More Than Checks and Balances
At Adaro, we have always seen good corporate governance (GCG) as integral to our reputation for putting shareholders’ interests first, and in recent years, Adaro has strengthened its GCG practices in order to stay ahead of growing concerns over standards of corporate governance in Indonesia.
We keep abreast of developments in best governance practices in Indonesia and internationally, and all Adaro employees are committed to upholding the principles of transparency, accountability, responsibility, independence and fairness to protect the interests of all stakeholders – a commitment that has been a key factor in the Company’s long-term success.
Adaro is controlled by five Indonesian families whose long business relationship can be traced back to the early days of PT Astra International Tbk, historically one of the most respected and well-governed corporations in Indonesia. While they collectively hold approximately 65% of the Company, none of these five families has outright control of Adaro. This is unique as it creates a system of checks and balances to make sure decisions are made in the best interest of Adaro and its varied stakeholders.
We conduct periodic reviews and evaluations in order to get an objective picture of GCG implementation and to improve year by year. We believe that consistent adherence to good practices can improve the growth of the Company’s business as well as create a favorable environment for investment. It will also help us to achieve our vision to be a leading Indonesian mining and energy group.
On November 2015, Indonesia’s Financial Service Authority (OJK) issued the new regulation 21/POJK.04/2015 on the Implementation of Corporate Governance in Public Companies. In implementing this regulation, we are revising the existing charters of our Board of Commissioners and Board of Directors, and may issue other policies as necessary to comply with this new regulation. While we are still finalizing the draft of an official code of conduct and a formal whistleblower mechanism for the reporting of misconduct, employees are proactively encouraged to report any cases of fraud or breaches of our business ethics, company rules or regulations, articles of association, laws or confidential information to their direct supervisor.
We expect to issue the official Company Code of Conduct during 2016.
Policy on the Selection and Capability Enhancement of Suppliers or Vendors
Currently, the Company has a Business Process and Procurement Division in charge to make policies that manage the criteria and requirements for suppliers or vendors involved in the procurement process of goods and services required by the Company. These policies serve to ensure the quality, transparency, continuous improvement in obtaining goods or services, as well as align with the application of SOP in every line of business within the group.
Documentation of this policy is being finalized, and in parallel has been applied to every subsidiary within the group. The Company plans to publish and present this policy on the website and in the Annual Report in 2016.
Policy of Compliance on Creditor’s Rights
The Company has a Financial Management Policy in which regulates the financing transactions that apply to every subsidiary within the group. Every subsidiary is obliged to conduct the study and analysis of the benefits and the Company’s ability before financing transaction.
Documentation on this Policy is being finalized. The Company plans to publish and present this policy on the website and in the Annual Report in 2016.
Insider Trading, Anti-Corruption, and Anti-Fraud
Currently, the Company has not issued formal policies related to insider trading, anti-corruption and anti-fraud. However, as stated in the Charter, the Board of Commissioners and Board of Directors is obliged to prevent the occurrence of the above matters.
Below is a detailed picture of Adaro’s governance principles and systems.
We maintain open communications with our shareholders and other stakeholders about strategic activities, developments and transactions. In accordance with regulations, we submit to our shareholders quarterly operations reports and financial statements as well as monthly updates on mining operational activities. We also conduct the Annual General Meeting of Shareholders, Public Exposé and other similar activities.
We see accountability as a necessary condition to achieve our desired performance and results. Being accountable, therefore, is the duty and responsibility of every organ of the company. The principle is outlined in the form of policies, guidelines and a technical manual that enable the company to implement it in an organized manner, taking into account the interests of the shareholders and stakeholders.
We exercise our responsibilities as a good corporate citizen by respecting the law, the community in which we operate and the environment. As a listed company, we strive to comply with the Capital Market Law and all the regulations set out by the capital market regulator. Moreover, as a coal mining company, we not only comply with applicable regulations but also take very seriously our responsibility towards local communities and the environment.
Each section of the company operates independently, with no unit dominating over others and no interference from any party. All company decisions are made in a professional and objective manner, free of conflicts of interest and with respect to the relationship among our business units.
We are committed to ensuring that the rights of our shareholders and stakeholders are properly met. Our shareholders and stakeholders are entitled to receive the same information about the company’s performance and activities. We also provide equal opportunities in recruitment and human resource management, with no discrimination over tribe, religion, race, class, gender or physical condition.
Annual General Meeting of Shareholders (AGMS)
The AGMS is the highest decision-making body in Adaro. The AGMS enables all shareholders to exercise their right to voice opinions and cast votes on issues related to the Company and its future. The AGMS is also the forum to evaluate the Board’s achievements during the fiscal year. The implementation of the AGMS is based on Adaro’s Articles of Association, as well as prevailing laws and regulations.
On April 18, 2016, Adaro Energy held its AGMS for the fiscal year 2015 at Adaro Institute, Tempo Scan Tower, South Jakarta. For details of resolutions please see the summary of minutes here.
Board of Commissioners
At Adaro, the Board of Commissioners (BoC) comprises five members, three of whom are representatives of the major shareholders and two are independent. This composition complies with the Company’s Articles of Association, prevailing laws and regulations and the BoC Charter, which stipulate that at least 30% of board members be Independent Commissioners. All members of the BoC possess integrity, competence and good reputation, and act in good faith, prudently and responsibly, prioritizing the company’s best interests.
The composition of the BoC is based on consideration of the Company’s condition and the diversity of its members’ skills, knowledge and experience.
The BoC supervises the company’s business in accordance with the principles of good corporate governance, laws and regulations, and the Articles of Association. The appointment and dismissal of commissioners is determined by the AGMS.
Duties and Authority: The BoC oversees the company’s management and carries out other duties as mandated by the AGM or applicable laws and regulations. The board advises the BoD and examines certain actions as requested by the latter, in accordance with prevailing regulations and shareholder approval. Board members must also monitor the effectiveness of good corporate governance practices being implemented by the company and make necessary adjustments accordingly.
Board of Directors
The Board of Directors (BoD) consists of executives responsible for the day-to-day management of the company, steering it towards the stated goals, objectives and business activities. In performing its duties, the board receives advice from the BoC.
Adaro’s BoD currently comprises seven members, which appointed by considerations of expertise, integrity, leadership, experience, honesty, good conduct, as well as the dedication to promote and develop the company.
The composition of the BoD is based on consideration of the Company’s condition and members’ decision-making effectiveness.
Recommendations on policies and criteria required in the process of proposing a person to be a member of the Board of Directors and recommendations on the proposed candidates who qualify as members of the Board of Directors are prepared by the Company’s Nomination and Remuneration Committee and given to the Board of Commissioners.
The board meets on a regular basis, or as needed, to discuss Adaro’s operational and financial performance, coal market conditions, project progress and other issues that require attention and decision-making.
The members are authorized to represent the company on most matters and events, with some exceptions for policies or actions that would require the written consent of the BoC and/or approval from the AGMS.
To date, the Company has not yet established specific policies related to Self Assessment Policy to measure the performance of the BoC and BoD. The Company will prepare a list of questions for every member of the BoC and BoD as a mechanism of self-assessment on their performance.
Adaro Energy believes that it is prudent to have in place risk management systems and procedures to mitigate key business risks and assist in the achievement of strategic objectives.
A sound risk management system will enhance our ability to deal effectively with potential events that create uncertainty. We want to be able to respond in a manner that minimizes negative impacts and increases positive outcomes so we can communicate to our stakeholders our value creation programs and goals with more certainty.
We established our Risk Management Unit in 2010, which is headed by the Director & Chief Financial Officer. This unit works together with senior management to implement our risk management program across the AE group.
We have adopted the three lines of defense (3LD) model in our risk management program. The 3LD model involves managing risks (risk owners), overseeing risks (risk management unit, legal, QHSE, finance) and providing independent assurance (internal audit and external audit). All of these functions play important roles in our corporate governance activities.
For a detailed summary of our business risks at both the operational and strategic levels, please see our Annual Report 2015 or download the relevant pages here:Adaro Energy Risk Management 2015
As stipulated in the Audit Committee Charter, the committee reviews Adaro’s financial statement, appoints and monitors the performance of Independent Auditors, monitors the implementation of policies and procedures in every level of the organization, monitors the risk profile, as well as ensures that internal audit functions are working as intended.
Adaro’s Audit Committee consists of one independent commissioner, acting as the chairman, and two expert non-Adaro employees. The current members of the Audit Committee are:
Mr. Setyawan has served as an Independent Commissioner of PT Adaro Energy Tbk since 2008.
He obtained a degree in mechanical engineering from the Bandung Institute of Technology in 1962 and a diploma in ballistic engineering from the University of Belgrade’s Yugoslavian Military Science and Industry Institute in 1966. He served in the Indonesian Army until 1981, retiring with the rank of lieutenant colonel. In 1982, he joined PT United Tractors, initially serving as a Manager and later as Director and Commissioner until 1998.
He also served as Senior Vice President for PT Astra International Tbk from 1989-1997, President Director for PT Astra Mitra Ventura from 1992-1997, Director for the Asia region for GIBB Ltd from 1997-1999, Executive Vice President for PT Raja Garuda Mas from 2000-2002, Independent Commissioner for PT Pembangunan Jaya Ancol Tbk 2004-2011, and President Commissioner for PT Jakarta Propertindo from 2010 to 2013.
Dr Irwandy Arif, MSc., Member
A renowned expert in the Indonesian mining industry, Irwandy holds a doctorate from the École des Mines de Nancy, France, and a degree in mining and industrial engineering from the Bandung Institute of Technology. He previously consulted for some of Indonesia’s biggest mining companies, including PT Berau Coal, PT Freeport Indonesia and PT Bukit Asam Tbk. He also chaired the audit committee at PT Antam Tbk. Irwandy has published various scientific papers and student handbooks on mining, geology and geo-technical engineering.
Mamat Ma’mun, SE, Member
Mamat holds an economics degree from Padjadjaran University, Bandung. He worked at the Astra Group for more than 30 years, including as a trustee on the Astra Group Pension Fund. He began serving as member of the Audit Committee in 2009 and is currently a commissioner at PT Duta Oto Prima, PT Anugrah Power Mandiri and PT Dharma Group.
To read the Audit Committee Charter, please click here
This function has developed an organizational structure, work standards and practices, and communication and quality assurance programs. Its practices are based on the International Standards for the Professional Practice of Internal Auditing, and it adopts the Internal Audit Code of Ethics issued by the Institute of Internal Audit (IIA).
To provide optimum benefits with the available resources, the Internal Audit Function selects subjects to be included in the annual audit plan based on the assessment of risk priorities.
It rates the adequacy of controls performed by management to mitigate risks and compiles these in each audit report submitted to the Board of Directors, Audit Committee and related management personnel. Each audit report includes recommendations or corrective actions agreed upon with the management.
However, such recommendations only provide value upon implementation by the management, therefore it continuously monitors their implementation and reports the progress to the Board of Directors and Audit Committee on a quarterly basis.
The Internal Audit Function consists of internal auditors with a variety and complementary range of educational backgrounds, skills and work experiences. The division is led by the Chief Audit Executive, who reports directly to the President Director & CEO.
As of February 2016, the division consisted of 12 auditors.
The Company has a Disclosure Committee to provide clear guidance on the disclosure of material information that can impact shareholder decisions. The committee has issued a disclosure information policy, which is also used as a communication policy with stakeholders.
The Disclosure Committee comprises the President Director, Vice President Director, Chief Finance Officer, Chief Legal Officer and Chief Operating Officer. It meets quarterly to discuss the corporate action plan and consider whether actions arising from it may have a potential impact on shareholders’ decision-making.
Material information disclosed by the Company is reported through IDX and OJK e-reporting, and is available on the Company’s website. Following the rapid popularity of social media, the Company additionally uses Facebook and Twitter to disclose material information.
The Corporate Secretary must have a thorough knowledge of capital market rules and regulations, an ability to maintain confidentiality and other relevant competencies, especially with regard to information disclosure.
The Corporate Secretary’s function in a public company is regulated under OJK regulation 35/POJK.04/2014.
Adaro’s Corporate Secretary is currently Mahardika Putranto. He earned a bachelor’s degree in commerce from the University of New England, and a master’s degree in economics from the University of Macquarie, both in Australia.
He joined Adaro as Deputy Head of the Corporate Secretary and Investor Relations Division in January 2014 and was appointed as Corporate Secretary in September 2014.
Investor Relations (IR) reports to the Director and Chief Financial Officer. However, as the main liaison between the company and the capital markets, Investor Relations communicates regularly with all members of the Board of Directors and many different parts of the company. We maintain active interaction and engagement with key capital market participants, including institutional investors, analysts, potential investors and financial media.
In 2015, we attended 11 conferences and had 418 meetings. Support from the Board of Directors and the rest of the company was evident in their participation in several conferences and meetings in 2015.
Investor Communication Program 2015
|UBS Indonesia Conference||March|
|Credit Suisse Asian Investment Conference||March|
|dbAccess Asia Conference||April|
|Citi ASEAN Conference||June|
|CIMB Indonesia Conference||June|
|DBS Pulse of Asia Conference||July|
|Macquarie ASEAN Conference||August|
|Citi Indonesia Conference||September|
|dbAccess Indonesia Conference||November|
|Morgan Stanley Asia-Pacific Summit||November|
|Financial statements and press releases||Quarterly|
|Exploration Activities Reports||Monthly|
|Reports of share ownership of 5% and above||Monthly|
The Board of Commissioners decided on March 31, 2015, that nomination and remuneration functions in the Company will be carried out directly by the Board of Commissioners, without the formation of a nomination and remuneration committee.
We employ a performance-based system for determining remuneration for the Board of Commissioners and Board of Directors.
During 2015, discussion of nominations and remuneration were included in Board of Commissioners meetings. In 2015, total remuneration of the commissioners and directors of Adaro and its consolidated subsidiaries was US$20.4 million, a 1% increase from US$20.1 million in 2014.
For guidelines on nomination and remuneration functions, please click here
Read More About Adaro
- Adaro at a Glance
Exploring for coal; mining and selling it; generating power from it. Understand our business in seconds.
- Our Vision
Adaro strives to deliver positive energy from Indonesian coal. See how our strategy helps us do that.
- Our Cleaner Coal Products
Our core product, Envirocoal, is the world’s cleanest solid fossil fuel. Find out what makes it remarkable.
- Our Reserves and Resources
We control or have options on 12 billion tonnes of coal in Indonesia. See where it is and how we plan to mine it.
- Our Market and Customers
We sell our coal to power providers and cement manufacturers in Indonesia and worldwide. Find out who and where.
- Our Corporate Structure
We own or have stakes in 21 vertically integrated subsidiaries. Find out how they operate and fit together.
We have a unique ownership based on five key shareholding families. Get to know our directors and commissioners.
Adaro has come a long way since first breaking ground. See how it has grown into one of Indonesia’s largest companies.
Adaro insists on world-class governance principles and standards, ensuring the best service for shareholders.
Adaro is consistently recognized for quality in mining, environmental care and as an employer. Read about our successes.
How do we find our coal? What CSR do we do? What is it like to work at Adaro? Find answers to these and more.
FGD, demurrage, overburden, GAR, panamax, calorific value: demystify coal’s complex terminology.