PRINCIPLES OF GOOD CORPORATE GOVERNANCE
The best practices of Good Corporate Governance (GCG) is applied in the Company as it is an engagement in rendering the benefits for shareholders, especially public shareholders, and may maintain contribution to company’s vulnerability and make improvements correlated with all stakeholders. These all conductive efforts have to be implemented in the principles of Good Corporate Governance.
The Implications of the principles are:
This principle covers most of the things in formalizing the corporate rules in which protecting minority or special interest, proper corporate code of conduct, giving security for the benefits of the whole stakeholders, namely by assigning the Independent Commissioner, which means to assure protection for minority shareholders. The Independent Commissioner is appointed from the person who does not hold any position inside the Company in order to make him/her focus on the duty and to avoid intervension from the Company.
This principle covers most of the things in developing the accounting system based on the proper standard of accounting and best pratices which guarantee the qualified financial statement and revealing informations. The said financial statement has to be audited by the Independent Public Accountant who’s listed in Financial Services Authority.
This principle’s implemented throughout the arrangement of the financial statement provided and reported at the right time.
It’s admittedly obvious that shareholders’s role must be legally determined, and the active mutual benefit between the company and the stakeholders could approach the affluent, vocation and company’s health financially.
Therefore, to perform the vocation and wealthy company existency, the Company has enrolled all of the employees in BPJS Ketenagakerjaan (The Indonesian Labor Social Security Provider), conducted the tax payment and tax report in schedule, besides, Company minimum wage’s tended higher than the Indonesian new provincial minimum wage which stipulated yearly. These all will effect the improvement of company’s performance becoming more professional and ethical.
COMPANY CODE OF CONDUCT
Standard Code or better known as the Code of Conduct drawn up to carry out the right and good company management, so, this needs a guideline that accommodate the aims to establish and regulate the suitability behavior for achieving the consistent implementation of GCG as a corporate culture that maximizes the application of the principles of Good Corporate Governance which can accomplish Company’s vision and mission.
With the spirit of change, the Company through the decision of the Board of Directors KEP-064 / MEP-KD / VI / 2013 dated June 1st 2013 of the Code of Conduct (Code of Conduct), has made revisions to the book Code of Conduct Mitra Energi Persada, part of the GCG implementation, which’s expected to be the essential in tasks execution for all levels of management and all parts in Mitra Energi Persada.
The Code of Conduct includes a series of reference for all parts in MEP to have good attitude and behavior, where without exception, must be carried out by all the members; from the Board of Commissioners, Board of Directors, Committees and all employees in whole working activities in MEP and also while representing MEP. Pedoman perilaku (Code of Conduct) mencakup serangkaian acuan bagi seluruh insan dalam bersikap dan berperilaku yang harus diikuti oleh segenap insan MEP mulai dari Dewan Komisaris, Direksi, Komite dan seluruh karyawan dalam seluruh kegiatan bekerja di dan bagi MEP, tanpa pengecualian.
The Code of Conduct is compiled in line with the basic values of MEP, practiced both in internal relations (between fellow employees of the MEP) in order to create a healthy and conducive working atmosphere, as well as in relations with external parties incorporates the Government, customers, partners, suppliers/contractors, the surrounding communities and the public in general.
Wherever it is, Company and all parts of MEP put the Company’s Code of Conduct into effect in every way consistently, and strengthen the support for implementing GCG, this in turn, ultimately enhancing the corporate image to its stakeholders.
ISSUES CODE OF ETHICS
The company’s code of ethics governs policy on ethical values, stated explicitly as a standard behavior that’s considered as a major guidance for all boards of Mitra Energi Persada.
ENFORCEMENT, INTERNALIZATION AND SOCIALIZATION THE CODE OF ETHICS
MEP continuously performs the internalization of a code of ethics or code of conduct and its enforcement through commitment that Mitra Energi Persada applied both codes by way of being and behaving in respect to MEP’s standard behavior, and a code of ethics or code of conduct became one of the factors for evaluation and assesment MEP’s the of the employees’ performance. Code of ethics or code of conduct should be socialised to all insan MEP as well as stakeholders.
Duties & Responsibilities of the Boad of Commissioners
- The Company’s board of commissioners is an organ that is collectively in charge of supervising particularly and or general in accordance with the articles of association of the company provide advices to the Board of Directors
- Commissioners did not participate in making operational decisions.
- The position of each member of the BOC is equivalent, whilst the assignment and the discharge of Commissioner’s position will be done in The Generel Meeting of Shareholders (“GMS”).
- The main task of the commissioner as a primus inter pares is to coordinate the activities of the BOC
- In carrying out the duties, the BOC is responsible to the GMS which is a manifestation of accountability supervising towards the management of the company in the frame of Good Corporate Governance Principles’ implementation.
Duties & Responsibilities of the Boad of Directors
In carrying out its duties and responsibilities, the Board of Directors always adhered to and is guided by the Articles of Association and internal regulations and legislation in force.
The principal task of the Board of Directors are:
- Lead and manage the Company in accordance to the purposes and objectives of the Company, and constantly trying to improve the efficiency and effectiveness of the Company as well as maintain and manage the Company’s assets.
- Directors stints implementation of management of the Company for the interests and objectives of the Company and represent the Company both in and out of court as a mandate from shareholders set out in the GMS.
- Directors are obliged to be accountable for the implementation of its duties to the shareholders through the GMS.
- Directors always follow up on audit findings and recommendations from the Internal Auditor’s examination results which’s carried out by the internal auditing unit or the external auditors.
- The assignment and also the discharge are done by the GMS.
Audit Committee of the Company is established by decision of the Board of Commissioners No. KEP-172/MEP/2014 dated November 24, 2014 about the Assignment of Company’s Audit Committee.
Legal Basis For The Establishment Of The Audit Committee
The Audit Committee’s established based on :
- OJK regulations No. Kep-29/PM/2004 dated September 24, 2004, attachment No. IX. 1.5 the implementing Guidelines on the establishment and Work of the Audit Committee
- The legislation of the Republic of Indonesia No. 40 year 2007 on limited liability company.
Educational qualifications and work experience
The Audit Committee of the company has the educational qualifications and work experiencen that are adequate in supporting the implementation of the task as the Audit Committee.
The process of recruitment of members of the Audit Committee by the Board of Commissioners is conducted by considering compentency, expertise and integrity and the skills for teamwork.
The task of the Audit Committee is to assist the Board of Commissioners in fulfilling functions of supervising, for instance managing the company so that it can run effectively and efficiently. In the performance of duties and in reporting, the Audit Committee are independent and accountable to the Board of Commissioners.
The above mentioned responsibility of the Audit Committee to the Board of Commissioners is the the embodiment of accountability oversight of the management in the company in the framework of implementing the GCG principles.
Duties and responsibilities of the Audit Committee contained in the Audit Committee’s Charter which was formally authorized in the annex to the decision of the Board of Commissioners 172/MEP/PI/2014 dated November 24, 2014, as follows:
- To assist the BOC in ensuring the effectiveness of internal control system and the effectiveness of task execution/implementation of the external auditor and internal auditor
- To assess the execution of the activities and audit results in which will be conducted by external auditing.
- To provide recommendations on allurement of system of management and control its performance.
- To make sure that company has been dutifullycomplyingto a satisfactory review towards the information released by the company.
- To identify all matters that required BOC’s close attention and carry out other tasks related to the duties of the BOC.
A public company is obliged to appoint the Corporate Secretary as determined in the regulation of the financial services authority no. 35/POJK. 04/2014 dated December 8, 2014.
DUTIES OF CORPORATE SECRETARY ARE:
- To Manage the informations related to the business environment and establish a good relationship between the company with the parties which supporting the industry’s capital market institutions and capital market regulator.
- To Ensure that the company runs the principles of GCG as well as complying with the provisions of the prevailing regulations applied.
- Convening the AGM of the company.
- To Organize communication between the BOD/management with stakeholders in order to build the image of the company.
- Convening the secretarial duties of the Executive Board as well as facilitating the relationship of company with stakeholders
The Company has appointed Said August Putra as Corporate Secretary, based on the Directors Decree No. 290 / SK-MEP / 2015 on April 23, 2015.
Based on the Decision of the Chairman of Bapepam-LK No. KEP-496 / BL / 2008 dated 28th November 2008, Bapepam No. IX.I.7 regarding the Establishment and Guidelines for Internal Audit Charter, the Company has the Internal Audit Charter (Internal Audit Charter) established by the Board of Commissioners on November 18, 2014.
Duties and responsibilities of Internal Audit Internal Audit according Chapter include:
- To Draw up and implement the Annual Audit Program.
- To Test and evaluate the implementation of the Internal control system of the company (SPIP) and risk management in accordance with the company’s policy
- To conduct examination and assessment over the efficiency and effectiveness in the areas of finance, accounting operations, human resources, information technology and other activities.
- Provide advice or solution on the adjustment and objective information about the reviewed activities at all levels of management.
- Create reports on audit results and submit these reports to the President Director and Board of Commissioners.
- Compile the program to evaluate the quality of the internal audit activity.
- To make specific checks where necessary.
- To Perform the Internal Audit Management in the Subsidiary as a special assignment from President Director, in order to do the guidance, supervision, learning and consulting in the frame of preparing and carrying out the Internal Audit in the Subsidiary.
RISK MANAGEMENT SYSTEM
As other business sectors, line of business conducted by the Company and Subsidiaries are also inseparable from the riskscaused by various factors that may affect the business activities of the Company and its Subsidiaries.
The business risks are as follows:
Currently, the Company, through its subsidiary the Company’s business unit is focusing on natural gas distribution business activities. Starting in 2012, the natural gas distribution business is the Company’s revenues. The risks which will be described below will be closely associated with the business focus of the Company and its subsidiaries.
RISK OF GAS SUPPLY
The Company through its subsidiaries have a risk on the supply of gas, where the inherent potential for rising raw material prices due to demand for renegotiation of the gas price from suppliers in order to improve the economic level in the business area. In addition, also the inherent risk of not obtaining the existing supply contract extension agreements with suppliers that can cause a decrease in the number of gas supply to customers.
The Company’s risk management above by:
- The contract of sale and purchase of natural gas were made in the long term and the selling price of natural gas has been specified in the contract with the supplier and the customer so that the Company may face the risk of oil price fluctuations on the international market.
- Because natural gas is a natural resource that is not renewable hence ensuring the sustainability of its operations for a long period, the Subsidiary on December 1, 2012 has signed amendments to the gas purchase agreement with PT Medco E & P Indonesia as the manufacturer and supplier of natural gas contract which is valid until December 31, 2017.
- Currently the Company is in the process a request for an additional allocation / gas resources from existing suppliers and also propose new sources of gas from other suppliers in the working/business area of the Company.
RISK OF DAMAGE TO PIPELINES FOR GAS DISTRIBUTION
On gas transmission activities identified the existence of a risk of stress on pipelines in the working region such as swamps or areas that have high enough levels of humidity so it can cause the pipes experiencing fatigue, rapture and rusty which ultimately can stop the flow of gas. In addition there is also the risk of fires and damage to pipe in the field that caused the Subsidiary should fund such repairements, where it might disrupt the cashflow.
To minimize the risk of damage, such as fire, explosion, engine failure, earthquakes, natural disasters and others, Subsidiary has protected for the main assets of operational facilities of subsidiary companies throughout its business units with insurance.
Besides, Subsidiary also had subcontracting work inspection and maintenance of gas pipelines to local companies in the business working area. It is intended other than as a form of social responsibility to the environment operational also in order to better focus on its core business conducted by the Company through its subsidiaries in the field of natural gas trading.
The Company believes that by strengthening the culture and build risk management capabilities, the Company through the Subsidiary will be able to monitor and minimize the risks associated to all operational aspects of the Company and its subsidiaries effectively and ultimately, and yet to protect and enhance shareholder value.
THE RISK OF POLITICS AND GOVERNMENT
The company and subsidiaries have been taking into account the risk of the country as the political situation and governance at the central level as well as regional that could potentially provide both positive and negative impacts for the company and its subsidiaries. Changes in the political situation could potentially affect government policy that could be associated with the company’s business activities to especially Subsidiary. This happens because the Company through a subsidiary company in running its business continuously interact with local governments.
To anticipate changes in the direction of government policy, the Subsidiary has made a contract of sale and purchase of natural gas in the long term with its suppliers and customers. The Company also always complies with the laws and regulations applied relating to oil and gas which already in force as well as changes.
SOCIAL AND ENVIRONMENTAL RISKS
Potential interference on pipelines by the activities of third parties around the pipeline because of the residents’s activities near the pipeline was identified risks inherent in the gas distribution that can result in losses to the Country and / or third parties in which the possibility that Subsidiary should compensate for the damage caused.
To deal with the occurrence of the potential risks that could cause environmental damage such as fire and explosion, engine failure, earthquakes, natural disasters and others, Subsidiaryhas insured pipelines assets against all risks (all risk property) and earthquakes insurance, other than as a form of social responsibility of the Company on the surrounding environment. The Company through its Subsidiary has involved the local community in the supervision and maintenance of the natural gas pipeline owned by Subsidiary.
Fluctuations in currency exchange rates and interest rates as the consequence of macro-economic dynamics are a source of currency risk that could potentially pose a negative impact for the company. This needs to be carefully consideredsince Subsidiary has transactions in USD and non USD.
To minimize this, the entire main contracts made by the Subsidiary are made in the same currency, namely American Dollar. By itself, the entire income of the Subsidiary acquired in the same currency withmost of the Company’s expenditures.
RISK CAPITAL REQUIREMENTS
The company’s business activities, particularly gas distribution conducted by the Subsidiary, needs large enough expenditures from the initial capital for construction of distribution lines, especially when there is a new gas customer.
To anticipate many needs of investment and excessive working capital financing in regards to the construction of gas pipelines for new customers, then, the Subsidiary has been gaining additional bank loans facilities.
REPORTING SYSTEM AND COMPLAINTS
Violations Report System (whistleblowing system) is a system that manages the complaint / disclosure substantially about behavior against the law, act unethically / undue that secretly and independently used to optimize the role of all members in Mitra Energi Persada and others in revealing violations occurring within the Company.
As part of the Company’s commitment to continue to apply the principles of GCG, all parts of Mitra Energi Persada should avoid the violations of GCG and Code of Conduct. Accordingly, the Company has had a whistleblowing system as a medium for the delivery of reporting those violations.
- All parts in MEP and the public or anyone’s encouraged to report if there are indications of irregularities behavior through that complaints channel accompanied by adequate data and facts.
- All types of complaints submitted directly to the Head of MEP in the form of a private and confidential letter with a clear identity.
- Any reports or complaints submitted will be treated confidentially to give protection to the plaintiff from the threat or terror of a particular party, and does not affect the position, as well as his career.
- Reports of irregularities against the code of ethics or code of conduct must be followed up through in-depth investigation based on facts obtained by a team or Committee that designated by the Board of Directors.
- Decisions on proven / absence of such reporting will be made and taken upon consideration of the consequences of actions,degree of deliberate intent and motives.
- The sanctions imposed may include an oral reprimand, warning letter (first, second, and third), up to the terminationof employment (Layoff).
- The email address can be contacted related complaints and reporting violations is firstname.lastname@example.org and phone number 021 794 5838