PT Tirta Mahakam Resources Tbk

Good Corporate Governance

PT Tirta Mahakam Resources Tbk is fully committed to run good corporate governancein the course of their business and try to continue toimprove its implementation in managing a trustworthy company, growing and sustainable.

Fully aware that good corporate governance is very important both for shareholders, creditors, employees and the Company itself. Therefore, it was necessary that the working relationship between the Board of Commissioners and the Audit Committee, the Board of Directors and all employees work in harmony in order to achieve good corporate governance.


GCG Purpose of Implementation

The Company applies corporate governance based on Good Corporate Governance (GCG) Standards with the following objectives:
• Optimizing the value of the company in order to have a strong competitiveness.
• Creating a balance of interests of all stakeholders to be in line with the value of the Company.
• Directing and controlling work relations between the Company’s organs, including the GMS, the Board of Commissioners and the Board of Directors
• Ensuring management transparency and accountability as well as information disclosure as well as possible and as widely as possible for stakeholders
• Directing efforts to achieve the Company’s vision and mission
• Increase the professionalism of human resources
• Building a positive corporate image.
Each of these goals then leads to a big goal, which is to create value added for Shareholders and protect the interests of other stakeholders.


GCG Legal Basis

The legal references used in implementing GCG in the Company are:
a. Law of the Republic of Indonesia No.40 of 2007 concerning Limited Liability Companies.
b. Law of the Republic of Indonesia No.8 of 1995 concerning Capital Market.
c. Financial Services Authority Regulation No. 29 / POJK.04 / 2016 concerning the Annual Report of Issuers or Public Companies.
d. Financial Services Authority Regulation No.21 / POJK.04 / 2015 concerning Implementation of Public Company Governance Guidelines.
e. Financial Services Authority Regulation No.33 / POJK.04 / 2014 concerning Board of Directorsand Board of Commissioners of Issuers or Public Companies.
f. Financial Services Authority Regulation No.32 / POJK.04 / 2014 concerning the Plan and Implementation of General Meeting of Shareholders of Public Companies.
g. Financial Services Authority Circular Letter No.30 / SEOJK.04 / 2016 concerning the Form and Content of the Annual Report of Issuers or Public Companies.
h. Indonesian Corporate Governance Roadmap from the Financial Services Authority.


GCG Principles

The Company is committed to implementing Corporate Governance principles which consist of transparency, accountability, responsibility, independence and fairness.
• Transparency- Providing corporate information which is accurate, concise and punctual, including financial report, annual report, and other relevant matters;
• Accountability-Ensuring that all Company’s decision and action can be held responsible to public;
• Responsibility-Carrying out its responsibilities by always paying attention to the compliance aspect in accordance with the prevailing laws;
• Independence-Conducting the Company’s business activity independently, without any coercion from others ;
• Fairness- Fullfilling the stakeholder’s interest while also act fairly and equitably.

In accordance with Indonesian’s law No. 40 Year 2007 about Limited Liabiliy Company, organs of a company consist of the General Meeting of Shareholders (GMS), Board of Commisioners (BOC), and Board of Directors (BOD).


Annual General Meeting of Shareholders

General Meeting of Shareholders is the highest decision-making institution in the structure of the Company. GMS has the authority to dismiss and appointBoard of Commissioners and Board of Directors, approved the amendment of article of association and approved the annual financial statements, approved the corporate action of the Company and its Corporate funding sources, appoint external auditors, and decides the remuneration of the members of the Board of Commissioners and Board of Directors.

In 2018, the Company held one Annual General Meeting of Shareholders and two Extraordinary General Meeting of Shareholders.


Board of Commissioners

The Board of Commissioners is authorized to carry out general as well as special controlling activities and give advice to the Board of Directors. Membership positions in this board are occupied by individuals who are appointed by the General Meeting of Shareholders, while the functions, powers and responsibilities of the Board of Commissioners refer to stipulations contained within Law No. 40 Year 2007 on Limited Liability Companies, OJK Rule No. 33/POJK.04/2014, concerning Directors and Commissioners of Issuers or Public Companies and Board of Commissioners Charter.

The Board of Commissioners comprises members with diverse expertise and clear division of duties and responsibilities in order to create accountability and encourage commitment from each member in carrying out their controlling function.

The Board of Commissioners is assisted by committees in carrying out their duties, namely the Audit Committee. In addition, the Board of Commissioners can also ask for advice and assistance from consultants or professional advisors.

To date, the members of the BOC comprises of 3 Commissioners including the President Commissioner , Commissioner and Independent Commissioner. This composition of Independent Commissioner is in accordance with the implementation of compliance to the Circular Letter of the Head of Bapepam-LK No. SE-03/PM/2000 and the Capital Market’s regulation which require a publicly-listed company to have at least 30% Independence Commissioners within its Board.

In accordance with the Acticles of Association, the members of the BOC are elected for a period of 3 years and can be replaced before the expiry of their tenure.

Duties and Responsibilities of the Board of Commissioners
The Board of Commissioners is a corporate organ that holds the duty and responsibility of controlling and providing counsel to the Board of Directors with regard to the management of the Company. In this role, the Board of Commissioners acts as a collective body and must ensure that the Company is properly implementing good corporate governance principles. That said, the Board of Commissioners itself is cannot interfere with decision-making processes related to operational decisions.

The duties, powers and responsibilities of the Board of Commissioners are as follows:
• Controlling all management activities carried out by the Board of Directors, including in activities of planning and development operations and budgeting, compliance to the Company’s Articles of Association, and implementation of the mandates and resolutions of the General Meeting of Shareholders.
• Carrying out evaluations of corporate work plans and budgets; monitoring the Company’s development; coordinating with the Board of Directors upon signs that the Company is in tribulation so that the Board of Directors can immediately inform the Shareholders; and providing recommendations with regard to solutions and steps for improvement.
• Providing counsel and opinion to the Annual General Meeting of Shareholders with regard to corporate _nancial reports, development plans, appointment of external auditors, and any other important and strategic decisions related to the Company’s corporate actions.
• The Board of Commissioners is not authorized to operate or manage the Company, except in situations where all members of the Board of Directors have been temporarily dismissed for one reason or another.

Board of Commissioners Charter
The Charter of the Board of Commissioners is of_cially issued on May 24, 2018. This Charter sets out the legal basis, structure of membership, tenure, membership requirements for duties, responsibilities and authorities, business rules, reporting and accountability of the Board of Commissioners. This Charter is reviewed periodically and updated when needed.
The Board of Commissioners Charter click here

Remuneration of the Board of Commissioners
Board of Commissioners not need to establish a Nomination and Remuneration Committee, it is the Board of Commissioners are still guided by the AGMS is delegated all powers to the main Shareholders of PT Harita Jayaraya to determine the remuneration of the Board of Commissioners and Board of Commissioners be authorized to determine the remuneration of Board Directors.

Board of Commissioners Meeting Agenda
Timely if needed, The BOC conducts Board of Commissioners meetings to evaluate business target and to discuss all matters pertaining to the development of the Company. In 2018 the Board of Commissioners has held six (6) meetings with attendency level of 100% on each member. This meeting is intended as one of many forms in which the Board of Commissioners oversight function on the Company’s performance. The meeting agenda includes matters that are within the scope of the Board of Commissioners’ responsibilities, including corporate strategy and performance, corporate governance issues and other strategic issues. The Board of Commissioners’ meeting is also one of the meeting places where each member has the right to express opinions and also evaluate the performance of the Board of Directors in running the Company. The Board of Commissioners also holds four (4) meetings with the Board of Directors during 2018.


Board of Directors

The Board of Directors is fully responsible for prudent management of the Company and to comply with prevailing regulations in order to protect the interest of the Company and to operate in line with the purpose of the Company. The Directors whether individually or collectively must act with precision, prudence, and consider all aspects of a situation in carrying out their duties.

Duties and Responsibilities of Directors
In conducting their duties and responsibilities, each member of the Board of Directors is guided by the decisions of the General Shareholders Meeting, the Company’s Articles of Association, the decisions and directions of the Board of Commissioners, the decisions of the Board of Directors, by the relevant regulations and regulatory governing the forestry and wood products industries, capital market regulation, other areas related to the Company’s activities, and by the principles of GCG.

To date, members of the Board of Directors comprises of 3 (three) members, including the President Director, Director and Independent Director. This composition of Independent Director is in accordance with the implementation of the Decree of the Board of Directors of the Indonesia Stock Exchange No. Kep-00001 / BEI / 01-2014 regarding Amendment No. I-A Regarding Listing of Shares and Equity Type Securities Others than Shares Issued by the Listed Company. In December 2018, the legal basis for the existence of an Independent Director was revoked based on the Decree of the Directors of the IDX 2018 No. Kep-00183 / BEI / 12-2018 dated December 27, 2018, concerning the Registration of Shares and Equity-Type Securities Other than Shares Issued by the Listed Company.

In accordance with the Articles of Association of the Company, members of the Board of Directors hold 3 (three) years, and can be reappointed, however members of the Board of Directors can be replaced before the term of office ends. Timely if needed, the Board of Directors conducts meeting to evaluate business target and to discuss all matters pertaining to the development of the Company.

In 2018, the Board of Directors of the Company has been regularly conducting monthly meetings with all department heads. The Board of Directors also held a meeting with the Board of Commissioners in 2018 of four (4) times.

President Director
The President Director has the duty and authority to ensure that the Company’s operational activities run well in accordance with the mandated vision and mission. Every year, the President Director plays an important role in achieving each target mandated by the Company in accordance with the Company’s Budget Work Plan in the current year. This important role is then seen in the preparation of strategic plans toensure the achievement of effectiveness and efficiency of production.

Related to his duties in terms of operational activities he also manages human resources, finance and marketing.

Director
Director of the Company is currently in the handshake of Mr. Irwan Santoso. He has a duty to deal with of raw materials and production. Broadly speaking, the Director role is to conduct strategic planning related to the production as well as monitoring the ongoing processes in the current year.

Determination of the remuneration of the Board of Directors is conducted in accordance with the results of the Annual General Meeting of Shareholders, where the Board of Commissioners is given the authority to determine the remuneration of the Board of Directors The Board of Commissioners has determines the amount of remuneration does not exceed 3 billion Rupiah per year.

Board of Directors Charter
The Board of Directors Charter functions as a series of procedures and guidelines designed to facilitate and assist the operational activities of the Board of Directors. The Charter of the Board of Directors is officially issued on May 24, 2018. This Charter sets out the legal basis, structure of membership, tenure, requirements for membership of duties, responsibilities and authorities, business rules, reporting and accountability of the Directors. This Charter is reviewed periodically and updated when needed.
The Board of Directors Charter click here

Board of Directors Meeting Agenda
In compliance with OJK Rule No. 33/POJK.04/2014, concerning Board of Directors and Board of Commissioners of Issuers or Public Companies, the Board of Directors meets at a minimum of 12 times a year, and they may also convene additional meetings if deemed necessary. If they cannot be physically present, Board of Directors are permitted to participate in meetings via video or teleconferencing.

Decisions at Board of Directors’ Meetings are taken by majority vote, with each Director holding one vote. In accordance with the Articles of Association, a quorum is reached if more than half of the Directors attend or are represented at the meeting. However, in the case of material transactions, at least two-thirds of the Directors must attend or be represented to reach a quorum.

The Board of Directors may also make a valid and binding decision without formally holding a meeting, provided that all members of the Board of Directors have agreed in writing by signing the decision letter containing the relevant proposal. Decisions made in such manner shall have similar legal validity to decisions made in formal meetings of the Board of Directors.

Throughout 2018, the Board of Directors held 12 meetings, this number did not include 4 meetings with the Board of Commissioners.


Audit Committee

The establishment of the Company’s Audit Committee refers to the Regulations Governing the Guidelines and Implementation of the Audit Committee’s work through the Decree of the Chairperson of Bapepam and LK Number Kep-643 / BL / 2012 dated December 7, 2012 and updated with FSA Regulation No.55/POJK.04/2015 concerning Establishment and Guidelines for Audit Committee Work Implementation.

The members of the Audit Committee Requirements based on Regulation Financial Services Authority (FSA) Regulation No. 55/POJK.04/2015 on the Establishment and Implementation of the guidelines of the Audit Committee is a committee established by and responsible to the Board of Commissioners. The main function of the Audit Committee is to assist the Board of Commissioners in ful_lling its oversight responsibilities for the financial reporting process, the application of risk management and _nance as well as related internal control system, including the audit process, and the application of good corporate governance in the management of the Company.

Based on the decision of the Board of Commissioners, the changes to the members of the Audit Committee are as follows:

Chairman : Pohan Wijaya Po
He was appointed as chairman of Audit Committee since June, 2015.
Last education held : Bachelor of Economic.
He also serves as an Independent Commissioner.

Member : Fugiandy Andershen
He was appointed as member of Audit Committee since 2014.
Last education held : Bachelor of Economic.

Member : Woe Kim Hoy
He was appointed as member of Audit Committee since 2017.
Last education held : Bachelor of Economic.

Audit Committee Task Execution
The Audit Committee performed their task by emphasizing on their position as one committee under supervision of the Board of Commissioners. Broadly Speaking, the Audit Committee is responsible to help supervising the Company’s performance. The Audit Committee also has the authorization and responsibility to evaluate the Board of Directors and all his staffs.

In carrying out the task mentioned above, during 2018, the audit Committee has met five (5) times with 100% attendance rate on each member. In addition, the Audit Committee also held other meeting to discuss the development of the Company’s performance along with its _nancial statement as a whole.

Audit Committee Report
The Audit Committee together with the external auditor have reviewed the Company’s Financial Statement which has been presented fairly and found there is no material improper presentation.

1. Regarding Financial Reports, Projections and Other Financial Information.
The Financial Report for the year 2018 has been presented in accordance with established accounting standards in Indonesia, these are the Statement of Financial Accounting Standards (SFAS), and with the regulations and guidelines established by Financial Services Authority (FSA), previously Capital Market and Financial Institution Supervisory Agency (BAPEPAM-LK).

Regarding the Company’s conduct of transactions with related parties as de_ned by SFAS No. 7, Definition of Related Parties, the nature and volume of signi_cant transactions with related parties have been appropriately described in the Financial Report.

All of the information in the Company’s Financial Report for the year ending December, 31 2018 have been fully audited and disclosed.

2. The Company’s Compliance with Regulations Governing Capital Market and Other Relevant Regulations and Legislation.
The Company’s management in implementing the policy and its activities are carried out in accordance with the regulations in the Articles of Association, applicable regulations and regulations in the Capital Market, issued by Financial Services Authority (FSA), Indonesia Stock Exchange (IDX) and other applicable provisions including unlimited provisions in field of Forestry and Industry & Trade.

3. Implementation of Examination by the Internal Auditor
The Audit Committee has examined the implementation of the planning program and the report of the internal auditor for 2018 and have concluded that these activities have been conducted appropriately and independently and demonstrate increased effectiveness in internal control procedures of the Company. The internal audit functions have examined all operational units, conducting both financial and operational audits of these units.

4. Risk Facing The Company and The Management of Risk by The Board of Directors in 2018.
Management has conducted appropriate assessments and anticipatory measures for potential risks facing the Company.

5. Complaints Presented by Shareholders and Stakeholders.
Throughout 2018, the Company did not receive complaints from Shareholders or other Stakeholders.

As a conclusion to the statements above, the Audit Committee is of the opinion that The Financial Reports for the year ended 31 December 2018 prepared by the Company, are in accordance with established principles of accounting in Indonesia.

The Internal Audit Committee function has been implemented effectively.

The Management of the Company by the Board of Directors has implemented the principles of good corporate governance in accordance with regulations governing the capital market and other regulations promulgated by the government of Indonesia; and all of the decisions made at the General Meeting of Shareholders, Board of Commissioners’ meetings and Board of Directors’ meetings have been implemented appropriately.

All the activities mentioned above, along with the procedures for implementing the Audit Committee work has been adapted to meet the requirements as stipulated in the Regulation of Financial Services Authority (FSA) No. 55 / POJK.04 / 2015 on the Establishment and Implementation Guidance of the Audit Committee.

Committee Audit Charter click here


Corporate Secretary

Corporate Secretary is a section under the Board of Directors that is responsible for the implementation functions in the areas of secretarial, investor relations, corporate communications aspects, public relation,and providing policy recommendations for improvements in order to improve the efficiency, effectiveness and productivity in the framework of good corporate governace.

Currently the corporate secretary is held by Mr. Djohan Surja Putra, who also serves as the President Director of the Company, serving as corporate secretary since 2014.

Duties and Responsibilities
The duties and responsibilities of the corporate secretary are as follows :
• To monitor the development in the capital market especially the prevailing regulatory;
• To provide recommendations to the Board of Directors and the Board of Commissioners of the Company to comply with Capital Market regulations;
• To assist the Board of Directors and the Board of Commissioners in the implementations of corporate governance including :
1. Information disclosure to the community, including the information availability in Company’s website
2. Report socialization to Financial Services Authority(FSA) in a timely manner.
3. Conduct and record the meeting of the Board of Directors and/or the Board of Commissioners.
4. Orientation program implementation for the Board of Directors and/or the Board of Commissioners.
• As a liasion between the Issuer or Public Company and Shareholders, the Financial Services Authority(FSA) and other stakeholders.
• Must oversee the confidential of document, data and information to meet the obligation in accordance with law or otherwise specified in the legislation.
• Must not take personal advantage either directly or indirecty, that may disadvantage the Issuer or Public Company.
• Must participate in education and/or training.

Implementation of Duties
In 2018, Corporate Secretary has performed several main activites namely :
1. Reporting Annual Report, Semiannual report, Quarterly Financial Report and the other reports required by FSA and IDX.
2. Reporting and conducting the Annual General Meeting of Shareholders and Public Expose.
3. Conducting Board of Directors and Managers Monthly meeting.
4. Conducting Internal Audit Unit and Audit Committee Quarterly meeting.
5. Providing reports as required by FSA through official website of the Company and national newspaper.

Throughout 2018, the Corporate Secretary has followed several activities of training and development to enhance its competency level with his duties and responsibilities.


Internal Audit

Guidelines for Good Corporate Governance requires the importance of internal control in order to maintain the Company’s assets and performance and fulfill the legislation.

Regulation of Bapepam – LK No.IX.I.7 on the Formation and Guidelines for the preparation of Internal Audit Charter stated the Issuers and Public Companies must estabilish the Internal Audit Unit that perform the Internal Audit function, which gives assurance and consultation that are independent and objective, with the aim to elevate the value and improve the operations of the Company, through a systematic approach, by evaluating and improving the effectivenes of risk management, control, and governance process.

To perform Good Corporate Governance, based on the Board of Directors Decree in 2010, the Company has estabilished the Internal Audit Charter which became the guidelines for the Internal Audit.

Name : Eddy Sofyan
Title : Head of Internal Audit

Eddy Sofyan, was appointed as Chairman of the Internal Audit Companies in 2018 by Decree of President Director No. 02/TMR/XII/2018 dated December 10, 2018. Joined the Company in 2018, he graduated from Trisakti University as a Bachelor of Economics.

The structure and position of the Internal Audit Unit
Internal Audit Charter are as follows:
1. Internal Audit Unit is the internal supervisory unit of a Company incorporated under the Board of Directors.
2. The Internal Audit Unit is led by a head of the Internal Audit Unit.
3. The Head of Internal Audit Unit is appointed and dismissed by the Board of Directors upon approval of the Board of Commissioners.
4. The Board of Directors may dismiss the Head of Internal Audit Unit after obtaining the approval of the Board of Commissioners, if the Head of Internal Audit Unit does not qualify as an auditor and Internal Unit fails or incompetent or running errands.
5. The Head of Internal Audit Unit is administratively responsible and reports to the Board of Directors and functionally accountable and report to the Board of Commissioners.
6. Auditor and all member of the Internal Audit Unit are responsible to the Head of Internal Audit directly.

Duties and Responsibilities of Internal Audit Unit
The Duties and Responsibilties of the Internal Audit Unit in accordance with Internal Audit Charter are as follows :
• Preparing and implement an annual internal audit plan.
• Implement the activities on the course of the implementation of the internal control system applicable company procedures.
• Perform inspection and assessment of the ef_ciency and effectiveness in finance, accounting, operations, human resources, marketing, information
technology and other activities.
• Provide suggestions for improvements of information on the activities examined at all levels of management.
• Creating the audit report and submit the report to the the Board of Directors and the Board of Commissioners.
• Monitor, analyze, and report on implementation of the improvements that have been suggested.
• In collaboration with the Audit Committee.
• Preparing programs to evaluate quality of internal audit activities are done.
• Conducting special inspections if necessary.

Implementation of Duties Internal Audit Unit
Throughout 2018, the Internal Audit Unit with its function as a guarantee of the Company’s performance has been running well and effectively. Internal Audit Unit has conducted operational audits throughout the unit including internal review in several divisions, evaluation of the application of risk management and improvement of the effectiveness of control efforts.

Internal Audit Charter
The work of Internal Audit Department refers to the Internal Audit Charter, which sets out the objectives, organisation, responsilibilities and authority of the Internal Audit Department.

Internal Audit Unit Charter click here


External Auditor

The function of independent oversight of the _nancial aspects of the Company conducted by the external audit performed by the Public Accountant Firm. The Company has appointed the Public Accounting Firm of S. Mannan, Ardiansyah & Rekan as the external auditor of the Company’s Financial Statement for _scal year 2018. The external auditor performs his duties according to the prevailing professional standards and ethics.

Main Duties
The main duty of Public Accounting Firm of S.Mannan, Ardiansyah & Rekan is to perform as a public accountant with auditing standards estabilished by the IAPI. The standards require external auditor to plan and perform the audit activity in order to obtain reasonable assurance that the financial statements are free of any material misstatement. An audit includes the examing, on test basis, evidance supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used along with the sigin_cant estimates which made by management, as well as evaluating the financial statement overall.

Assesment Result
The Audits for the fiscal year 2018 which conducted by KAP S.Mannan, Ardiansyah & Rekan stated that the Company’s financial statements are presented fairly unmodified based on generally accepted accounting principles in Indonesia.


Business Risk Management

The Company’s ability to continuously providing values to its stakeholders relies on its ability to sense the different risks relevant to its operation.

In conducting its business, the Company faces the following risks:

• Raw Materials Supply to Industry
The purchase of the Company’s raw materials comes from regions where the smooth flow of transportation is strongly in_uenced by natural weather conditions so that this will affect the timeliness of raw material supply to production facilities. In overcoming the log sustainability factor due to weather factors, the Company took steps to buy logs from other regions, which were relatively uninterrupted by weather factors.

• Fluctuation of Rupiah
The Company whose product sales are 95% for export and sales proceeds in foreign currencies, namely the United States Dollar and Japanese Yen, then the decline in the value of the Rupiah that occurred in recent years will increase the Company’s revenue, but on the other hand the Company also experienced unrealized exchange loss for bank loans in US dollars currency.

• Destination Country’s Policy
The Company’s main market is for export, where its destination varies from Japan and Europe and must have met standard of product and quality of the importer’s authority. The Company has attained certification such as: Japan Agricultural Standards (JAS), Forest Stewardship Council – Chain of Custody (FSC-COC), California Air Resources Board (CARB) and EPA (Environment Protection Agency).

• Country and Political Risks
Various actions and policies that may be undertaken by the Government affect the Company. These include uncertainties regarding the imports and exports tariff regulations, taxation policies, foreign exchange restrictions, changing political conditions and currency control.

• Social and Environmental Risks
The Company’s are governed by several laws and regulations which relate to the social and environmental impact of the timber industry. Waste disposal and production process may potentially pollute the air, land and water. The Company ensures that the operation carry out International best practice in environmental safety standards and waste treatment facilities that comply with or exceed government requirements and regulations.

• Insurance Coverage
As of December 31, 2018, the fthe property, plant and equipment are covered by insurance against losses by _re and other risks under a policy package with insurance coverage totaling IDR 145,592,900,000 and USD 32,500,000 , which, in management’s opinion, is adequate to cover possible losses that may arise from the said insured risks

• Capital Management
The primary objective of the Company’s capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximize shareholder value. In addition, the Company is also required by the Corporate Law effective August 16, 2007 to contribute to and maintain a non-distributable reserve fund until the said reserve reaches 20% of the issued and fully paid share capital. This externally imposed capital requirements are considered by the Company at the Annual General Shareholders Meeting (“AGM”).

The Company manage its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to Shareholders, issue new shares or raise debt financing. No changes were made in the objective, policies or processes for the year 2018. The Company’s policy is to maintain a healthy capital structure in order to secure access to finance at a reasonable cost.