BoD Charter

CHARTER OF THE BOARD OF DIRECTORS

 

CHAPTER 1

INTRODUCTION

 

1 Preface

PT Indo Tambangraya Megah Tbk ( ITM ) is a coal and energy company and publicly listed at IDX and at the same time the Company also subsidiary of Banpu Public Listed Company, which shares listed in the Thailand Stock Exchange (SET). With regard to the above status, the ITM Board of Directors (BOD) in carrying out its role and responsibility shall strictly comply with the prevailing laws and regulations and shall run the company in accordance with the Good Corporate Governance (“GCG”) principles and best practices.

In attaining the Company’s vision and mission, the BOD shall refer to the principles of transparency, accountability, responsibility, independency and fairness as the only way to pursuit sustainability of the Company and at the same time also promotes best governance practices while managing its operation in the interest of shareholders and wider stakeholders.

In performing its duty, responsibility and authority, the BOD deemed appropriate to establish the general guidelines named as “the Charter of the Board of Directors” (hereinafter referred to as “BOD Charter”). The BOD Charter shall be the reference for the members in executing its role and acting consistently for the advancement of the Company and the interest of its diversified stakeholders.

The first BOD Charter has been in effect since February 2010 and its amendment version made in April 2011. Recognizing the developments in the company’s GCG, adoption of SDG and new capital market regulations, the Charter is hereby again amended.

 

2. Vision and Mission

Vision

To be a professional, accountable and ethical BOD to create sustainable corporate values for its stakeholders.

Mission

The BOD shall pursue the Company’s mission of having an excellence operations, competence employee, sustainable business and care to the society and environment and adhere to the GCG principles and best practices.

 

3. Objective

This BOD Charter stipulates the rules and guidelines for BOD in determining and executing its duties, responsibility and authority objectively and effectively.

 

CHAPTER 2

ESTABLISHMENT, ORGANIZATION AND TERM OF OFFICE

2.1 Reference

 

 

2.2 Organization

The members of BOD are appointed, replaced or dismissed by the General Meeting of Shareholders. The process of assessment, selection and nomination of candidates are the responsibility of the BOC assisted by the SD, GCG, Nomination and Compensation Committee (SDGNCC). The Company establishes and maintains a balanced BOD composition in terms of professional and gender.

2.2.1 Structure

2.2.1.1 BOD shall consist of at least 2 (two) members. One member serves as President Director and other members serve as Director;

2.2.1.2 The composition of BOD shall enable BOD to make decision effectively, timely and independently. And being a public listed company, ITM shall have at least 1(one) independent director.

2.2.1.3 Member of BOD shall be proposed and recommended to the GMS through the Board of Commissioners (BOC), from candidates that has met the requirements and selection criteria, assisted by the SDGNCC

2.2.1.4 Other than the President Director, distribution of duties and authorities among the BOD members shall be determined and stipulated in a BOD Resolution;

2.2.1.5 The President Director is also assigned to ensure the effectiveness of the GCG implementation.

 

2.2.2 Multiple and Mobility of Membership

2.2.2.1 Director can hold a multiple position as

2.2.2.1.1 member of BOD in 1 (one) other publicly listed company;

2.2.2.1.2 member of BOC in other 3 (three) publicly listed companies;

2.2.2.1.3 member of Committee at maximum of 5 (five) publicly listed companies where he/she also hold the position as member of BOD or BOC;

That multiple position concurrently held by a Director shall not in contrary towards other regulation. In case there is other regulations regulates on this multiple position, the tighter shall be the ruling;

2.2.2.2 To be eligible as independent director, a retirement transition of 6 months is needed for affiliated director;

2.2.2.3 to be eligible as President Commissioner, a retirement transition of 6 months is needed for a President Director.

 

2.2.3 Membership Requirements

Members of BOD are expected to deliver their utmost while performing their duties, responsibility and authority with professional expertise, skill and know-how for the best interest of the company.

2.2.3.1 General Requirements

2.2.3.1.1 Must be an honest person, have good character, high integrity, having leadership and loyalty to the Company;

2.2.3.1.2 The person is capable in carrying out legal actions;

2.2.3.1.3 Have never been declared bankrupt or never been acting as the member of the BOD or member of the BOC who has been charged guilty causing a company being declared bankrupt 5 (five) years prior to his/her appointment in the Company;

2.2.3.1.4 Have never been sentenced due to criminal action in monetary/financial sector within 5 (five) years prior to his/her appointment in the Company;

2.2.3.1.5 Have never been a member of BOD or BOC who had not been executed AGMS of a company, his accountability never been rejected by an AGMS, used to make a company who had been granted effective by OJK, had been incompliance with the obligation to submit Annual Report (AR) to OJK;

2.2.3.1.6 Each Director shall have a high professional, and ethical standards, field experience as well as high mastery of expertise, skills and competencies that are of relevance to the business of the Company;

2.2.3.1.7 Each Director shall have a good understanding of the Company Law, Capital Market Law and related Rules and Regulations, IDX Rules, the Company’s Articles of Association, Mining Law and all regulations that prevail pertaining to the Company business and is obliged to comply with all provisions related to their duties, responsibility and authority;

2.2.3.1.8 Each Director shall have a good understanding of best practices of GCG and Social Responsibility (SR) and is committed to adhere to them.

2.2.3.2 Independent Requirements

BOD as an organ of the Company shall function and be responsible collegially and individually while executing their fiduciary duties. At least 1 (one) of BOD members serves as an Independent Director. The Independent Director shall fulfill the requirements of IDX.

2.2.3.2.1 Do not have any affiliate relation with the controlling

shareholders at least 6 (six) months prior to the appointment;

2.2.3.2.2 Do not have affiliate relation with the other members of the BOD and the BOC either horizontally or vertically;

2.2.3.2.3 Do not occupy any position as a member of the BOD in any companies;

2.2.3.2.4 Do not acting as an Insider in the supporting institution or profession of the capital market whose services is utilized by the Company for 6 (six) months prior to the appointment;

2.2.3.2.5 Do not act as an agent to protect the interest of the Company’s Directors or Commissioners, Major Shareholders or other shareholders who are related to the company’s Major Shareholders.

 

2.3 Term of Office

2.3.1 Each member of BOD shall be appointed and dismissed by the GMS. Such appointment shall be effective as of the date determined in the GMS and shall cease at the closing of the 3rd (third) AGMS after the date of appointment, without prejudice to the right of the GMS to dismiss Directors at any time by stating the reasons for the dismissal and having given a fair chance to defend for the Directors under dismissal.

2.3.2 The member of the BOD whose office term will expire, he/she may be nominated for reappointment;

2.3.3 Director shall retire when he or she reaches the age of 60 (sixty) and such retirement shall be effective on the date of the following GMS. An exempt is eligible if the General Meeting of Shareholders resolves to appoint  him/her as Director within the agreed term of office beyond his/her retirement age.

2.3.4 Each BOD member may resign from the post by notifying the Company in writing 90 (ninety) days in advance as regulated by OJK and the resignation come into force when accepted by the GMS or 90 (ninety) days after submission of resignation letter whichever is earlier. The resigning member may be held accountable for her or his works as member of the BOD from the appointment date to the resignation date;

2.3.5 BOC may temporarily terminate a member of BOD for a reason, such termination shall be informed to the terminated-director and to the capital market regulators and BOC shall convene GMS to confirm such of termination within 90 (ninety) days after the date of termination;

By the lapse of 90 (ninety) days or if within that 90 (ninety) days, the Company would have not convened GMS, or the GMS cannot make any resolution, such of termination shall automatically invalid and the terminated-director shall be back to function.

2.3.6 The Company has to report to the authority on the resignation or the temporary termination of that BOD member as regulated by the capital market regulators and make disclosure on the result of GMS

2.3.7 The term of office for the successor who is appointed to replace a resigned or dismissed member of BOD shall hold the remaining office term of the replaced member unless otherwise determined by the GMS;

2.3.8 As of the date of termination, that terminated-director as mentioned in item 2.3.5 shall not authorize to manage the publicly listed company for the interest of the company and he/she also does not eligible to represent the company in or out of the court up to the time of GMS resolution either to accept or reject the temporary termination or by the lapse of 90 (ninety) days;

2.3.9 The office term of a member of BOD shall automatically cease under the conditions of :

2.3.9.1 Resignation

2.3.9.2 Expiry of the term of office

2.3.9.3 Non-fulfillment of statutory requirements

2.3.9.4 Death

2.3.9.5 Dismissal by virtue of a resolution of GMS

2.3.9.6 Bankrupt or guardianship by virtue of a court verdict

2.3.9.7 Retirement

 

CHAPTER 3

DUTIES, RESPONSIBILITIES AND AUTHORITIES

 

3.1 Duties and Responsibilities

BOD shall execute its duties, responsibilities and authority in good faith and with prudent considerations for the best interest of the Company at all times as set out in the Company’s Articles of Association, resolutions of shareholders’ meeting, related laws and regulations and shall acts in good faith with a view to maximizing the Company’s value to the shareholders and all stakeholder.

BOD shall set and revisit the Company’s vision and mission for BOC approval as deemed necessary by the BOD.

BOD shall be accountable to convene the Company’s AGMS and other GMS as necessary in compliance with the prevailing regulations and as required by the Company’s AoA.

BOD requires its new members to attend an orientation session to learn about the Company’s expectation from their roles, duties and responsibilities and what its corporate governance policy and practices are. The orientation will also help them understand the Company’s business better as well as provide a chance to visit the Company’s operations as a preparation for their tasks.

BOD has a policy to provide directorship education about GCG, industrial outlooks, business prospects and innovations where it urges Director to attend seminar or coursework organized by the Indonesian Institute for Corporate Directorship or other similar and reputable institutes to promote effective Director performances.

 

3.1.1 Scope of Work

In addition to any action taken as required by the laws, the Company’s AoA and the resolutions of the shareholders’ meeting, BOD hereby stipulates that the consideration, acknowledgement and approval of the following matters shall be vested under the authority, duty and responsibility of the BOD in relation to its management roles :

3.1.1.1 develop the Company’s policies, business strategies, business plans and annual budget;

3.1.1.2 the Company’s monthly and quarterly performance and operation in which performance is compared with the plan, budget and business outlook of the following period of the budget year;

3.1.1.3 the Company’s investment in a project worth less than IDR 150 billion;

3.1.1.4 adjustment of annual operation plan which total amount is less than 5% of the total approved administration;

3.1.1.5 strategic plan of each business unit;

3.1.1.6 calculate the interim dividend payment for the BOC approval;

3.1.1.7 use of capital investment;

3.1.1.8 approve additional capital budget of new item up to IDR 4 billion;

3.1.1.9 assets write off;

 

3.1.2 Succession Plan

The BOD with the assistance of Human Resource Head prepares succession plan for the executives below Director level to ensure continuity and sustainability of the company;

The succession plan includes assessment approach, leadership and managerial training and development programs and incubation and facilitation program.

 

3.1.3 Risk Management Committee

The Company adopted enterprise risk management system for all material and controllable risks which may affect the Company’s operations. This includes preventive and mitigation of risks relating to the achievement of the company’s vision and implementation of its strategies as well as risks in relation to the financial condition of the Company, its operation and other relevant areas.

BOD establish Risk Management Committee, and this Committee shall report to BOD on its operation plans and performance and shall also regularly report to the Audit Committee.

 

3.1.4 Internal Audit

BOD shall ensure an effective and efficient internal control system that covers every aspect of its operation and compliance with related laws, rules and regulations. Effective and adequate check and balance mechanisms are in place to protect shareholders investments in the Company and its assets.

BOD establish an independent Internal Audit function to ensure that all operation units of the Company are in compliance with set operating procedures. Internal Audit function shall prepare and submit their auditing report to President Director and to Audit & Risk Oversight Committee.

 

3.1.5 Relationship between BOD and BOC

3.1.5.1 BOD shall provide access to BOC and supply BOC with best possible information pertaining to areas needed enabling BOC to make decision. Joint meeting between BOD and BOC is necessary in order to have a better understanding and relationship between the board.

3.1.5.2 BOD and BOC shall jointly signed the Company’s Annual Report.

3.1.5.3 Each BOD members is obliged to provide to BOC any material information so required by the BOC. Minutes of the BOD meetings shall also be made available if the BOC considers them of importance to its supervisory works.

 

3.1.6 Business Ethics

BOD and its individual members shall serve as a good role model towards the following basic ethical standards for the whole members of the organization;

3.1.6.1 Conflict of Interest

3.1.6.1.1 A BOD member is not eligible for loan programs of the Company;

3.1.6.1.2 Each BOD member is obliged to disclose their shareholdings of the Company’s shares either direct or indirect through relatives and nominees;

3.1.6.1.3 Each members of the BOD declares through the Company’s Transparency Center any intents to get involved in any transactions or business contracts with the Company with a view to avoiding her or his involvement in the decision on the respective transactions or business contracts;

3.1.6.2 Insider Information

BOD members shall prohibit the abuse of any material information with regard to the Company business for personal benefit of his/her own family or that of any other third parties.

3.1.6.3 Confidentiality

BOD members shall keep classified corporate information strictly confidential, especially internal information that may affect the business of the Company or its share price.

3.1.6.4 Trading Rule

BOD members shall refrain from trading the Company’s shares no fewer than 30 (thirty) days prior to the information disclosure to the public if that information is a report based on an accounting period such as an operating result, financial statements and an annual report

In case the information is a report of corporate action in a particular situation such as acquisition/disposal of assets, connected transaction, joint venture/cancellation of joint venture, capital increase/capital reduction, issuance of new securities, repurchase of own shares, payment or non payment of dividend or incidents that affect the company’s share price, in such cases, BOD members shall refrain from trading the Company’s shares from the period he / she learns of the information to the day the Company discloses the information to public.

Any BOD members is required to report their dealings in company’s shares within 3 (three) business days after such of trading.

3.1.6.5 Anti – corruption

BOD shall refrain and be prohibited from receiving and/or giving gratification or take personal benefits from the Company’s business relations with third parties.

 

3.1.7 Accountability

In performing its role, BOD as management of the Company shall submit its accountability report in the form of AR and SD that covers the company operations, GCG implementation, social responsibility and financial statement for AGMS approval and ratification.

AGMS approval to the AR and SD and ratification on the financial statement of the Company shall release and discharge BOD members as long as it has been reflected in the AR and SD without minimizing the responsibility of each member of BOD in the event that a crime, mistake or negligence occurs causing damage to any third parties which can not be indemnified by the Company’s assets.

 

3.1.8 Performance Evaluation

With reference to the Company’s target, each BOD member shall establish their KPI relevant to their role and responsibility through online system that the Company has had in place in the beginning of the year and BOC approves it. Those KPI shall be evaluated twice a year. Aspects of evaluation shall be based on the triple bottom line reference they are profit, planet and people.

The result of KPI evaluation did by BOC shall be the reference for BOC in determining the reappointment of BOD members as the case may be.

 

3.1.9 Remuneration

3.1.9.1 Remuneration package for BOD shall be reviewed periodically and recommended by the SDGNCC to BOC for GMS approval. And distribution to each director can be delegated from the GMS to the BOC which will be determined through BOC Meeting.

3.1.9.2 Remuneration package for BOD members and its formula shall be based on the company and individual performance and specific assignment as well as up-to-date survey on market condition.

 

3.2. Authorities and Delegation of Authority

3.2.1 In accordance with the Company’s AoA, BOD shall have the authority to approve certain legal actions and represent the Company in and out of the Court;

3.2.2 BOD member is not authorized to represent the Company in the case of

3.2.2.1 there is a court case between the Company with that member of BOD;

3.2.2.2 and that member of BOD having an interest that is in conflict with the Company;

3.2.3 Under such of condition as mentioned in item 3.2.2, those are eligible to represent the Company shall be :

3.2.3.1 the other member of BOD who are not having conflict of interest with the Company;

3.2.3.2 the BOC in case all of BOD members having conflict of interest with the Company;

3.2.3.3 other party appointed by the GMS in case all member of the BOD and BOC having conflict of interest with the Company.

3.2.4. For an effective management, BOD may delegate their power to the authorized person to represent the Company and also may set a delegation of authority table and that delegation of authority shall not prejudice to the BOD accountability as set out in the Company’s AoA.

 

CHAPTER 4

MEETING, REPORTING AND BUDGET

 

4.1 Meeting

4.1.1 BOD shall set their meeting schedule in advance prior to the year end for the coming year.

4.1.2 BOD shall convene regular meeting at least once every month or at any time deemed necessary or considered necessary by one or more member(s) of the BOD. Such meeting shall be valid if it is attended by majority of BOD members.

4.1.3 BOD shall convene joint meeting with BOC at least once on every 4 (four) months.

4.1.4 The meeting material for such of scheduled meeting shall be distributed to the meeting participants at the latest 5 (five) days prior to the meeting date. For an unscheduled meeting, the meeting material may be distributed to the meeting participants prior to that meeting.

4.1.5 President Director shall chair the meetings of the BOD.

4.1.3 In the absence or inability of President Director to chair and attend a meeting of BOD, of which case it is unnecessary to give evidence to third parties, a member of BOD elected by and from the members of BOD being present at the Meeting may chair the Meeting of BOD.

4.1.4 A member of BOD may be represented in the Meeting of the BOD only by another member of the BOD under a power of attorney.

4.1.5 A meeting of the BOD shall be legal and entitled to make binding resolutions if more than 1/2 (one half) of the number of members of the BOD are present or represented at the Meeting.

4.1.6 Resolutions of the Meeting of BOD shall be made based on deliberations for a consensus. If consensus is not achieved, resolutions shall be made by the majority.

4.1.7 Minutes of the Meeting of BOD and joint meeting of BOD and BOC shall be signed by the participating members.

4.1.8 BOD may also make legal, binding decisions without having to convene a meeting of BOD, on condition that all the members of BOD have been notified in writing of the relevant proposal and that all the members of BOD give approval to the proposal put forward in writing and sign such approval. Resolutions so made in such a procedure shall have the same force as those made legally at the meeting of BOD.

 

4.2 Reporting

4.2.1 BOD regulary reports the company’s operations and performance in comparison with the plan, budget and business outlook of the following period of the budget year to the BOC

4.2.2 Report of BOD activities and the Company performance for every fiscal year shall be reflected in the Company’s AR and SD and propose to AGMS for approval and ratification.

 

4.3 Budget

BOD sets the Company strategy, annual plan and budget before the fiscal year ended, BOD shall submit draft of the Company’s Annual Work Plan and Budget for BOC approval.

 

CHAPTER 5

CLOSING

 

5.1 Validity and Evaluation

5.1.1. This Amendment of BOD Charter takes effect on the date stated below to replace the first BOD Charter which was established in February 2010.

5.1.2. This BOD Charter shall be reviewed as necessary with a view to aligning it with developments in capital market laws and regulations, as well as in GCG and social responsibilities in general.

Approved by Board of Directors of PT Indo Tambangraya Megah Tbk on 23 July 2018