PT. Indo Tambangraya Megah Tbk (ITM) is a coal-relatedenergy company and publicly listed at the Indonesia Stock Exchange (IDX), which is obliged to comply with all related laws and regulations prevail to its status and business.

Such compliance is essential for ITM in the accomplishment of its vision and mission. Furthermore ITM also upholds the principles and rules of Good Corporate Governance namely transparency, accountability, responsibility, independency and fairness and promotes best governance practices while managing its operation in the interest of shareholders and wider stakeholders.

In performing its supervisory role vis a vis the Board of Directors (BOD) and to facilitate its work in fulfillment of its fiduciary duties,the Board of Commissioners (BOC) needs to have a general guidelines named as "the Charter of Board of Commissioners" (hereinafter referred to as "BOC Charter"). The above mentioned guidelines shall be the reference for the Board Members in executing its responsibility, authority and in acting consistently for the advancement of the company and the interest of all stakeholders.

Vision

A value-enhancing supervisory organ, acting on behalf of shareholders and wider legitimate stakeholders to oversee and keep the BOD's individual and collective leadership and managerial actions in line of which Indonesia is a party, principles and rules of good corporate governance and corporate social responsibility as well as observed.

Mission

The BOC acts collectively. It taps professional expertise through various committees with a view to maximizing its mastery of information about the business, leadership and management of ITM. The BOC observes transparency, accountability and fairness in its works. It bases its relationship with the BOD on mutual respect as stipulated in the Company Law and the Capital Market Law.

Objective

This Charter stipulates the rules and guidelines for the BOC in designing and executing its supervisory duties, responsibility and authority objectively and effectively, observant of the company's values and in compliance with the principles and rules of good corporate governance. The Charter also serves as the basic for the performance evaluation of the BOC each of its members.

ORGANIZATION

The members of the Board of Commissioners are appointed and dismissed by the General Meeting of Shareholders. The process of evaluation and selection of candidates shall be carried out by the Good Corporate Governance, Nomination and Compensation Committee.

Structure

The Board of Commissioners (BOC) shall consist of at least 2 (two) members. One member serves as President Commissioner while the rest serves as ordinary members of the Board of Commissioners.

The number of and composition of Commissioners shall enable the BOC to make decision in an effective, timely and independent manner. At least one third of the members of the Board of Commissioners shall be independent with due observance to the capital market regulations.

Membership Requirements

Members of the Board of Commissioners are expected to bring professional supervisory expertise and know -how to the BOC and shall be prepared to do their utmost while performing their duties, responsibility and authority.

General Requirements

Each Commissioner shall have a high professional, and ethical standards, field experience as well as high mastery of expertise, skill and competencies that are of relevance to the business of the company.

Each Commissioner shall have a good understanding of the company law, capital market law and regulation, the company's articles of association 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.

Each Commissioner shall have a good understanding of best practices of good corporate governance and corporate social responsibility and is committed to adhere to them.

Commissioner shall retire when he or she reaches the age of 72 and such retirement shall be effective on the date of the following AGMS.

Independence Requirements

The Board of Commissioners as an organ of the company shall function and be responsible collectively while overseeing and providing advises to the Board of Directors. At least one of the Commissioners serves as Independent Commissioner and in case of two or more Independent Commissioners at least one shall have accounting or finance background. The Independent Commissioners shall fulfill the following requirements:

• They do not have any affiliate relation with the controlling shareholders
• They do not have family affiliations with the other members of the Board of Commissioners and those of the Board of Directors either horizontally or vertically
• They do not occupy any position as a member of the Board of Commissioners or the Board of Directors in any companies that are affiliated with the company
• They do not act as an agent to protect the interest of the company's directors of commissioners, major shareholders or other shareholders who are related to the company majority shareholders
• They are able to perform duty, express opinions and report on their works and performance as designated by the Board of Commissioners independent of the control and influence of the company's major shareholders or person related to them, including their closed relatives
• Members of the Board of Commissioners shall demonstrate independence and autonomy while performing their supervisory duties, responsibility and authority independently

TERM OF OFFICE

Each member of the Board of Commissioners shall be appointed and dismissed by the General Meeting of Shareholders (GMS). Such appointment shall be effective as of the date determined in the GMS and shall cease at the closing of the 3rd (third) Annual General Meeting of Shareholders (AGMS) after the date of appointment, without prejudice to the right of the GMS to dismiss Commissioner at any time by stating the reasons for the dismissal and having given a fair chance for defense to the Commissioner under dismissal.

The member of the Board of Commissioners whose office term has come to an end may be nominated for reappointment.

Each Commissioner may resign from the post by notifying the company in writing and the resignation come into force when accepted by the General Meeting of Shareholders or 60 (sixty) days after submission whichever is earlier. The resigning member may be held accountable for her or his works as member of the Board of Commissioners from the appointment date to the resignation date.

The term of office for the successor who is appointed to the replace a resigned or dismissed member of the Board of Commissioners shall be limited to the remaining office term of the replaced member, unless otherwise determined by the GMS

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

• Resignation
• Expiry of the term of office
• Non-fulfillment of statutory requirements
• Death
• Dismissal by virtue of resolution of GMS
• Bankrupt or guardianship by virtue of a court verdict
• Retirement

DUTIES AND RESPONSIBILITIES

Supervising and providing advices to the Board of Directors are the main function of the Board of Commissioners. In carrying out its duties, the Board of Commissioners has the right to establish appropriate committees to assist the board in reviewing and making informed recommendations to the BOD. Through such supervision the BOC ensures that the BOD strictly complies with the Company Articles of Association, Resolutions of Shareholders meeting, related laws and regulations and acts in good faith with a view to maximizing the company's value to shareholders and stakeholders.

The Board of Commissioners requires 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.

The Board of Commissioners has a policy to provide directorship education about good corporate governance, industrial outlooks, business prospects and innovations where it urges commissioner to attend seminar our coursework organized by the Indonesia Institute for corporate Directorship or other similar and reputable institutes to promote effective board performances.

Scope of Work

In addition to any action taken as required by the laws, the Company's articles of association and the resolutions of the shareholders meeting, the Board of Commissioners hereby stipulates that the consideration, acknowledgement and approval of the following matters shall be vested under the authority, duty and responsibility of the Board of Commissioners in relation to its monitoring and supervisory roles:

• the company's policies, business strategies, business plans and annual budget
• the company's monthly and quarterly performance and operation report in which performance is compared with the plan, budget and business outlook of the following period of the budget year
• the Company's investment in a project worth more than IDR 150 billion
• investment which exceeds 10 percent of the total investment budget of an approved project, and which exceeds 10 percent of the total non-project investment budget
• transaction or act which materially affects the company's financial status, liabilities, business strategy and reputation
• purchase and disposal of assets, acquisition of business and participation in a joint venture project which are not in conflict with the rules and regulations of Bapepam and the Indonesia Stock Exchange
• entering into a contract not relating to a normal course of business of the company and any contract relating to normal course of business of the company that is material
• parts of a connected transactions between the company, its parent company, subsidiaries, associated companies and related individuals according to the capital market regulations
• any transaction which causes the ratio of company's debt-to equity ratio to exceeds 2.5:1
• distribution of interim dividend
• net borrowing that exceeds a maximum amount of IDR 30 billion (equivalent to THB 100 Million) subject to annual review
• changes in policy and practices with material implications to accounting, risk management and reserves
• significant changes relating to management and financial control system
• determination and review of approval authority granted to the executives and subsidiaries
• recruitment of the board members, committee members, approval of salary increment budget and bonus or bonus formula or annual remuneration package adjustment formula of the board and committee members, executives and employees
• nomination, appointment and termination of directors and the secretary of the board of commissioners and its committees
• appointment and determination of authority of the sub committees
• establishing and supervising the management in accordance with the good corporate governance policy and practices
• appointment of directors or executives to be directors of subsidiaries and associated companies
• registration of new companies and dissolution of companies
• duty to keep corporate information strictly confidential especially internal information not to be disclosed to the public or information that may affect its business or share price
• amendment to the scope of approval authority of the board of commissioners as stated in item 1-20 above.

Committees

To assist the Board of Commissioners in exercising its oversight and advisory roles the Boards of Commissioners might establish committees in accordance with prevailing laws and the Committee on nomination, remuneration, good corporate governance and risk management. Board committee establishment shall be based on the Board of Commissioners Decree.

The Board of Commissioners shall appoint their members to serve in the committee. The qualifications of selected commissioners shall be appropriate for the duties of each committee and each committee shall be chaired by independent commissioner unless there is no such independent commissioner. The term of office of a committee member shall be three years and can be renewed by the BOC and shall be stipulated in relevant committee's charter.

Each board committee shall perform its duties as assigned by the Board of Commissioners. Management shall attend the board committee meeting on invitation to submit reports or to provide information. Board committee shall have the right to engage external experts at the company's expenses.

Each committee shall have their own Charter as their working guideline. They shall their working reports to the Board of Commissioners as well ad every proposal and recommendation.

Nomination of The Members of The Board Of Commissioners

The Good Corporate Governance, Nomination and Compensation Committee shall recommend to the BOC the nomination criteria and search for the candidates with appropriate qualifications. It also nominates the candidates to the Board Commissioners to replace the retiring Commissioners or the fill any other vacancy. The Board of Commissioners chooses a candidate that fits with the company's needs the most and propose her or him to the General Meeting of Shareholders for appointment.

Relationship Between BOC and BOD

The board of Commissioners may invite Directors and or executives of the company to attend its meeting with the purpose of supplying the BOC with best possible information pertaining to areas for which the invited directors or executives are responsible. Such mechanism aids the BOC to make an informed decision. The invited directors and or executives are thereby able to gain a better understanding of the businesses and issues that are deemed important by the BOC. To forge a mutual understanding and respect between the BOC and the BOD to the advantage of the Company's shareholders and stakeholders the BOC shall convene a joint meeting of the BOC and the BOD at least once a year. In addition, members of the Board of Commissioners may directly communicate with individual executives without interfering with the management's day-to-day operation.

The Board of Commissioners and the Board of Directors shall jointly signed the company's Annual Report.

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

Business Ethics

The Board of Commissioners and its individual members shall serve as a good role model in fostering the observance of the following basic ethical standards for the whole members of the organization:

• Insider Information
  • The Board of Commissioners 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
• Confidentiality
  • The Board of Commissioners members shall keep classified corporate information strictly confidential, especially internal information that may affect the business of the company or its share price
• Trading Rule
  • The Board of Commissioners members shall refrain from trading the company's shares no fewer than 30 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, the Board of Commissioners 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
• Anti-corruption ethics
  • The Board of Commissioners shall refrain and be prohibited from receiving gratification or take personal benefit from the company's business relations with third parties

Accountability

In performing its supervisory role, the Board of Commissioners shall submit its accountability report on its supervisory works vis-à-vis the Board of Directors as regards the latter's conduct of the management of the company. The report of the BOC shall be reflected in the approval of Annual Report and ratification of the company's financial statement by the General Meeting of Shareholders.

The General meeting of Shareholders approval to the annual report and ratification on the financial statement of the company shall release and discharge the Board of Commissioners members as long as it has been reflected in the annual report without minimizing the responsibility of each member of the Board of Commissioners 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.

Performance Evaluation

The Board of Commissioners shall assess its operation annually. The assessment includes an evaluation of each commissioner performance and independence. The conduct of this assessment is the responsibility of the Good Corporate Governance, Nomination and Compensation Committee which will prepare a report for the board's consideration.

The Good Corporate Governance, Nomination and Compensation Committee shall recommend to the Board of Commissioners the criteria for assessing the annual performance of the Commissioners performance individually and collectively shall consider the following elements :

• strategic direction setting
• breath and depth of the high level policies
• effectiveness in monitoring and supervising the BOD
• success in integrating the interests of stakeholders in the Company's strategic and functional management and in supervising compliance of the Company with regulatory system
• effectiveness of the board structure
• record of attendance in both the Board of Commissioners and the Committees meeting whenever applicable
• integrity and refrain from engaging in activities that are in conflict with the company's interests
• knowledge, understanding, commitment and ability to observe the company's values, vision, mission, long term plan
• capability in expressing his/her independent argumentations and opinion in providing solutions to the company's strategic issues

Remuneration

Remuneration for the Board of Commissioners as a group shall be approved by the General Meeting of Shareholders with distribution among individual members left to be decided by the President Commissioner.

Remuneration package for the Board of Commissioners members shall be based on up-to-date survey on market condition. It is proposed by the Compensation Committee to the BOC for final decision. The package is reviewed on the periodic basis by the Compensation Committee.

The formula for remuneration for each member of the BOC shall not refer to a specific assignment or company's performance.

AUTHORITIES AND DELEGATION OF AUTHORITY

In accordance with the company's articles of association, the Board of Commissioners shall have the authority to approve certain legal actions taken by the Board of Commissioners.

The Boards of Commissioners may hire external expert consultants to provide advice with regard to the functioning of the Board of Commissioners and the board committees at the company expenses.

Each member of the Board of Commissioners shall individually or jointly be entitled to enter buildings, office and yards used by the Company during the office hours and shall be entitled to examine the books and documents and assets of the Company.

At the time the Board of Commissioners may, under a resolution of the Meeting of the Board of Commissioners, suspend one or more member(s) of the Board of Directors from his/her (their) post(s) if he / she / they have acted in a way contrary to these Articles of Association and/or in contravention of applicable laws and regulations, reasons for such suspension shall be stated explicitly in accordance with prevailing Law.

If all the members of the Board of Directors are suspended or if for any cause none member of the Board of Directors is available, then the Board of Commissioners to temporarily manage the Company and to act for and on behalf of and to represent the company.

The Board of Commissioners might also have other authorities as set out in the Delegation of Authority table.

MEETING

The Board of Commissioners shall convene at least once a year or at any time deemed necessary by one or more member(s) of the Board of Commissioners or shareholders jointly representing 1/10 (one tenth) of the total number of shares with lawful voting rights.

President Commissioner shall chair the meetings of the Board of Commissioners.

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

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

A meeting of the Board of Commissioners shall be legal and entitled to make binding resolutions if more than ½ (one half) of the number of members of the Board of Commissioners are present or represented at the meeting.

Resolutions of the Meeting of the Board Commissioners shall be made based on deliberations for a consensus. If such resolutions based on deliberations for a consensus cannot be made, the resolution shall be made through vote casting based on votes ‘for' of more than ½ (one half) of the total number of votes cast legally at the Meeting.

In the event that there is an equal number of the approving votes and the disapproving votes, the resolution shall be deemed to be rejected:

• Each member of the Board of Commissioners being present shall be entitled to cast 1 (one) vote and 1 (one) additional vote for every other member of the Board of Commissioners represented by him/her
• Each member of the Board of Commissioners personally in any way, directly or indirectly having interests in a transaction, contract or proposed contract, to which the Company becomes one of its parties shall declare the nature of the interests in a Meeting of the Board of Commissioners and shall not be entitled to participate in voting regarding the matters relating to such transaction or contract, unless the meeting of the Board of Commissioners specifies otherwise
• Vote of a person shall be cast by means of a ballot with no signature, while votes of other matters shall be cast verbally, unless the Chair of the meeting specifies otherwise with none of those present at the meeting raising an objection thereto
• Blank or unlawful votes shall be considered to have been inexistent, and shall not be calculated in determining the number of votes cast at the meeting

Minutes of the meeting of the Board of Commissioners shall be signed by the Chairman of the meeting and by another member of the Board of Commissioner being present and/or represented at the meeting.

The Board of Commissioners may also make legal, binding decisions without having to convene a meeting of the Board of Commissioners, on the condition that all the members of the Board of Commissioners have been notified in writing of the relevant proposal and that all the members of the Board of Commissioners 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 the Board of Commissioners.

REPORTING

Report of the Board of Commissioners activities and the company performance for every fiscal year shall be reflected in the company's Annual Report and propose to the General Meeting of Shareholders for approval and ratification

BUDGET

One month before the fiscal year ended, the Board of Commissioners shall submit draft of their annual work plan and budget that will also cover budget for committees and professional expenses for expert/consultant besides other routine operational expenses for the Board of Commissioners operations.

VALIDITY AND EVALUATION

This Board of Commissioners Charter shall take effect as of the date of its approval

This Board of Commissioners Charter shall be evaluated for improvements from time to time to comply with the prevailing rules and regulations.