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Adaro Energy is fully aware and committed to implementing governance standards that conform to best practices including implementation within its subsidiaries. As part of our corporate culture, we engage and interact with all of our stakeholders in a way that promotes mutual trust, better understanding and good faith. In doing so, we are required to be transparent, accountable, responsible, independent and fair in all aspects of engagements with our stakeholders.
The main scope of Adaro Energy’s good corporate governance policies encompass; clear segregation of duties and responsibilities among the Board of Directors and Board of Commissioners, checks and balances, clear business roles and strategies within the Company and its subsidiaries, ethical business conduct, engagements with stakeholders through risk mitigation, and operational oversight by the Board of Commissioners through the Audit Committee and Internal Audit, upholding corporate social responsibility in sustaining good corporate citizenship as well as disclosure of material information in a timely and accurate
| No. |
Principles and Recommendations |
Adaro's Practices |
| 1 |
Good Corporate Governance
Principles |
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GCG principles need to be
implemented at each business facet
and within the entire company, and
includes transparency, accountability,
responsibility, independency and
fairness. |
The essence of corporate governance
has been consistently applied by the
management and the formal system
to support the implementation of the
GCG has continuously improved in 2010
through the following initiatives:
• Development of charters for the BOC
and BOD, expected to be finalized in
2011
• Procurement systems were enhanced
and formalized in 2010 and expected to
go live in 2011.
• The disclosure committee currently
meets on a regular basis, at least
monthly and as required. |
| 2 |
Business Ethics and Code of
Conduct |
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To attain long-term success, GCG
implementation needs to be based
on high levels of integrity. Sets of
values need to be developed that
describe the morals of the company
in conducting its business, which
are then further elaborated into a
code of conduct. |
The Company has developed a set of core values for the entire Adaro
Group. A part of the code of conduct was formalized such as a gratification
policy and has been disseminated and distributed to all employees.
The procurement system employing
advanced IT system application is
expected to create a more transparent and
accountable systems for procurement of
goods and services. This system will go
live in 2011. |
| 3 |
Organs of the Organization |
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The GMS, the BOD, and the
BOC have an important role in
implementing GCG effectively.
By carrying out their respective
functions based on the principles
that each organ is independent in
carrying out its duty, they function in
the sole interest of the company. |
The BOD currently consists of 7 Directors
who are in charge of managing Adaro
and its subsidiaries. A board manual that
assigns the rules and responsibilities of
each Director is currently being finalized to
ensure the accountability of all directors'
actions. This is scheduled for completion
in 2011.
The BOC consists of 6 members 4 of
whom are representatives of the ultimate
shareholders and 2 being independent
commissioners. One of the independent
commissioners is the Head of Audit
Committee.
In support of its oversight function of the
Company's subsidiaries, the Company
in 2010 appointed Dr. Ir. Kusmayanto
Kadiman- former Minister of Research
and Technology (2004-2008) – as
Commissioner of PT Jasapower Indonesia
and Erry Fimansyah, former President
Director of PT Bursa Efek Indonesia (BEI)
as Commissioner of PT Makmur Sejahtera
Wisesa.
The diverse background of the members
of the BOC and BOD provides the
necessary expertise and qualifications.
In the decision making process, a
risk management approach has been
implemented at both the senior
management and executive levels. Going
forward, formal sets of committees and
policies will be established.
Management has declared its vision and
mission statements. These statements
and objectives have been disseminated
throughout the Adaro Group particularly
during the Company's President's
Message event held once a year attended
by all level of employees and the
Company's BOC and BOD. |
| 4 |
The Rights and Role of the
Shareholders |
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Shareholders as owners of share
capital have certain rights and
responsibilities within the company
in accordance with the laws and
regulations and the Articles of
Associations of the company. |
Adaro's Articles of Association comply
with both Indonesian Company Law
No. 40 Year 2007 and with Bapepam-LK
regulation.
While conducted in the spirit of achieving
mutual consensus, GMS decisions are
made by voting. Voting is only valid if
cast by more than half of the attendees,
following the stated quorum.
Management invites shareholders to
attend the GMS through the publication
of the invitation in 2 nationally circulated
media which include detailed information
of the GMS.
Since its IPO, the Company has regularly
distributed both final dividends and
interim dividends. The announcements of
those dividends distributions have been
published in 2 national circulated daily
media.
Adaro regularly reports changes in the
shareholdings of the BOC and BOD.
Adaro's AOA stipulates that all material
transactions where there may be a
conflict of interest must have GMS
approval whereas ultimate shareholders
with conflicts of interest must cast their
votes in an agreement with independent
shareholders. The quorum required
for this exercise is at least half of total
independent shareholders and the vote is
valid only if approved by more than half of
the attending independent shareholders. |
| 5 |
The Rights and Role of
Stakeholders |
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Stakeholders including employees,
resource providers, and
communities, particularly in which
the company operates, have an
interest in the company and are
directly affected by the strategic
and operational decisions of
the company. Therefore, the
relationship between the company
and its stakeholders needs to be
fair and equal, in accordance with
the prevailing laws and regulations,
and should be based on mutual
arrangements applicable to each
respective party. |
Adaro maintains aregister of shareholder
through the Company's Shares Registrar
(PT Ficomindo Buana Registrar) in
accordance with prevailing laws and
regulations and the AOA. Adaro regularly
provides information updates to its
stakeholders through disclosures listed
in IDX website and press releases.
Resolutions of the Company's GMS
are published in 2 nationally circulated
publications, the IDX website as well as
the Company's website.
Adaro will continually enhance its
human resources practices, monitor the
implementation of its code of conduct,
improve labor agreements and systems.
A Human Resources Information
System (HRIS) system was finalized and
effectively installed in 2010. Through the
HRIS system, the Company expects to
have better tools to manage its human
resources.
Since its inception in 2009, Adaro Bangun
Negeri has spearheaded the Company's
corporate social responsibilities programs
and community development, which
greatly contributed to the overall
betterment in the key aspects of
economic development, educational
enhancement, health improvement and
social and cultural promotion. |
| 6 |
Statement of GCG
Implementation |
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A statement regarding the
implementation of GCG shall be
made a part of the company's annual
report. In the event that GCG has not
been fully implemented, a company
shall disclose the non-conformance
aspects and the reasons for such.
The statement shall comprise the
structure and working mechanism
of the BOC and the BOD, and other
pertinent information regarding the
implementation of GCG. |
The BOC and BOD as well as the Company's committees conduct regular
meetings. The attendance and the minutes of the Boards meetings are
recorded and documented.
In the future, Management expects to
employ independent third parties to audit
and provide attestations on the corporate
governance statements. |
| 7 |
Institutionalization of GCG
Practices |
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GCG shall be implemented in a
systematic and continuous manner.
Accordingly, it is necessary to have
practical guidelines to be used as a
reference in implementing GCG. |
Adaro has made progress in improving its governance practices exhibited
in the establishment and implementation of governance aspects
throughout the year as stated in the above mentioned points. |
In 2008, we became a public listed company, which bolstered our
level of corporate governance, particularly in the way of governing
the corporate structure and engagement with our stakeholders. Adaro
Energy takes into account existing regulations, best practices and
corporate culture in exercising good corporate governance to ensure
smooth implementation. In the subsequent years, we have made
notable progress in governance practices.
We established an audit committee in January 2009 as required by
regulators. Furthermore, an internal audit unit was also established
in the same period, which also fulfils Bapepam-LK regulations. Both
of these units have formalized their charters to define their roles and
serve as a guidance for best governance practices.
The key shareholders of Adaro Energy restructured some of their
holdings of stock of the Company into a single entity, called PT Adaro
Strategic Investments, which directly owns 43.91% shares of the
Company. This initiative was made in July 2009 to further increase
the efficiency and cohesiveness of decision making and to strengthen
the continuity and commitment of the key shareholders to create a
bigger and better Adaro.
In further strengthening the implementation of its governance, the
Company developed the charters for both the Board of Commissioners
and Board of Directors in 2010 which are expected to be finalized
in early 2011. These charters clearly define the supervisory and
management functions and roles of the BOC and BOD in order for
them to effectively perform their duties and responsibilities.
In 2010, the Company proactively enhanced its procurement system
to create a more speedy, efficient, accountable process in support of
the Company's logistics and supplies. This enhanced procurement
system is expected to strengthen the Company's corporate-wide
governance and is expected to roll out in 2011.
The following narratives further exhibit the policies and
implementation of the Company's good corporate comparisons with
the Indonesian Principles of Good Corporate Governance.
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