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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. AE 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 AE a trustworthy, transparent, and sustainable company for all its stakeholders.

Code of Conduct

AE 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 AE 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.

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 in September 2018, which was attended by the 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.

The Company's official code of conduct can be found here.

Whistleblowing Mechanism

While AE’s formal whistleblowing mechanism for the reporting of misconduct is still being finalized, all employees are expected to proactively report to their direct supervisor in the event that they find any case of fraud or breach of our business ethics, company rules or regulations, Articles of Association, laws or confidential information.

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 AE’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.

During 2020, no trading in the company’s shares was made based on insider information and no confidential information was used to manipulate the company’s share price and/or to gain personal benefits and/or benefits for any other parties.

In addition, AE 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, AE engages in transactions with related parties, which include its majority shareholders, PT Adaro Strategic Investments. The transactions primarily consist of services and other financial transactions.

In dealing with related parties, we ensure 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 to the coal specifications.
  2. Treating our mining services and logistics subsidiaries as third-party service providers and benchmark the fees of their services to that of external service providers from outside of the Adaro Group performing similar activities for the group.

All related party transactions must follow the rules of the Delegation of Authority and obtain approvals from AE’s BoD.

AE 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 2020, AE recorded revenue from sales of coal to TPI amounting to US$25.55 million and revenue from management and consulting services to TPI and BPI of US$0.36 million and US$0.50 million, respectively. Total revenue from related parties was US$27.86 million, or 1.10% of AE’s revenue.

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 Extraordinary General Meeting of Shareholders.

There was no transactions related to mergers, acquisitions, and takeovers in 2020.

Compliance on Creditor’s Rights

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

The Policy of Procurement of Goods and Services

AE has issued a Procurement Policy, which consists of the guidelines for the procurement of goods and/or services in such a way that fulfills the requirements of AE and its subsidiaries for ensuring smooth operational activities and adhering to the transparency and confidentiality principles.

This policy requires AE to determine Key Performance Indicators for measuring procurement progress, identifying risks, and developing the standard operating procedures for risk mitigation. Every party involved in the procurement process shall sign a conflict of interest statement to prohibit any activities that may lead to a conflict in any part of the process. Furthermore, the procurement team shall enhance vendor capability by giving evaluation upon vendor performance and provide feedback and improvement solutions to vendor.

Customers' Welfare

AE has treated its customers equally and responsibly as stated in its Code of Conduct, which among others always prioritize the customers’ satisfaction, provide accurate information with regard to the company’s products and/or services, and comply with and respect all terms, conditions, and provisions agreed collectively.

Complaint Handling Mechanism

AE 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.

AE’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

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

External Auditor

In 2020 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 AE’s BoC, to audit AE’s financial statements for the fiscal year ending on December 31, 2020.

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

In 2020, AE 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. AE paid a total amount of approximately Rp6 billion for the services from this professional institution in 2020.

In 2021 AGMS, the shareholders approved the re-appointment of Yanto, S.E., Ak., M.Ak., CPA and Public Accounting Firm Tanudiredja, Wibisana, Rintis & Rekan, a member firm of PricewaterhouseCoopers global network in Indonesia, to conduct an audit of the company’s consolidated financial statements for fiscal year 2021, and his replacement appointed and/or approved by the company’s BoC.

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, AE’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 AE in 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, AE 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

AE has disclosed the legal proceedings of the company in the Notes to the Consolidated Financial Statements for the year ending on December 31, 2020 – Schedule 5/135 to 5/136.

Administrative sanctions and suspension

No suspensions or administrative sanctions were imposed on any of our BoC or BoD members by the regulators in 2020.

Last modified on May 30, 2021, 7:14 am | 23456