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BOD Charter

PT Indo Tambangraya Megah Tbk ( ITM ) is a coal-related energy company and publicly listed at the IDX and at the same time the Company also subsidiary of Banpu Public Company, which shares listed in the Thailand Stock Exchange (SET). With regard to the above status, the ITM 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 the sustainable growth 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 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 all stakeholders.

Vision

A professional and ethical BOD who shall create sustainable corporate values for its shareholders and wider stakeholders.

Mission

The BOD shall pursuit 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.

Objective

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

ORGANIZATION

The members of BOD are appointed and dismissed by the General Meeting of Shareholders. The process of evaluation and selection of candidates shall be carried out by the GCG, Nomination and Compensation Committee.

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

The composition of BOD shall enable BOD to make decision effectively, timely and independently. And in accordance with IDX rule, at least one of BOD members shall be an Un-affiliated Director.

Pursuant to the GMS Resolutions no. 33 dated 27 August 2007, the BOD of the Company consists of five Directors including the President Director.

Member of BOD shall be proposed and recommended to the GMS through the Board of Commissioners from candidate that has met the requirements and selecting criteria of the GCG, Nomination and Compensation Committee.

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

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

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

General Requirements
Must be honest person, have good character, high moral, leadership and loyalty to the Company.

The person is capable in carrying out legal actions.

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

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

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.

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.

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

Independent Requirements
BOD as an organ of the Company shall function and be responsible collegially and individually while executing their fiduciary duties. At least one of BOD member serves as an Un-affiliated Director. The Un-affiliated Director shall fulfill the following requirements:

Do not have any affiliate relation with the controlling shareholders at least 6 (six) months prior to the appointment.

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

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

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.

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 Major Shareholders.

TERM OF OFFICE

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.

The member of the BOD whose office term expired may be nominated for reappointment.

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.

Each BOD member 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 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.

The term of office for the successor who is appointed to replace a resigned or dismissed member of BOD or the one who fill in the vacant position shall be the remaining office term of the replaced member unless otherwise determined by the GMS.

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

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

DUTIES AND RESPONSIBILITIES

BOD shall execute its duties, responsibilities and authority as set out in the Company 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 stakeholders.

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.

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, 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:

  • develop the Company’s policies, business strategies, business plans and annual budget;
  • 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;
  • the Company’s investment in a project worth less than IDR 150 billion;
  • adjustment of annual operation plan which total amount is less than 5% of the total approved administration;
  • strategic plan of each business unit;
  • calculate the interim dividend payment for the BOC approval;
  • use of capital investment;
  • approve additional capital budget of new item up to IDR 4 billion;
  • assets write off;
  • fixed assets transfer among the company in Indonesia

Risk Management Committee
The Company adopted a 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.

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 establishes 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 BOC and also provide administration services to Audit Committee.

Relationship between BOD and BOC
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 boards.

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

Each BOD member 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.

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.

  • 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.
  • 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.
  • 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.

  • Anti – corruption ethics
    • BOD shall refrain and be prohibited from receiving gratification or take personal benefits from the Company’s business relations with third parties.

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

AGMS approval to the Annual Report and ratification on the financial statement of the Company shall release and discharge BOD members as long as it has been reflected in the Annual Report 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.

Performance Evaluation
BOD performance evaluation shall be based on the long term and annual plan of the Company that shall reflect in the key performance indicator. The semi-annual assessment covers both the performance and behavior of the members reflecting the corporate values.

Remuneration
Remuneration package for BOD shall be reviewed periodically and recommended by the GCG, Nomination and Compensation Committee 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.

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.

AUTHORITIES AND DELEGATION OF AUTHORITY

In accordance with the Company’s Articles of Association, BOD shall have the authority to approve certain legal actions and represent the Company.

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 articles of association.

MEETING

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

President Director shall chair the meetings of the BOD.

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.

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.

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.

Resolutions of the Meeting of BOD 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 1/2 (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 BOD being present shall be entitled to cast 1 (one) vote and 1 (one) additional vote for every other member of BOD represented by him/her.
  • Each member of BOD 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 BOD and shall not be entitled to participate in voting regarding the matters relating to such transaction or contract, unless the meeting of BOD 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 BOD shall be signed by the Chairman of the Meeting and by another member of BOD being present and/or represented at the Meeting.

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.

REPORTING

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

BUDGET

14 (fourteen) days before the fiscal year ended, BOD shall submit draft of their annual work plan and budget for BOC approval.

VALIDITY AND EVALUATION

This BOD Charter shall take effect as of the date of its approval.

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