it may acts independently. One Member of the Board of Directors is appointed as the Managing Director. Managing Director acts as the coordinator of the Board of Directors activities (primus inter pares). Composition Structure of the Board of Directors may refer to the Law No.40 Year 2007 on Limited Compay Liabilities and Regulation of Financial Service Authority No. 33/POJK.04/2014 on the Board of Directors and the Board of Commissioners of the Issuers or Public Company. 26 POJK No. 21 Year 2015 on the Implementation of Guidelines on Public Limited Company Governance. 27 POJK No. 33/POJK.04/2014 on the Board of Directors and Board of Commissioners of the Issuers or Public Company. 28 Chapter 5.The Board of Directors, Section B. The Composition of the Board of Directors, The Indonesian Corporate Governance Manual (ICGM), Financial Service Authority (OJK), C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 41

46 5.3 Appointment and Dismissal The Members of the Board of Directors are appointed and dismissed by the General Meeting of Shareholders Appointment The Members of the Board of Directors are appointed by the General Meeting of Shareholders for one period of at most 5 years or until the closing of annual General Meeting of Shareholders at the end of the respective period. The requirement and regulation for the appointment of nomniation of the Members of the Board of Directors may refer to the following regulations: 1. Law No. 19 Year 2003 on State Owned Enterprises. 2. Law No. 40 Year 2007 on Limited Liability Company; 3. Regulation of Minister of State Owned Enterprises No. PER- 03/MBU/02/2015 on Requirements and Procedure of Appointment and Dismissal of the Members of Board of Directors of State Owned Enterprises. 4. Regulation of the Financial Service Authority No. 33/POJK.04/2014 on the Board of Directors and Board of Commissioners of the Issuers or Public Company Dismissal Procedure of dismissal of the Members of the Board of Directors is regulated in the Copmany's Articles of Association which refers to the result of the General Meeting of the Shareholders by stating the reasonable explanation and the respective Member of the Board of Directors has been given opportunity to defend him/herself. The requirement and regulation for the dismissal of the Members of the Board of Directors may refer to the following regulations: 1. Law No. 19 Year 2003 on State Owned Enterprises. 2. Law No. 40 Year 2007 on Limited Liability Company; 3. Regulation of Minister of State Owned Enterprises No. PER- 03/MBU/02/2015 on Requirements and Procedure of Appointment and Dismissal of the Members of Board of Directors of State Owned Enterprises. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 42

47 4. Regulation of the Financial Service Authority No. 33/POJK.04/2014 on the Board of Directors and Board of Commissioners of the Issuers or Public Company. 5.4 Requirements of the Members of the Board of Directors Requirements of the Members of the Board of Directors may refer to: 1. Law No. 19 Year 2003 on State Owned Enterprises. 2. Law No. 40 Year 2007 on Limited Liability Company; 3. Regulation of Minister of State Owned Enterprises No. PER- 03/MBU/02/2015 on Requirements and Procedure of Appointment and Dismissal of the Members of Board of Directors of State Owned Enterprises. 4. Regulation of the Financial Service Authority No. 33/POJK.04/2014 on the Board of Directors and Board of Commissioners of the Issuers or Public Company. In general, Qualification for Managing Director and other Directors is as follows: 1. The Members of the Board of Directors shall have capability and integrity required to ensure the appropriate execution of the Company managerial function. 2. The Members of the Board of Directors are forbidden to use the Company for the personal interest, his/her family, business group and/or other parties. 3. The Members of the Board of Directors shall understand and comply to the Articles of Association and any rules and legislation related to the tasks. 4. The Members of the Board of Directors shall understand and implement the GCG Guidelines. 5.5 Board of Directors Meeting 29 The Board of Directors Meeting is organized at least once in a month and if necessary, upon the request from the Managing Director or the proposition from 1/3 (one third) of total Members of the Board of Directors or upon written request of the Board of 29 Chapter 3. The Internal Corporate Documents, Section C. Company Codes of Corporate Governance, The Indonesian Corporate Governance Manual (ICGM), Financial Services Authority (OJK), C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 43

48 Commissioners Meeting. The Board of Directors shall organize the Board of Directors Meeting with the Board of Commissioners periodically for at least once in 4 (four) months 30. The attendance list of the the Board of Directors must be disclosed in the company annual report. Several matters to be the guidelines in the implementation of the Board of Directors Meeting are as follows: a. The Calling of the Board of Directors Meeting is delivered in written by the Member of the Board of Directors appointed by the President Commissioner at least 1 (one) day before the meeting is held. The written calling of the meeting shall include agenda, date, time and place of the meeting. b. The Board of Directors Meeting can be held if attended by majority of all Members of the Board of Directors. c. A Member of the Board of Director can only represent one other Member of the Board of Director in the Board of Directors Meeting based on written power of attorney. d. Every presenting Member of the Board of Directors has the right of 1 (one) vote and additional 1 (one) vote for other members of Board of Directors he/she represents. e. Anything discussed and decided in the the Board of Directors Meeting must be included in the Minutes of Meeting. Minutes of Meeting is signed by the presenting Members of the Board of Directors, and is delivered to all Members of the Board of Directors. If the minute of meeting is made by a Notary, then the signature is not required. f. The Board of Directors may also make legal decisions without arranging the Board of Directors Meeting, provided that all Members of the Board of Directors give a written approval on the proposal by signing the approval (circular decision). The decision taken in this manner has the same power with legitimate decisions taken with the Meeting of Board of Directors. 30 POJK No. 33/POJK.04/2014 on the Board of Directors and Board of Commissioners of the Issuers or Public Company. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 44

49 5.6 Orientation Program and Capability Improvement Program Orientation Program Orientation Program must be conducted to the Members of the Board of Directors who is appointed for the first time and is conducted at the time of appointment of the Members of the Board of Directors to establish a solid team work. Implementation of the orientation program includes: a. Orientation Program can be in form of presentation, meeting, site visit to the Company and document review or other program considered appropriate to the Company where the program is implemented. b. Secretary of the Company is responsible to conduct Orientation Program. 31 c. Orientation program given to the Members of the Board of Directors may includes the followings: 1. Implementation of GCG principles by the Company. 2. Overview of the Company, in terms of purpose, nature, scope of activities, financial performance and operation, strategy, short term and long term business plan, competitive position, risks and other strategic issues. 3. Any description related to the authority to be delegated, internal and external audit, system and policy of the internal control, including Audit Committee. 4. Description on the tasks and responsibilities of the Board of Commissioners and Board of Directors and any forbidden matters Capability Improvement Program The Members of the Board of Directors may always follow the latest updates on the Company core business and always ready make anticipation for the continuity and 31 Article 43 Sub article (2 )Regulation of Minister of Stated Owned Enterprises No. Per-01/MBU/2011 on the Implementation of Good Corporate Governance (GCG) on Stated Owned Enterprises (BUMN). C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 45

50 progress of the Company. Provisions on the capability improvement program for the Board of Directors are as follows: a. Capability improvement program is implemented in order to improve the effectiveness of the implementation of the Board of Directors tasks. b. The plan for the capability improvement program must be included in the RKAP. c. Every Member of the Board of Directors participating in the capability improvement program such as seminar and/or training must then share the knowledge to other Members of the Board of Directors. 5.7 Performance Evaluation The performance of the Board of Directors and the Members of the Board of Directors will be evaluated every year by the shareholders in the General Meeting of Shareholders. The Board of Commissioners proposes the criteria of the performance evaluation of the Board of Directors which is then stipulated in the General Meeting of Shareholders. Performance evaluation of the Board of Directors and the Members of the Board of Directors may be used as: a. The basis of remuneration and incentive. b. The consideration for the shareholders to dismiss the Board of Directors and the Members of the Board of Directors at anytime if fails/is less satisfying in fulfilling the obligations as agreed in the management contract and fails to do the tasks properly 32. c. The means of effective assessment of the Board of Directors and basis of release and discharge (acquit et de charge). Performance assessment of the Board of Directors is conducted by the General Meeting of Shareholders by referring to the following provisions: 32 Regulation of the Minister of State Owned Enterprises No. Per-03/MBU/02/2015 on the Requirements and Procedures of Appointment and Dismissal of the Members of the Board of Directors of the State Owned Enterprises. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 46

51 a. Performance assessment of the Board of Directors is conducted by the General Meeting of Shareholders based on the indicators as provided in the KPI (Key Performance Indicators) included in the management contract. b. Performance assessment of the Board of Directors is conducted by the General Meeting of Shareholders by giving release and discharge (acquit et decharge) to the Board of Directors for the Company management done in the Annual General Meeting of Shareholders. 5.8 Remuneration 33 The remuneration policy for every Member of the Board of Directors is detailed in the Company annual financial statement. This is one of the points of discussion in the agenda of the Annual General Meeting of Shareholders. Committee of Nomination and Remuneration prepares the proposal to the Board of Commissioners for the remuneration policy or gives opinion on the proposal of the remuneration policy prepared by the Board of Commissioners. 33 Chapter 5. The Board of Directors, Section G. The Remuneration and Reimbursement of The Board of Directors, Remuneration Policy, The Indonesian Corporate Governance Manual, Financial Service Authority (OJK), C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 47

52 CHAPTER 6 COMPANY SECRETARY The Company appoints Company Secretary which acts as the liaison officer in order to facilitate the relationship among Company Organs, relationship between Company and the Stakeholders, and the fulfillment of applicable rules and legislation. Company Secretary is assigned to monitor the development of capital market regulation and ensure the availability of Company information to be accessible by public. Company secretary is any individual or any person in charge of a work unit which functions as the company secretary. Company Secretary is appointed and dismissed by the Managing Director based on the internal mechanism of the Company with the approval from the Board of Commissioners. Company Secretary is directly responsible to the Managing Director. The report of tasks implementation of the Company Secretary must also be submitted to the Board of Commissioners. The function of Company Secretary is at least as follows 34 : 1. Following the capital market updates especially applicable rules and legislations in the capital market. 2. Providing inputs to the Board of Directors and the Board of Commissioners to comply with the rules and legislations in the capital market. 3. Assisting the Board of Directors and the Board of Commissioners in implementing the company governance, which includes: a) Information disclosure to public, including the availability of information on the Company website; b) Submission of report to the Financial Services Authority in a timely manner; c) Organization and documentation of General Meeting of Shareholders; d) Organization and documentation of the Board of Directors and/or the Board of Commissioners Meeting; and e) Implementation of orientation program to of the Company for the Board of Directors and/or the Board of Commissioners. 34 POJK No. 35/POJK.04/2014 on the Company Secretary of the Issuers or Public Company. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 48

53 4. As the liaison officer between the Company and the Shareholders, Financial Service Authority, and other Stakeholders. 5. Ensuring that the Company complies with the regulation on the disclosure requirements in line with the implementation of GCG principles. 6. Providing information required by the Board of Directors and the Board of Commissioners periodically and/or at anytime required. 7. As the liaison officer both internal, between the Company Organs, and external such as relationship between capital market authority and Financial Service Authority To administrate and maintain the Company documents, including, but not limited to the List of Shareholders, Special List and Minutes of the Board of Directors Meeting, the Board of Commissioners Meeting, and General Meeting of Shareholders. Company Secretary must at least meet the following requirements 36 : 1. Capable of taking legal action. 2. Having knowledge and understanding in the field of legal, financial, and company governance. 3. Understanding the company business activities. 4. Capable of communicating appropriately. 5. Having domicile in Indonesia. The above requirements must be met by the Company Secretary during his/her tenure. 35 Chapter 2. The General Governance Structure of A Company, Section B. The Governance Structure of a Limited Liability Company, The Indonesian Corporate Governance Manual (ICGM), Financial Service Authority (OJK), POJK No. 35/POJK.04/2014 on the Company Secretary of the Issuers or Public Company. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 49

54 CHAPTER 7 SHAREHOLDERS Shareholders are the capital owner in the Company and therefore have the embedded rights to any securities and are protected by the applicable rules and legislations. 7.1 Shareholder Rights Every shareholder has the following rights 37 : a. The rights to attend, express opinion, and votes in the General Meeting of Shareholders based on the provision that one share has one vote. b. The rights to file a lawsuit to the Company to the District Court if disadvantaged from any unfair Company's action and without fair reason as a result of the decision of the General Meeting of Shareholders, Board of Directors and/or Board of Commissioners. c. The rights to ask the Company to buy the shares for a fair price if the respective shareholder disagree to the Company actions that disadvantages the shareholders, in form of: Changes to the Articles of Association; Transfer or the use as collateral of Company wealth which values more than 50% of the net wealth of the Company; or Merger, Consolidation, Take over, or Separation. d. The rights, in the General Meeting of Shareholders forum, to obtain explanation related to the Company from the Board of Directors and/or the Board of Commissioners, as long as related to the meeting agenda and do not in conflict with the Company interest. e. The rights to obtain the copy of materials to be discussed in the General Meeting of Shareholders at the Company office since the date of summoning for the General Meeting of Shareholders until the date of execution of the General Meeting of Shareholders. f. The rights to review the list of shareholders, the special list and the Minutes of the General Meeting of Shareholders and annual report and to obtain the copy 37 Law No. 40 Year2007 (point b, c, d, e, f, g, i, m) article 61, 62, 75, 82, 100, 72, 97 and 43). C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 50

55 of minutes of the General Meeting of Shareholders and copy of the annual report. g. The rights to receive the share of Company profit designated for the shareholders in form of divident proportionately to the number of owned shares. h. The rights of at least 1 shareholder which represent 1/10 (one tenth) of all shares with voting rights, to file a lawsuit to the District Court to the Member of the Board of Directors and/or the Board of Commissioners that, due to their mistakes or failure, has caused any damages to the Company. i. The rights of at least 1 shareholder which represent 1/10 (one tenth) of all shares with voting rights, to inspect the Company in order to obtain data or explanation in case any allegation that the Company or the Members of the Board of Directors or the Board of Commissioners have committed any acts against the law which cause any damage to the company or the shareholders or any third parties. j. The rights to give power of attorney with substitution rights to any individual or legal entity to represent him/her in the General Meeting of Shareholders. k. The rights to obtain information regarding the Company in a timely manner, structured, and well-ordered, except any matters considered confidential, so that the shareholders may make decision in relation with their investment in the Company based on accurate information. l. The rights to appoint and dismiss the Board of Directors and the Board of Commissioners m. The rights to receive offers for shares purchase proportionately to the number of owned shares if the Company issues new shares for the capital increase. 7.2 Controlling Shareholder Controlling shareholder is 1 (one) shareholder with majority (of more than 50%) of voting rights of all shares with voting rights. Controlling shareholder is responsible to: C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 51

56 a. Pay attention to the interest of the minority shareholders and other stakeholders according to the Articles of Association and the applicable rules and legislations. b. Disclose to any authorized parties, the information regarding the controlling shareholder until the ultimate shareholders in case there is any allegation of the violation to the provision in the Articles of Association and/or applicable rules and legislations, or in case being requested by any authorized parties as mandated by the applicable rules and legislations. c. Seek any effort that the accountability and the relationship between the companies under his/her control are done clearly. 7.3 Corporate Responsibility The Board of Directors and the Board of Commissioners is obliged to guarantee the fulfillment of rights and responsibility of every shareholder based on the principle of equality and fairness according to the Articles of Association and the applicable rules and legislations. In implementing the obligation, the Board of Directors and the Board of Commissioners always encourage that the implementation shall be based on the following provision: a. To protect the rights of shareholders according to the provision in the Articles of Association and applicable rules and legislations. b. To organize the General Meeting of Shareholders and list of shareholders orderly and regularly according to the Articles of Association and applicable rules and legislations. c. To provide information regarding the Company in a timely manner, correctly and regularly for all shareholders. d. To give clear explanation and accurate information regarding the organization of the General Meeting of Shareholders. e. To treat the majority and minority shareholders equally and fairly where the disclosure of information is given to all shareholders without differentiating the type and classification of owned shares except the Board of Directors has the appropriate accountable reason not to disclose the information. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 52

57 CHAPTER 8 GENERAL MEETING OF SHAREHOLDERS General Meeting of Shareholders ("RUPS") is the highest Organ of the Company having all authorities not given by the Board of Commissioners and Board of Directors as limited by the Laws on Limited Company Liabilities and/or Company's Article of Association 38. The General Meeting of Shareholders is a means for the shareholders in influencing and directing the Company. The General Meeting of Shareholders is also a forum where the Board of Commissioners and the Board of Directors report and account for the implementation of tasks and performance to the shareholders. 8.1 Types of General Meeting of Shareholders Annual General Meeting of Shareholders Annual General Meeting of Shareholders is organized every year, the latest of 6 (six) months after the closing of Company's accounting year. Agenda in the General Meeting of Shareholders includes the agenda of the Board of Directors for: a. The approval of the Annual Report regarding the condition and operation of the Company. b. Legalization of the Company's Financial Statement. c. The use of Company's net profit. d. Stipulation of the appointment of Public Accountant proposed by the Board of Commissioners to audit the Financial Statement of the current year. e. The release and discharge (acquit et decharge) of the Board of Directors and the Board of Commissioners regarding the management and supervision executed for the respective accounting year, as long as the actions has been reported in the annal report and annual calculation and conforms to the applicable provisions. f. Other matters requiring the approval from the General Meeting of Shareholders. 38 Article 75 Sub article (1) Law No. 40 Year 2007 on Limited Liability Company. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 53

58 8.1.2 Extraordinary General Meeting of Shareholders Extraordinary General Meeting of Shareholders is organized at anytime necessary for the sake of Company interest. There is no limit to the number of Extraordinary General Meeting of Shareholders and the Company may organizes it all year round. 8.2 The Authority of the General Meeting of Shareholders Authority related to the Structure of Company Organ, Board of Commissioners and the Board of Directors. a. To Appoint and Dismiss the Members of the Board of Commissioners and the Board of Directors. b. To stipulate the number and composition of the Members of the Board of Commissioners and the Board of Directors. c. To stipulate the division of tasks and authority of the management between the the Members of the Board of Directors. d. To stipulate the salary and remuneration of the Members of the Board of Commissioners and the Board of Directors Authority related to the Control of the Company Operation a. To approve the Annual Report including company financial statement b. To approve the report of supervision task from the Board of Commissioners. c. To approve Public Accountant to audit the financial statement of the current year Authority related to the capital and Company's Article of Association a. To approve the change of Articles of Association. b. To approve the addition and reduction of Company capital, including the authorized capital and issued capital and paid-up capital. c. To approve the repurchase of the Company shares. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 54

59 8.2.4 Authority to the Reorganization and Liquidation a. To approve merger, acquisition, separation and consolidation of the company. b. To approve the Company liquidation Authority to the Material Transaction of the Company a. Approval to transfer the Company wealth; or b. Approval whether or not to put as collateral to the Company wealth which accounts for 50% (fifty percent) of the net company wealth in 1 (one) transaction Approval to the use of Net Profit including the determination of reserve and dividend for the shareholders. a. The stated use of net profit including the determination of reserves is decided in the General Meeting of Shareholders. b. All stated net profit after deducted by reserve is divided to the shareholders as dividend, except otherwise decided in the General Meeting of Shareholders. c. The stated dividend may only be divided if the Company has positive profit balance. 8.3 The Organization of the General Meeting of Shareholders In every General Meeting of Shareholders, the Company always takes the following guidelines: Preparation of the General Meeting of Shareholders 39 a. Request for the General Meeting of Shareholders is conducted based on the following requirements: Requested by (one) or more shareholders which together represent 1/10 (one tenth) of total shares with voting rights, except Articles of 39 POJK No. 32 Year 2014 on the Plan and Organization of the General Meeting of Shareholders of Public Limited Company. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 55

60 Association determines smaller number, to organize the General Meeting of Shareholders. By means of registered letter and is addressed to the Board of Directors, which fulfills the following requirements: - Conducted in good faith; - Considers the Company interest; - It is a request that requires the decision from the General Meeting of Shareholders; - It is supported with reasons and any related materials to be decided in the General Meeting of Shareholders; and - It is not against the rules and legislation and the Company's Articles of Association. b. The Board of Director must announce the General Meeting of Shareholders to the shareholders within the period of at least 15 (fifteen) days since the date of request for the General Meeting of Shareholders is received by the Board of Directors. c. In case the Board of Directors does not announce the the General Meeting of Shareholders, the shareholder may once again request the General Meeting of Shareholders to the Board of Commissioners. The Board of Commissioners must announce the General Meeting of Shareholders to the shareholders within the period of at least 15 (fifteen) days since the date of request for the General Meeting of Shareholders is received by the Board of Commissioners. d. In case the Board of Directors or the Board of Commissioners do not announce the General Meeting of Shareholders within the stated period, then the Board of Directors and the Board of Commissioners must announce: There is a request of the General Meeting of Shareholders from the shareholders; C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 56

61 The reason of not organizing the General Meeting of Shareholders within the period of the 15 (fifteen) days since the receipt of request for the General Meeting of Shareholders from the respective shareholders; Using the following media: - 1 (one) daily in Bahasa Indonesia with national circulation; - Stock Exchange website; and - Company website, in Bahasa Indonesia and foreign language, provided that the foreign language must at least in English. e. The Company must first submit the notification of meeting agenda to the Financial Service Authority of at least 5 (five) days before the announcement of the General Meeting of Shareholders, excluding the date of the announcement. f. The Company must announce the General Meeting of Shareholders to the shareholders at least 14 (fourteen) days before the summoning of the General Meeting of Shareholders, excluding the date of the announcement and the date of summoning The organization of General Meeting of Shareholders 1. The General Meeting of Shareholders is organized by summoning the shareholders using the advertisement of at least 2 (two) dailies in Bahasa Indonesia, 1 (one) of them with the broad circulation of Indonesian territory, and 1 (one) is at the Company domicile within the period of at least 14 (fourteen) days before the date of the General Meeting of Shareholders excluding the date of summoning and the date of the General Meeting of Shareholders The General Meeting of Shareholders is organized athe Company domicile or in any location where the Company operates the business 40 Article 21 Sub article (2) of the Articles of Association of PT Semen Indonesia (Persero) Tbk. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 57

62 or at the domicile of the Stock Exchange where the Company shares are registered, in the territory of the Indonesian State In the summoning of the General Meeting of Shareholders, it must include the agenda, date, time, and location of the the General Meeting of Shareholders. 4. Every shareholder has the rights to obtain comprehensive explanation and accurate information regarding the procedure to be met in relation with the organization of the General Meeting of Shareholders, inlcuding any explanation concerning any matters related to the agenda of the General Meeting of Shareholders which is given before the the General Meeting of Shareholders and during the General Meeting of Shareholders. 5. Information and/or proposal in the summoning for the General Meeting of Shareholders must be available at the Company office before the the General Meeting of Shareholders is organized. 6. The organization of General Meeting of Shareholders is the responsibility of the Board of Directors. Therefore, the Board of Directors must prepare and organize the General Meeting of Shareholders appropriately according to the stipulation in the Company's Articles of Association and applicable rules and legislations. 7. The General Meeting of Shareholders may be organized upon the written request of one or more shareholders which represents of at least 1/10 (one tenth) of total shares issued by the Company with legitimate voting rights. The General Meeting of Shareholders may also be organized upon the request from the Board of Commissioners The General Meeting of Shareholders may be conducted usng teleconference media, video conference, or other electronic media 41 Chapter 8. The General Meeting of Shareholders, Section A. General Provisions, The Indonesian Corporate Governance Manual (ICGM), Financial Service Authority (OJK), Article 19 Sub article (4) of the Articles of Association of PT Semen Indonesia (Persero) Tbk. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 58

63 which allows the participants of the General Meeting of Shareholders to look and listen to each other directly and to participate in the meeting. 9. The appointment of the meeting chairman, preparation of agenda, decision on quorum, voting rights, and meeting decision are conducted according to the stipulations in the Company's Articles of Association and rules and legislations. 10. The General Meeting of Shareholders, in the miscellaneous agenda, has no right to make decision, except all shareholders are present and/or represented in the General Meeting of Shareholders and approve the addition of meeting agenda The decision of the General Meeting of Shareholders must be made based on deliberation to reach consensus using transparent and fair procedure. 12. In each General Meeting of Shareholders, minutes of meeting must be made and signed by the chairman of the meeting and at least 1 (one) shareholder appointed from and by other participants of the General Meeting of Shareholders. The signature is not required if the minutes of the General Meeting of Shareholders is made by the deed of notary The minutes of the General Meeting of Shareholders contains any matters discussed and decided, including dissenting opinion and is administered by the Board of Directors. 14. The shareholders may also make legal decisions without arranging the General Meeting of Shareholders physically, provided that all shareholders have been notified in written and all shareholders gave written approval on the proposal by signing the agreement (Circular General Meeting of Shareholders). The decision taken in this manner 43 Ibid, Article 75 Sub article (3). 44 Article 90 Sub article (1) and (2) of the Articles of Association of PT Semen Indonesia (Persero) Tbk. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 59

64 has the same power with legitimate decisions taken in the General Meeting of Shareholders Every decision of the General Meeting of Shareholders must be announced in 2 (two) newspaper in Bahasa Indonesia Article 91 Law No. 40 Year 2007 on Limited Liability Company. 46 Ibid, Article 18 Sub article (4). C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 60

65 CHAPTER 9 MATERIAL TRANSCATION OF THE COMPANY The shareholders must be legally protected if the Company conducts material transaction, affiliated transaction and any transaction which contains conflict of interest Material Transaction Material transaction of the Company includes all the followings: 47 a. Capital participation in the business entities, project and/or certain business activities; b. Purchasing, sales, transfer, exchange of assets or business segments; c. Asset lease; d. Fund lending; e. Asset guaranteeing; and/or f. Company collateral, which values of 20% (twenty percents) or more from the company equity, done in one or a series of transcation for a certain purpose or activity Stipulating the Transaction Value Material transaction is valued based on the audited annual financial statement; mid-year financial statement supported by the Accountant report for the purpose of limited review of at least for the equity account; or audited interim financial report other than interim mid-year financial statement, in case the Company has interim financial statement Approval from the General Meeting of Shareholders a. Material transaction of 20% (twenty percents) to 50% (fifty percents) of the equity does not require the approval from the General Meeting of Shareholders. b. Material transaction of more than 50% (fifty percents) must require approval from the General Meeting of Shareholders. 47 Decree of Chairman of the Capital Supervisory Agency and Financial Institution No. Kep-614/BL/2011 on the Material Transaction and Change of Primary Business Activities (Regulation of the Capital Supervisory Agency No.IX.E.2). C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 61

66 9.1.4 Disclosure of Information The Company must disclose information regarding the material transaction to the public at least in one national newspaper in Bahasa Indonesia and submit the transaction documents to the Financial Service Authority for two (2) workdays after the transaction agreement is signed. 9.2 Affiliated Transaction. Affiliate is 48 : a. The relationship of the family from marriage and descendant up two level, both horizontal and vertical; b. The relationship between Company and Employees, Directors, or Board of Commissioners; c. The relationship between two (2) companies of which there is one or more same Members of the Board of Directors or the Members of the Board of Commissioners. d. The relationship between the company and any parties (individual, company, joint venture, association, or organized group), both directly and indirectly, to control or being controlled by the Company; e. The relationship between two (2) companies controlled directly and indirectly, by the same Party; or f. The relationship between the Company and the primary shareholders. Affiliated Transaction is any transaction conducted by the Company and the Affiliates of the Company, or an Affiliate of the Members of the Board of Directors, Members of the Board of Commissioners, or primary shareholders of the Company. Controlled Copmany is any company controlled directly and indirectly by the Company Law No. 8 Year 1995 on Capital Market. 49 Decree of Chairman of the Capital Supervisory Agency and Financial Institution No. Kep-412/BL/2009 on the Affiliated Transaction and Conflict of Interest of Certain Transaction (Regulation of the Capital Supervisory Agency No.IX.E.1). C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 62

67 9.2.1 Disclosure The Company shall announce the dusclosure of any information related to each Affiliated transaction to the public and submit the proof of announcement and supporting documents to the Financial Service Authority the latest of 2 (two) workdays after the transaction, which at least includes: 1. Description of the Affiliated Transaction which details: a. The object of the respective transaction; b. The values of the respective transaction; c. Name of the parties conducting the transaction and their relationship with the Company; and d. Nature of the Affiliated transaction and te Parties conducting the transaction with the Company; 2. Summary of the assessor report, must at least covers the following information: a. Identity of the Parties; b. Object of assessment; c. Purpose of assessment d. Assumption; e. Approach and assessment method; f. Conclusion; and g. Opinion of the fairness to transaction with the period between the assessment date and transaction date must not more than 6 (six) months. 3. Explanation, consideration and reasoning of the transaction, compared to the other similar transaction not conducted with affiliated parties. 4. Company plan, data of the company being taken over, and any other related information in case the transaction concerns with the company take over; C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 63

68 5. The statement of the Board of Commissioner and the Board of Directors that all material information has been disclosed and that the information is not misleading; and 6. Report summary from the expert or independent consultant, if necessary. The following affiliated transaction is only required to be reported by the Company to OJK the latest of 2 (two) workdays after the Transaction which covers the information as included above, point 1), point 3), point 4), and point 5). 1. The use of every facility provided by the Company to th Members of the Board of Commissioner, the Members of the Board of Directors, and/or primary shareholders in case the primary shareholders also act as the Employees and the facility is directly related with their responsibilities to the Company and according to the Company policies and approved by the General Meeting of Shareholders; 2. Transaction between Company and Employee, Members of the Board of Directors, or Members of the Board of Commissioner and the Employee, and the Employees, Members of the Board of Directors, or Members the Board of Commissioner of the Company with the same requirements, as long as approved by the General Meeting of Shareholders. The transaction also includes benefits provided by the Company to all Employees, Members of the Board of Directors, or Members of the Board of Commissioner with the same requirements, according to the policies stipulated by the Company; 3. Transaction which does not exceed 0.5% (zero point five percent) of total issued capital of the Company and no more than IDR 5,000,000,000 (five billion Indonesian rupiah); 4. Transaction conducted by the Company as the implementation of the rules and legislation or the Court verdict; 5. Transaction between the Company and the Controlled Company of which the shares or capital is owned ate least 99% (ninety nine percent) C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 64

69 or between the Controlled Companies of which the shares or capital is owned at least 99% (ninety nine percent) by the Company; and/or 6. Transaction between the Company and Controlled Company of which the shares or capital is not entirely owned or none of the share or capital of the Controlled Company is owned by the Members of the Board of Commissioners, Members of the Board of Directors, primary shareholders of the Company, or the Affiliated Parties, and the financial statement of the Controlled Company has been consolidated by the Company. The following Affiliated Transaction is exempted from the obligation as stated previously: 1. Rewards, including salary, pension fund, and/or special benefits given to the Members of the Board of Commissioners, Members of the Board of Directors, and primary shareholders in case the primary shareholders also act as employees, if the total values of the rewards are disclosed in the periodic financial statement. 2. The continuous transaction conducted previously before the Company held an Initial Public Offering or before the submission of registration as public company, with the requirements as follows: a. The transaction already disclosed completely in the prospectus of the initial public offering or in the disclosure of information on the statement of the Public Company registration; and b. requirements and condition of the transaction has no changes that can disadvantage the Company. 3. Continuous transaction conducted after the Company held initial public offering or after the registration statement as a public company becomes effective, with the requirements as follows: a. The initial transaction that underlies the following transactions have met the regulation; and C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 65

70 b. requirements and condition of the transaction has no changes that can disadvantage the Company. 4. Transaction which is the primary business activity of the Company or the Controlled Company; and 5. Transaction which is the supporting of the primary business activity of the Company or the Controlled Company. 9.3 Transaction which Poses the Conflict of interest 50 The Conflict of interest is a different between the economic interest of the company and the economic interest of the personal member of the Board of Directors, members of the Board of Commissioners, or primary Shareholders which can disadvantage the Company. Transaction that contains conflict of interest must be approved first by the Independent Shareholders or their representatives authorized in the General Meeting of Shareholders, and the approval is confirmed in form of deed of notary. The following transactions that contains conflict of interest are exempted from the above provisions: a. The use of every facility provided by the Company to the Members of the Board of Commissioner, the Members of the Board of Directors, and/or primary shareholders in case the primary shareholders also act as the Employees and the facility is directly related with their responsibilities to the Company and according to the Company policies and approved by the General Meeting of Shareholders; b. Transaction between the company and the Employees, the Members of the Board of Directors, or the Members of the Board of Commissioner, as long as has been approved by the General Meeting of Shareholders. Including the benefits provided by the Company to all Employees, Members of the Board of Directors, or Members 50 Decree of Chairman of the Capital Supervisory Agency and Financial Institution No. Kep-412/BL/2009 on the Affiliated Transaction and Conflict of Interest of Certain Transaction (Regulation of the Capital Supervisory Agency No.IX.E.1). C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 66

71 of the Board of Commissioner with the same requirements, according to the policies stipulated by the Company; c. Rewards, including salary, pension fund, and/or special benefits given to the Members of the Board of Commissioners, Members of the Board of Directors, and primary shareholders in case the primary shareholders also act as employees, if the total values of the rewards are disclosed in the periodic financial statement. d. Transaction which does not exceed 0.5% of total issued capital of the Company and no more than IDR 5,000,000,000 (five billion Indonesian rupiah); e. Transaction conducted by the Company as the implementation of the rules and legislation or the Court verdict; f. Transaction between the Company and the Controlled Company of which the shares or capital is owned ate least 99% or between the Controlled Companies of which the shares or capital is owned at least 99% by the Company. Transaction that contains conflict of interest which is exempted from the above provision, but is Affiliated Transaction, then it follows the provision on the Affiliated Transaction. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 67

72 CHAPTER 10 DISCLOSURE OF INFORMATION 51 Information or Material Fact is any important and relevant information or facts regarding to any events, incidents, or facts which can influence the securities/stocks price at the Stock Exchange where the stocks are registered and/or the decision of the investors, candidate investors, or other parties with any interest to the information or fact. The Company as the public company must submit the disclosure of information or Material Facts in order to fulfill the principle of disclosure of information which has important values to the stakeholders as the consideration in making the investment decision. In relation with this fulfillment, the Company must submit the report on Information or Material Facts to the Financial Service Authority and to announce the Information or Material Facts to public Principles of Disclosure of Information The Company discloses relevant important information to any interested parties in the Annual Report, and other media according to the applicable rules and legislation in a timely manner, accurate, clear and objective. Important financial and non-financial information is disclosed by the Company for the decision making of the investor, creditor, and any other interested parties; either the disclosure is obligatory or voluntary. The Company stipulates the policies on classification and management of information which regulates the criteria of confidential information and public information to guarantee the safety, clarity and consistency of the information treatment. Information the be disclosed by the Company to the Stakeholders must conform the criteria stipulated by the Board of Directors. 51 Regulation of the Financial Service Authority No. 31/POJK.04/2015 on the Transparency of Information or Material Facts by Issuers or Public Company. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 68

73 10.2 Points in the Disclosure of Information 52 The Company must submit the report on Information or Material Facts to the Financial Service Authority and to announce the Information or Material Facts to public. The stated Information or Material Facts includes: a. Business merger, separation, consolidation or joint venture; b. Proposal for security purchasing from other companies; c. Purchasing or sales of company shares in material values; d. Division of shares or combination of shares; e. Distribution of interim dividend; f. Deletion of record or re-registration of shares in the Stock Exchanges; g. Income in form of dividend of extraordinary in nature; h. Gain or lost of important contract; i. New invention or new products which give added-values to the Company; j. Additional sales of shares to the public or in limited amount with material values; k. Changes in control both directly and indirectly on the Company; l. Changes of the members of the Board of Directors and/or the members of the Board of Commissioners; m. Repurchasing or payment of shares in payables and/or bonds; n. Purchasing or sales of important asset; o. Workers dispute that disturbs Company operations; p. Legal case to the Company and/or members of the Board of Directors and members of the Board of Commissioners which affect materially. q. Replacement of Accountant in charge of Company audit. r. Replacement of Trustee Agent; s. Replacement of Stock Administration Bureau; t. Change in financial year of the Company; u. Changes in reporting currency in the financial statement; 52 Regulation of the Financial Service Authority No. 31/POJK.04/2015 on the Transparency of Information or Material Facts by Issuers or Public Company. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 69

74 v. The Company is under special supervision from the related regulator that can affect the continuity of the Company business; w. Limitation of the Company business activities by related regulator; x. Changes or under performance in the published financial projection, materially; y. Any incident that causes the increase in financial obligation and decrease in Company income materially; z. Debt restructuring; aa. Seizure or closure of part or all business segment; bb. Material impact to the Company due to force majeure; and/or cc. Other Information or Material Facts. Information or Material Facts in the report ad announcement as stated above must at least includes: a. Date of incident; b. Type of Information or Material Facts; c. Description of Information or Material Facts; and d. Impact of Information or Material Facts incident; Submission of report and announcement of Information or Material Facts must be done as soon as possible the latest of two (2) workdays after the existence of Information or Material Facts. Submission of report and announcement must be done as soon as possible the latest of two (2) workdays after the existence of Information or Material Facts, which at least using: a. Company website, in Bahasa Indonesia and foreign language, provided that the foreign language must at least in English. b. Daily newspaper in Bahasa Indonesia with national circulation Voluntary Disclosure The Company develops a communication media and information system which is up to date both for the internal and external interest, as the means of communication C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 70

75 established to achieve the Company purposes. The media used by the Company in relation with the voluntary disclosure of information is the Company website, mass media and social media Company Website 53 The Company must have a website established based on the rules and legislation and reflects the Company identity. Company website presents the actual and up to date public information regarding the company and presented in Bahasa Indonesia and English. Information which must be presented on the website includes: 1. General information the Company; 2. Information for investors; 3. Information on Corporate Governance; 4. Information on Corporate Social Responsibility. The form of disclosure of information presented in the website are: a. The Company financial statement (3 years) b. The Company financial ratio (3 years) c. Internal Company Documents d. Structure, authority, and composition of the Company organ e. List of parties affiliated to the Company in the last year f. Annual and quarter reports (3 years) g. Materials and decision of the General Meeting of Shareholders (3 years) h. Information of the Company securities i. Company news 53 Regulation of the Financial Service Authority No. 8 Year 2015 on the Website of Issuers or Public Company. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 71

76 Whereas, the forms of disclosure of information in the mass media are: 54 a. New products b. Material contracts c. Acquisition d. Financial report e. Production plan f. Security 54 Chapter 13. Information Disclosure, Section C. Voluntary Disclosure, The Indonesian Corporate Governance Manual (ICGM), Financial Service Authority (OJK), C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 72

77 CHAPTER 11 PROCEDURE OF CONTROL AND AUDIT 11.1 Public Accountant (External Auditor) Annual financial statement of the Company must be audited by independent Public Accountant (External Auditor). Independent audit by the Public Accountant is conducted to provide opinion on the fairness in all materials of the financial position, business result, changes in equity, cash flow, according to the applicable accounting principles in Indonesia which is then delivered to the Shareholders. Public Accountant is any individual who acquire a license to provide assurance service such as audit to the historic financial information. There are several principles to be followed in implementing the audit to the Company financial statement by Public Accountant 55 : a. Public Accountant conducting the audit to the Company financial report must meet the following requirements: i) Independent, free of any influence from the Board of Commissioners, the Board of Directors and other interested parties. ii) He/she must be reputable and trusted public accountant and is registered in OJK. iii) He/she must meet the Government Regulation No. 20 Year 2015 on the Practice of Public Accountant. b. The General Meeting of Shareholders apooints the Public Accountant to do the audit to the Company financial statement based on the proposal from the Board of Commissioners. c. The Board of Commissioners, using Audit Committee, processes the appointment of Public Accountant nominee according tot he stipulation on the procurement of goods and service of the Company, and if necessary, the Board of Commissioners may request the assistance from the Board of Directors in 55 Article 31 Sub article 1-5 Regulation of Minister of Stated Owned Enterprises No. Per-01/MBU/2011 on the Implementation of Good Corporate Governance (GCG) on Stated Owned Enterprises (BUMN). C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 73

78 the appointment process. The appointment by the Audit Committee is based on the independence, scope of appointment and fee. d. The Board of Directors is responsible to prepare and present the Company financial statement and provide all accounting records and supporting data required by the Public Accountant to allow the Public Accountant to provide opinion on the fairness, consistency, and conformity of the Company financial statement to the Indonesian financial accounting standard. e. Public Accountant must prepare the audit report and submit the report to the Board of Directors the latest at the end of the third month since the date of the annual financial statement Internal Control Function Interal control is a process conducted by the Board of Directors, management and employees of the Company, which is designed to give fair guarantee that the Company financial report is reliable and accurate, the company operation is effective and efficient, and the applicable rules and legislations are complied. One of the tasks of the Board of Directors is to ensure the effectiveness of the Company internal control system Internal Control Principles a. Internal control system must function at all time without interruption. b. Every individual involved in the internal control system must be responsible to the tasks. c. Internal control system must separate tasks, having the decent distribution of authority and approval Internal Auditor Internal audit is inseparable part of the Company internal control system. The Board of Directors must establish an Internal Audit unit which is an independent and objective work unit conducting the assurance and consultation activities, which is designed to give added-values and improve the organization operation C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 74

79 in a systematic approach to evaluate and improve the effectiveness of risk management, control and corporate governance process. General policies related to the implementation of Internal Audit function are as follows: a. The Internal Audit Unit is led by a Head of Internal Audit. b. To guarantee the independence of Internal Audit implementation, the Internal Audit work unit is structurally positioned below the Managing Director and has the functional relation with the Audit Committee. c. The Head of Internal Audit is appointed and dismissed by the Managing Director with the approval from the Board of Commissioners and is reported to the OJK. d. The Investigation Result of Audit Internal unit must also be submitted to the Board of Commissioners via Audit Committee. e. The Head of Internal Audit is held by an official one level below the Board of Directors. f. Internal Audit has the following functions 56 : i). Evaluation to the effectiveness of internal control implementation, risk management and corporate governance, according to the rules and legislations and Company policies; ii). Investigation and assessment to the efficiency and effectiveness in the finance, operation, human resources, information technology, and other activities. g. In implementing the tasks, the Internal Audit must always maintain independence and professionalism according to the professional standard as included in the stipulated Internal Audit Charter. 56 Article 28 Sub article (4 )Regulation of Minister of Stated Owned Enterprises No. Per-01/MBU/2011 on the Implementation of Good Corporate Governance (GCG) on Stated Owned Enterprises (BUMN). C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 75

80 CHAPTER 12 RELATIONSHIP OF THE COMPANY AND THE STAKEHODLERS The Company realizes that the success of the GCG implementation in the Company is not far from the stakeholders support. Stakeholders have important roles in its commitment to always implement the principles of GCG and high ethical standard in the relationship with the Company. Therefore, there will be a balance and harmonious relationship between the Company and Stakeholders according to the principles of fairness and mutual respect. The Company respects and seeks to fulfill all rights and to follow up every problem or complaint from the Stakeholders in relation with the fulfillment of rights using the stipulated mechanism. The good relationship between the Company and Stakeholders and the increasing values of shareholders in the long run can only be achieved by the Company business integrity in each business activity as described in details in the Guidelines on Company Ethics. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 76

81 CHAPTER 13 MEASUREMENT OF GCG IMPLEMENTATION 57 The Company must measures the GCG implementation in form of: 1. Assessment, which is a program to identify the implementation of GCG in the Company by measuring the implementation and execution of GCG in the Company conducted periodically every 2 (two) years. The assessment can be self assessment and using independent assessor. 2. Review, which is a program to describe the follow up of implementation and execution of GCG in the Company, conducted at the following year after the assessment, which includes the evaluation to the assessment result and follow up to the recommendation for improvement. The result of assessment and review is reported together with the submission of Annual Report. 57 Article 44 Sub article (1), (2), (9) Regulation of Minister of Stated Owned Enterprises No. Per- 01/MBU/2011 on the Implementation of Good Corporate Governance (GCG) on Stated Owned Enterprises (BUMN). C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 77

82 CHAPTER 14 CLOSING GCG is a system which guarantees the good management in the determination and achievement of Company purposes and therefore must be implemented consistently. The implementation of GCG Guidelines is expected to guarantee the Company to always run the business activities according to the standard of ethics and GCG principles. In relation with the implementation of GCG, Company seeks to do the followings: a. Establishing commitment, direct involvement and leadership from the Board of Commissioners and the Board of Directors; b. Developing the good Corporate culture as the basis to direct and develop the mindset and behavior; c. Creating healthy organization climate; d. Implementing the Guidelines on Company Ethics and other guidelines in relation with the implementation of GCG Company evaluates the GCG Guidelines to find out and measure the conformity to the Company needs, and the effectiveness of the implementation program of GCG Guidelines. The development of GCG Guidelines and improvement to the implementation program must be done continuously. Commitment an support form all Company Individuals and Stakeholders is the key success to the implementation of GCG Guidelines. By implementing good corporate governance, it is expected that the Company can compete effectively, efficiently, and healthy and always achieve and maintain the leading position in the business competition climate. C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 78

83 C u l t u r e o f P T S e m e n I n d o n e s i a ( P e r s e r o ) T b k. 79