Governance Practices

GOVERNANCE PRACTICE

With the issuance of KPK Regulation Number 2 of 2019 concerning Gratification Reporting dated 5 November 2019 which revoked the previous regulation, the SIG Gratification Procedure also needs to be adjusted. During semester 1 of 2020, the gratuity procedure was rearranged to comply with the latest KPK Regulations and was approved by the Director of Business Strategy and Business Development in May 2020. The latest gratuity procedure has code P/SIG/GRC/003.

The company believes that the implementation of good corporate governance (GCG) will encourage the creation of fair competition and a conducive business climate. In addition, the implementation of GCG is also an important part in supporting sustainable economic growth and stability. This understanding underlies the Company's commitment to always uphold the implementation of GCG at every level of the organization and its operational activities. Through high commitment and consistency to the implementation of good corporate governance, the Company believes it will be able to prevent Corruption, Collusion and Nepotism (KKN) practices and improve the oversight function in the management of the Company.

Consistent implementation of GCG also improves business performance and sustainable growth, which will ultimately increase corporate value for shareholders and other stakeholders.

Management's commitment to compliance with GCG consists of several policies and related provisions including:

1. Commitment from all levels of the Company to implement all rules and policies as part of efforts to implement the best practices of corporate governance. This is shown by the top management by always basing all decisions and determining the company's main policies on the relevant rules and laws.
2. Top management signs a Statement of Compliance with the Code of Ethical Conduct, a Statement of Conflict of Interest and a Statement of Share Ownership to comply with all the rules in the Company's Code of Ethical Conduct. Statement of Compliance with the Code of Ethical Conduct signed by all levels of the Company.
3. Determination of KPIs related to GCG implementation.
4. Implementation of entity level control tests to ensure the effectiveness and implementation of entity level internal controls in order to provide reasonable assurance of the reliability of financial reporting.

Allocation of an adequate annual budget for the implementation of GCG, including for programs to increase the competence of the parties involved in implementing GCG (Board of Commissioners, Organs of the Board of Commissioners, Directors, Risk Management Function, Internal Control Function, Internal Oversight Function, Corporate Secretary Function , Information Technology Function and other work units).

BASIS OF GCG IMPLEMENTATION

In implementing GCG, the Company is based on a number of rules, but not limited to:

1. Law No. 40 of 2007 concerning Limited Liability Companies.
2. Law No. 19 of 2003 concerning State Owned Enterprises (BUMN).
3. Regulation of the Minister of BUMN Number PER-01/MBU/2011 concerning the Implementation of Good Corporate Governance in BUMN, which was later amended through the Minister of State BUMN Regulation Number PER-09/MBU/2012 concerning Amendments to Ministerial Regulations State Owned Enterprises Number PER-01/MBU/2011 concerning Implementation of Good Corporate Governance in State Owned Enterprises.
4. Decree of the Secretary of the Ministry of State-Owned Enterprises No. SK-16/S.MBU/2012 concerning Indicators/Parameters of this section can be made Assessment and Evaluation of the Implementation of Good Corporate Governance in State-Owned Enterprises.< /li>
5. Regulation of the Financial Services Authority Number 21/POJK.04/2015 concerning Implementation of Public Company Governance Guidelines.
6. OJK Circular Letter No. 32/ SEOJK.04/2015 concerning Guidelines for Public Company Governance.
7. Companys Articles of Association. Download (In the interest of protecting the personal data of parties in the Companys Articles of Association, we close this section in the Companys Articles of Association).

ROAD MAP OF GCG IMPLEMENTATION

The Company has prepared a GCG Roadmap to provide an overall picture of various aspects of corporate governance that need to be improved as well as to foster Managements commitment to implementing GCG which is then always followed by steps to improve and consistently implement it.

The Companys management has also established an overview of the stages of implementing the Companys GCG with the aim of becoming an ethical and responsible company, as well as making good governance practices a culture in managing the company, as follows:

GCG MECHANISM

The company implements the GCG mechanism in an order, in which all GCG organs have their own responsibilities but still carry out GCG implementation in an integrated manner. The GMS has the highest authority in which the shareholders will carefully consider their decisions for the long-term interests of the Company. After the decision is taken, the GMS will then hand over all supervisory authority and implementation of the decision to the Board of Commissioners and the Board of Directors.

Based on this mechanism, the management of the Company and implementation of each decision of the GMS is carried out by the Board of Directors. The Board of Commissioners then supervises and provides advice to ensure that the Company's objectives and the resolutions of the GMS are carried out and achieved. In carrying out its work, the Board of Commissioners is assisted by the organs of the Board of Commissioners, namely the Secretary to the Board of Commissioners, the Audit Committee, the Nomination, Remuneration & GCG Committee and the Risk Management and Investment Strategy Committee. The Directors who are responsible for managing the Company will be assisted in carrying out their management duties by the Risk Management Function, Internal Control Function, Internal Oversight Function, Corporate Secretary Function, Information Technology Function and other work units that carry out the Company's management functions.

Besides that, the Company also conducted an independent audit of the presentation of financial statements conducted by a Public Accountant. This process is important, where the financial report is one of the fundamental information that reflects the Company's performance and management carried out by management.