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Corporate Governance Fact Sheets


Consistent adherence to the GCG principles is important to ensure business growth and create a favorable climate for investment. AEI strives to apply the GCG principles on a day-to-day basis in all its business units. Together with the Adaro Values of “Integrity, Meritocracy, Openness, Respect and Excellence”, this will keep AEI a trustworthy, transparent, and sustainable company for all its stakeholders.

 

Code of Conduct

AEI always runs its business by applying the Adaro Values of “Integrity, Meritocracy, Openness, Respect and Excellence” and strengthens GCG implementation in order to stay ahead of the increasingly stronger attention to the standards of corporate governance in Indonesia. To support this commitment AEI has issued an official Code of Conduct, which is applicable to all members of the BoC, BoD, supporting organs, senior management, and all employees at all levels without exception. This Code of Conduct is presented on AEI’s website www.adaro.com.

The Code of Conduct sets forth the principles and behaviors that must be upheld in interacting with the stakeholders in a fair and balance manner. This guidelines cover:

  1. the Adaro Values;
  2. how the company and every individual of the company must comply with the applicable laws and regulations, as well as GCG principles;
  3. how every individual in the company must interact with various stakeholders, including the shareholders, customers, suppliers, communities, creditors, and other employees;
  4. the communication with the shareholders and investors;
  5. insider trading, anti-corruption and anti-fraud, and transactions with a conflict of interest; and
  6. the company’s information disclosure.

The company has promulgated the Code of Conduct to all Executives in Charge (EIC) of the company’s subsidiaries. After such promulgation, the EIC will continuously disseminate the Code of Conduct to all employees at the Adaro Group.

 

Whistleblowing mechanism

All employees and other stakeholders are expected to proactively report any misconduct or any case of fraud or breach of our business ethics, company rules or regulations, Articles of Association, laws or confidential information, along with supporting proof and documentation, to the company’s BoD or to corporate contact available on the company’s website. All the reports received by the company will be processed on anonymous basis.

 

Insider trading, anti-corruption and anti-fraud

In line with the Adaro Value of “Integrity”, all personnel within the Adaro Group are obliged to prevent the occurrence of insider trading, corruption and fraud. This obligation has been included in AEI’s Code of Conduct and BoC and BoD Charter.

In those documents, it is clearly stated that the BoC, BoD, supporting organs, and all employees at all levels are obligated to avoid and prohibited from buying and/or selling the company’s shares when receiving information, whether directly or indirectly, from the company’s insider(s), being involved in any activity conducted to manipulate the company’s share price, and using the company’s confidential information to gain personal benefits and/or benefits for any other parties.

In addition, AEI has issued a gratification policy that prohibits each employee of the Adaro Group from accepting any gifts or gratuities which is considered an act of bribery.

Transactions and balances with related parties

In the normal course of business, AEI engages in transactions with related parties. The transactions primarily consist of services and other financial transactions.

In dealing with related parties, the company ensures that all transactions are fair and at arm’s length by doing the followings:

  1. determining the pricing policies of coal sales to related parties based on international benchmarks, adjusted for coal specifications; and
  2. treating our mining services, logistics, and other subsidiaries as third-party service providers and benchmarking the fees for their services (to the extent available) to that of service providers external to the Adaro Group which perform similar activities for the group.

In 2021, all related party transactions has been reported and disclosed based on the provisions of OJK regulations.

AEI has investments in joint venture companies, i.e. PT Tanjung Power Indonesia (TPI), PT Bhimasena Power Indonesia (BPI) and Kestrel Coal Resources Pty Ltd. In 2021, AEI recorded revenue from sales of coal to TPI amounting to US$26.49 million, revenue from sales of coal to BPI amounting to US$1.78 million, and revenue from management and consulting services to TPI and BPI of US$0.34 million and US$22.51 million, respectively. Total revenue from related parties was US$51.24 million, or 1.28% of AEI’s revenue.

AEI’s related parties transactions in 2021 has been disclosed in 2021 Financial Statement attachment 5/117 to 5/121.

 

Mergers, acquisitions, and takeovers

In the cases of mergers, acquisitions, and/or takeovers, which require shareholders’ approval, the BoC and BoD appoint an independent party to evaluate the fairness of the transaction price. In accordance with OJK regulations number 17/POJK.04/2020 concerning the material transactions and changes in business activities, the transactions amounting more than 50% of the equity must obtain the shareholders’ approval through GMS.

In December 2021, ATA, a limited liability company whose 99.99% of shares are directly owned by AEI, executed a transaction to purchase shares of PT Cita Mineral Investindo Tbk (CITA) totaling 145,601,100 shares for Rp358,761,110,400. By executing this transaction, ATA owns around 3.7% of CITA’s shares.

 

Compliance with creditor’s rights

AEI stakeholders, including creditors, are entitled to obtain fair and equal treatments in accordance with its business relationship with the company. AEI has complied with and committed to fulfilling the creditors’ rights according to the terms agreed in the respective contracts, in accordance with AEI’s Code of Conduct.

 

The Policy of Procurement of Goods and Services

AEI has imposed a new policy for the procurement of goods and/or services effectively as of March 1, 2021 across the Adaro Group, to supersede the previous policy. This new policy was formulated to increase the capability and standardization of the process for the goods and/or services procurement carried out by the procurement / purchasing teams within the Adaro Group.

Among the provisions of the policy for goods and/ or services procurement is the use of information technology and the enhancement of GCG application in the procurement process of goods and/or services. AEI and one of its subsidiaries (SIS) have been employing the E-Procurement application system for supporting the goods and services procurement process since 2021. This application will ensure transparency and equal treatments at all procurement processes, from vendor registration, procurement selection process, and contract management, to the evaluation of vendors’ performance.

 

Customers’ welfare

AEI has treated its customers equally and responsibly according to its Code of Conduct, which among others states that AEI always prioritizes the customers’ satisfaction, provides accurate information with regard to the company’s products and/or services, and complies with and respects all terms, conditions, and provisions agreed collectively.

 

Complaint handling mechanism

AEI strives to maintain and enhance its reputation of providing customers with high-quality products and services. The company is committed to being responsive to the needs and concerns of our customers and to resolving any complaints as quickly as possible.

AEI’s subsidiary, PT Adaro Indonesia, has a Standard Operating Procedure on complaint handling mechanism in place to facilitate customers in the event that they wish to report any dissatisfaction to our marketing team. Any complaints from customers will be investigated by the Operations, Marketing dan Logistics Team, who will coordinate with the marketing team to formulate corrective actions to handle the complaints as well as to prevent the same problems from recurring. The marketing team will communicate the results of the investigation to the customers and find the best solutions.

 

Long-term incentives for BoD and employees

AEI is still conducting analyses to determine the form of the most appropriate long-term incentives for the BoD and employees.

 

External auditor

In 2021 AGMS, the shareholders approved the reappointment of Yanto, S.E., Ak., M.Ak., CPA and Public Accounting Firm Tanudiredja, Wibisana, Rintis & Rekan, a member firm of the PricewaterhouseCoopers global network, or his replacement to be appointed and/or approved by AEI’s BoC, to audit AEI’s financial statements for the fiscal year ending on December 31, 2021.

Tanudiredja, Wibisana, Rintis & Rekan has been auditing AEI’s financial statements since 2015 and providing tax consultation and advisory services to the company.

In 2021, AEI utilized professional services from the external auditor for financial audit services, in addition to other services from a number of institutions, including tax consultant, legal consultant, share registrar, actuaries, and rating agencies. AEI paid a total amount of approximately Rp7.03 miliar for the services from this professional institution in 2021.

 

Information technology

Information technology has evolved to be a vital part of a company’s growth and operations, especially for companies with the scale of the Adaro Group. With its rapid growth in both size and sectors, AEI’s pit to power integrated businesses have a high level of complexity to demand standardization and the best practices in IT implementation to allow simpler and faster work processes, in order for the company to be more efficient and effective to achieve targets through optimum productivity.

This perspective has encouraged the company to integrate its Enterprise Resource Planning (ERP) which initially consisted of a number of systems into 1Adaro ERP – a single centralized and standardized ERP system. The 1Adaro ERP system is integrated with the Executive Dashboard comprising Microsoft Axapta 2012 and SAP S/4HANA. The migration of the system kicked off with the implementation of Microsoft Axapta 2012 for AEI on December 2019 with more than 25 subsidiaries being integrated, followed by the implementation of SAP S/4HANA at SIS.

The rapid development of IT also pushes the company to enhance and optimize its IT infrastructure and facilities to accommodate the company’s needs and comply with the internal regulations as well as the applicable regulatory requirements. One of the top priorities is the protection against cybercrimes. Therefore, AEI will constantly review and apply the cutting-edge security measures to protect the interests of the stakeholders, including anticipating IT disasters.

 

Material litigation faced by the company

AEI has disclosed the legal proceedings of the company in the Notes to the Consolidated Financial Statements for the year ending on December 31, 2021 – Schedule 5/146.

 

Administrative sanctions and suspension

No suspensions or administrative sanctions were imposed on any of our BoC or BoD members by the regulators in 2021.

Last modified on June 23, 2022, 10:39 am | 25608