|Good Corporate Governance|
Good Corporate Governance
Implementing Good Corporate Governance (GCG) is not only a reflection of the Company’s compliance with prevailing laws and regulations in Indonesia. For the Company, GCG implementation is in line with the Company's vision and mission and serves as the cornerstone in the creation and building of resilient and sustainable corporate structure.
General Meeting of Shareholders
According to Law No. 40 of 2007 on Limited Liability Companies (UUPT), the General Meeting of Shareholders (GMS) is an instrument of the Corporation vested with authority not given to the Board of Directors or the Board of Commissioners, within the limits as stipulated in the law and the Company’s Articles of Association. The GMS plays a crucial role in a company. Through the GMS, shareholders make important decisions related to the company, among others evaluating the performances of the Board of Commissioners and the Board of Directors, approve the Annual Report, and approve strategic decisions related to corporate actions proposed by the Board of Directors. Shareholders neither intervene in the tasks, functions, and authorities of the Board of Commissioners nor those of the Board of Directors.
On April 11, 2016, the Company held an Annual GMS and Extraordinary GMS (EGMS) which adopted the following resolutions:
Board of Commissioners
The following are the tasks and responsibilities of the Board of Commissioners:
In line with the provisions of the Company's Articles of Association, for certain actions, the Board of Directors requires the approval from the Board of Commissioners.
As resolved during the GMS of April 14, 2015, the Board of Commissioners have comprised of five persons, two of which are Independent Commissioners. Appointment and termination of the members' term of office shall be decided during the GMS. The composition of the Board of Commissioners for 2016 was as follows:
The Board of Commissioners delivered its accountability for oversight on the management of the Company at the GMS on April 11, 2016. Until the end of its term, the Board of Commissioners has held 6 Board of Commissioners meetings to discuss the Company's performance in line with the strategic plan and working plans set forth by the Company's Board of Directors for the relevant financial year. During each of these meetings, the Board of Commissioners also invited the Board of Directors and Audit Committee.
The Board of Commissioners held regular meetings to discuss the Company’s performance. In line with the Articles of Association, a Board of Commissioners' Meeting is deemed valid and authorized to make binding decisions if more than half of the members of the Board of Commissioners are present or represented during such meeting. The Board of Commissioners and its members have full access to all information related to the Company.
The Board of Commissioners may hold discussions between its members or with other Corporate Instruments, including decision making, with or without convening a meeting. Without prejudice to the provisions of the Capital Market Law regarding the obligation of holding regular Board of Commissioners meetings, such meetings shall be held in accordance with the procedures and provisions stipulated in the Legal Foundation of this Charter, at a minimum of once every two months. At the end of each quarter, the Board of Commissioners will hold a meeting together with the Board of Directors to review the Company's performance for the respective quarter.
During the current financial year, the implementation of the Board of Commissioners responsibilities has been supported by two Committees, namely the Audit Committee and the Nomination and Remuneration Committee. Both committees assisted the Board of Commissioners in every decision that affect the Company.
Board of Directors
The Board of Directors is the Corporate Instrument that carries out the duties and the full responsibility of the Company's management in accordance with the Company's vision, mission and strategies as well as the provisions of its Articles of Association. Members of the Board of Directors are appointed and discharged from office by the GMS.
In 2015, the Board of Directors enacted a Board of Directors Charter which sets out the legal foundation and implementation of the Board of Directors’ duties along with its values, description of tasks, responsibilities and authority, procedures for meetings and decision-making or reporting, and the Board of Directors' accountability.
The following are the tasks and responsibilities of the Board of Directors:
During the current financial year, the composition of the Board of Directors is as follows:
Board of Directors’ meetings are held regularly. This policy is in compliance with provisions of the Company's Articles of Association and UUPT, and regular weekly Board of Directors meetings were held 32 times during 2016.
In order to comply with the Indonesia Stock Exchange (BEI) regulation No. I-A on Listing of Shares (Stock) and Equity-Type Securities Other Than Stock Issued by the Listed Company (Pencatatan Saham dan Efek Bersifat Ekuitas Selain Saham yang diterbitkan oleh Perusahaan Tercatat) (BEI Regulation No. I-A), the GMS appointed Mister Rudy as an Independent Director.
In 2015, the Board of Directors enacted a Board of Directors Charter to serve as a guideline for the Board of Directors, and to become an integral and inseparable part of the Articles of Association. This Charter covers values, description of tasks and responsibilities, and authority, meeting procedures and decision making as well as reporting and accountability of the Board of Directors.
During 2016, in performing its primary tasks and functions, the Board of Directors was supported by two Committees, namely the Audit Committee and the Nomination and Remuneration Committee. Both committees assisted the Board of Directors in every decision making for the Company.
The Audit Committee was established by and answers to the Board of Commissioners. In the performance of its duties and responsibilities, the Audit Committee shall refer to the Audit Committee Charter established by the Board of Commissioners. Membership of the Audit Committee shall comprise three persons, one of whom shall be one of the Independent Commissioner who concurrently Chairs the Audit Committee. The term of office of the Audit Committee shall be 2 years.
The main function of the Audit Committee is to assist the Board of Commissioners in carrying out their supervisory function over the Company. The Audit Committee shall regularly meet with the Board of Directors and its ranks to evaluate the Company Performance and submit a report of its evaluation during each of the regular meetings with the Board of Commissioners. Reports on the accountability of the Audit Committee will be further elaborated in the Audit Committee Report.
In 2016, the Board of Commissioners established the following composition of the Audit Committee:
In 2016, the Audit Committee enacted the Audit Committee Charter applicable as guidance in the implementation of the tasks and functions of the Audit Committee. Throughout 2016 the Audit Committee performed its tasks and responsibilities independently, particularly in implementing its oversight function of the Company.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee was established by and answers to the Board of Commissioners. In the performance of its duties and responsibilities, the Nomination and Remuneration Committee shall refer to the Nomination and Remuneration Charter enacted by the Board of Commissioners.
Membership of the Nomination and Remuneration Committee shall comprise of three persons, one of whom shall be one of the Independent Commissioners that concurrently Chairs the Nomination and Remuneration Committee. The term of office of the Nomination and Remuneration Committee shall be 2 years.
The Nomination and Remuneration Committee assists the Board of Commissioners in performing its function of nominating and remunerating members of the Board of Directors and the Board of Commissioners. Reports on the accountability of the Nomination and Remuneration Committee will be further elaborated in the Nomination and Remuneration Committee Report.
In 2016, the Board of Commissioners established the following composition of the Audit Committee, as follows:
In 2016, the Nomination and Remuneration Committee enacted the Nomination and Remuneration Committee Charter as a guideline in carrying out its duties and functions. Throughout 2016, the Nomination and Remuneration Committee performed its tasks and responsibilities, as well as independently monitoring the Company's performance.
The Corporate Secretary is one of the functions within the Company that is assigned and given the responsibility to communicate with external parties such as the capital market authorities, stock exchange authorities, investors, and the public. The Corporate Secretary answers to the Board of Directors.
The position of Corporate Secretary is held by Rudy who is also a duly appointed member of the Board of Directors.
The Internal Audit is responsible for assisting the Board of Directors in evaluating all of the Company's business activities. The Internal Auditors also assist the Board of Directors in ensuring that Good Corporate Governance is implemented in every aspect of the Company's organization. The Internal Auditors assist the Board of Directors in conducting the Company's business efficiently and effectively in order to improve on the existing performance.
By virtue of the decree of the Chief of Bapepam-LK No. KEP/496/BL/2008, the Internal Auditors must perform their duties according to the Internal Audit Charter which regulates the Internal Audit working system. In performing its tasks, the Internal Auditors must be guided by a Risk Based Audit Method. This auditing method demands testing of the internal control system, efficiency and effectiveness of the Company's business operations, and compliance with prevailing laws and regulations.
Internal Auditors are partners of the Board of Commissioners, the Board of Directors and other stakeholders, working together to achieve the Company's objectives. The Internal Audit convenes routine meetings with the Audit Committee and holds discussions with all relevant divisions. The objective is to review and disseminate information of the Internal Audit team's findings and recommend corrective measures to improve the Company's performance. In 2016, the Audit Committee Charter was enacted as guidance in the implementation of its tasks and functions.
The Company, whose main line of business is in oil palm plantations, will always face many business risks, the majority of which are among others external risks beyond the Company's control. The business risks faced by the Company corresponds with the risk characteristics of the commodity sector, one of which is price fluctuations.
The Company analyzes all potential risks and subsequently formulates a control strategy or manages the risks. The objective of implementing risk management is:
The following are several risks which have the potential of affecting the Company's business operations:
Business ethics is a system of values explicated from the corporate culture, and adhered to by all components within the Company, from the Board of Directors, the management, to all employees. Business ethics will become a reference for all components within the Company in their conduct with the environment, both internal and external. Including the conduct with stakeholders.
The Company always affirms its commitment to uphold business ethics at all times by complying with all prevailing laws and regulations in Indonesia. In its implementation, the Board of Directors together with the management and all employees, always ensure that every aspect of the Company's business shall adhere to the principles of Good Corporate Governance, which cover such aspects as transparency, accountability, reasonability, and full of responsibility. Consistent implementation of business ethics will increase the Company's value in the eyes of shareholders and other stakeholders.
In implementing business ethics, the Company will also avoid conflicts of interest within the company, starting from the Board of Directors, the management, and all of the employees. The Board of Directors, the entire management, and all employees are prohibited from accepting compensations in any form, from others who have either direct or indirect interests.
The Company also consistently and continuously communicates the Business Ethics Standards as well as Company values to all employees and all stakeholders. As such, Business Ethics Standards may become the reference in attitude and conduct of all components within the company.
The Company and all of its subsidiaries have engaged the services of Professional Institutions Supporting the Company to assist its business activities, including independent accountants, public appraisers, actuaries, and rating service providers at a total cost of approximately Rp 12.6 billion in 2016.
Fair Business Competition
During the period of 2011, the Company and other CPO producers were investigated by the Business Competition Supervisory Commission (KPPU). The investigation was related to allegation of cartel practices among CPO producers and cooking oil manufacturers. The charges were based on the KPPU analysis regarding high cooking oil prices during 2010 to 2011.
The charges were not proven during court proceedings.
The Company has never committed any cartel practice of CPO and cooking
oil price fixing. The surge in cooking oil prices was solely due to high
demand, while at the same time the production capacity could not meet
The Company's sustainability cannot be separated from the efforts to build and foster relationships with all stakeholders. The Company has identified its stakeholders and approach methods to continue maintaining harmonious relationships with them.