BOARD MANUAL PT TIMAH (Persero) Tbk. Revised I Guidance ... MANUAL TIMAH 22052017_INA... · 2 Legalization Page of Board Manual PT TIMAH (Persero) Tbk Board Manual is the text of

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BOARD MANUAL

PT TIMAH (Persero) Tbk.

Revised I

Guidance for Commissioners and Directors

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Legalization Page of Board Manual PT TIMAH (Persero) Tbk

Board Manual is the text of agreement between the Directors and Commissioners

as the legal basis governing the working relationship between the two (2) organs

of the Company, which cannot be separated from the Articles of Association, and

soft structure of Good Corporate Governance (GCG).

Through the legalization of Board Manual, the rules that have been agreed by the

Board of Commissioners and the Board of Directors have been authorized to be

executed by both parties consistently and continuously, in an effort to achieve the

Vision and Mission of the Company that have been set. On the other hand, the

endorsement of the Board Manual is the commitment of the Board of

Commissioners and Directors in implementing Good Corporate Governance

(GCG) consequently that must be the role model for the entire range of the

implementers in the corporate environment.

Jakarta, 18 September 2014

Board of Commissioners Board of Directors

Insmerda Lebang Sukrisno

President Commissioner President Director

Suhendro Ahmad Subagja

Independent Commissioner Operational and Production Director

Erfi Triassunu Akhmad Rosidi

Commissioner Financial Director

Eko Prasojo Dadang Mulyadi

Commissioner Trade Director

Mochtar Husein Abrun Abubakar

Commissioner General & Human Resource Director

Abdul Hudarni Rani Purwijayanto

Commissioner Planning & Business Development Director

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Preface

The Board Manual was made as one of the requirements for the Company that has

been required to implement the principles of Good Corporate Governance in each

business process.

By performing all provisions stipulated in the Board Manual, the commitment of

the Board of Commissioners and the Board of Directors can be a motivation for

employees to implement good corporate governance principles consistently,

consequently, and continuously in the work environment.

Each enhancement of the contents of the Board Manual will be carried out by the

Corporate Secretary Work Unit with adjustment to the current conditions and

applicable regulations relating to SOEs.

Jakarta, 18 September 2014

Head of Corporate Secretary

Agung Nugroho

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TABLE of CONTENTS

Table of Content

CHAPTER I: INTRODUCTION I.1 TWO-TIER BOARD SYSTEM

I.2 BACKGROUND OF BOARD MANUAL ARRANGEMENT

I.3 PURPOSE AND OBJECTIVES

I.4 LEGAL REFERENCE OF BOARD MANUAL

I.5 GLOSSARYOF TERMS

CHAPTER II: BOARD OF COMMISSIONERS II.1 FUNCTIONS OF BOARD OF COMMISSIONERS

II.2 REQUIREMENTS OF BOARD OF COMMISSIONERS

II.2.1 Formal Requirements of the Board of Commissioners

II.2.2 Objective Requirements of the Board of Commissioners

II.2.3 Other Requirements of the Board of Commissioners

II.3 MEMBERSHIP OF THE BOARD OF COMMISSIONERS

II.3.1 Membership

II.3.2 Position

II.4 INDEPENDENT COMMISSIONERS

II.4.1 Criteria for Position of Independent Commissioners

II.4.2 Nominations Procedure of Independent Commissioners

II.5 INTRODUCTION PROGRAM AND CAPABILITY BUILDING

II.5.1 Introduction Program

II.5.2 Capability Building Program

II.6 ETHICS OF THE BOARD OF COMMISSIONERS

II.6.1 Ethics relating to exemplary

II.6.2 Ethics relating to the Compliance with Legislation

II.6.3 Ethics relating to the Company Opportunities and Personal Benefits

II.6.4 Ethics Relating to Transparency and Confidentiality of Information

II.6.5 Ethics Relating to the Conflict of Interest

II.6.6 Ethics of Business and Anti-Corruption

II.7 DUTIES AND OBLIGATIONS OF THE BOARD OF COMMISSIONERS

II.7.1 General Policy

II.7.2 In Relation to Shareholders/General Meeting of Shareholders

II.7.3 In Relation to the Company's Work Plan and Budget

II.7.4 In Relation to Nomination, Remuneration, and Human Resources

II.7.5 In Relation to the Performance Evaluation of Board of

Commissioners and Board of Directors

II.7.6 In Relation to Risk Management

II.7.7 In Relation to the Information Technology

II.7.8 In Relation to Mining Business and other Company’s Policies

II.7.9 In Relation to Ethics of Business and Anti Corruption

II.7.10 In Relation to the Internal Control System

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II.7.11 In Relation to Disclosure and Confidentiality of Information

II.7.12 In Relation to Reporting

II.7.13 In Relation to Other Tasks and Obligations

II.8 AUTHORITY OF THE BOARD OF COMMISSIONERS

II.9 RIGHTS OF BOARD OF COMMISSIONERS

II.10 MEETINGS OF THE BOARD OF COMMISSIONERS


II.10.2 Meeting Procedures of the Board of Commissioners

II.10.3 Attendance Mechanism

II.10.4 Procedures of Problems Discussion and Decision-making

II.10.5 Making Minutes of Meeting of the Board of Commissioners

II.J.6 Procedures for Preparation of Minutes of Meeting of the Board of

Commissioners

II.11 EVALUATION OF THE BOARD OF COMMISSIONERS


II.11.2 Performance Evaluation Criteria of Board of Commissioners

II.12 SUPPORTING ORGANS OF BOARD OF COMMISSIONERS

II.12.1 Committees of Board of Commissioners

II.12.1 Secretary of The Board of Commissioners

CHAPTER III: BOARD OF DIRECTORS III.1 FUNCTION OF BOARD DIRECTORS

III.2 REQUIREMENTS OF BOARD OF DIRECTORS

III.2.1 Formal requirements of the Board of Directors

III.2.2 The Objective Requirements for Members of the Board of Directors

III.2.3 Other requirements of the Board of Directors

III.3 MEMBERSHIP OF THE BOARD OF DIRECTORS

III.3.1 Membership

III.3.2 Position

III.4 INDEPENDENCE OF BOARD OF DIRECTORS

III.5 INTRODUCTION PROGRAM AND CAPABILITY BUILDING

III.5.1 Introduction Program

III.5.2 Capability Building Program

III.6 ETHICS OF THE BOARD OF DIRECTORS

III.6.1 Ethics Relating to exemplary

III.6.2 Ethics Relating to the Compliance with Legislation

III.6.3 Ethics Related to Disclosure and Confidentiality of Information

III.6.4 Ethics Related to Company Opportunities and Personal Benefits

III.6.5 Ethics Related to the Conflict of Interest

III.6.6 Ethics of Business and Anti Corruption

III.7 DUTIES AND OBLIGATIONS OF THE BOARD OF DIRECTORS

III.7.1 General Policy

III.7.2 In Relation to Shareholders/General Meeting of Shareholders

III.7.3 In Relation to Strategy and Work Plan

III.7.4 In Relation to Risk Management

III.7.5 In Relation to the Information Technology

III.7.6 In Relation to Mining Business and other Company’s Policies

III.7.7 In Relation to Human Resources

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III.7.8 In Relation to Ethics of Business and Anti Corruption

III.7.9 In Relation to the Internal Control System

III.7.10 In Relation to Disclosure and Confidentiality of Information

III.7.11 In Relation to Stakeholders

III.7.12 In Relation to Accounting and Bookkeeping System

III.7.13In Relation to Other Tasks and Obligations

III.8 AUTHORITY OF THE BOARD OF DIRECTORS


III.8.2 Actions of the Board of Directors which require prior written

approval from the Board of Commissioners


approval from the Board of Commissioners and approval from the GMS

III.8.4 The authority to carry out other actions

III.9 RIGHTS OF BOARD OF DIRECTORS

III.10 MEETINGS OF THE BOARD OF DIRECTORS

III.10.1General Policy

III.10.2Meeting Procedures of the Board of Directors

III.10.3Attendance Mechanism

III.10.4Procedures of Problems Discussion and Decision-making

III.10.5Making Minutes of Meeting of the Board of Directors

III.11 EVALUATION OF THE BOARD OF DIRECTORS

III.11.1General Policy

III.11.2Performance Evaluation Criteria of Board of Directors

III.12 SUPPORTING ORGANS OF BOARD OF DIRECTORS

III.12.1 Corporate Secretary

III.12.2 Internal Control Unit (ICU)

CHAPTER IV: THE ACTIVITIES AMONG THE ORGAN OF THE

COMPANY

IV.1 THE BASIC PRINCIPLES OF THE WORKING RELATIONSHIP

BETWEEN THE BOARD OF COMMISSIONERS AND THE BOARD OF

DIRECTORS

IV.2 JOINT MEETING OF THE BOARD OF DIRECTORS AND BOARD OF

COMMISSIONERS

IV.2.1 General Policy

IV.2.2 Meeting Procedures

IV.2.3 Attendance Mechanism and Legality of the Meeting

IV.2.4 Procedures of Problem Discussion and Decision Making

IV.2.5 Minutes of Meetings

ATTACHMENTS

Attachment I: THE STATEMENT OF ACTING INDEPENDENTLY

IN OPERATIONAL OVERSIGHT OF PT TIMAH

(PERSERO) TBK

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Attachment II: THE STATEMENT OF ACTING INDEPENDENTLY

IN MANAGEMENT OF PT TIMAH (PERSERO) TBK

Attachment III : ACTION PROCEDURES OF THE BOARD OF DIRECTORS

REQUIRING THE APPROVAL OF THE BOARD OF

COMMISSIONERS AND / OR AGM

Attachment IV: Procedure of Admission or Provision of Medium/Long Term

Loans

Attachment V: Company Binding Procedures As a Guarantor

Attachment VI: Procedures for Elimination of Accounts Receivable Loss or

Dead Inventory

Attachment VII: Business Cooperation Procedures

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CHAPTER I

INTRODUCTION

I.1 TWO-TIER BOARD SYSTEM

The management of the Limited Company in Indonesia refers to Law No. 40 of

2007 on Limited Liability Company. Based on that law, the management adopts a

dual board system (two-tier board), that is the separation of functions between the

Board of Commissioners that performs the function of monitoring and providing

advice to the Board of Directors and the Board of Directors that is authorized and

responsible for managing the company. The Board of Commissioners and the

Board of Directors perform their obligations in accordance with the mandate in

the Articles of Association and applicable laws (fiduciary responsibility).

The basic principles of working relations between Board of Commissioners and

Directors are openness and mutual respect that both have a responsibility to

maintain the company's business sustainability in the long term. Therefore, the

Board of Commissioners and Directors must have a common vision, mission,

values, and business strategy.

I.2 BACKGROUND OF BOARD MANUAL ARRANGEMENT

a. The compilation of Board Manual is an embodiment of the Company's

commitment to consistent implementation of Good Corporate Governance

(GCG) in order to manage the Company's mission and achieve the vision

that has been set.

b. The application of GCG in the Company is not only to meet the

legislation, but should be able to embody the principles of good corporate

governance, transparency, accountability, responsibility, independence and

fairness, in the Company's activities consistently.

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c. There is a clarity of function of Board of Commissioners and Board of

Directors in running the Company; therefore, the working relationship can

be more effective and productive so that the achievement of performance

can be realized.

I.3 PURPOSE AND OBJECTIVES

The Board of Commissioners and Board of Directors as a part of the Company’s

organs should be a good role model for every part in the Company. The

implementation of tasks and functions of this Company’s organ should be done

with good intention, full of responsibility, and high dedication for the sake of the

Company.

Board Manual contains a compilation of the principles of corporate law, the

applicable legislation, direction from shareholders and the Articles of Association

governing the working procedures of the Board of Commissioners and Board of

Directors. Board Manual is a codification of the various regulations applicable to

the company and of best practices as well as the principles of Good Corporate

Governance.

The objectives of Board Manual are as follow:

1. Provide guidance/guidelines to facilitate the Board of Commissioners and

Board of Directors in understanding the duties and responsibilities, rights

and obligations, as well as regulations related to the working procedures of

the Board of Commissioners and Directors;

2. Improve the efficiency and effectiveness as well as the quality of the

working relationship between the Board of Commissioners and Board of

Directors.

Board Manual is a living document that the development must always be carried

out in accordance with the needs of the Company and the legislation in force.

Changes on Board Manual should be based on the agreement between the Board

of Commissioners and Board of Directors.

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Considering that the Board Manual is a compilation of the principles of corporate

law, then the implementation should still refer to the legislation in force. The

various detailed provisions contained in Articles of Association, Shareholders’

Direction set forth in the General Meeting of Shareholders (GMS), and other legal

provisions still remain binding even if not specifically described in this Board

Manual.

The principle of good faith, full of responsibilities and fiduciary duties, skill and

care that are attached to the holders of the position of Commissioners and

Directors is a general principle that must be respected by the Company Organs

who oversee and manage the Company.

I.4 LEGAL REFERENCE OF BOARD MANUAL

a. Laws of the Republic of Indonesia, among which are:

1) Law of the Republic of Indonesia No. 4 Year 2009 concerning

Mineral and Coal Mining


Information and Electronic Transactions


Disclosure of Public Information


Limited Liability Company

5) Law of the Republic of Indonesia No. 19 Year 2003 concerning State-

Owned Enterprises

6) Law of the Republic of Indonesia No. 20 Year 2001 concerning the

amendment to Law No. 31 Year 1999 concerning the Eradication of

Criminal Acts of Corruption

7) Law of the Republic of Indonesia No 28 Year 1999 on the

Implementation of a Country that is Clean and Free from Corruption,

Collusion, and Nepotism

8) Law of the Republic of Indonesia No. 5 Year 1999 concerning the

Prohibition of Monopolistic Practices and Unfair Business

Competition

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9) Law of the Republic of Indonesia No 8 Year 1995 concerning the

Capital Market

b. Government Regulations, among them are:

1) Government Regulation Number 24 of 2012 on Amendment to

Government Regulation Number 23 of 2010 concerning the

Implementation of Mineral and Coal Mining Activities;

2) Government Regulation Number 12 of 1998 on the Company

(Persero) jo. Government Regulation Number 45 of 2001.

c. Regulation of the Minister of State-Owned Enterprises, among them are:

1) Regulation of the State Minister for State-Owned Enterprises Number:

PER-09/MBU/2014 about the Third Amendment on Regulation of the

Minister of State for State Owned Enterprises Number PER-

01/MBU/2012 about Requirements and Procedures for the

appointment and dismissal of member of Board of Directors of State-

Owned Enterprises;


PER-15/MBU/2012 regarding Amendment of Regulation of the State

Minister for State-Owned Enterprises Number PER-05/MBU/2008

concerning Procurement of Goods and Services in State-Owned

Enterprises;

3) Regulation of the State Minister for State Owned Enterprises Number:

PER-12/MBU/2012 on Supporting Organ for Board Of

Commissioners/Supervisory Board of the State-Owned Enterprises;


PER-09/MBU/2012 regarding Amendment Regulation of the State

Minister for State-Owned Enterprises No. PER-01/MBU/2011

regarding the Governance Good Company (GCG) in State-Owned

Enterprises;


PER-07/MBU/2010 regarding Guidelines for Remuneration for

Directors, Board of Commissioners and Supervisory Board of State-

Owned Enterprises;

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PER-04/MBU/2014 on Guidelines for Remuneration for Directors,

Board of Commissioners and Supervisory Board of State Owned

Enterprises;


PER-02/MBU/2013 on Guidelines for Developing the Information

Technology Management of State-Owned Enterprises

d. Decrees of the Minister of State-Owned Enterprises, among which are:

1) Decree of the Minister of State-owned enterprises Number Kep-

104/MBU/2002 regarding the assessment of the members of Board of

Directors of State-Owned Enterprises;

2) Decree of the Minister of State-Owned Enterprises Number Kep-

103/MBU/2002 on the Establishment of the Audit Committee For

State-Owned Enterprises;


102/MBU/2002 about Drafting a Long-Term Plan (RJP);


101/MBU/2002 concerning the Preparation of the Company's Budget

Work Plan (RKAP);


100/MBU/2002 concerning the Assessment of the Level of Health of

State-Owned Enterprises


09A/MBU/2002 concerning the Assessment of the Appropriateness

and Propriety of the Members of the Board of Directors of State-

Owned Enterprises;

7) Regulation of the Minister of State-Owned Enterprises No. PER-

01/MBU/2011 dated 1 August 2011 about the Assignment of Good

Corporate Governance in State-Owned enterprises;

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8) Regulation of the Minister of State-owned Enterprises No. PER-

12/MBU/2013 date 24 August 2012 about Supporting Organs to Board

of Commissioners/Supervisory Board of State-owned enterprises;

e. Decree of the Secretary of the Ministry of State-Owned Enterprises

Number: SK/16/URS.MBU/2012 about Indicators/Parameters of

Assessment and Evaluation over the Implementation of Good Corporate

Governance in State-Owned Enterprises;

f. Regulation of the Financial Services Authority (OJK or “OJK”) formerly

BAPEPAM (Capital Market Supervisory Board) and LK (Financial

Institution), among others:

1) Regulation of BAPEPAM and LK Number VIII.G.7 concerning

Guideline for Financial Report of Issuers or Public Companies,

Attachment of Decision of Bapepam and LK Chairman Number

Kep-347/BL/2012 dated 25 June 2012;

2) Regulation of BAPEPAM and LK Number VIII.G.11 concerning

the Responsibility of the Board of Directors on the Financial

Statements, Attachment to the Decision of the Chairman of

BAPEPAM Number: Kep-40/PM/2003 dated 22 December 2003;

3) Regulation of BAPEPAM and LK Number IX.E.1 concerning

Affiliate Transaction and a Conflict of Interest of Certain

Transaction, attachment to Decision of Bapepam Chairman and LK

Number: Kep-412/BL/2009 dated 25 November 2009;

4) Regulation of BAPEPAM and LK Number IX.E.2 concerning

Material Transactions and Changes of Main Business Activities,

Attachment to the Decision of the Chairman of Bapepam and LK

Number: KEP-614/BL/2011 28 November 2011;

5) Regulation of BAPEPAM and LK Number IX.I.1 concerning Plans

and the Implementation of the General Meeting of Shareholders,

Attachment to the decision of the Chairman of Bapepam Number:

KEP-60/PM/1996 dated 17 January 1996;

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6) Regulation of BAPEPAM and LK Number IX.I.4 concerning the

Formation of the Corporate Secretary, attachment to the Decision

of the Chairman of Bapepam Number: Kep-63/PM/1996 dated 17

January 1996;


Establishment and Working Implementation of Audit Committee

Guidelines, attachment to the Decision of Chairman of Bapepam

Number Kep-29/PM/2004 dated 24 September 2004;


Board of Directors and Board of Commissioners of Issuers and

Public Company, attachment to the Decision of Chairman of

Bapepam Number Kep-45/PM/2004 dated 29 November 2004;

9) Regulation of Bapepam and LK Number IX.I.7 concerning the

Establishment and Guidelines for Internal Audit Charter,

attachment to the Decision of the Chairman of Bapepam Number:

Kep-496/BL/2008 dated 28 November 2008;

10) Regulation of Bapepam and LK Number IX.J.1 concerning the

Fine points of the Company's Articles of Association that do Share

Public Offering which is Equity and Changes in public, attachment

to the Decision of Chairman of Bapepam and LK Number: Kep-

179/BL/2008 dated 14 May 2008;

11) Regulation of Bapepam and LK No. X.K.2 concerning The

Obligation to Submit Periodic Financial Statements, attachment

Decision to the Chairman of Bapepam Number: Kep-36/PM/2003

dated 30 September 2003;

12) Regulation of Bapepam and LK No. X.K.4 concerning Reports on

Finance Utilization from Public Offering, attachment to the

Decision of the Chairman of Bapepam Number: Kep-27/PM/2003

dated 17 July 2003;

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13) Regulation of Bapepam and LK No. X.K.7 concerning the Term of

Submit of Periodical Financial Statements and Annual Report for

the Issuer or Public Company whose securities are Listed in

Indonesia Stock Exchange and Stock Exchange in Other Countries,

attachment to the Chairman of Bapepam Number: Kep-40/BL/

2007 dated 30 March 2007;

14) Regulation of Bapepam and LK No. X.K.6 concerning the

Obligation to Submit Annual Report for the Issuer or Public

Companies, attachment to Decision of Chairman of Bapepam No.

Kep-431/BL/2012 dated 1 August 2012;

15) Regulation of Bapepam and LK No. X.M.1 concerning the

Disclosure of Certain Shareholders, attachment Decision of

Chairman of Bapepam Number: Kep-82/PM/1996 dated 17

January 1996.

g. Capital Market Regulations by Indonesia Stock Exchange Board of

Directors Decision No. Kep-00001/BEI/01-2014 on Amendment No. I-A

of the Registration of Shares and Equity Securities other than Shares

issued by Listed Company dated January 20, 2014;

h. The General Code of Indonesia Good Corporate Governance issued by the

National Committee on Governance Policy in 2006;

i. The Code for Independent Commissioner by Task Force of the National

Committee on Governance Policy;

j. Statutes of PT Timah (Persero) Tbk as has been modified several times

and last by Notary Act of Change No. 75 dated 26 June 2014, made by

Notary Fathiah Helmi Bachelor of Law and has been authorized by

Minister of Law and Human Rights No. AHU-0064462.40.80.2014;

k. The Code of Corporate Governance of PT Timah (Persero) Tbk, which has

been signed by the President Commissioner and the President Director on

December 28, 2012.

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I.5 GLOSSARY OF TERMS

The terms used in this Board manual, unless otherwise stated, contain the

following definitions:

a. The Company with the capital P is PT TIMAH (Persero) Tbk., while

companies with a small letter p refers to companies in general.

b. The Company’s Organ is the General Meeting of Shareholders, the Board

of Commissioners and Board of Directors.

c. General Meeting of Shareholders (GMS) is the Company's Organ that has

authority not granted to the Board of Commissioners and Board of

Directors in accordance with the legislation in force and the Articles of

Association of Company.

d. Board of Commissioners (BOC) is the organ of the Company which

covers the entire Board of Commissioners as a whole council (Board) in

charge of general and/or special supervision as well as providing advice to

the Board of Directors in accordance with the Articles of Association and

legislation in force.

e. Member of the BOC is a member of the Board of Commissioners which

refers to individuals (not as a Board).

f. Independent Commissioner is a member of the Board of Commissioners

who is not affiliated with the Board of Directors, members of the Board of

Commissioners and Shareholders of controllers, as well as free from the

business relationship or other relationship which could affect its ability to

act independently or act solely in the interest of the Company.

g. Secretary to the Board of Commissioners is a secretary appointed by the

Board of Commissioners to be in charge of running the administrative

tasks and secretariat pertaining to all activities of the Board of

Commissioners.

h. Audit Committee is a committee that is working professionally and

independently that is established by the Board of Commissioners to help

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and strengthen the function of the Board of Commissioners in performing

the oversight function over the financial reporting process, the audit

process, implementation of internal control, the implementation of Good

Corporate Governance as well as carry out the special assignment from the

Board of Commissioners.

i. Supporting Committee of the Board of Commissioners is a committee that

can be formed by and responsible to the Board of Commissioners in

monitoring the framework of the tasks and functions of the Board of

Commissioners to conduct coaching and supervision over the management

of the Company outside the Audit Committee's tasks, such as, among

others:

1. Monitor, evaluate (oversight) and ensure the systems and

procedures for the nomination and remuneration of the Board of

Directors and the Board of Commissioners and provide

recommendations for selecting and determining the number of

members of the Board of Commissioners and Board of Directors;

2. Monitor, evaluate (oversight) and ensure that systems and

procedures are in good management and development of human

resources, Risk Factors, Good Corporate Governance (GCG) and

Mine Closure according to the regulations.

j. Board of Directors is the organ of the Company which covers the entire

members of Board of Directors as a whole Board that is authorized and

fully responsible for the management of the Company for the benefit of

the Company, in accordance with the purposes and objectives of the

Company and representing the Company, both in and out of court in

accordance with the provisions of the Statutes and applicable regulations.

k. Member of Board of Directors is a member of the Board of Directors

refers to the individual (not as the Board).

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l. External auditor is an auditor from outside the Company that is

independent and professional providing audit and non-audit services to the

Company.

m. Internal Auditor is an Internal Supervisory Unit that is a structural

technical unit within the Company in charge of carrying out audits and

ensuring the Company's internal control system to be effective.

n. Corporate Secretary is a structural function unit within the Company

assigned to provide support to Directors in the execution of their duties

and act as a liaison between the shareholders, the Board of

Commissioners, Board of Directors, Work Unit and Stakeholders.

o. Board of Directors and Management are structural officers in accordance

with the organizational structure of which the function is to run the

activities in accordance with the limits-specified authority.

p. Employees are the employee of PT TIMAH (Persero) Tbk., that is every

person who is formally bound in an employment relationship with the

Company as a permanent employee or as an employee with Specific Time

Work Agreement (PKWT) in accordance with Legislation regulation in

force, from the lowest position to the highest, that is 1 (one) level below

the Board of Directors.

q. Stakeholders are parties that are related to the Company because they have

a legal relationship with the Company, they are Employees, Government,

Customers, Creditors, Investors, Communities, and other certain related

parties.

r. Conflict of interest is the conflict between the economic interests of the

Company and individual economic interests of members of the Board of

Directors, member of the Board of Commissioners, or major shareholders

that could harm the Company.1

1 General Code of GCG KNKG of 2006

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s. Material transaction is any transaction with a value below 20% (twenty

percent) or more of the Company's Equity, which is done within 1 (one) or

a series of transactions for a particular purpose or activities that include:2

1. Investments in enterprises, projects, and/or certain business

activities;

2. The purchase, sale, transfer, and exchange on business segments or

asset;

3. Rent-leasing the asset;

4. Lending and borrowing of funds;

5. Guarantee the assets; and/or

6. Giving the Company’s guarantees

t. The Company's equity is the value of net wealth (assets minus the value of

all financial liabilities) of the Company, calculated based on the latest

financial statements/current as follows:

1. The audited annual financial statements;

2. The semi-annual financial statements are accompanied by the

accountant's report in the context of a limited review for the minimum to

the account acuity; or

3. The audited interim financial statements in addition to semi-annual

interim financial statements, in which case the Company has interim

financial statements.

u. Mining business is the activity for the exploitation of mineral or coal

which covers the general investigation, exploration, feasibility studies,

construction, mining, processing and refining, transportation and sales, and

post-mining.

2 Regulation of BAPEPAM and LK Number IX.E.2 concerning the Material Transaction and the

Change of Main Business Activity Number 1 article a point 2

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v. Reclamation is the activity carried out throughout the stages of mining

business to restructure, recover, and improve the quality of environment

and ecosystems to function again in accordance with its designation.

w. Post-mining activities, hereinafter referred to as Post-Mining is an planned

activity, systematic, and continual after the end part or all mining activities

to restore the function of the natural environment and the social function

of local conditions in the entire mining area.

x. Day referred to in this document is calendar days not an effective business

day.

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CHAPTER II

BOARD OF COMMISSIONERS

II.1 FUNCTIONS OF BOARD OF COMMISSIONERS

The Board of Commissioners (BOC) is one of the organs of the Company

which serves to conduct general and/or specified supervisory in accordance with

the Articles of Association as well as provide advice to the Board in carrying out

the Company's management3. The Board also has the task of monitoring the

effectiveness of Good Corporate Governance practices that is applied by the

Company.4

The Oversight Function of Board of Commissioners consists of two (2)

levels, they are:

1. Performance Level, which is the function of the BOC to supervise by

providing guidance and instruction to the Board of Directors and

provide input to the General Meeting of Shareholders;

2. Conformance level, that is in the form of monitoring activities at a

later stage to ensure that advice has been run as well as the fulfillment

of the provisions of the applicable legislation and the Articles of

Association.

The Supervisory of Board of Commissioners:

1. Supervision shall be conducted by the Board of Commissioners on the

management policy, the general management of the Company, either

3 Law No. 40 of 2007 concerning the Limited Liabilities Company Article 1 Paragraph (6)

4 Regulation of the Minister of State-Owned Enterprises Number PER-09/MBU/2012 concerning

Amendment to the Regulation of the Minister of State-Owned Enterprises Number PER-

01/MBU/2011 concerning Implementation of Good Corporate Governance (GCG) in State-Owned

Enterprise Article 12 paragraph (7)

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concerning the Company or business of the Company and give advise to

the Board of Directors;5

2. In conducting supervision, the Board of Commissioners acts as a council

or assembly and can not act individually but on the basis of the Board of

Commissioners' decision;6

3. Supervision should not be turned into executive duties which are the

authority of the board of Directors;

4. Supervision shall be exercised to the decisions that have been made (ex

post facto) and/or to the decisions to be taken in the event of an indication

of a conflict of interest (preventive basis);

5. Supervision is carried out not only by receiving information from the

Board of Directors/GMS, but can also be done by taking other appropriate

actions of information from other sources, in which the action should be

done collectively;

6. Supervision is carried out not only with simply approve or not approve

against actions that require approval by the Board of Commissioners, but

the oversight done by covering all aspects of business and corporate

aspects of the company.

II.2 REQUIREMENTS OF BOARD OF COMMISSIONERS

The requirements that must be met to become a member of the Board of

Commissioners consists of formal requirements, objective and other requirements

that are tailored to the needs and nature of the business of the Company as a State-

owned enterprises (SOEs) engaged in the mining sector.

II.2.1 Formal Requirements of the Board of Commissioners:



23

Member of the Board of Commissioners must meet the formal requirements, as

follows:

a. Able to carry out the Act law, and;

b. Never declared bankrupt or become a member of the Board of Directors or

the Board of Commissioners that is convicted, led a company to a

bankruptcy, or had been convicted of committing a criminal act that is

detrimental to the country's financial and/or related to the financial sector

in a period of 5 (five) years before his appointment.

II.2.2 The Objective Requirements of the Board of Commissioners

Member of the Board of Commissioners must meet the objective requirements as

follows:

a. Integrity and morals, that never involved:

1. Engineering deeds and practices that diverge in the management of

State-Owned Enterprises/Companies/Institutions of work before

nomination;

2. The deed of injured promise and deed that can be categorized

giving advantage against private law to the members of the Board

of Commissioners, officers of the Company as well as acts that can

be categorized as a breach to the provisions with regard to the

principles of maintaining a healthy company.

b. Technical competencies/skills, Member of the Board of Commissioners

has:

1. Adequate knowledge in the field of business of the Company;

2. The ability to perform the function of supervision and giving

advice and can work as a team;

3. Understanding the company's management problems.

24

c. Psychologically, a member of the Board of Commissioners has the

intelligence level of intellectual, emotional and spiritual that are adequate

to carry out his duties as a member of the Board of Commissioners of the

company.

II.2.3 Other Requirements of the Board of Commissioners, are as follow:

a. Understand the legislation in the field of Limited Company, the

Company’s Core Business and other appropriate business scope of the

Company;

b. Not being a board member of political parties, and/or legislative candidate,

and/or legislative members

c. Not being a candidate/vice of a regional head and/or a head/vice of a

regional head;

d. Not being in a position that according to the legislation is banned for being

coupled with the office of the members of the Board of Commissioners;

e. Not being in the service as a member of the Board of Commissioners of

the Company for 2 (two) consecutive periods;

f. Have a dedication and provide full time to do the task;

g. Physically and spiritually healthy (not being under an illness that may

inhibit the implementation of the task as a member of the Board of

Commissioners);

h. Between the members of the Board of Commissioners and between

members of the Board of Commissioners and Directors there shall not be a

blood family relationship to the third degree, both according to the straight

line and the side line including relations that arise because of marriage;7

i. For Independent Commissioners, in addition to the qualification above,

there also applies the independency conditions set by the Ministry of State

7 The Articles of Association of PT TIMAH (Persero) Tbk Article 20 Paragraph 13

25

Owned Enterprises and by the Capital Market Supervisory Body and

Financial Services Authority that will be discussed further on the part of

the Independent Commissioner letter II.D.

II.3 MEMBERSHIP OF THE BOARD OF COMMISSIONERS

II.3.1 Membership

a. The Board of Commissioners shall consist of at least 3 (three) members of

the amount specified by the GMS8, with the number of members of the

Board of Commissioners maximally the same with the number of

members of the Board of Directors;9

b. In the composition of the Board of Commissioners, at least 30% (thirty per

hundred) is a member of the Board of Independent Commissioners10

specified in the decision of the nomination;

c. Member of the Board of Commissioners which is derived from the former

member of the Board of Directors must not serve as a member of the

Board of Directors of the Company concerned at least 1 (one) year;11

d. The members of the Board of Commissioners shall be elected by the

GMS, from the candidate proposed by the Shareholders of Seri A

Dwiwarna after being through the nomination process in accordance with

the regulation and the nomination is binding for the GMS;12

e. The Members of the board of commissioners shall be elected and

dismissed by the GMS, should which the GMS be attended by

8 Articles of Association of PT TIMAH (Persero) Tbk Article 20 Paragraph 1

9Decree of the Secretary of the Ministry of State-Owned Enterprises Number: SK-16/S.MBU/2012

about the Indicator/Parameter and Assessment Evaluation of the implementation of Good

Corporate Governance on State-Owned Enterprises, Indicator 8 Parameter 24 Criteria 3a 10

Regulation of the Capital Market Number i-A about the Recording of Stocks and Equity

Securities other than Shares issued by the Registered Company Roman III Points III.I.4 11

Decree of the Secretary of the Ministry of State-Owned Enterprises Number: SK-

16/S.MBU/2012 about the Indicator/Parameter and Assessment Evaluation of the implementation

of Good Corporate Governance on State-Owned Enterprises, Indicator 8 Parameter 24 Criteria 3c 12

The Articles of Association of PT TIMAH (Persero) Tbk Article 20 Paragraph 8

26

Shareholders of Series A Dwiwarna and the decision of the meeting must

be approved by the Shareholders of Series A Dwiwarna;

f. The individual nominated as a candidate for members of the Board of

Commissioners shall undergo the evaluation process of fit and proper test

by or at the request of the Shareholders;

g. The potential members of the Board of Commissioners that have been

undergoing the fit and proper test and selected to be proposed by

Shareholders will be assigned and appointed by the GMS and the

nomination is binding to the GMS;

h. If due to any reason the position of one or more members of the Board of

Commissioners is vacant or the Company has no one as a member of the

Board of Commissioners, at least within 60 (sixty) days since the vacancy,

a GMS shall be held to fulfill the vacancy. During the term is unfilled and

the successor is not present or has not yet taken office, then one of the

members of the Board of Commissioners shall run the work of the

members of the Board of Commissioners with the same power and

authority.

II.3.2 Position

a. The term of office of the members of the Board of Commissioners is for a

period of 5 (five) years counted from the date specified by the

Shareholders who assigned him (them) and ended at the close of the 5

GMS (fifth) after his inauguration date (them), with not reducing the rights

of Shareholders to dismiss the members of the Board of Commissioners

during the time before his term of office ended by mentioning the reason,

among others if the members of the Board of Commissioners are not able

to carry out their task well, do not implement legislation and/or the terms

of the Articles of Association, involved in actions that is detrimental to the

Company and/or the Country due to the negligence or error of the related

27

members of the Board of Commissioners, declared guilty by the court with

permanent legal force, and/or resign.13

b. The term of the members of the Board of Commissioners ends due to the

following:14

1. Resignation,

2. Demise

3. Expiry of term of office.

4. Dismissal based on GMS decision.

5. Being no longer eligible as a member of the Board of Commissioners

based on the applicable legislation.

c. In the case of resignation of members of the Board of Commissioners:

1. Members of the Board of Commissioners who resign from his position

is still obligated to inform in writing concerning his resignation to the

Company by no later than sixty days with a copy to the Board of

Commissioners, Directors and Shareholders who propose appointing

members of the Board of Commissioners concerned;15

2. Within sixty days after the receipt of the resignation letter, an

Extraordinary GMS must be held to specify the resignation, but when

the company does not hold Extraodinary General Meeting of

Shareholders within a period of sixty days and the resignation of the

members of the Board of Commissioners has become valid without

requiring the approval of the GMS;16

13

Articles of Association of PT TIMAH (Persero) Tbk Article 20 Paragraph 9 14 Articles of Association of PT TIMAH (Persero) Tbk Article 20 Paragraph 19 15

Articles of Association of PT TIMAH (Persero) Tbk Article 20 Paragraph 19 letter a 16

Articles of Association of PT TIMAH (Persero) Tbk Article 20 Paragraph 18 letter b and c

28

3. Member of Board of commissioner who resigned can still be asked for

accountability since the assignment until his effective date of

resignation.17

d. One or more members of the Board of Commissioners can be discharged

for temporary by Shareholders if the members of the Board of

Commissioners is acting contrary to the Articles of Association or there

are indications that are detrimental to the company or neglect its

obligations or there are urgent reasons for the Company with the terms as

follows:

1. Temporary dismissal must be informed in written to the person

concerned with the reason;

2. Within a period of sixty days after the temporary dismissal, an

Extraordinary GMS must be held to decide whether the members of

the Board of Commissioners will be discharged permanently or

returned to the original position;

3. Member of the Board of Commissioners which is temporarily

dismissed is given the opportunity to present and defend themselves;

4. If Extraordinary GMS is not held within sixty days after the temporary

dismissal, the dismissal is legally void.

e. The GMS can appoint others to fill the office of the members of the Board

of Commissioners which is discharged from his position and the GMS can

appoint a person as a member of the Board of Commissioners to chair the

empty office of the members of the Board of Commissioners. The term of

office of a person who is appointed to replace the discharged member of

the Board of Commissioners or to chair the empty positions is the

remaining term of the replaced members of the Board of Commissioners;

17

Law Number 19 of 2003 concerning State-Owned Enterprises Article 28 Paragraph (6)

29

f. The appointment of members of the Board of Commissioners shall not be

concurrent with the appointment of members of the Board of Directors,

except the appointment is for the first time of establishment.18

g. In the case of an addition of a member of the Board of Commissioners, the

term of office of the new Board of Commissioners shall be 5 (five) years.

II.4 INDEPENDENT COMMISSIONERS

The composition of the Board of Commissioners of the Company must be in such

a way that it enables effective, timely, and prompt decision-making. In addition,

the Board of Commissioners shall carry out its duties and responsibilities

independently, in the sense of being able to perform its duties objectively and

freely from the pressures and interests of any party, including in relation to each

other or the relationship to the Board of Directors. The number of Independent

Commissioners shall be at least 30% (thirty per hundred) of the members of the

Board of Commissioners (adjusted to the Company's complexity and the

resolutions of the GMS).

II.4.1 Criteria for Position of Independent Commissioners:

In addition to the requirements of the Board of Commissioners as outlined in the

letter II.2, to be appointed as an Independent Commissioners must meet the

following criteria:

a. Does not own shares either directly or indirectly to the Company;19

b. Has no affiliation with the Company, Board of Commissioners, Directors

or major Shareholders;20

18

Law Number 19 of 2003 concerning State-Owned Enterprises Article 28 Paragraph (6) 19

Regulation of Bapepam IX.I.5 concerning the Establishment and Implementation Guidance of

the Audit Committee number 1 letter b point 2 20

Regulation of Bapepam IX.I.5 concerning the Establishment and Implementation Guidance of

the Audit Committee number 1 letter b point 3

30

c. Does not take office as a member of the Board of Directors in a company

affiliated with PT TIMAH (Persero) Tbk.;

d. Does not work on the Government including the Ministry, non-ministry

and military officials and the police;

e. Does not take an executive position or have a business relationship with

the corresponding companies and other companies affiliated in a period of

3 years;21

f. Does not become the supplier and significant customer or occupy the

executive position and the Board of Commissioners of the supplier

company and significant customer of the corresponding company or other

companies affiliated;

g. Not a professional counselor/expert of the company or other companies of

the industry group with the Company;

h. Does not have financial ties, either directly or indirectly with the Company

or other companies that provide products or services to the company;

i. Does not have a contractual relationship with the Company as a former

member of the Board of Directors and a former member of the Board of

Commissioners as well as a former employee of the Company in a specific

period of time;

j. Free from the interests and business activity or other relationship that can

prevent or interfere the ability to think and/or act independently;

k. Understand the details of the business management and company financial

as well as able to read the financial reports.22

II.4.2 Nominations Procedure of Independent Commissioners

21

Guideline for Independent Commissioner by Task Force of National Committee of Governance

Policy 22

Guideline for Independent Commissioner by Task Force of National Committee of Governance

Policy

31

a. Board of Commissioners and/or Committees under the Board of

Commissioners (through the Board of Commissioners) may submit

proposed names as candidates for Independent Commissioners to the

GMS;

b. In the nomination of Independent Commissioners, it is important that the

opinion of the Minority Shareholders be considered, among others, in the

form of Minority Shareholders' right to nominate candidates for

Independent Commissioners as a form of protection against the interests of

the Minority Shareholders and other Stakeholders;

c. The nominating mechanism can be done by announcing in the mass media

complete with the agenda at the time of the announcement of the GMS;

d. Prospective candidates must be more than 1 (one) person;

e. The nominated candidate must pass the fit and proper test conducted by

the Shareholder.

II.5 INTRODUCTION PROGRAM AND CAPABILITY BUILDING

II.5.1 Introduction Program

With the background of members of the Board of Commissioners who come from

several parties representing Shareholders, the Introduction Program is then very

important to be held. This is done so that members of the Board of

Commissioners can get to know each other and work together as a solid,

comprehensive and effective team. The conditions on the Introduction Programs

include the following:

a. For newly appointed members of the Board of Commissioners, an

Introduction Program is required regarding the conditions of the Company

in general;

32

b. The person responsible for this Introduction Program is the Corporate

Secretary or anyone who performs the functions as Corporate Secretary;23

c. Introduction Program includes:

1. Implementation of Good Corporate Governance principles in the

Company;

2. A description of the duties and responsibilities of the Board of

Commissioners and the Board of Directors according to the

applicable law;

3. The description of the Company relating to the objectives, nature,

and scope of activities, financial and operating performance,

strategy, short-term and long-term business plan, competitive

position, risk, internal control and other strategic issues;

4. Information relating to delegated authority, internal and external

audits, internal control systems and policies and the Audit

Committee;

5. A description of the obligations, duties, responsibilities and rights

of the Board of Directors and Board of Commissioners;

6. Understanding of the ethical and normative principles prevailing

within the Company and the local community;

7. Team Building. In this activity includes the Board of Directors,

either new or formerly appointed.

d. The Introduction Programs can be in the forms of presentations, meetings,

visits to Company facilities, visits to the mine or mining processing sites,

review of the Company’s documents or other programs deemed

appropriate to the needs.

23

Regulation of the Minister of State-Owned Enterprises Number: PER-09/MBU/2012 concerning

the Amendment to the Regulation of the Minister of State-Owned Enterprises No. PER-

01/MBU/2011 on the Implementation of Good Corporate Governance (GCG) on State-Owned

Enterprise Article 43 Paragraph 2

33

II.5.2 Capability Building Program

The capability building is deemed important for the Board of Commissioners to

keep up-to-date on the latest developments of the Company's business and the

prevailing laws and regulations.

The provisions on the Capability Building Program for the Board of

Commissioners are as follows:

a. The Capability Building Program is held in order to improve the working

effectiveness of the Board of Commissioners

b. The plan to hold the Capability Building Program should be included in

the Board of Commissioners' Work Plan and Budget;

c. Every member of the Board of Commissioners participating in a

Capability Building Program like a seminar and/or training is required to

share information and knowledge with other members of the Board of

Commissioners;

d. The member of the Board of Commissioners concerned is responsible for

reporting on the event of the Capability Building Program. The report is

submitted to the Board of Commissioners.

The Capability Building Program includes:

a. Knowledge related to the principles of corporate law and the updating of

legislation relating to the Company's business activities, as well as the

internal control system;

b. Knowledge related to strategic management and its formulation;

c. Knowledge related to risk management;

d. Knowledge related to quality financial reporting.

II.6 ETHICS OF THE BOARD OF COMMISSIONERS

II.6.1 Ethics relating to exemplary

34

1. The Board of Commissioners should encourage the creation of ethical

behavior and uphold the highest standards in the Company, so that the

Board of Commissioners becomes a good example for Directors and

Company Employees;

2. The Board of Commissioners must meet the requirements of ability and

integrity so that the implementation of supervisory and advisory functions

for the interests of the Company can be properly implemented;24

3. Carrying out duties in a trustworthy, dedicated manner, upholding honesty

as a high value, that is honest in expressing his opinion, both orally and in

writing, and honest in attitude and action;

4. Tolerance in attitudes and actions, polite in expressing opinions, both

orally or in writing;

5. Respect Shareholders' and/or GSM resolutions;

6. Have an orientation to add value to the Company;

7. Continually enhance its knowledge and understanding of issues relating to

supervision and advice to the Directors in the management of the

Company;

8. To take an attitude, to express an opinion, and to take an action in private,

which must be clearly and expressly stated that his or her attitude, opinion

or actions are personal;

9. To take attitudes, opinions and actions based on objectivity, professional

and independent elements in the interest of the Company in proportion to

the interests of the Stakeholders;

10. In carrying out its duties and obligations, put the interests of the Board of

Commissioners in its entirety above personal interests.

24

General Guidelines for GCG KNKG of 2006 KNKG Chapter IV Board of Commissioners

Section

35

II.6.2 Ethics relating to the Compliance with Legislation

The Board of Commissioners is required to comply with the applicable laws and

regulations, the Articles of Association and the Code of Corporate Governance as

well as the Company's policies.

II.6.3 Ethics relating to the Company Opportunities and Personal Benefits

During their term of office, the Board of Commissioners is not allowed to:

1. Take the Company's business opportunity for its own benefit, their family,

their business group and/or other parties;

2. Take personal advantage from the Company's activities, other than the

salary and facilities they receive as a Member of the Board of

Commissioners of the Company, as determined by the GMS;25

3. Use the Company's assets, the Company's information or their positions as

a Member of the Board of Commissioners for the personal interest or

others, which is contrary to applicable laws and regulations and the

Company's policies.

II.6.4 Ethics Relating to Transparency and Confidentiality of Information

The Board of Commissioners must disclose information in accordance with

applicable laws and regulations and always keep the confidentiality of

confidential Company’s information entrusted to them in accordance with

applicable laws and Company’s policies.

II.6.5 Ethics Relating to the Conflict of Interest

A conflict of interest is a condition in which the interests of the Board of

Commissioners are in conflict with the interest of the Company to achieve profit,

25

Law Number 19 of 2003 concerning State-Owned Enterprises Article 7

36

increase the value, achieve the vision and carry out the mission and direction of

the GMS, which will ultimately harm the Company. On the basis of such matter,

the Members of the Board of Commissioners shall always:

1. Avoidance of conflict of interest;

2. Fill in the Special Register containing ownership of shares and/or

ownership of shares by their family to the Company and other companies,

including without ownership of shares, and periodically at the end of each

year update and shall notify the Company in the event of any change of

data, according to the prevailing laws and regulations;26

3. Guided not to take advantage of position for personal interest or for the

interest of other person or party that is against the interest of the Company;

4. The Board of Commissioners is prohibited from having multiple positions

at the same time as the Board of Directors or Board of Commissioners at

other companies in the same relevant market, having a close relationship

in the field and/or type of business and simultaneously able to control the

market share of certain goods and/or services which may result in

monopolistic practices and/or unfair business competition;27

5. The members of the Board of Commissioners shall not hold dual position

of:28

a. Members of the Board of Directors of State-Owned Enterprises,

Regional-Owned Enterprises and Private-Owned Enterprises

b. Other positions in accordance with the provisions of legislation, the

management of political parties and/or candidates/legislators;

and/or

c. Other positions that may cause a conflict of interest.

26

Law No. 40 of 2007 concerning the Limited Liabilities Company Article 116 letter b 27 Law No. 5 of 1999 concerning Prohibition of Monopolistic Practices and Unfair Business

Competition Article 26 28


37

6. Members of the Board of Commissioners whose dual positions are

prohibited as referred to in item 5 shall withdraw from one of these

positions no later than 30 days from the date of the dual positions;29

7. Avoid any activity that may affect their independence in performing the

task;

8. Conduct disclosure in the event of a conflict of interest, and the Member

of the Board of Commissioners concerned shall not involve themselves in

the Company's decision-making process in connection therewith;

9. Not responding to requests from any party and for any reason, whether

requests directly from certain parties including and not limited to

officials/officials within Government agencies and political parties relating

to the request for donations, including those relating to the procurement of

goods and services at the company;

10. Comply with applicable laws and regulations, including by not engaging

in insider trading for personal gain.

II.6.6 Ethics of Business and Anti Corruption

1. Members of the Board of Commissioners do not accept, give or offer

directly or indirectly anything of value to and/or from Customers or

Government Officials to influence or in return for what they have done

and other actions in accordance with applicable laws and regulations;30

2. The members of the Board of Commissioners do not accept either direct or

indirect, rewards and/or gifts, and/or grants and/or donations and/or

entertainment of any kind from any party outside the Board of

Commissioners, for what they have done in relation to the functions and

29 Decision of Secretary of the Ministry of State-Owned Enterprises No. SK-16/S.MBU/2012 on

Indicator/Parameter of Assessment and Evaluation of Good Corporate Governance

Implementation on State-Owned Enterprise, Indicator 7 Parameter 19 Criterion 2 30


Amendment to the Regulation of the Minister of State-Owned Enterprises No. PER-01/MBU/2011

on the Implementation of Good Corporate Governance (GCG) on State-Owned Enterprise Article

40 Paragraph 1

38

duties of the Board of Commissioners or in their capacity as a Member of

the Board of Commissioners;

3. Rewards, gifts, grants and donations in letters (b) are excluding

honorariums, transportation money, travel and lodging expenses or

souvenirs that are granted to members of the Board of Commissioners;

Further regulation on the ethics of the Board of Commissioners will be set forth in

the Code of Conduct which is an inseparable document of this Board Manual.

II.7 DUTIES AND OBLIGATIONS OF THE BOARD OF

COMMISSIONERS


1. The basic principles for the implementation of supervisory and

advisory tasks to the Board of Directors by the Board of

Commissioners include:

a) The composition of the Board of Commissioners shall enable

effective, timely, and prompt decision making, and may act

independently;

b) Members of the Board of Commissioners shall be professionals,

having integrity and capacity to perform their functions properly

including ensuring that the Board of Directors has taken into

account the interests of all stakeholders;

c) The functions of supervision and advice given to the Board of

Directors include precautionary measures, remedies, and

temporary dismissals.

2. Implementation of supervision and giving advice to the Board of

Directors by the Board of Commissioners, among others, is done by:

a. Requesting a written statement to the Board of Directors

regarding a problem that occurred;

39

b. Providing opinions or directives in meetings of the Board of

Commissioners with the Board of Directors or other meetings

attended by the Board of Commissioners;

c. Visits to Divisions/Bureaus/Branches/Units and Learning

Centers, in order to ensure the Company's operational

operations such as human resources (HR), operations,

finance, and others work effectively. In the event that the

Board of Commissioners will conduct a working visit to the

Division/Bureau/Branch Office/Unit and Learning Center,

the procedures to be performed are as follows:

1) The Board of Commissioners submits the plan of

working visit in writing to the Board of Directors by

stating the purpose and purpose, location and time of

working visit to be conducted;

2) The Board of Directors prepares for such work visit,

including providing necessary facilities in accordance

with the provisions on the official travel of the Board

of Commissioners;

3) In the case of a working visit conducted jointly with

the Board of Directors, the above procedure is not

required.

d. Respond to periodic reports submitted by the Board of

Directors.

In relation to the implementation of the supervisory and advisory

function to the Board of Directors, the Board of Commissioners

has the duty and/or obligation to:

a. Subject to the provisions of applicable laws and regulations,

the Company's Articles of Association, and decisions of the

GMS;

40

b. In good faith and responsibly performing duties for the

Company's interests and business;

c. Supervise the interest of the company by taking into account

the interests of shareholders and being responsible to the

GMS;

d. Conduct supervisory duties on the Board of Directors'

policies in executing the Company's management including

the implementation of the Company's Long Term Plan

(RJPP), the Company's Work Plan and Budget (RKAP), the

Articles of Association and the resolutions of the General

Meeting of Shareholders and the prevailing laws and

regulations for the Company's interests with the aims and

objectives of the Company;31

e. Provide opinions and suggestions to the Board of Directors in

relation to the management of the Company;

f. Provide opinions and suggestions to the Board of Directors in

relation to the preparation of the vision, mission and other

strategic plans stipulated in the Articles of Association;

g. Monitor the process of transparency and communication

effectiveness within the Company;

h. Follow the development of the Company's activities, either

from internal information provided by the Company or from

external information that is of the media or other sources;

i. Where deemed necessary, may attend work/coordination

meetings with the Board of Directors and all its staff;

j. Make efforts to ensure that the Board of Directors and its

staff comply with the legislation and other regulations in

31


41

managing the Company including all agreements and

commitments made by the Company with the third parties;

k. Implement Good Corporate Governance consistently;

l. Monitor the effectiveness of GCG practices, among others,

by holding regular meetings between the Board of

Commissioners and the Board of Directors to discuss the

implementation of Good Corporate Governance in the

Company;

m. Make a Report of the Board of Commissioners and keep

copies thereof;32

n. Report to the Company concerning the ownership of their

shares and/or their family to the Company and other

companies including the amendment;33

o. Monitor and resolve conflict of interest issues at management

level, Board of Directors and Board of Commissioners

Members, including misuse of the Company's assets and

manipulate the Company's transactions;

p. Conduct a division of labor among members of the Board of

Commissioners governed by themselves, and for the smooth

functioning of the Board of Commissioners may be assisted

by a Secretary of the Board of Commissioners appointed by

the Board of Commissioners at the expense of the Company.

II.7.2 In Relation to Shareholders/General Meeting of Shareholders

32

Law No. 40 of 2007 concerning the Limited Liabilities Company Article 116 letter a 33




12 Paragraph 9

42

1. Provide relevant information related to the supervisory duties exercised by

the Board of Commissioners to Shareholders and Stakeholders on the basis

of provisions in a timely, accurate, clear and objective manner;

2. Call and notify the Extraordinary GMS when the Board of Directors fails

to make notices and the conduct of the GMS at the request of the Board of

Commissioners or the Shareholders of Series A Dwiwarna or 1 (one)

Shareholder or more which has at least 1/10 (one per ten) with valid voting

rights, in the event that the period has passed 15 (fifteen) days after the

letter of request;34

3. Lead a GMS which may be exercised by a member of the Board of

Commissioners appointed by the Board of Commissioners;35

4. Provide reports on the supervisory duties that have been carried out during

the past financial year to the GMS,36

in order to obtain the acquittal and

discharge of the responsibilities (acquit et decharge) of the GMS;

5. Report immediately to the GMS in case of symptoms of declining

performance of Company37

accompanied by suggestions for improvement

of such performance;

6. Provide opinions and suggestions for GMS in respect of the appointment

and dismissal of the Board of Directors;

7. Provide opinions and suggestions to the General Meeting of Shareholders

regarding any issues deemed necessary for the management of the

Company;

8. Submit a proposal to the GMS on Key Performance Indicators for the

Board of Commissioners in performing supervisory and advisory functions

34

The Articles of Association of PT TIMAH (Persero) Tbk Article 13 Paragraph 2 and 3 35

The Articles of Association of PT TIMAH (Persero) Tbk Article 15 Paragraph 1 36 The Articles of Association of PT TIMAH (Persero) Tbk Article 21 Paragraph 2 letter b point

viii 37

The Articles of Association of PT TIMAH (Persero) Tbk Article 21 Paragraph 2 letter b point iv

43

to the Board of Directors in accordance with prevailing laws and

regulations;38

9. Provide opinions and suggestions to the GMS in relation to the Company's

Long Term Plan/RKAP development plan, RKAP and its

amendments/additions proposed by the Board of Directors, investment

plans/equity or shareholdings;

10. Propose a Public Accountant (External Auditor) to the General Meeting of

Shareholders based on proposals and selection made by the Audit

Committee in accordance with the assignment of the Board of

Commissioners by appointment process under the provisions of the

procurement of Company's goods and services39

and the applicable laws

and regulations;

11. Sign the Annual Report, in the event that a member of the Board of

Commissioners is unwilling to sign the Annual Report, they must state the

reason in writing;40

12. Appoint one of the other members of the Board of Directors to perform the

duties of the Board of Directors who are absent and temporarily perform

the duties of the Board of Directors in the event of a Company at any time

for any reason does not have a member of the Board of Directors, with an

obligation no later than 30 (thirty) days after the vacancy, the Board of

Commissioners proposes the General Meeting of Shareholders to fill such

vacancy;

13. Sign share certificates and collective share certificates with the President

Director. If the President Director is absent, then it will be replaced by one

38




15 Paragraph 1 and 2 39




31 Paragraph 1, 2, and 3 40

Law No. 40 of 2007 concerning the Limited Liabilities Company Article 67 Paragraph (2) and

Law No. 19 of 2003 concerning State-Owned Enterprises Article 23 paragraph 3

44

of the Directors. If the President Commissioner is absent, then it shall be

replaced by one of the members of the Board of Commissioners;

14. Provide opinions and suggestions to the General Meeting of Shareholders

regarding any other matters deemed necessary for the management of the

Company.

II.7.3 In Relation to the Company's Work Plan and Budget

1. Prepare the work plan and budget of the Board of Commissioners for the

current year as part of the Company's work plan and budget;

2. Review and provide opinions on the Company's Work Plan and Budget

(RKAP) and the Company's Long-Term Plan (RJPP) prepared by the

Board of Directors;

3. Sign the RKAP in order to give approval or endorsement to the RKAP

prepared by the Board of Directors, no later than 31 December of the

current year or before the start of the new fiscal year;

4. Approve the RJPP that the Board of Directors has prepared, before the

RJPP period runs to an end.

II.7.4 In Relation to Nomination, Remuneration, and Human Resources

1. Review and supervise to ensure that the Company has a strategy and

nomination policy that includes the process of organizational analysis,

procedures and criteria for recruitment, selection and promotion;

2. Propose a nomination and selection system for candidates for members of

the Board of Commissioners and Members of the Board of Directors of the

Company, and submit it to the General Meeting of Shareholders to be

ratified;

45

3. Ensure that the Company has a transparent remuneration system in the

form of salaries or honoraria, fixed allowances and facilities and variable

incentives;

4. Formulate and determine and propose to the General Meeting of

Shareholders (if necessary) related to the remuneration policy in the form

of salary or honorarium, fixed allowances and facilities and variable

incentives and tantiems for the Board of Commissioners and the Board of

Directors;

5. Evaluate employee benefits, allowance and other facilities, and submit

transparent recommendations at least once in 2 (two) years, on:

a. Assessment of Employee benefits system, grant allowance, and

other facilities;

b. Pension systems and benefits;

c. Systems and other benefits in the case of reduction of Employees.

6. Ensure there is liability insurance of members of the Board of

Commissioners and Board of Directors;

7. Conduct supervision to ensure that the Board of Directors has appointed

members of the Board of Commissioners and Directors of

Subsidiaries/Joint Ventures and Officials one level below the Board of

Directors in accordance with the prevailing regulations;

8. Receive Report of Appointment of Directors and Board of Commissioners

of Subsidiaries/Joint Ventures Company after being recorded in each of

the AGMS of Subsidiaries;

9. Further regulation concerning Subsidiaries refers to the prevailing laws

and regulations;

10. Ensure that the Company has human resource management and

development policies;

46

11. Review and supervise human resource development management practices

based on the Company governance guidelines in particular management

policies and procedures in the field of human resource development;

12. Review and supervise the implementation of Human Resource Planning,

Recruitment, Selection, Employee Placement and Positioning System

within the Company's organizational structure, promotion and demotion as

well as mutation and related to the determination of remuneration;

13. Reviewe plans for promotion and mutation of officers one level below the

Board of Directors in accordance with the qualifications assigned to the

Company;

14. Conduct oversight of existing industrial relations within the Company.

In performing this obligation, the Board of Commissioners may be assisted by the

Nomination, Remuneration and Human Resources Committee (if formed) or other

committees established by the Company with its duties and functions providing

Nomination, Remuneration and Human Resources recommendations.

II.7.5 In Relation to the Performance Evaluation of Board of

Commissioners and Board of Directors

Develop the key Performance Indicators (KPI) of the Board of Commissioners:

1. Evaluate the performance of the Board of Commissioners based on the

Key Performance Indicators (KPI) of the Board of Commissioners with a

self assessment system or other system to be decided in the Board of

Commissioners meeting;

2. Provide responses and recommendations on the establishment of KPI

Directors at the beginning of each working year;

3. Evaluate the performance of the Board of Directors based on the KPI of

the Board of Directors and respond to the Board of Directors, then submit

the recommendation to the GMS.

47

II.7.6 In Relation to Risk Management

The Board of Commissioners must ensure that the implementation of risk

management has been carried out thoroughly in the Company. In performing this

task, the Board of Commissioners may be assisted by the BoC Committees. The

Board of Commissioners performs an active role in supervising the

implementation of Risk Management conducted by the Board of Directors. In

addition, the Board of Commissioners is also encouraged to perform the following

functions:

1. Obtain an understanding and evaluation of Risk Management

implementation in the Company including but not limited to risk

management policies and implementation in the Company, various risks

faced by the Company, strategy, system, methodology and infrastructure

and risk management;

2. Evaluate the conformity between policies and the application of Risk

Management, and to evaluate the responsibility of the Board of Directors

in implementing the Risk Management policy as referred to in letter (a)

above;

3. Coordinate the implementation and supervision of the existence and level

of effectiveness of each component of Enterprise Risk Management

(ERM) within the Company;

4. Measure the effectiveness of each component of the ERM that has been

applied to the Company;

5. Evaluate and decide on the application of the Board of Directors relating

to transactions that require the approval of the Board of Commissioners.

In order to carry out the task of monitoring the management of Risk Management,

the Board of Commissioners may be assisted by other Committees established by

the Company with duties and functions including monitoring and evaluation of

the business risks managed by the Corporation.

48

II.7.7 In Relation to the Information Technology

1. Obtain information on the policies and application of information

technology systems used by the Company;

2. Provide suggestions and opinions on the information technology system

applied by the Company.

II.7.8 In Relation to Mining Business and other Company’s Policies

The Board of Commissioners oversees and gives advice to the Board of Directors

on the policies issued by the Company by conducting the review, providing

advice and opinions on:

1. Policy, publication mechanism and Corporate Social Responsibility (CSR)

program, Community Development Partnership (PKBL), Reclamation and

Post Mining program;

2. Policies to ensure the implementation of mining governance including

environmental management and Post Mining in accordance with

applicable regulations and with the principles of Good Mining Practices;

3. Procurement policy of goods and services and their application in

accordance with the provisions applicable to State-Owned Enterprises

(SOEs);

4. The accounting policies and preparation of financial statements in

accordance with generally accepted accounting standards in Indonesia;

5. The quality policy and service and its implementation in the Company;

6. Ensure business transactions with Subsidiaries are conducted on an arm's

length relationship basis as do business transactions with unaffiliated

parties.

49

In performing this duty, the Board of Commissioners may be assisted by the Audit

Committee and other Committees established in the Company as required.

II.7.9 In Relation to Ethics of Business and Anti Corruption

1. Members of the Board of Commissioners are prohibited from giving or

offering, or receiving, directly or indirectly, anything of value to or from

customers or a Government official to influence or in return for what they

do and other actions, in accordance with the provisions of legislation;41

2. Support corruption eradication efforts proclaimed by the Government by

reporting on assets to be submitted to the Board of Directors and

subsequently filed with the competent Government Institution;

3. Report any action or relationship that may cause a conflict of interest;

4. Not abusing authority and position in various business activities of the

Company for personal and group interests;

5. Protect the Company's assets from unauthorized use;

6. Report to the competent agency for any indication or fraud occurring

within the Company in accordance with applicable regulations in the

Company.

II.7.10 In Relation to the Internal Control System

The Board of Commissioners has an obligation to:

1. Ensure the effectiveness of the Company's internal control system

41




40 Paragraph 1

50

2. Ensure the effectiveness of execution of duties of Internal Auditor and

External Auditor, by assessing the Competence, Independence and scope

of duties of Internal Auditor and External Auditor;

3. Ensure the Internal Auditor, External Auditor and Audit Committee have

access to information about the Company that is required to perform its

duties;

4. Assess the accuracy of information prepared for other parties, especially in

Annual Financial and Non-Financial Statements and Annual Reports.

II.7.11 In Relation to Disclosure and Confidentiality of Information

1. Oversee the Company to disclose important information in the Annual

Report (including the Financial Statements) to other parties in accordance

with applicable laws in a timely, accurate, clear and objective manner;

2. The Board of Commissioners is responsible to the Company to maintain

the confidentiality of the Company's data and/or information;

3. The confidential information obtained while serving as a member of the

Board of Commissioners shall be kept confidential in accordance with

applicable laws and regulations;

4. Ensure that the Company's Annual Report contains information on its

identity, its main jobs, the positions of the Board of Commissioners in

other companies, including meetings conducted within one fiscal year

(internal meetings or joint meetings with the Board of Directors), as well

as honoraria, facilities and/or other allowances received by the Company.42

II.7.12 In Relation to Reporting

42




12 Paragraph 8

51

1. Submit quarterly reports on progress of realization of Performance

Achievement Indicators to Shareholders;43

2. Conduct research and review of the reports of the Board of Directors and

all its staff, especially those relating to specific tasks that have been

decided together;

3. Examine and review reports of committees under the Board of

Commissioners;

4. Report the appointment and dismissal of members of the Audit Committee

and other committees (if any) to the GMS;

5. Examine and review quarterly reports on the implementation of the RKAP

prepared by the Board of Directors and provide necessary

advice/recommendations;

6. Examine and review periodic reports and annual reports prepared by the

Board of Directors and sign annual reports.44

II.7.13 In Relation to Other Tasks and Obligations

Carry out other obligations in the context of supervision task and giving advice to

the Board of Directors, as long as it is not contrary to the laws and regulations, the

Articles of Association and/or the resolutions of the GMS.45

II.8 AUTHORITY OF THE BOARD OF COMMISSIONERS

a. The Board of Commissioners is authorized to approve or reject in writing

the plan of the Board of Directors to:46

43 Regulation of the Minister of State-Owned Enterprises Number: PER-09/MBU/2012 concerning



15 Paragraph 3 44 The Articles of Association of PT TIMAH (Persero) Tbk Article 21 Paragraph 2 letter b point v 45

The Articles of Association of PT TIMAH (Persero) Tbk Article 21 Paragraph 2 letter b point ix 46


52

1. Establish a Subsidiary and/or Joint Venture Company;

2. Conduct equity participation in other companies, Subsidiaries and

Joint Venture Companies;

3. Merger, consolidation, acquisition, separation and dissolution of

Subsidiaries;

4. Conduct licensing agreements, management contracts, lease assets,

joint operations and other cooperation agreements that exceed

certain values established by the Board of Commissioners;

5. Binds the Company as a guarantor (borg or avalist) that has

financial consequences that exceed a certain amount determined by


6. Transfer, relinquish or pledge less than 50% (fifty percent) of the

Company's total net worth in 1 (one) transaction or more, whether

related to each other or not;

7. Eliminate from the books of bad debts and inventories of dead

goods exceeding certain value determined by the Board of

Commissioners;

8. Carry out other actions that have not been determined in the RKAP

but still stipulated in the Company's Articles of Association and the

prevailing laws and regulations.

b. Temporarily terminate the members of the Board of Directors from their

positions if the members of the Board of Directors act in contrary to the

Articles of Association or there is indication of any action that causes the

Company to be liable or neglect their obligations or there is an urgent

reason for the Company, taking into account the following provisions:47

1. Decisions of the Board of Commissioners concerning the

temporary dismissal of members of the Board of Directors shall be

47


53

conducted in accordance with the decision-making procedures of

the Board of Commissioners Meeting;

2. Such suspension shall be notified in writing to the members of the

Board of Directors concerned with the reasons for such action with

a copy to the Board of Directors and submitted within 2 (two) days

after the issuance of such suspension;

3. Temporary suspended members of the Board of Directors are not

authorized to perform the Company's management and represent

the Company either inside or outside the Court;

4. Within a period of 45 (forty five) days after the interim provision,

an Extraordinary General Meeting of Shareholders shall be

convened by the Board of Commissioners to decide whether to

revoke or enforce the decision of such dismissal;

5. In the Extraordinary GMS, members of the Board of Directors are

given an opportunity to defend themselves;

6. If within a period of 45 (forty five) days of the Extraordinary GMS

is not held or the Extraordinary GMS can not make a decision, then

the suspension shall be void and the member of the Board of

Directors concerned shall perform the necessary duties;

7. The temporary suspension may not be renewed or re-established

for the same reason, if the suspension is declared void as referred

to in item 6.

c. Manage the Company temporarily in the event that all members of the

Board of Directors are suspended temporarily or the Company does not

have any member of the Board of Directors. In such case, the Board of

Commissioners is entitled to grant a temporary authority to one or more of

the members of the Board of Commissioners to perform the duties of the

Board of Directors on the responsibilities of the Board of Commissioners;

54

d. Can propose to the Board of Directors to execute GMS if deemed

necessary by mentioning matters to be discussed;

e. Approve the appointment of the Head of the Internal Audit Unit and the

Corporate Secretary;

f. Give approval that the interests of one of the members of the Board of

Directors shall be represented by other members of the Board of Directors

in the event of a conflict of interest to the member of the Board of

Directors represented. In the event of a conflict of interest by all Members

of the Board of Directors, the Company shall be represented by the Board

of Commissioners or by one member of the Board of Commissioner

appointed by the Board of Commissioners;

g. Carry out other supervisory authority as long as it is not contradictory to

the laws and regulations, the Articles of Association, and/or the GMS

decision.

II.9 RIGHTS OF BOARD OF COMMISSIONERS

a. Members of the Board of Commissioners either jointly or individually at

all times during working hours of the Company is entitled to enter the

yard, building and office or other premises used or controlled by the

Company and is entitled to inspect all books, letters and other documents,

inspect and match the state of the cash for verification purposes and others,

check the securities and check the Company's assets and acknowledge any

actions taken by the Board of Directors;

b. Obtain access to Company information in a timely and complete manner;

c. Request an explanation of all questions asked or requested from the Board

of Directors and each member of the Board of Directors;48

d. Establish an Audit Committee and Other Committees (if deemed

necessary) by taking into account the Company's needs and capabilities;

48

The Articles of Association of PT TIMAH (Persero) Tbk Article 21 Paragraph 2 letter a point iii

55

e. Attend a Board of Directors meeting if invited by the Board of Directors

and provide views on the issues being discussed;

f. Appoint and dismiss the Secretary of the Board of Commissioners (if

deemed necessary), to expedite the duties of the Board of Commissioners;

g. Each member of the Board of Commissioners shall be entitled to receive

honorarium and benefits/facilities including post employment benefits that

a type and amount is determined by the GMS with due regard to the

prevailing laws and regulations;

h. Obtain the Company's facilities and facilities in accordance with the

resolutions of the General Meeting of Shareholders which are provisioned

in accordance with the Company's financial condition, the principles of

decency and fairness and are not contradictory to the prevailing laws and

regulations.

II. 10 MEETINGS OF THE BOARD OF COMMISSIONERS


a. The Meeting of the Board of Commissioners is a meeting held by the

Board of Commissioners;

b. Internal Meeting of the Board of Commissioners is a meeting attended

only by members of the Board of Commissioners;

c. The Board of Commissioners holds meetings at least once a month. In the

Meeting, the Board of Commissioners may invite the Board of Directors;49

d. The BoC meetings consist of Internal Meetings of the Board of

Commissioners and Board of Commissioners Meeting together with the

Board of Directors (Radirkom), as well as the Board of Commissioners'

Meeting together with the Committees under the Board of Commissioners;

49


56

e. The Board of Commissioners may hold meetings outside the schedule

specified with conditions as follow:

1) Request 1/3 (one third) of the total members of the Board of

Commissioners;

2) Written request from the Board of Directors; or

3) Written requests from 1 (one) or several Shareholders representing

at least 1/10 (one ten) of the number of shares with voting rights,

stating the matters to be discussed

f. The summoning of the meeting of the Board of Commissioners shall be

conducted by the President Commissioner or by a member of the Board of

Commissioners appointed by the President Commissioner;

g. Meetings of the Board of Commissioners may be held by teleconferencing

between members of the Board of Commissioners residing in different

places, by conference call, video conference or other communication

equipment which enables each Member of the Board of Commissioners to

hear and communicate and participate in the meetings;

h. A Call of Meeting of the Board of Commissioners shall be submitted in

writing by the President Commissioner or by a member of the Board of

Commissioners appointed by the President Commissioner and delivered

within a period of at least 7 (seven) days before the meeting or in a shorter

period of 3 (three) days if in urgent circumstances, excluding the date of

the call and the date of the meeting;50

i. Calling of the Meeting shall not be required if all Members of the Board of

Commissioners are present at the Meeting;51

j. The call of the Meeting must include the event, date, time, and meeting

place;52

50 The Articles of Association of PT TIMAH (Persero) Tbk Article 22 Paragraph 10 51

The Articles of Association of PT TIMAH (Persero) Tbk Article 22 Paragraph 12 52


57

k. Before the meeting, the Secretary of the Board of Commissioners

circulates the agenda of the meeting to obtain input from the members of

the Board of Commissioners on the agenda. These inputs may include

addition/subtraction or sharpening of the meeting agenda;

l. Every member of the Board of Commissioners shall have the right to

propose the agenda of the meeting to be held;

m. The members of the Board of Commissioners are allowed to have different

opinions although the overall number of votes that agree more. In this

case, the different opinions should be noted in the minutes of the meeting

as a form of dissenting opinion.

II.10.2 Meeting Procedures of the Board of Commissioners

a. The Secretary of the Board of Commissioners receives the

materials/documents/management reports from the Company's Board of

Directors. The materials/documents/management reports will be used as

meeting material for the Board of Commissioners. These materials

include: Monthly Report of the Company, Quarterly Report of the

Company, and Annual Report of the Company and other reports;

b. The Secretary of the Board of Commissioners documents the

materials/reports/documents received in accordance with the procedures of

the administration of the letter;

c. The Secretary of the Board of Commissioners submits the

materials/documents/reports to the President Commissioner;

d. The President Commissioner studies the materials and directs the

Secretary of the Board of Commissioners for a follow-up;

e. If such directions are to be followed up with meetings, the Secretary of the

Board of Commissioners shall immediately prepare the meeting agenda;

58

f. The Secretary of the Board of Commissioners circulates the agenda of the

meeting and the materials/documents/reports to be discussed in the

meeting to the members of the Board of Commissioners to obtain inputs

on the agenda;

g. Members of the Board of Commissioners receive, read, and study the

meeting agenda along with materials that have been prepared. Upon

completion, the agenda is sent back to the Secretary of the Board of

Commissioners together with the inputs of the respective Members of the

Board of Commissioners and affixing the paraff or signature as a sign of

approving the agenda of the meeting;

h. The Secretary of the Board of Commissioners shall prepare a letter of

invitation to the meeting after receiving all available inputs from the

members of the Board of Commissioners;

i. In the invitation letter, the Secretary of the Board of Commissioners sets

out the points of issue to be discussed in the meeting;

j. If the meeting invites another party, the Secretary of the Board of

Commissioners is responsible for making an invitation letter to the party

concerned. In the event that the other party is from Management, ie, an

official of 1 (one) level and/or 2 (two) levels below the Board of Directors,

therefore such purpose must be in the knowledge of the Board of

Directors;

k. Meeting participants receive invitations and meeting materials;

l. In the event that the Meeting of the Board of Commissioners is conducted

by way of teleconference, the following provisions apply:

1) Each participating member of the Board of Commissioners shall be

deemed present at the Meeting to determine the fulfillment of the

attendance quorum requirements and the decision of the Board of

Commissioners Meeting;

59

2) The place where the Chairman of the Meeting takes part shall be

regarded as the venue for the Meeting of the Board of

Commissioners;

3) The minutes of the meeting shall be submitted and signed by all

Members of the Board of Commissioners, whether or not

participating in the Meeting.

II.10.3 Attendance Mechanism

a. The Meeting of the Board of Commissioners is valid and entitled to take

binding decisions when attended or represented by more than 1/2 (one-

quarter) of the members of the Board of Commissioners;53

b. A member Board of Commissioners may be represented in the Meeting

only by other members of the Board of Commissioners by a written

authority granted exclusively for such endeavor and a Member of the

Board of Commissioners may only represent another member of the Board

of Commissioners;54

c. This Power of Attorney is binding for members of the Board of

Commissioners who are not present on the result of the Board of

Commissioners' Meeting;

d. Each meeting of the Board of Commissioners is chaired by the President

Commissioner. In the event that the President Commissioner is unable to

attend or should be absent, the meeting shall be chaired by a Member of

the Board of Commissioners appointed by the President Commissioner. In

the event that the President Commissioner does not make an appointment,

the longest term of the Board of Commissioners acts as Chairman of the

Meeting. In the event that there is more than 1 (one) longest-term member

53


The Articles of Association of PT TIMAH (Persero) Tbk Article 22 Paragraph 15 and 16

60

of the Board of Commissioners, the oldest Member of the Board of

Commissioners acts as Chairman of the Meeting;55

e. Internal Meeting of the Board of Commissioners is attended by members

of the Board of Commissioners, Secretaries of the Board of

Commissioners or other officials assigned by the President Commissioner,

except for special meetings which may only be attended by members of


f. In other events, the Meeting of the Board of Commissioners shall not be

entitled to take a decision unless all members of the Board of

Commissioners or its authorized representative is present and agrees on

the addition of the agenda/meeting agenda.

II.10.4 Procedures of Problems Discussion and Decision-making

a. Before the discussion of the meeting adenda, the Chairperson first explains

the disciplinary procedures of the meeting, among others, regarding the

use of communication tools in the Meeting, question/answer/opinion

mechanism, voting mechanism (if there is voting);

b. The Meeting of the Board of Commissioners shall prioritize the discussion

on an agenda which requires the decision-making or approval of the Board

of Commissioners;

c. All decisions of the BOC Meeting shall be in good faith, rational

considerations and have been thoroughly investigated against relevant

matters, sufficient and free from conflict of interest and independently

created by each Member of the Board of Commissioners;

d. Decision making by the Board of Commissioners is conducted through the

Board of Commissioners Meeting;

55

The Articles of Association of PT TIMAH (Persero) Tbk Article 22 Paragraph 17, 18, 19, and

20

61

e. All decisions in the Meeting of the Board of Commissioners shall be taken

by deliberation for consensus;56

f. To maintain independence and objectivity, any member of the Board of

Commissioners with a conflict of interest is required not to participate in

voting for decision-making. It should be noted in the minutes of the

meeting;

g. If the consensus is not reached by consensus, then the decision of the

Meeting of the Board of Commissioners shall be taken by vote agreeing to

more than 1/2 (one half) of the total number of valid votes issued at the

meeting;

h. If the number of votes that agree and disagree as much, then the Chairman

of the Meeting decides the result of the meeting, except on the person, the

decision of the meeting shall be conducted by a closed vote;57

i. Each member of the Board of Commissioners shall be entitled to issue 1

(one) vote plus 1 (one) vote for the member of the Board of

Commissioners they represent;58

j. The blank and invalid votes are considered absent and not counted in

determining the number of votes cast in the meeting;

k. In the case of the proposal of more than 2 (two) alternatives and the voting

result has not received 1 (one) alternative with the vote of more than 1/2

(one per two) part of the total votes cast, then re-election of 2 (two)

alternatives which receives the most votes so that one (1) alternative

receives a vote of more than 1/2 (one-half) of the total votes cast;59

l. The Board of Commissioners may also adopt legitimate decisions without

holding a Meeting of the Board of Commissioners provided that all

members of the Board of Commissioners have been notified in writing and

all members of the Board of Commissioners agree on the proposals

56

The Articles of Association of PT TIMAH (Persero) Tbk Article 22 Paragraph 21 57 The Articles of Association of PT TIMAH (Persero) Tbk Article 22 Paragraph 24 58



62

submitted in writing by signing the agreement. The decisions taken in such

manner shall have the same power with the decisions taken with validity in

the Meeting of the Board of Commissioners;

m. The decision making/approval of the Board of Commissioners on the

proposal of the Board of Directors shall be done no later than 14 (fourteen)

days after receipt of the written request of the Board of Directors

accompanied by complete documents and requirements in accordance with

applicable regulations.60

If within 45 (forty five) days of receipt of the

application of the Board of Directors, the Board of Commissioners has not

provided a written response, the Board of Commissioners shall be deemed

to approve the proposal of the Board of Directors;

n. Decisions concerning strategic aspects should be made through the

mechanism of the Board of Commissioners Meeting. These strategic

aspects include, among others, the actions of the Board of Directors which

must be immediately approved by the General Meeting of Shareholders,

all actions of the Board of Directors which have received written

recommendation from the Board of Commissioners, and all deeds which

must obtain written approval from the Board of Commissioners.

II.10.5 Making Minutes of Meeting of the Board of Commissioners

a. Every Meeting of the Board of Commissioners shall be made of minutes

of meetings which contain opinions which are evolving in the meeting,

either supporting or non-supporting or dissenting opinion, the conclusion

of the meeting, and the reasons for the absence of any member of the

Board of Commissioners, if any;61

60 Decision of Secretary of the Ministry of State-Owned Enterprises No. SK-16/S.MBU/2012 on

Indicator/Parameter of Assessment and Evaluation of Good Corporate Governance

Implementation on State-Owned Enterprise, Indicator 14 Parameter 44 Criterion 2 61




14 Paragraph 3

63

b. The minutes of the Meeting of the Board of Commissioners are signed by

the Chairman of the Meeting and all Members of the Board of

Commissioners who are present at the meeting;62

c. The minutes of the Meeting should illustrate the course of the meeting. It

is important to be able to see the decision-making process as well as be a

legal document and legal evidence to determine the accountability of the

outcome of a meeting decision; Therefore, the Minutes of Meeting shall

include:

1) Place, date and time of the meeting;

2) The agenda discussed;

3) Attendance list signed by each meeting participant;

4) The duration of the meeting took place;

5) Implementation of follow up evaluation of previous meeting result

(if any);

6) Opinions in meetings;

7) Who expressed an opinion;

8) Decision-making process;

9) Decisions taken;

10) Statement of objection to the decision of the meeting if there is no

unanimity.

d. The minutes of the Meeting shall be attached with a letter of authorization

granted exclusively by a member of the Board of Commissioners who is

not present to the other members of the Board of Commissioners.

II.J.6 Procedures for Preparation of Minutes of Meeting of the Board of

Commissioners

62


64

a. The Secretary of the Board of Commissioners or other officers appointed

by the President Commissioner and/or the Chair of the Meeting shall be

responsible for the creation, administration and distribution of the Minutes

of Meeting;

b. The minutes of the Meeting of the Board of Commissioners shall reflect

the dynamics of the meeting, namely the matters discussed (including the

dissenting opinions of the members of the Board of Commissioners, (if

any) and matters decided;

c. The resolutions of the Board of Commissioners Meeting shall be

submitted to the Board of Directors on the day after the Meeting is held;

d. In the event that the Meeting is not accompanied by the Secretary of the

Board of Commissioners or other officers appointed by the President

Commissioner, minutes of meeting shall be made by one of the appointed

members of the Board of Commissioners of the Board of Commissioners

present;

e. Every member of the Board of Commissioners shall be entitled to receive

a copy of the Meeting of the Board of Commissioners, regardless of

whether the member of the Board of Commissioners concerned is present

or not present at the Meeting of the Board of Commissioners;

f. The draft Minutes of Meeting of the Board of Commissioners shall be

submitted to the Board of Commissioners no later than 7 (seven) days after

the meeting;

g. Every member of the Board of Commissioners present and/or represented

in the Meeting of the Board of Commissioners shall submit approval or

objection and/or proposed revision to the draft Minutes of the meeting (if

any);

h. The minutes of the Meeting of the Board of Commissioners shall be

signed no later than 14 (fourteen) days after the meeting, then the original

Meeting shall be submitted to the Board of Directors to be kept and

65

maintained as Company documents, while the Board of Commissioners

shall keep copies thereof.

II.11 EVALUATION OF THE BOARD OF COMMISSIONERS


The performance of the Board of Commissioners and Members of the

Board of Commissioners is evaluated by the Shareholders in the GMS. The

performance evaluation of the Board of Commissioners and each member of the

Board of Commissioners shall be based on the KPIs stipulated by the GMS.

Performance Achievement Indicator is a measure of the assessment of the

successful execution of duties and responsibilities of supervision and giving

advice to the Board of Directors by the Board of Commissioners in accordance

with the provisions of the laws and/or Articles of Association of the Company.

The results of the evaluation on the performance of the Board of

Commissioners as a whole and the performance of each Members of the Board of

Commissioners as an individual constitute an integral part in providing incentives

for Members of the Board of Commissioners.

The performance evaluation results of each individual Board of

Commissioners is one of considerations for the Shareholders to dismiss and/or re-

appoint the Member of the Board of Commissioners. The results of the

performance evaluation are also a means of assessment and improvement of the

effectiveness of the Board of Commissioners.

II.11.2 Performance Evaluation Criteria of Board of Commissioners

The performance evaluation criteria for the Board of Commissioners and

individual members of the Board of Commissioners shall be submitted by the

Board of Commissioners or the Nomination and Remuneration Committee (if

formed) to the Board of Commissioners to be stipulated in the GMS, which shall

consist of at least the following:

66

a. The preparation of KPIs is done at the beginning of the year and

evaluates its achievements at the beginning of the following year;

b. Attendance at Board of Commissioners, Board of Commissioners

Meetings with Directors and Board of Commissioners Meeting

with Committee;

c. Contribution in supervising and giving advice to Directors on the

management of the Company;

d. Achievement of the work program of the Committees of the Board

of Commissioners;

e. Engagement in certain assignments;

f. Commitment to advance the interests of the Company;

g. Compliance with applicable laws and regulations, Articles of

Association, GMS rules, and Company policies.

II.12 SUPPORTING ORGANS OF BOARD OF COMMISSIONERS

II.12.1 Committees of Board of Commissioners

In conducting supervisory duties and providing advice to the Board of

Directors, the Board of Commissioners shall establish an Audit Committee and

may establish other committees in accordance with the development of applicable

laws and regulations and/or in accordance with the needs of the Company. The

established committees have duties related to the supervisory function of the

Board of Commissioners, including but not limited to internal control system

aspect, nomination and remuneration for the Board of Directors and Board of

Commissioners, the implementation of risk management and the application of

Good Corporate Governance principles in accordance with the prevailing law.

Further explanation of the membership requirements of committees,

duties, responsibilities and scope of committees established by the Board of

67

Commissioners shall be governed by the Charter of each committee and shall

become an integral part of this Board Manual.

The establishment of committees at the level of the Board of

Commissioners is ratified by a Decision Letter of the Board of Commissioners.

Establishment of additional committees in accordance with the needs and the

number of members of the Board of Commissioners and approved by the Decision

Letter of the Board of Commissioners.

If at any time, such committees are irrelevant to the conditions of the

Company or are not required, the committees may be terminated.

II.12.2 Secretary to the Board of Commissioners

To assist in the smooth implementation of its duties, the Board of

Commissioners shall be entitled to receive the Secretary to the Board of

Commissioners under the Company's expenses. The Secretary to the Board of

Commissioners undertakes the duties and obligations to assist the Board of

Commissioners in the secretarial function, as well as to ensure that the duties of

the Board of Commissioners are well executed, all necessary information of the

Board of Commissioners is available, and other duties as stipulated in applicable

legislation. Further regulation regarding the Secretary to the Board of

Commissioners shall be conducted by the Board of Commissioners in a separate

document and is an inseparable document of this Manual Board.

68

CHAPTER III

BOARD OF DIRECTORS

III.1 FUNCTION OF BOARD OF DIRECTORS

The Board of Directors shall be the organ of the Company which is solely

responsible for the maintenance of the Company for the interest and purposes of

the Company and represents the Company either inside or outside the court in

accordance with the provisions of the Articles of Association.63

III.2 REQUIREMENTS OF BOARD OF DIRECTORS

Requirements for the members of the Board of Directors shall consist of formal,

material, and other requirements as governed by applicable laws and regulations.64

III.2.1 Formal requirements of the Board of Directors

Members of the Board of Directors shall meet the following formal requirements:

a. Mampu melaksanakan perbuatan hukum;

b. Tidak pernah dinyatakan paillit atau menjadi anggota Direksi atau Dewan

Komisaris yang dinyatakan bersalah, menyebabkan suatu Perusahaan

pailit, atau pernah dihukum karena melakukan tindak pidana yang

merugikan keuangan negara dan/atau yang berkaitan dengan sektor

keuangan dalam kurun waktu 5 (lima) tahun sebelum pengangkatannya;

63 Law No. 40 of 2007 concerning the Limited Liabilities Company Article 1 Paragraph (5) and

Law No. 19 of 2003 concerning State-Owned Enterprises Article 1 paragraph (9), Article 5

Paragraph (3) 64

Regulation of the Minister of State-Owned Enterprises Number: PER-06/ MBU/2012

concerning Amendment to the Regulation of the Minister of State-Owned Enterprises No. PER-

01/MBU/2012 on Requirements and procedures for the appointment and dismissal of members of

the Board of Directors Article 4

69

III.2.2 Objective Requirements for Members of the Board of Directors

Members of the Board of Directors shall meet the following material

requirements:

a. Experience, in the sense that the they have a track record that shows

success in the management of BUMN/Company/Institution where they

work before the nomination;

b. Expertise, in the sense that they have:

1) Adequate knowledge in the Company's business field;

2) Understanding of corporate governance and management;

3) Ability to formulate and implement strategic policies in the

framework of the Company's development.

c. Integrity in the sense that they are never involved:

1) Engineering acts and deviant practices, in the management of

BUMN/Company/Institution of the place they work before the

nomination (doing dishonest);

2) Any breach of contractual injuries that do not comply with

commitments agreed upon by the State-Owned

Enterprise/Company/Institution of the place they work before the

nomination (behave inappropriately);

3) The actions categorized in the course of providing unlawful

benefits to the person of the candidate for the Board of Directors,

the employee of the BUMN/Company/Institution in which they

work, or any other party prior to the nomination (behave

inappropriately);

4) Acts that can be categorized as violations of the provisions relating

to the principles of healthy corporate governance (bad behavior).

d. Leadership in the sense they have the ability to:

70

1) Formulate and articulate the Company's vision;

2) Direct officials and employees of the Company to be able to do

something to realize the Company's objectives;

3) Encourage (give new energy) and provide motivation to officials

and Employees of the Company to be able to realize the goals of

the Company.

e. Have a strong will (enthusiasm) and high dedication to promote and

develop the Company.

III.2.3 Other requirements of the Board of Directors:

a. Not being a board member of a political party, and/or legislative member,

and/or not running for legislative candidate;

b. Not being a head/deputy head of region and/or not running for candidate

of head/deputy head of region;

c. Not currently serving as an officer of the Board, Board of

Commissioners/Supervisory Board of SOEs, members of the Board of

Directors to SOEs and/or Companies, except to sign a declaration willing

to resign from the position if elected as a Member of the Company's Board

of Directors;

d. Not currently occupying positions that is based on laws and regulations

prohibited to be concurrent in the position of Members of the Board of

Directors, except to sign a declaration willing to resign from the post if

elected as a member of the Board of Directors;

e. Not serving as a member of the Board of Directors at the Company for 2

(two) consecutive periods;

f. Physically and spiritually healthy (not suffering from a disease that could

impede the performance of duties as a member of the Board of Directors)

as proven by a health certificate from a government hospital;

71

g. Between the members of the Board of Directors and among members of

the Board of Directors with the Board of Commissioners shall be

prohibited from having a blood relations up to the third degree, either on a

straight line or a line aside, including the relationship arising out of

marriage.65

III.3 MEMBERSHIP OF THE BOARD OF DIRECTORS

III.3.1 Membership

a. The number of Directors shall be at least 3 (three) persons and adjusted to

the needs,66

complexity and strategic plans of the Company, one of whom

shall be appointed as President Director;

b. The composition of the Board of Directors is a combination of

professionals who have the knowledge and experience required by the

Company, enabling effective, efficient and prompt decision-making

processes;

c. The members of the Board of Directors shall be appointed by the GMS,

from the candidates proposed by the Series A Dwiwarna Shareholder after

the nomination process in accordance with applicable laws and regulations

and binding to the General Meeting of Shareholders;67

d. The Directors are appointed and dismissed by the GMS, where in the

GMS must be attended by the A Dwiwarna Share Shareholders and the

resolutions of the GMS must be approved by the Dwiwarna Series A

Shareholder;

e. With respect to individuals nominated as candidates for members of the

Board of Directors, they shall be subject to a fit and proper test by or at the

request of the Shareholder;

65 The Articles of Association of PT TIMAH (Persero) Tbk Article 20 Paragraph 3 66



72

f. Candidates for Members of the Board of Directors who have followed the

fit and proper test and are elected to be nominated by the Shareholders

shall be appointed and inaugurated by the GMS and such nominations

shall be binding to the GMS;

g. If for any reason the position of the Board of Directors is vacant, then

within a period of no later than 60 (sixty) days after the vacancy takes

place, an Extraordinary General Meeting of Shareholders shall be

convened to fill the vacancy post. As long as the vacancy is vacant and the

replacement is not yet or has not assumed office, then one of the other

Directors shall be appointed based on the decision of the Board of

Directors to carry out the work of the Board of Directors with the same

powers and authorities;

h. If for any reason the Company does not have a member of the Board of

Directors, within a period of no later than 60 (sixty) days after the vacancy

takes place, an Extraordinary General Meeting of Shareholders shall be

convened to fill the vacancy. As long as the vacancy is not yet filled, the

Board of Commissioners shall temporarily carry on the work of the Board

of Directors in progress with the right only to the deeds concerned with the

ongoing things and activities.

III.3.2 Position

a. The term of office of a member of the Board of Directors shall be for a

period of 5 (five) years from the date stipulated by the GMS which appoint

them and terminate at the close of the 5th (fifth) GMS after the date of

their appointment, without prejudice to the right of the GMS to terminate

any member of the Board of Directors at any time before his/her term of

office expires by stating the reasons, inter alia if the Board of Directors is

unable to perform their duties properly, unable to fulfill their obligations

as agreed in the management contract, does not enforce the legislation

and/or provisions of the Articles of Association, engage in actions that are

73

detrimental to the Company and/or the State, are found guilty of a court

decision that has had permanent legal force, and/or resign.68

b. The term of office of a member of the Board of Directors shall expire if:69

1) Resign;

2) Die;

3) The term ends;

4) Dismissed based on the resolution of the GMS;

5) No longer qualify as a Member of the Board of Directors under

applicable laws and regulations.

c. In the event that a member of the Board of Directors resigns, then:

a. Members of the Board of Directors resigning from their positions

shall notify in writing of such intent to the Company within 60

(sixty) days with a copy to the Board of Commissioners, other

Members of the Board of Directors and Shareholders proposing the

appointment of the members of the Board of Directors concerned;70

b. Within 60 (sixty) days after the receipt of the letter of resignation,

an Extraordinary General Meeting of Shareholders shall be

convened to determine such resignation, but if the Company does

not hold an Extraordinary GMS within the period of 60 (sixty)

days then the resignation of the Board of Directors becomes valid

without requiring the approval of the GMS;71

c. A resigning member of the Board of Directors may be held

accountable from the date of appointment until the effective date of

resignation.72

68


The Articles of Association of PT TIMAH (Persero) Tbk Article 17 Paragraph 21 70 The Articles of Association of PT TIMAH (Persero) Tbk Article 17 Paragraph 19 letter a 71

The Articles of Association of PT TIMAH (Persero) Tbk Article 17 Paragraph 19 letter b and c 72


74

d. One or more Members of the Board of Directors may be

temporarily dismissed by the Board of Commissioners if the

member of the Board of Directors acts contrary to the Articles of

Association or there is an indication of loss of the Company or

neglect of its obligations or there is an urgent reason for the

Company under the following conditions:73

1) Decisions of the Board of Commissioners concerning the

temporary dismissal of members of the Board of Directors

shall be conducted in accordance with the decision-making

procedures of the Board of Commissioners Meeting;

2) Such temporary dismissal shall be notified in writing to the

person concerned with any reason that causes a temporary

dismissal action with a copy to the Board of Directors;

3) Notice of suspension shall be submitted within 2 (two) days

after the stipulation of such suspension is terminated;

4) Within 45 (forty five) days after the suspension, an

Extraordinary GMS shall be convened by the Board of

Commissioners which will decide whether to revoke or

enforce the decision of such dismissal;

5) The temporary suspended members of the Board of

Directors shall be given an opportunity to defend

themselves;

6) If an Extraordinary GMS is not held within 45 (fourteen

five) days after the suspension, or the GMS can not make a

decision, then the suspension is null and void and the Board

of Directors concerned shall perform the duties properly;

73


75

7) The temporary suspension can not be renewed or re-

established for the same reasons, if the suspension is null

and void as referred to in number 6 (six).

e. Appointment of members of the Board of Directors shall not be

concurrent with the appointment of members of the Board of

Commissioners, except for appointment for the first time at the

time of establishment;

f. In the case of an addition to the Board of Directors, the term of

office of the new Board of Directors shall be 5 (five) years.74

III.4 INDEPENDENCE (AUTONOMY) OF DIRECTORS

In order that the Board of Directors can act as well as possible in the interest of

the Company as a whole, the independence of the Board of Directors is one of the

important factors that must be maintained. To maintain independence, it is

necessary to stipulate the following provisions:

a. In addition to the Board of Directors, other parties are prohibited from

engaging in or interfering with the management of the Company;

b. The Board of Directors shall be prohibited from engaging in activities that

could interfere with their independence in administering the Company.

III.5 PROGRAM FOR INTRODUCTION AND CAPABILITY

BUILDING

III.5.1 Introduction Program

Conditions on introduction programs include the following:

a. For newly appointed members of the Board of Directors, an Introduction

Program is required regarding the general condition of the Company;

74


76

b. The person responsible for the recognition program is the Secretary of the

Company or any person who performs the functions as a Corporate

Secretary;75

c. Program introduction includes:

1) Implementation of Good Corporate Governance principles in the

Company;

2) A description of the duties and responsibilities of the Board of

Directors and the Board of Commissioners by law;

3) The description of the Company relates to the objectives, nature,

and scope of activities, financial and operating performance,

strategy, short-term and long-term business plan, competitive

position, risk, internal control and other strategic issues;

4) Information relating to delegated powers, information relating to

internal audits and external audits, and internal control systems and

policies in the Company;

5) A description of the obligations, duties, responsibilities and rights

of the Board of Directors and Board of Commissioners;

6) Understanding of the ethical principles and norms prevailing

within the Company and the local community;

7) Team Building. In this activity, the BoD's introduction program

includes the Board of Commissioners, both newly and formerly

served.

d. The introduction program can be in the form of presentations, meetings,

visit to Company facilities, visit to mine or mining processing sites, review

of Company’s documents or other programs deemed appropriate to the

needs.

75




Enterprises Article 43 Paragraph 2

77

III.5.2 Capability Building Program

Capability Building is important to ensure that the Board of Directors can keep

up-to-date on the latest developments of the Company's business and the

prevailing laws and regulations and to anticipate future problems for the

sustainability and progress of the Company.

The provisions on the Capability Building Program for the Board of Directors are

as follows:

a. Capability Building Program is implemented in order to improve the

effectiveness of the Board of Directors;

b. Plans to implement the Capability Building Program should be included in

the Work Plan and Budget of the Board of Directors;

c. Every member of the Board of Directors participating in a Capability

Building Program such as a seminar and/or training is required to hold

presentations to other Members of the Board in order to share information

and knowledge;

d. The members of the Board of Directors concerned are responsible for

reporting on the implementation of the Capability Building Program. The

report is submitted to the Board of Directors.

The Capability Building program can be in the form of:

a. Knowledge relating to the principles of corporate law and the updating of

legislation relating to the Company's business activities, as well as

information technology;

b. Knowledge relating to strategic management and its formulation;

c. Development of special skills in building harmonious relationships with

all stakeholders to generate a sense of support for stakeholders over the

Company's long-term existence;

78

d. Capability Building related to the effective leadership in managing Human

Resources (HR), encompassing future human resource development

challenges, environmental development challenges, equal employment

opportunities, planning, selection and placement of labor, employment

development, training programs and skills appropriate for the workforce,

reasonable wage determination, employee performance appraisal, safety

related matters and employee welfare, as well as the development of a

reliable working system required by the Company in the long term;

e. Knowledge related to the change management that can bring the Company

to the vision and mission to be realized;

f. Knowledge related to the corporate social responsibility; and

g. Knowledge related to the quality financial reporting.

III.6 ETHICS OF THE BOARD OF DIRECTORS

III.6.1 Ethics related to exemplary

a. The Board of Directors shall encourage the creation of ethical conduct and

uphold the highest ethical standards in the Company. One way is to make

themselves a good example for Employees;

b. Carry out duties in a trustworthy, dedicated manner, upholding honesty as

a high value, being honest in expressing opinions both orally and in

writing, as well as being honest in attitudes and actions;

c. Tolerant in attitudes and actions, and courteous in expressing opinions

both orally and in writing;

d. Respect the decision of the Board of Commissioners, Shareholders and/or

AGMS;

e. Have an orientation to add value to the Company;

f. Continually improve their knowledge and understanding of matters

relating to the maintenance of the Company;

79

g. To take an attitude, to express an opinion, and to act as an individual, the

member concerned must clearly and firmly state that such attitude, opinion

or action is personal;

h. To take attitudes, opinions and actions should be based on objectivity,

professional and independent elements in the interest of the Company in

line with the interests of the Stakeholders;

i. In carrying out their duties and obligations, put the interests of the Board

of Directors in its entirety above personal interests.

III.6.2 Ethics related to Compliance with Laws and Regulations

The Board of Directors must comply with applicable laws and regulations, the

Articles of Association and the principles of Good Corporate Governance as well

as the Company's defined policies.

III.6.3 Ethics Related to Disclosure and Confidentiality of Information

The Board of Directors shall disclose information in accordance with applicable

laws and regulations and always maintain the confidentiality of information

entrusted to them in accordance with applicable laws and Company’s policies.

III.6.4 Ethics Related to Company Opportunities and Personal Benefits

Directors are not allowed to:

a. Take the business opportunity of the Company for their own sake;

b. Use Company’s assets, Company’s information or their position as Board

of Directors for personal interest outside the applicable laws and

regulations and applicable Company’s policies;

c. Compete with the Company, that is, using information/inside information

to gain profit for the interest other than Company’s interest;

80

d. Take personal benefit from the activities of the Company, other than salary

and facilities received as Members of the Board of Directors determined

by the GMS.76

III.6.5 Ethics related to Conflicts of Interest

a. Members of the Board of Directors are prohibited from engaging in

actions that have a conflict of interest, and take personal advantage,

directly or indirectly from decision-making and activities of the Company

other than their legitimate income;77

b. The Board of Directors shall not utilize the position for personal gain or

for the benefit of any other person or party that is contrary to the interests

of the Company;

c. The Board of Directors shall fill in a Special Register containing the

ownership of shares and/or ownership of shares by the families in the

Company and other companies and date of shares acquired78

, including

without ownership of shares, and periodically renew at the end of the year

and shall notify the Company on change of data, in accordance with

applicable laws and regulations.

d. In the event of a conflict of interest, it shall be disclosed, and the Member

of the Board of Directors concerned shall not involve themselves in the

decision making process of the Company in connection with the conflict

of interest.

e. Members of the Board of Directors are prohibited from holding multiple

positions as:

76

Law Number 19 of 2003 concerning State-Owned Enterprises Article 7 77




Enterprises Article 23 78

Law No. 40 of 2007 concerning the Limited Liabilities Company Article 50 Paragraph (2)

81

1) Members of the Board of Directors at State-Owned Enterprises,

Regional-Owned Enterprises, Private-Owned Enterprises, and

other positions that may create a conflict of interest;

2) Members of the Board of Commissioners/Supervisory Board of

BUMN;

3) Members of the Board of Commissioners of Private Companies,

except:79

a) Members of the Board of Commissioners of the concerned

BUMN subsidiary/joint venture company, provided that it

is only entitled to the accumulation of income as a member

of the Board of Commissioners in one or more

subsidiaries/joint venture companies up to 30% (thirty

percent) of the salary of the respective Directors in the

BUMN , while other income/the rest are handed over to the

BUMN's income.

b) Members of the Board of Commissioners to represent/fight

for the interests of BUMN (such as on PT Bursa Efek

Indonesia), Members of the Board of Commissioners

because of the obligations determined by the laws and

regulations, or Members of Board of Directors with

maximum tenure of 3 (three) months and based on

legislation can not be renewed or any member of the Board

of Directors to be dismissed, to the extent of obtaining

permission from the Minister of SOEs.

4) Other structural and functional positions at central and local

government agencies/institutions;

79

Regulation of the State Minister for State-Owned Enterprises Number: PER-09/MBU/2014

about the Third Amendment on Regulation of the Minister of State for State Owned Enterprises

Number PER-01/MBU/2012 about Requirements and Procedures for the Appointment and

Dismissal of Member of Board of Directors of State-Owned Enterprises

82

5) The management of a political party and/or a candidate/legislative

member;

6) Other positions that may create a conflict of interest; and/or

7) Other positions in accordance with the provisions of legislation.

f. Members of the Board of Directors having dual positions prohibited as

referred to in point e shall withdraw from one of these positions at least 30

(thirty) days from the date of double positions;

g. Avoid any activity that may affect independence in performing the task;

h. Not respond to any requests from any party for any reason, whether

requests directly from certain parties including and not limited to

officials/officials within Government agencies and political parties,

whether related to the request of donations or related to the procurement of

goods and services at the company;

i. Not participating in trading practices involving insider trading;

j. Comply with applicable laws and regulations.

III.6.6 Ethics of Business and Anti Corruption

a. Members of the Board of Directors do not accept, give or offer directly or

indirectly anything of value to and/or from Customers or Government

Officials to influence or in return for what has been done and other actions

in accordance with applicable laws and regulations;80

b. Members of the Board of Directors shall not accept directly or indirectly,

rewards and/or gifts, and/or grants and/or donations and/or entertainment

of any kind whatsoever for what they have done in relation to the functions

80





83

and duties of the Board of Directors or in their positions as a member of

the Board of Directors;

c. Rewards, gifts, donations and donations in letters (b) are excluding

honorariums, transportation money, travel and lodging expenses or

souvenirs, provided by the Company to the members of the Board of

Directors;

Further regulation of business ethics and anti-corruption is set forth in the Code of

Conduct which is an inseparable document of this Board Manual.

III.7 DUTIES AND OBLIGATIONS OF THE BOARD OF DIRECTORS


Duties and Obligations of Directors in managing the Company are:

a. Carry out duties in good faith for the Company's interests and in

accordance with the purposes and objectives of the Company, as well as

ensure that the Company performs its social responsibilities and takes into

account the interests of various Stakeholders in accordance with the

provisions of legislation;81

b. Devote their full effort, thought, attention and devotion to the tasks,

obligations and attainment of the Company's purposes and objectives;82

c. Comply with the Articles of Association of the Company and the laws and

regulations and shall be obligated to implement the principles of

professionalism, efficiency, transparency, independence, accountability,

responsibility, and competence;83

81




Enterprises Article 19 Paragraph 1 82



84

d. Undertake and ensure the implementation of the Company's business and

activities in accordance with the purposes and objectives and business

activities of the Company;84

e. Make a list of Shareholders, Special Register, Minutes of GMS, and

Minutes of Board of Directors Meeting;85

f. Report to the Company concerning the ownership of shares and/or

ownership of shares by the family (wife/husband and children) to the

Company and other companies, including any changes;86

g. Make an Annual Report as a form of accountability of the Company's

management and prepare the Company's financial documents as referred

to in the law regarding the Company’s Documents;87

h. Maintain and retain in the place of domicile of Company List of

Shareholders, Special Register, Minutes of GMS, Minutes of Board of

Commissioners Meeting, and Board of Directors' Meeting, Annual Report

and Company's financial documents and other Company’s documents;88

i. Provide periodic reports in a manner and time in accordance with

applicable regulations and other reports when requested by the Board of

Commissioners;89

j. Hold and maintain the Company's books and administration in accordance

with the prevailing norms of a Company;

84

The Articles of Association of PT TIMAH (Persero) Tbk Article 18 Paragraph 2 Letter b Point i 85 The Articles of Association of PT TIMAH (Persero) Tbk Article 18 Paragraph 2 Letter b Point

iii 86





The Articles of Association of PT TIMAH (Persero) Tbk Article 18 Paragraph 2 Letter b Point

iv 88 The Articles of Association of PT TIMAH (Persero) Tbk Article 18 Paragraph 2 Letter b Point

ix 89

The Articles of Association of PT TIMAH (Persero) Tbk Article 18 Paragraph 2 Letter b Point x

85

k. Apply GCG principles consistently and continuously with reference to

prevailing regulations with due regard to the prevailing provisions, norms

and Articles of Association of the Company;

l. Ensure that the External Auditor, Internal Auditor, and Audit Committee,

as well as other committees (if any), have access to accounting records,

supporting data and information about the Company, to the extent

necessary to perform its duties;

m. Each member of the Board of Directors shall be fully liable in person if the

person concerned is guilty or negligent in performing their duties for the

Company's business and interests;

n. The members of the Board of Directors can not be held liable for losses of

the Company, if they can prove that:90

1) The loss is not due to errors or negligence;

2) Have made good faith and prudent care for the interest and in

accordance with the purposes and objectives of the Company;

3) It has no direct or indirect impact of interest on the proceeds of the

proceeds resulting in a loss; and

4) Have taken action to prevent the continuation of such losses.

o. Divide the tasks and authorities among the Directors as determined by the

Decision of the Board of Directors in the event that the GMS does not

specify the division of the duties.91

III.7.2 In relation to Shareholders/General Meeting of Shareholders

a. The Board of Directors shall organize and maintain a Shareholder Register

and documents related to the GMS in accordance with the provisions of

laws and regulations;

90

Law No. 40 of 2007 concerning the Limited Liabilities Company Article 97 Paragraph (5) 91


86

b. The List of Shareholders includes:92

1) The name and address of the Shareholder;

2) Number, number and date of acquisition of shares owned by the

shareholders, if issued more than one classification of shares;

3) The amount deposited in the name and address of an individual or

legal entity that has lien on the shares or as the recipient of the

stock fiduciary warrant and the date of acquisition of the liens or

the date of fiduciary guarantee registration;

4) Remarks of the deposit of shares in a form other than money;

5) Changes in ownership of shares, if any;

6) Other information deemed necessary by the Board of Directors.

c. Notifies the refusal to the party who will transfer the rights to the shares

within 30 (thirty) days after the date of application for registration is

received by the Board of Directors, if the Board of Directors refuses to

register the transfer of rights to the shares;93

d. Prepare the Annual Report and submit to the GMS after being reviewed by

the Board of Commissioners within 6 (six) months after the end of the

Company's financial year;94

e. Provide an explanation to the GMS on the Annual Report;95

f. Prepare the Annual Report in accordance with the provisions of the

prevailing laws and regulations signed by all members of the Board of

Directors and Board of Commissioners members for submission in the

GMS. The Annual Report must be made available at the Company office

no later than 14 (fourteen) days prior to the date of the General Meeting of

92


The Articles of Association of PT TIMAH (Persero) Tbk Article 108 Paragraph 8 94 Law No. 40 of 2007 concerning the Limited Liabilities Company Article 166 Paragraph (1) 95


vii

87

Shareholders held and may be obtained for review by shareholders with

written request;

g. In the event that any member of the Board of Directors or a member of the

Board of Commissioners does not sign the annual report as referred to

above, they shall state the reasons in writing;96

h. Call and hold an Annual GMS and/or Extraordinary GMS;

i. Prior to the announcement of the GMS, the Company shall first submit the

clear and detailed AGM agenda to OJK (Financial Service Authority) no

later than 7 (seven) days prior to the notice.97

j. Announced in 2 (two) Indonesian language newspapers, one of them

national circulation and the other issued at the place of domicile of the

Company or place of domicile of Stock Exchange where the Company's

shares are registered, and if deemed necessary by the Board of Directors in

1 (one) English-language newspaper98

, and announce in 1 (one) newspaper

for the proposed merger, melting and acquisition of the Company no later

than 30 (thirty) calendar days before the GMS summon;99

k. Request approval of the GMS to conduct Material Transactions with a

value greater than 50% (fifty percent) of the Company's Equity, which is

performed in one or a set of transactions for a particular purpose or activity

in accordance with the procedures and requirements set forth in the OJK

regulations;100

l. Request approval of the GMS to transfer or dispose of the right, or to

make the debt of more than 50% (fifty percent) of the Company's net

96 Law Number 19 of 2003 concerning State-Owned Enterprises Article 23 Paragraph (3) 97

Regulation of Bapepam IX.I.1 concerning the Planning and Implementation of the General

Meeting of Shareholders Point (3) 98

The Articles of Association of PT TIMAH (Persero) Tbk Article 14 Paragraph 4 letter f 99 Law No. 40 of 2007 concerning the Limited Liabilities Company Article 127 Paragraph (2) 100

Regulation of Bapepam IX.E.2 On Material Transactions and Changes in Main Business

Activities Number 2 Letter b

88

worth in either one or more transactions, whether related to each other or

not;101

m. Carry out legal actions in the form of transactions containing conflicts of

interest, between the personal economic interests of members of the Board

of Directors, the Board of Commissioners or the Main Shareholder, with

the Company's economic interests, but the Board of Directors requires the

approval of the GMS by virtue of agreeing to most of the Shareholders

without any conflict of interest;102

n. Provide GMS material to the Shareholders at the Company Office and

shall be provided free of charge upon request;103

o. Prepare minutes of the General Meeting of Shareholders which at least

contain the time, agenda, participants, opinions that develop in the GMS,

and resolutions of the GMS;104

p. Submit the result of the GMS to OJK and announce the result of GMS in

national newspaper at the latest 2 (two) days since the execution of

GMS;105

q. Provide a copy of the Minutes of GMS to the Shareholders;106

r. Request approval of the GMS if the Company wishes to buy back the

issued shares, including the transfer;107

101



Law No. 40 of 2007 concerning the Limited Liabilities Company Article 82 Paragraph 3 and 4 104 Regulation of the Minister of State-Owned Enterprises Number: PER-09/ MBU/2012



Enterprises Article 6 Paragraph 4 105 Regulation of Bapepam LK Number IX.I.1 concerning the Planning and Implementation of the

General Meeting of Shareholders Point (4) 106





Law No. 40 of 2007 concerning the Limited Liabilities Company Article 38 Paragraph (1)

89

s. Obtain approval from the GMS to enter into Collective Labor Agreement

(PKB) with employees relating to the income of employees not required

by or exceeding the provisions of laws and regulations;108

t. Request approval of the GMS if the Company wishes to increase the

Company's capital amount. The GMS may transfer such authority to the

Board of Commissioners for a maximum period of 1 (one) year;109

u. Submit the Company’s documents required in the GMS;

v. In the voting, Members of the Board of Directors representing

Shareholders are prohibited from acting as the proxy of the

Shareholders.110

III.7.3 In Relation to Strategy and Work Plan

a. Prepare the Company's vision, mission, objectives, strategy and culture;

b. Prepare the RKAP and submit to the Board of Commissioners no later

than 60 (sixty) days prior to the start of the fiscal year, to obtain the

approval of the Board of Commissioners;111

c. Prepare RJPP which is a strategic plan containing the target and objectives

of the Company to be achieved within 5 (five) years112

, and submit to the

Board of Commissioners no later than 60 (sixty) days before the ending

period of the RJPP, to obtain the approval of the Board of Commissioners;

d. Implement and strive for achievement of long-term goals listed in the

RJPP;

108





Law No. 40 of 2007 concerning the Limited Liabilities Company Article 41 Paragraph (2) 110

Law No. 40 of 2007 concerning the Limited Liabilities Company Article 85 Paragraph 1 and 4 111 The Articles of Association of PT TIMAH (Persero) Tbk Article 18 Paragraph 2 Letter b Point

II 112

Law No. 19 of 2003 concerning State-Owned Enterprises Article 21 Paragraph (1

90

e. Implement and strive for the achievement of short-term targets listed in the

RKAP through the determination of performance targets derived at the

level of work units and structural positions within the organizational

structure of the Company.

III.7.4 In Relation to Risk Management

a. Establish and implement an integrated risk management program that is

part of the implementation of GCG principles;

b. Develop a risk management system and execute it consistently. The risk

management system developed consists of the following stages:

1) Risk Identification, that is the process of identifying the types of

potential and relevant risks;

2) Risk Measurement, that is a process for measuring the size of the

impact and probability of the results of risk identification

3) Risk Profile Formulation, that is a process to describe the

magnitude of the impact and probability of each type of risk, based

on the results of risk measurement;

4) Risk Handling, that is a process to establish possible efforts to deal

with potential risks;

5) Risk Monitoring, that is a process for monitoring various factors

that are expected to lead to the emergence of risk;

6) Evaluation, that is the review process on the adequacy of overall

risk management activities conducted within the Company;

7) Reporting and Disclosure, that is the process for reporting the risk

management system implemented by the Company and its

disclosure to the telated parties in accordance with applicable

provisions.

91

III.7.5 In Relation to Information Technology113

a. The Board of Directors shall prepare and establish information technology

governance by creating a technology master plan for a period of 3 (three)

to 5 (five) years aligned with the Company's Long Term Plan (RJPP) and

implemented in the annual plan as part of the Work and Budget plan

Company (RKAP);

b. The Board of Directors shall monitor and evaluate the implementation of

information technology master plan on a regular basis and every year to

know the success of the achievement of the implementation, results, and

objectives of the information technology master plan;

c. Deliver periodic monitoring and evaluation results that are part of the

BUMN Management Report at the GMS/Minister every quarter and

annual evaluation results;

d. Able to review and make changes to master information technology plans

that have been established if necessary to anticipate business changes and

developments in information technology;

e. Establish effective information technology governance;

f. Deliver periodic information governance reports to the Board of

Commissioners

g. Maintain and evaluate the quality of information technology governance

functions in the Company.

III.7.6 In Relation to Mining Business and Other Company’s Policies

In conducting the Company's business, in this case mining business, as well as

related to company policy in other field, conducted by Board of Directors, among

others are:

113


concerning Guidelines for the Preparation of Technology Management of SOE Information

92

a. Establish and implement "Standard Operation Procedure" in the field of

mining technical in accordance with the rules of "Good Mining Practice"

and prevailing laws and regulations;

b. Conduct continuous exploration and valuation of reserves and mining

feasibility studies in accordance with international standards to safeguard

business continuity in the mining sector;

c. Develop and implement policies and publication mechanisms of the

Corporate Social Responsibility (CSR) program, Partnership and

Community Development Program (PKBL), Reclamation Program and

Post-Mining Program;

d. Ensure environmental management and Post Mining in accordance with

the provisions of applicable laws and regulations;

e. Arrange and implement procurement policies of goods and services in

accordance with provisions for state-owned companies;

f. Prepare the quality and service policies, and their implementation in the

Company.

III.7.7 In Relation to Human Resources

a. Prepare the organizational structure/structure of the Company complete

with details of tasks and Human Resources (HR);114

b. Develop and implement human resource management guidelines,

including HR planning system, recruitment, selection, placement,

promotion, mutation, and demotion, as well as position criteria in the

organizational structure of the Company;

c. Ensure the placement of Employees in accordance with the criteria of

positions in the organizational structure of the Company;

114 The Articles of Association of PT TIMAH (Persero) Tbk Article 18 Paragraph 2 Letter b Point

xi

93

d. Submit to the Board of Commissioners on promotional plans for the

positions of the Corporate Secretary and the Head of the Internal Audit

Unit;

e. Ensure the implementation of education and training to employees in

accordance with competence and position;

f. Implement the measurement and performance assessment of the Work

Unit and positions in the organizational structure of the Company in an

objective and transparent manner;

g. Implement employee benefits system, grant benefits and other facilities in

accordance with applicable provisions and submit to the Board of

Commissioners in a transparent manner on:

• Employee benefit system, grant allowance and other facilities;

• Pension systems and benefits;

• Systems and other benefits in the case of reduction of Employees

III.7.8 In Relation to the Business ethics and Anti-Corruption

a. Ensure that all members of the Board of Commissioners, Directors and

Officials one level below the Board of Directors have reported the assets

to the authorized Government Agency;

b. Socialize the gratuity control program in accordance with prevailing laws

and regulations;

c. Report and avoid any actions or relationships that may create a conflict of

interest;

d. Not abusing authority and position in various business activities of the

Company for personal or group interests;

e. Protect Company’s assets from unauthorized use;

94

f. Report indications or fraud occurring within the Company in accordance

with the Company's regulations;

g. Report immediately to the leader on the scope of work when being aware

of misuse of Company’s data, information and documents in accordance

with applicable regulations in the Company.

III.7.9 In Relation to the Internal Control System

a. Establish policies on effective Internal Control systems to secure the

Company's investments and assets;115

b. Provide feedback on the Internal Control System implemented by the

Company and conduct follow-up and monitoring of recommendations

provided by the Internal Audit Unit (SPI);

c. Internal Control System is a system that must be compiled/built by the

Board of Directors so as to be able to direct and guide subordinates in the

implementation of their duties to achieve the goals and objectives that

have been set, and able to prevent the occurrence of irregularities, leaks

and Company’s financial wastage, even able to prevent the occurrence of

Corruption, Collusion, and Nepotism (KKN);116

d. To ensure an effective internal control system, the President Director is

structurally assisted by all Structural Officials up to Head Section level;

e. Further description of the duties and functions of the SPI shall be set forth

in the Internal Audit Unit Charter established by the Decree of the Board

of Directors;

f. The Internal Control System includes the following:117

115 Regulation of the Minister of State-Owned Enterprises Number: PER-09/ MBU/2012



Enterprises Article 26 Paragraph 1 116 Law Number 20 of 2001 concerning the Eradication of Corruption 117



95

1) The internal control environment within a disciplined and

structured Company consists of:

a) Integrity, ethical values and competence of employees;

b) Philosophy and style of management;

c) The way in which management undertakes to exercise

authority and responsibility;

d) Organizing and developing Human Resources;

e) Attention and direction made by the Board of Directors

2) Risk assessment and management, a process for identifying,

analyzing, assessing and managing relevant risks;

3) Control activities, that is an action taken in a process of control

over the Company's activities at each level and unit within the

Company's organizational structure, including competency,

authorization, verification, reconciliation, performance appraisal,

assignment and security of the Company's assets;

4) Information and communication system, that is a process of

presenting a report on operational, financial, and compliance with

the rules and regulations applicable to the Company;

5) Monitoring, that is a process of evaluating the quality of the

internal control system including the internal audit function at each

level and the unit of the Company, so that it can be implemented

optimally, provided that irregularities are reported to the Board of

Directors and copies are submitted to the Board of Commissioners.

g. Establish Standard Operating Procedures (SOPs) that support internal

control systems that are tailored to the needs of the Company.



96

III.7.10 In Relation to Disclosure and Confidentiality of Information

a. Disclose the application of GCG principles in the Company and important

information in the Annual Report and Financial Statements, as well as

other information to other parties in accordance with applicable laws in

timely, accurate, clear, and objective manner;

b. Deliver information on identity, main occupation, position as Board of

Commissioners in subsidiaries/joint venture companies and/or other

companies, including meetings conducted within one fiscal year (internal

meetings or joint meetings with the Board of Commissioners), as well as

salaries, and/or other benefits received from the Company and its

subsidiaries/joint venture companies, to be published in the Company's

Annual Report;118

c. Confidential information obtained while serving as a member of the Board

of Directors of the Company shall remain confidential in accordance with

applicable laws and regulations;

d. In the case of maintaining the confidentiality of Company’s Information,

directors are required to prioritize the interests of the Company rather than

the interest of individual or group.

III.7.11 In Relation to Stakeholders

a. Ensure the guarantee of rights of the Stakeholders arising under applicable

laws and/or agreements made by the Company with other Employees,

Service Users, Suppliers and Stakeholders;

118





97

b. Ensure that the Company's assets and business locations and other

facilities comply with laws and regulations concerning occupational health

and safety and environmental conservation;119

c. Provide a work environment that is free from all forms of pressure

(harassment) that may arise as a result of differences in character, personal

circumstances, and cultural background of a person.120

III.7.12 In Relation to Accounting and Bookkeeping System

a. Prepare Financial Statements based on Financial Accounting Standards

and submit to Public Accountants to be audited;121

b. Establish an accounting system in accordance with the Financial

Accounting Standards and under the principles of internal control,

especially the functions of handling, recording, storage, and supervision.

c. Responsible for the implementation of accounting policies and the

preparation of financial statements in accordance with generally accepted

accounting standards in Indonesia;

d. Conduct and maintain the Company's books and administration to produce

orderly bookkeeping, adequacy of working capital with efficient capital

cost, sound and robust balance sheet structure, timely and accurate

presentation of reports and financial analysis and other principles in

accordance with prevailing norms for the company.

III.7.13 In Relation to Other Tasks and Obligations

119










v

98

Carry out other duties and obligations in accordance with the provisions stipulated

in the Company's Articles of Association or as determined by the General Meeting

of Shareholders and the prevailing laws and regulations.122

III.8 AUTHORITY OF THE BOARD OF DIRECTORS


a. Establish policies in the management of the Company;123

b. In order to carry out the management of the Company, the President

Director shall have the right and authority to act for and on behalf of the

Board of Directors and to represent the Company with the stipulation that

all actions of the President Director shall be approved by the Meeting of

the Board of Directors;124

c. If the President Director is absent / or unable to attend due to any reason,

which is not necessary to be proven to a third party, then one of the

members of the Board of Directors appointed in writing by the President

Director shall be authorized to act for and on behalf of the Board of

Directors and perform the duties of the President Director;125

d. In the event that the President Director does not make an appointment, the

oldest member of the Board of Directors in office shall be authorized to act

for and on behalf of the Board of Directors and perform the duties of the

President Director;126

e. In the event that there is more than 1 (one) member of the oldest Board of

Directors in office, the oldest member of the Board of Directors in age

122


xii 123

The Articles of Association of PT TIMAH (Persero) Tbk Article 18 Paragraph 2 Letter a Point i 124 The Articles of Association of PT TIMAH (Persero) Tbk Article 18 Paragraph 15 125



99

shall be authorized to act for and on behalf of the Board of Directors to

perform the duties of the President Director;127

f. In the event that any member of the Board of Directors other than the

President Director is prevented for any reason whatsoever, which is no

need to be proven to any third party, then the other members of the Board

of Directors appoint one of the members of the Board of Directors to

perform the duties of the absent Members of the Board of Directors;128

g. All actions of the Board of Directors representing the President Director

may be confirmed in the Board of Directors' meeting;129

h. Arrange the submission of the power of the Board of Directors to represent

the Company within and outside the Court to a person or several Members

of the Board of Directors specifically appointed to it or to a person or

several Persons of the Company either individually or jointly or to

others;130

i. Arrange provisions on employment of the Company including the

determination of salaries, pensions or old-age benefits and other income

for Company’s Employees under applicable laws and regulations and

resolutions of the GMS;131

j. Appoint and dismiss Company’s Employees in accordance with Company

employment regulations and applicable laws and regulations;132

k. Appoint and dismiss Board of Commissioners and Board of Directors

whose financial statements are consolidated in the Company's Financial

Statements;

127


The Articles of Association of PT TIMAH (Persero) Tbk Article 18 Paragraph 19 129 The Articles of Association of PT TIMAH (Persero) Tbk Article 18 Paragraph 20 130

The Articles of Association of PT TIMAH (Persero) Tbk Article 18 Paragraph 2 Letter a Point

ii 131


iii 132


iv

100

1) The Board of Directors shall establish an evaluation team for the

appointment of the Board of Directors and Board of

Commissioners of the Subsidiary;133

2) AGMS of Subsidiaries are organs of Subsidiaries holding all

powers not submitted to the Board of Directors of Subsidiaries or

the Board of Commissioners of Subsidiaries;

3) In principle, the supervision of the Subsidiary is exercised through

the placement of a company representative as a member of the

Board of Commissioners and the Board of Directors of a

Subsidiary.

l. Carry out any other actions and acts concerning the maintenance of the

Company or the ownership of the Company's property, binding on the

Company with other parties and/or other parties with the Company, and

representing the Company in and out of court on all matters and events,

with limitations as stipulated in Legislation, Articles of Association and/or

resolutions of the GMS;134


approval from the Board of Commissioners135

a. Conduct equity participation in other companies;

Investments in other companies are the direct participation of the

Company in the ownership of shares in a limited liability company,

whether already established or to be established.

b. Establish a Subsidiary and/or Joint Venture Company;

133

Regulation of Minister of State-Owned Enterprises Number 03/MBU/2013 Chapter IV 134 The Articles of Association of PT TIMAH (Persero) Tbk Article 18 Paragraph 2 Letter a Point

v 135


101

1) A Subsidiary is a Limited Liability Company whose majority of its

shares are owned by the Company and/or a limited liability

company controlled by the Company;136

2) Joint Ventures are business entities formed by 2 (two) or more

parties to carry out joint economic activities.

c. Relinquish equity participation in other Company, Subsidiaries and Joint

Venture Company;

Disposal can be done by selling, granting and exchanging. The disposal of

investments in Subsidiaries, other companies and joint ventures may

include:

1) The disposal of part or all of the ownership of the Company's

shares in a Subsidiary (with ownership interest above 50%);

2) The disposal of a portion or all of the Company's ownership

interest in the Affiliated Company (with ownership interest below

50%).

d. Do Merger, consolidation, acquisition, separation and dissolution of

Subsidiaries;

e. Conduct licensing agreements, management contracts, lease assets, joint

operations and other cooperation agreements that exceed certain values

established by the Board of Commissioners;

f. Cooperation of operations is a form of cooperation in which the assets or

all of the Company's related resources are left in whole or in part to the

other party to manage or operate a joint business activity under agreed

terms or agreements;

g. Bind the Company as a guarantor (borg or avalist) having a financial result

that exceeds a certain amount determined by the Board of Commissioners;

136




Enterprises Article 45 paragraph 3

102

h. Legal action taken by the Company to guarantee other companies lending

money to creditors or to perform other actions which principally are

requested financial guarantees from the company;

i. Receive medium/long term loans and provide medium/long term loans that

exceed a certain amount determined by the Board of Commissioners;

j. Medium term and long term loans are loans granted by the creditor, ie

bank, financial institutions, non-bank financial institutions, and firms for

investment over a period of more than 1 (one) year. The loan is provided

based on a separate loan agreement agreed by the Company and the

creditor. Providing medium and long term loans is a loan granted to other

parties for a period of more than 1 (one) year. The loan is subject to a

separate loan agreement agreed by the Company and the other party;

k. Release or pledge the Company's assets less than 50% (fifty percent) of the

Company's net worth in 1 (one) transaction or more, whether related to

each other or not;

l. Eliminate from the books of bad debts and inventories of dead goods

exceeding certain value determined by the Board of Commissioners;

1) Removal of receivables, inventories and other non-productive

assets is the write-off of receivables and inventories that exceed

certain amounts determined by the Board of Commissioners, from

the financial statements;

2) The limit on the amount of the waiver value is determined by the

Board of Commissioners in the Company's Work Plan and Budget.

m. Undertake actions not yet established in the Company's Budget Plan;

1) The Board of Directors may undertake actions not yet established

in the Company's Work Plan and Budget. Such action is deemed

essential in order to solve a problem that occurs and solely for the

benefit of the Company;

103

2) Actions taken outside the Company's Work Plan and Budget shall

seek the approval of the Board of Commissioners.

n. On this authority the Board of Directors shall continue to comply with the

provisions stipulated in the laws of the Capital Market, including:

1) Announcement of Information on material transactions that must

be submitted to the public and the completeness of supporting

documents that must be submitted to OJK;

2) Type of information:

3) In the event that the transaction is an affiliate transaction, the

information that needs to be added is:

a) The relationship and nature of the affiliated relationship of the

parties conducting material transactions with other Companies;

and

b) Explanation, consideration, and reason for the transaction, as

compared with other similar transactions not conducted with

affiliated parties.

4) In the event that the Material Transaction object is in the form

of buying or selling of shares of other companies or shares of

overseas open companies, the Company is only required to disclose

the information as regulated in Capital Market regulations.


approval from the Board of Commissioners and approval from the GMS137

a. Do not collect bad debts that have been written off;

b. Conduct equity participation in another company that is a material

transaction for the Company, which is greater than 50% (fifty percent)

of the Company's equity;

137

The Articles of Association of PT TIMAH (Persero) Tbk Article 18 Paragraph 9, 10, and 11

104

c. Establish a subsidiary and/or joint venture that is a material

transaction for the Company, which is greater than 50% (fifty percent)

of the Company's equity;

d. Dismiss the equity participation in another company, a Subsidiary

and a joint venture that is a material transaction for the Company,

which is greater than 50% (fifty percent) of the Company's equity;

e. Merger, consolidation, acquisition, separation and dissolution of a

Subsidiary representing a material transaction for the Company, which

is greater than 50% (fifty percent) of the Company's equity;

f. Relinquish or pledge Company assets amounting to less than 50%

(fifty percent) of the Company's net worth in 1 (one) transaction or

more, whether related to each other or not, which is a material

transaction for the Company, which is of greater value From 50%

(fifty percent) of the Company's equity;

g. Transfer the Company's property which is more than 50% (fifty

percent) of the Company's net worth in 1 (one) or more transactions,

whether related to each other or not, occurring within 1 (one) financial

year;

h. In performing the above mentioned transactions must comply with

the principles of openness regulated by OJK and meet the

completeness of the documents. Documents that must be met at least

are (More detailed explanation as attached to the procedure):

1) Application Letter for a transaction;

2) Proposals include risk analysis, law, and benefits;

3) Independent stakeholder review (if any), Performance Report and

other company’s legality if the company engages in participation,

cooperation, and/or loan.

105

III.8.4 The authority to carry out other actions

The Board of Directors is authorized to perform other actions, within the scope of

the Company's interests and business, in compliance with applicable laws and

regulations.

III.9 RIGHTS OF THE BOARD OF DIRECTORS

a. For certain acts of its own responsibility, the Board of Directors

shall be entitled to appoint one or more as its representative or proxy, by

granting to them the authority for such certain act as governed by a power

of attorney;138

b. The members of the Board of Directors shall be paid salaries and

other facilities and benefits, including post-employment benefits summed

up by the GMS and such authority by the GMS may be delegated to the

Board of Commissioners;139

c. If the Company reaches a profit level, then the Board of Directors

may receive incentives in return for work performance of the amount

stipulated by the GMS;

d. Use the Company's facilities for activities related to the Company's

interests, in accordance with the laws and regulations of the Company;

e. Conduct activities outside the Company that are indirectly related

to the Company's interests, such as teaching activities, becoming

associates of business associates and the like, as long as using reasonable

time and under the knowledge of the President Director or other Members

of the Board of Directors;

f. Obtain leave in accordance with applicable provisions;

g. Obtain a copy of the minutes of the Meeting of the Board of

Directors, whether or not present at the meeting of the Board of Directors.

138



106

III.10 MEETING OF THE BOARD OF DIRECTORS


a. Board of Directors Meetings are meetings held by the Board of

Directors;

b. Meetings of the Board of Directors shall be held periodically, at

least 1 (one) time per month, and in such meetings the Board of Directors

may invite the Board of Commissioners;140

c. The Board of Directors may hold a meeting outside of the schedule

when:141

1) It is deemed necessary by one or more Members of the Board of

Directors.

2) Upon a written request from the Board of Commissioners.

3) Upon a written request of 1 (one) or more shareholders jointly

representing 1/10 (one ten) or more of the total number of shares with

valid voting rights.

d. Summoning of the Meeting of the Board of Directors shall include

the date, time, event and place of the Meeting;142

e. The summons of the Board of Directors' Meeting shall be in

writing by a member of the Board of Directors entitled to represent the

Company and delivered within 7 (seven) days prior to the meeting or

within a shorter period of 3 (three) days under urgent circumstances,

excluding the date of the call and date of the meeting;143

140 Regulation of the Minister of State-Owned Enterprises Number: PER-09/ MBU/2012



Enterprises Article 24 paragraph 1 141 The Articles of Association of PT TIMAH (Persero) Tbk Article 19 Paragraph 3 142



107

f. A summons of the Board of Directors' meeting may also be made

using the Company's communications media;

g. The meeting of the Board of Directors shall be deemed valid if held

at the place of domicile of the Company or at its principal place of

business activity within the territory of the Republic of Indonesia. If the

meeting of the Board of Directors is held elsewhere, may be considered

valid and may take a decision if it is exercised within the territory of the

Republic of Indonesia and is attended and/or represented by all members

of the Board of Directors or its authorized representative;144

h. Meetings of the Board of Directors may be held by way of

teleconferencing among Members of the Board of Directors residing in

different places, by conference call, video conference or other

communication equipment which enable each Member of the Board of

Directors to hear/communicate and participate in the Meeting;

i. Prior to the Meeting, the Corporate Secretary shall first circulate

the agenda of the meeting to obtain input from the members of the Board

of Directors on the agenda. These inputs may include addition/subtraction

or sharpening of the meeting agenda;

j. Each member of the Board of Directors shall have the right to

propose the agenda of the meeting to be held;

k. Members of the Board of Directors are allowed to have a different

opinion although the overall number of votes that agree is more. In such

case the different opinions should be recorded in the Minutes of Meeting

as a form of dissenting opinion;

l. The meeting material is prepared by the Corporate Secretary.

Meeting material can be delivered simultaneously with the delivery of the

invitation.

144


108

III.10.2 Procedure of Board of Directors Meeting

a. The Corporate Secretary receives the

materials/documents/management reports from the Board of Directors.

The materials/documents/management reports will be used as Board of

Directors' meeting materials. These materials include: Company’s

Monthly Report, Company’s Quarterly Report, and Company’s Annual

Report and other reports;

b. The Corporate Secretary archives the materials/reports/documents

received in accordance with existing letter administration procedures;

c. The Corporate Secretary submits the materials/documents/reports

to the President Director;

d. The President Director reviews the materials/documents/reports

and provides direction to the Corporate Secretary for a follow-up;

e. If such directions are to be followed up by the Meeting, the

Corporate Secretary shall immediately prepare the agenda of the Meeting;

f. The Corporate Secretary circulates the agenda of the meeting and

the materials/documents/reports to be discussed in the meeting to the

Members of the Board of Directors to obtain the inputs on the agenda;

g. Members of the Board of Directors receive, read and study the

meeting agenda along with the materials/documents/reports. Upon

completion, the agenda of the meeting shall be sent back to the Corporate

Secretary together with the inputs from the members of the Board of

Directors concerned and affix the initial or signature as a token to approve

the agenda of the meeting;

h. The Corporate Secretary makes a meeting invitation after receiving

input from members of the Board of Directors;

i. In the letter of invitation, the Corporate Secretary develops points

of issue to be discussed in the meeting;

109

j. If the meeting invites another party, the Corporate Secretary is

responsible for creating an invitation letter to the party concerned. In the

event that such other party is from Management, that is, an officer of 1

(one) level and/or 2 (two) levels below the Board of Directors, such

purpose must be in the knowledge of the relevant Board of Directors;

k. Meeting participants receive invitations and meeting materials;

l. In the event that the Board of Directors Meeting is held by way of

teleconference, the following provisions shall apply:

1) Each participating member of the Board of Directors shall be

deemed present at the Meeting to determine the fulfillment of the

attendance quorum requirement and the decision of the Board of

Directors Meeting;

2) The place where the Chairman of the Meeting will take part shall

be regarded as the venue of the Meeting of the Board of Directors;

3) Minutes of Meeting shall be submitted and signed by all Members

of the Board of Directors whether or not participating in the

Meeting.

III.10.3 Mechanism of Meetings Attendance

a. The meeting of the Board of Directors is valid and entitled to take a

valid and binding decision, if more than 1/2 (one per two) the number of

members of the Board of Directors is present or legally represented in the

meeting;145

b. In other items of events, the Meeting of the Board of Directors

shall not be entitled to take decisions unless all the Members of the Board

of Directors or their authorized representatives present and approve the

145


110

addition of the agenda of the Meeting and approve the agenda of the

Meeting;146

c. A Member of the Board of Directors may be represented in a

Meeting of the Board of Directors only by other members of the Board of

Directors by virtue of a power of attorney given specifically for that

purpose147

, where such power of attorney may be communicated by

facsimile, email or other electronic means of communications (if delivered

by facsimile, email or communication means of other electronics followed

by originals or certified copies as originally sent as evidenced by receipt or

by internationally recognized mail or courier as soon as possible);

d. All BoD meetings are chaired by the President Director and in the

event that the President Director is absent, then one of the Directors

appointed in writing by the President Director presiding over the Board of

Directors' Meeting;148

e. In the event that the President Director does not make an

appointment, then one of the longest Director in the position as a Member

of the Board of Directors presiding over the Board of Directors Meeting

and if the longest serving as a member of the Board of Directors is more

than 1 (one) person, the oldest Director in age acts as the chaiperson of the

Meetings of the Board of Directors.149

III.10.4 Process of Problem Discussion and Decision Making

a. Prior to the discussion of the agenda of the Meeting, the

Chairperson of the Meeting shall at first explain the disciplinary

procedures of the Meeting, including the use of communication tools in

the Meeting, question and answer mechanisms, and voting mechanisms (if

there is voting);

146

The Articles of Association of PT TIMAH (Persero) Tbk Article 19 Paragraph 10 147 The Articles of Association of PT TIMAH (Persero) Tbk Article 19 Paragraph 15 and 16 148



111

b. All decisions of the Board of Directors' meeting shall be in good

faith, rational considerations and have been thoroughly investigated into

relevant matters, sufficient and free from conflict of interest and

independently created by each Director;

c. The decision of the Meeting of the Board of Directors shall be

taken by deliberation for consensus. In the case of a decision based on

deliberations for consensus is not reached then the decision is taken with

the most ordinary votes;150

d. If the number of votes agreeing and disagreeing is the same, then

the decision of the meeting shall be in accordance with the opinion of the

Chairman of the Meeting with due observance of the provisions

concerning liability, except for the person, then the decision of the meeting

shall be conducted by a closed vote;151

e. To maintain independence and objectivity, any member of the

Board of Directors with a conflict of interest in a transaction, contract or

proposed contract, in which the Company is a party, the Board of

Directors concerned is required to disclose the conflict of interest and not

participate in voting for decision making. Disclosure of such conflict of

interest should be recorded in the minutes of the meeting;

f. Each Members of the Board of Directors present shall be entitled to

issue 1 (one) vote and 1 (one) additional vote for each member of the other

Board of Directors represented;152

g. The voting of a person shall be conducted by a closed ballot

without any signature, whereas voting on other matters shall be oral unless

the Chaiperson of the Meeting of the Board of Directors determines

otherwise without any objection based on the majority vote of those

present;

150 The Articles of Association of PT TIMAH (Persero) Tbk Article 19 Paragraph 17 and 18 151



112

h. In the case of the proposal of more than 2 (two) alternatives and the

result of the vote acquisition has not received 1 (one) alternative with a

vote of more than 1/2 (one per two) of the total votes cast, re-election is

made for the 2 alternatives proposed that obtain the most votes so that one

of the proposed alternative can receive vote more than 1/2 (one per two)

part of the number of votes issued;153

i. Blank votes and unauthorized votes are deemed not to be issued

legally and are considered non-existent, and not counted in determining

the number of votes cast;

j. The Board of Directors may also take a lawful decision without

holding a Meeting provided that all members of the Board of Directors

have been notified in writing of the proposed decision and all members of

the Board of Directors have consented by signing the proposal. The

decisions taken in such manner shall have the same power as those

adopted by law in the Meeting of the Board of Directors;

k. Decisions concerning strategic aspects should be made through the

mechanism of the Board of Directors Meeting. These strategic aspects

include all acts of the Board of Directors which must be approved by the

GMS after obtaining a written recommendation from the Board of

Commissioners as well as all actions of the Board of Directors which must

obtain written approval from the Board of Commissioners.

III.10.5 Minutes of Board of Directors' Meeting

a. The minutes of the Meeting of the Board of Directors shall be made

for each Meeting of the Board of Directors containing everything

discussed or decided in the meeting, including but not limited to the

opinions expressed in the meeting, either supportive or non-supporting or

153


113

dissenting opinion, Reasons for the absence of members of the Board of

Directors, if any;154

b. The minutes of the Meeting should illustrate the course of the

meeting. It is important to be able to see the decision-making process and

at the same time become a legal document and legal evidence to determine

the accountability of the outcome of a meeting decision. Therefore, the

Minutes of Meeting shall include:

1) Place, date, and time of the meeting is held;



4) The duration of the meeting takes place;


(if any);


7) Who expresses an opinion;


9) Decisions taken;

10) Statement of objection to the decision of the meeting if there is no

unanimity.

c. The minutes of the Meeting of the Board of Directors shall be made

by the Secretary of the Company or a person present at the meeting (if the

meeting is only attended by the Board of Directors) appointed by the

Chairman of the Meeting and shall then be signed by the Chairman of the

Meeting and all other Members of the Board of Directors present and

appointed to it by the Meeting to ascertain the completeness and

154





114

correctness of the minute of the meeting. If the minute of the meeting is

made by a Notary, such signing is not required;

d. Minutes of Meeting shall be accompanied by a special power of

attorney given by a member of the Board of Directors who is not present

to the other Director (if any);

e. Each member of the Board of Directors shall be entitled to receive

a copy of the minutes of the Meeting of the Board of Directors, whether or

not present at the Meeting of the Board of Directors;155

f. One copy of the Minutes of Meeting of the Board of Directors to be

submitted to the Board of Commissioners to be known156

after the revision

is made by the Board of Directors;

g. The minutes of the Board of Directors' Meeting must be submitted

to the Board of Directors no later than 3 (three) days after the meeting;

h. Within no later than 4 (four) days from the date of delivery of the

minutes of the meeting, each member of the Board of Directors present

and/or represented in the Meeting of the Board of Directors shall submit

their approval or objection and/or its proposed revision, if any, to what is

contained in the Minutes Board of Directors' Meeting to the Chairman of

the Board of Directors Meeting;

i. If an objection or proposed revision is not received within that time

period, it is concluded that there is no objection and/or correction and is

deemed to have agreed to the Minutes of the Board of Directors concerned

and copies of the minutes of the meeting shall be submitted to all

Members of the Board of Directors;

155





156


115

j. The original Board of Directors' Meeting shall be submitted to the

Board of Directors to be archived and maintained as Company’s

documents.

III.11 PERFORMANCE EVALUATION OF DIRECTORS


The performance of the Board of Directors and Members of the Board of

Directors is evaluated by the Board of Commissioners and submitted to

shareholders in the GMS as an evaluation of the performance of the Board of

Directors. In general, the performance of the Board of Directors is determined

based on the duties and obligations contained in the prevailing laws and

regulations and the Company's Articles of Association as well as the Shareholder's

mandate in the form of Key Performance Indicator (KPI). The formal evaluation

criteria shall be submitted openly to the Board of Directors from the date of their

appointment.

The results of the evaluation on the performance of the Board of Directors as a

whole and the performance of each individual Board of Directors shall be an

integral part of the compensation scheme and incentives for the Members of the

Board of Directors.

The performance evaluation results of each individual Member of the Board of

Directors shall be a basis for consideration, especially for the Series A Dwiwarna

Shareholder for dismissal and/or re-appointing the members of the Board of

Directors concerned. The result of performance evaluation is a means of

assessment and improvement of the effectiveness of the Board of Directors.

III.11.1 Performance Evaluation Criteria of the Board of Directors

The performance evaluation criteria for the Board of Directors are stipulated in

the GMS based on the KPI. In addition, the performance criteria for the Board of

Directors are also conducted individually submitted by the Nomination and

116

Remuneration Committee (if established) or by the Board of Commissioners to be

stipulated in the GMS, which shall at least include the following:

a. Preparation of KPI at the beginning of the year and evaluation of its

achievements;

b. Attendance at the Board of Directors Meeting or meeting with the


c. Contributions to the Company's business activities;

d. Engagement in certain assignments;

e. Commitment to advance the interests of the Company;

f. Compliance to applicable laws and regulations as well as

Company’s policies;

g. Achieving the Company's target as stated in RKAP and Contract

Management.

III.12 SUPPORTING ORGANS OF BOARD OF DIRECTORS

III.12.1 Corporate Secretary

a. The main functions of the Corporate Secretary for the Company are

as follows:

1) Follow the development of the Capital Market, in particular the

regulations applicable in the Capital Market;157

2) Provide input to the Board of Directors to comply with the

provisions of Law Number 8 of 1995 concerning Capital Market

and its rules of consent;158

157

Regulation of Bapepam IX.I.4 concerning the Establishment of Corporate Secretary Number 1

Letter a 158


Letter c

117

3) Ensure that the Company complies with the rules on disclosure

requirements in line with the application of GCG principles;159

4) Provide services to the public for any information required by

investor (investor relations) related to the condition of the

Company;160

5) Provide services to the public on any information required by

Stakeholders (Public Relations) relating to the condition of the

Company;

6) As a liaison officer or contact person between the Company and

OJK and the public;

7) The function of Corporate Secretary may be executed by the

member of the Company's Board of Directors.161

b. The duties of the Corporate Secretary are as follows:

1) Attend meetings of the Board of Directors and make minutes of

meetings;

2) Responsible for the holding of the GMS;

3) Prepare the necessary materials in relation to the reports/routine

activities of the Board of Directors to be presented to outside

parties;

4) Prepare the necessary materials/materials in relation to matters that

must be resolved by the Board of Directors regarding the

management of the Company;

5) Organize meetings within the Board of Directors;

159




Enterprises Article 29 Paragraph 4 Letter a 160


Letter b 161


Letter e

118

6) Follow up any decision of the Board of Directors by recording any

decisions made in the decision-making forums and its responsible

persons and monitoring as well as checking the progress of the

implementation of the outcome of the meeting;

7) Conduct activities in the secretarial field within the Board of

Directors and its administration including but not limited to the

List of Shareholders, Special List and minutes of Board of

Directors meetings, minutes of Board of Commissioners meetings,

minutes of meetings of the Board of Directors and Board of

Commissioners and minutes of the GMS;

8) Update the Special Register at least once every 1 (one) year;

9) Carry out socialization of the Company's strategic policies to the

Company's internal and external parties;

10) Conduct an introduction program for the new BoC and BoD and

document it;

11) Create a culture of compliance with regulations that apply to the

Company;

12) Provide Risk Management Plan (RPR) and implement risk aversion

to the impact of the Company's communication with Stakeholders;

13) Coordinate with the responsible GCG implementation related to

GCG socialization programs;

14) Achievement of Key Performance Indicators in accordance with

their areas and responsibilities.

c. The Corporate Secretary may obtain delegation from the Board of

Directors as follows:

1) Establish system and procedure of decision making by Corporate

Leaders, in order to support the determination of Company’s

policies;

119

2) Establish a communication system with capital market and

Corporate Stakeholder, both internal and external, in order to

provide transparent information services regarding the Company;

3) Establish effective methodologies and communication systems with

the Company's internal and external environment, in order to

socialize corporate-level strategic policies and to build and enhance

the Company's positive image in the community;

4) Implement strategic communications with Stakeholders on behalf

of the Board of Directors, in the context of socializing the

Company's strategic policies;

5) Define the methodology and planning system, the Company's

administrative control as well as the activities of the Company’s

Leader protocol;

6) Determine the system of control and management of the

Company's administrative documents, in order to ensure the

orderly administration and security of Company’s documents;

7) Stipulate the schedule of meetings of the Board of Directors, Board

of Commissioners Meeting with the Board of Directors, and

AGMS (Annual and Extraordinary), in order to smooth the

activities of the Company's organs;

8) Establishes risk aversion to the impact of the Company's

communication activities with Stakeholders, in order to minimize

the risk of decreasing the Company's image due to errors in

information flow related to the Company's activities;

9) Establish socialization programs for the implementation of GCG in

the Company;

10) Establish a working unit performance control pattern, in order to

achieve the target of the work unit;

120

11) Establish disciplinary sanctions/penalties against employees who

violate discipline in accordance with applicable regulations, in

order to enforce the Company regulations.

III.12.2 Internal Control Unit (ICU)

The Board of Directors shall establish an internal control. The Internal Control as

required by establishing Internal Control Unit (ICU) and making an Internal

Control Charter. The Internal Control Unit is led by a head who is appointed and

dismissed by the President Director based on the Company's internal mechanisms

with the approval of the Board of Commissioners.162

a. Internal Control functions are:163

1) Evaluation of the effectiveness of the implementation of internal

controls, risk management, and corporate governance processes, in

accordance with the laws and regulations of the Company;

2) Examination and assessment of efficiency and effectiveness in

finance, operations, human resources, information technology, and

other activities.

b. Duties and responsibilities of ICU

ICU has duties and responsibilities, among others:

1) Assist the Board of Directors, by monitoring the adequacy and

effectiveness of the management control system, confirm that

identified risks have been mitigated through risk management, and

conduct internal control effectively and consistently;

162









121

2) Coordinate and provide input to relevant Working Units to ensure

the realization of GCG primarily by encouraging organizational

effectiveness, the effectiveness of management control processes,

the effectiveness of risk management, the effectiveness of the

implementation of business ethics and the effectiveness of

achieving targets;

3) Deliver audit report result related to financial control process and

operational management control;

4) Coordinate with external control institutions in relation to

supervisory duties in the Company.

122

CHAPTER IV

THE ACTIVITIES AMONG THE ORGAN OF THE COMPANY

IV.1 THE BASIC PRINCIPLES OF THE WORKING RELATIONSHIP

BETWEEN THE BOARD OF COMMISSIONERS AND THE BOARD OF

DIRECTORS

A good working relationship between the Board of Commissioners and the Board

of Directors is one of the most important things, so that each organ of the

Company can work in accordance with its function effectively and efficiently.

Therefore, in maintaining a good working relationship between the Board of

Commissioners and the Board of Directors, the Company applies the following

principles:

a. The Board of Commissioners respects the functions and roles of the

Board of Directors in managing the Company as regulated in the laws and

regulations of the Company's Articles of Association;

b. The Board of Directors respects the function and role of the Board

of Commissioners to conduct supervision and advice to the Board of

Directors on the Company's management policy;

c. In the event that the correspondence between the Board of

Directors and the Board of Commissioners should explain the aim and

purpose of the letter;

d. Each working relationship between the Board of Commissioners

and the Board of Directors is a formal relationship, in the sense that it

must always be based on a standard mechanism or correspondence that can

be accounted for;

e. Any informal working relationship may be exercised by each

member of the Board of Commissioners and Board of Directors, but can

123

not be used as a formal policy prior to the mechanism or correspondence

that can be accounted for;

f. Each working relationship between the Board of Commissioners

and the Board of Directors is an institutional relationship in the sense that

the Board of Commissioners and the Board of Directors serve as collective

positions representing all its members so that every working relationship

between the Board of Commissioners and the Board of Directors must be

known by the Members of the Board of Commissioners and other

Members of the Board of Directors.

IV.2 JOINT MEETING OF THE BOARD OF DIRECTORS AND BOARD

OF COMMISSIONERS

IV.2.1 General Policy

a. A Joint Meeting of the Board of Directors and the Board of

Commissioners is a Board of Directors' Meeting with the Board of

Commissioners as a form of coordination and consultation in order to

discuss periodic reports of the Board of Directors and discusses the

conditions and business prospects and national/regional policies that

impact on the Company's performance and provide responses, notes and

advice or a decision put forth in Minute of the Meeting;

b. A Joint Meeting of the Board of Directors and Board of

Commissioners are attended by Members of the Board of Commissioners,

Members of the Board of Directors, Secretary of the Board of

Commissioners, Corporate Secretary or other officers assigned by the

President Commissioner/President Director and may invite speakers from

within or outside the Company, except for special meetings, only attended

by Members of the Board of Commissioners and Members of the Board of

Directors;

c. A Joint Meeting of Directors and Board of Commissioners is held

at least once in 3 (three) months.

124

IV.2.2 Meeting Procedures

a. All Joint Meetings of the Board of Directors and Board of

Commissioners are chaired by the President Commissioner. In the event

that the President Commissioner is absent, the meeting shall be chaired by

another member of the Board of Commissioners appointed by the

President Commissioner with a written power of attorney;

b. In the event that the President Commissioner does not make an

assignment, the longest member of the Board of Commissioners shall act

as the Chair of the Meeting. In the event that the longest member of the

Board of Commissioners is more than 1 (one) person, then the oldest

Member of the Board of Commissioners acts as the Chair of the Meeting;

c. The agenda of the Meeting is determined by the Board of

Commissioners and may also be based on the proposal of the Board of

Directors;

d. The summon of the Joint Meetings of the Board of Directors and

Board of Commissioners shall include the date, time, event, and place of

the Meeting;

e. The summon of the joint meetings of the Board of Directors and

the Board of Commissioners shall be made in writing by the President

Commissioner or by a member of the Board of Commissioners appointed

by the President Commissioner and delivered by the Secretary of the

Board of Commissioners within 7 (seven) days prior to the meeting or

within a shorter 3 (three) days in urgent circumstances, without taking into

account the date of the call and the date of the meeting;

f. Joint Meetings of the Board of Commissioners and the Board of

Directors may be held on the basis of the Board of Directors' proposals

with due diligence by the Board of Commissioners;

125

g. The Meeting Material is prepared by the Secretary of the Board of

Commissioners and submitted at least 1 (one) day before the meeting. The

submission of the meeting material together with the timing of the meeting

shall be possible only if approved by the Chairman of the Joint Meeting of

the Board of Directors and Board of Commissioners;

h. A Member of the Board of Commissioners may only be

represented by other Members of the Board of Commissioners by virtue of

a power of attorney and a Member of the Board of Directors may only be

represented by other Members of the Board of Directors by virtue of a

power of attorney.

IV.2.3 Attendance Mechanism and Legality of the Meeting

a. Joint Meetings of the Board of Directors and Board of

Commissioners are valid and entitled to take binding decisions if more

than 1/2 (one half) of the total number of Members of the Board of

Commissioners or representing legally present at the Joint Meeting of the

Board of Directors and Board of Commissioners;

b. In the items of other events, the Joint Meeting of the Board of

Directors and the Board of Commissioners shall not be entitled to take a

decision unless all members of the Board of Commissioners or those

representing are legally present and approve the addition of the agenda of

the Meeting.

IV.2.4 Procedures of Problem Discussion and Decision Making

a. Prior to the discussion of the meeting agenda, the Chairman of the

Meeting shall first discuss the disciplinary procedures of the meeting,

including the use of communication tools in the meeting, question and

answer mechanisms, voting mechanisms (if there is voting) and evaluate

the results of the previous meeting (if any);

126

b. All discussions in the Joint Meeting of the Board of Directors and

Board of Commissioners shall be in good faith, rational considerations and

have been thoroughly investigated into relevant matters, accurate,

adequate and free from conflict of interest and submitted independently by

each Member of the Board of Commissioners and Members Board of

Directors;

c. The joint meetings of the Board of Directors and the Board of

Commissioners are mechanisms for monitoring the Company's

performance and discussing the current situation that may affect the

Company's operational activities, and may also serve as

input/consideration for the Board of Commissioners and the Board of

Directors to take action within their respective jurisdictions;

d. Decisions made in the Joint Meeting of the Board of Directors and

Board of Commissioners are the decisions of the Board of Commissioners

and followed up by a Decision Letter of the Board of Commissioners;

e. The Board of Directors may follow up the decisions of the Joint

Meeting of the Board of Directors and the Board of Commissioners after

the Minutes of Joint Meeting of the Board of Directors and Board of

Commissioners signed or have been issued the Decision Letter of the


f. Decisions concerning strategic aspects should be maintained

through the Board of Commissioners Meeting mechanism. These strategic

aspects include, among other things, the conduct of the Board of Directors

which shall obtain the approval of the GMS after obtaining a written

recommendation from the Board of Commissioners and all the actions of

the Board of Directors which must obtain the approval of the Board of

Commissioners;

g. The results of the Joint Meetings of the Board of Directors and the

Board of Commissioners may also be the basis/consideration of the

decision making which is the authority of the Board of Directors.

127

IV.2.5 Minutes of Meetings

a. The Secretary of the Board of Commissioners or other officers

appointed by the Chair of the Meeting shall be responsible for the creation

and administration and distribution of the Minutes of the Joint Meeting of

the Board of Commissioners and the Board of Directors;

b. In the event that the Joint Meeting of the Board of Commissioners

and the Board of Directors is attended only by the members of the Board

of Commissioners and the Board of Directors, the Minutes of Meeting

shall be made by one of the appointed members of the Board of

Commissioners or Members of the Board of Directors of those present;

c. The Minutes of the Joint Meeting of the Board of Commissioners

and the Board of Directors shall be signed by all Members of the Board of

Commissioners and Board of Directors present at the Meeting;

d. The Minutes of the Joint Meeting of the Board of Commissioners

and the Board of Directors shall describe the course of the Meeting. It is

important to be able to see the decision-making process and at the same

time become a legal document and legal evidence to determine the

accountability of the outcome of a meeting decision;

Therefore, the Minutes of Meeting shall include:

1) Place, date and time of the meeting;



4) The duration of the meeting takes place;


(if any);


128

7) Who expresses an opinion;


9) Decisions taken;

10) Statement of objection to the meeting decision if there is no

unanimity.

e. Each member of the Board of Commissioners and Members of the

Board of Directors shall be entitled to receive a copy of the Minutes of the

Joint Meeting of the Board of Commissioners and the Board of Directors,

even though the person concerned is not present at the meeting;

f. Draft Minutes of the Joint Meeting of the Board of Commissioners

and the Board of Directors shall be submitted to Members of the Board of

Commissioners and Board of Directors no later than 7 (seven) days after

the meeting;

g. Each member of the Board of Commissioners and the Board of

Directors present and/or represented in the Joint Meeting of the Board of

Commissioners and the Board of Directors shall submit their approval or

objection and/or their proposed revision, if any:

h. The minutes of the Meeting of the Board of Commissioners shall

be signed no later than 14 (fourteen) days after the meeting, then the

original Minutes of Meeting shall be submitted to the Board of Directors

to be kept and maintained as Company documents, while the Board of

Commissioners shall keep the copies thereof;

i. The Minutes of the Joint Meeting of the Board of Commissioners

and the Board of Directors shall be signed no later than 14 (fourteen) days

after the Meeting is held, the original Minutes of Meeting shall be properly

administered and shall be maintained as the Company documents by the

Board of Directors or Corporate Secretary and the copies are kept by the

Secretary of the Board of Commissioners . The minutes of the Meeting

shall always be available when necessary.

129

Attachment I

THE STATEMENT OF ACTING INDEPENDENTLY

IN OPERATIONAL OVERSIGHT OF PT TIMAH (PERSERO) TBK

In order to apply Good Corporate Governance (GCG) consistently and

continuously as well as compliance with applicable laws and regulations as stated

in:

1. Law of the Republic of Indonesia Number 40 Year 2007

concerning Limited Liability Company;

2. Law of the Republic of Indonesia Number 19 Year 2002

concerning State-Owned Enterprises;

3. Regulation of the Minister of State-Owned Enterprises No. PER-

09/MBU/2012 on the amendment to the Regulation of the Minister of

State-Owned Enterprises No. PER-01/MBU/2011 on the Implementation

of Good Corporate Governance (GCG) in SOEs;

4. Bapepam and LK Regulation Number IX.E.1 concerning Affiliated

Transactions and Conflicts of Interest on Certain Transactions, attachment

of Decision of the Chairman of Bapepam and LK Number: Kep-

412/BL/2009 dated November 25, 2009;

5. PT TIMAH (Persero) Tbk Articles of Association as amended and

lastly amended by Deed of Amendment Number 75 dated 26 June of 2014,

made by Notary Fathiah Helmi Law Graduate and authorized by the

Minister of Justice and Human Rights No.: AHU-0064462.40. 80.2014;

6. Code of Corporate Governance at PT TIMAH (Persero) Tbk and

the Working Manual of Board of Commissioners and Board of Directors

(Board Manual) of the Company.

130

It is hereby stated that I:

Name:

Position:

Appointment based on GMS Number [...] and date [...] about [...]

1. Shares Ownership

Has no shares including family in PT TIMAH (Persero) Tbk

Own shares including family at PT TIMAH (Persero) Tbk

Has no shares including family outside PT TIMAH (Persero) Tbk

Own shares including family outside PT TIMAH (Persero) Tbk

2. Family Relationship

Not having a blood relation up to 3rd (3rd) degrees, either by linear or

sideline, including relationships arising out of marriage with other members

of the Board of Commissioners or with the Board of Directors

Having a blood relation up to third (3) level, either by linear or by line,

including relationships that arise due to marriage with other members of

Board of Commissioners or with the Board of Directors, namely:

Name of Member of Board of Commissioner/Director Position

Familiy Relationship

3. Multiple Position

Has multiple positions as;

Do not have multiple positions as:

a. Members of the Board of Directors of State-Owned Enterprises, State-

Owned Enterprises, and Private-owned Enterprises that may cause a

conflict of interest with my position at PT TIMAH (Persero) Tbk;

131

b. Other positions in accordance with the provisions of legislation,

administrators of political parties and/or candidates/legislative

members and/or may be heads/deputy heads of regional governments;

c. Other positions that may cause a conflict of interest with my position

at PT TIMAH (Persero) Tbk.

4. With full responsibility and sincerely exercise oversight over the management

of the Company and avoid any conflict of interest with PT TIMAH (Persero)

Tbk and update this statement annually and I convey to the Corporate

Secretary.

Jakarta, ......... 2014

Name:..

Position: ...........

132

Attachment II

THE STATEMENT OF ACTING INDEPENDENTLY

IN MANAGEMENT OF PT TIMAH (PERSERO) TBK

In order to apply Good Corporate Governance (GCG) consistently and

continuously as well as compliance with applicable laws and regulations as stated

in:

1. Law of the Republic of Indonesia Number 40 Year 2007 concerning Limited

Liability Company;

2. Law of the Republic of Indonesia Number 19 Year 2002 concerning State-

Owned Enterprises;

3. Regulation of the Minister of State-Owned Enterprises No. PER-

09/MBU/2012 on the amendment to the Regulation of the Minister of State-

Owned Enterprises No. PER-01/MBU/2011 on the Implementation of Good

Corporate Governance (GCG) in SOEs;

4. Bapepam and LK Regulation Number IX.E.1 concerning Affiliated

Transactions and Conflicts of Interest on Certain Transactions, attachment of

Decision of the Chairman of Bapepam and LK Number: Kep-412/BL/2009

dated November 25, 2009;

5. PT TIMAH (Persero) Tbk Articles of Association as amended and lastly

amended by Deed of Amendment Number 75 dated 26 June of 2014, made by

Notary Fathiah Helmi Law Graduate and authorized by the Minister of Justice

and Human Rights No.: AHU-0064462.40. 80.2014;

6. Code of Corporate Governance at PT TIMAH (Persero) Tbk and the Working

Manual of Board of Commissioners and Board of Directors (Board Manual)

of the Company.

133

It is hereby stated that I:

Name:

Position:

Appointment based on GMS Number [...] and date [...] about [...]

1. Shares Ownership

Has no shares including family in PT TIMAH (Persero) Tbk

Own shares including family at PT TIMAH (Persero) Tbk

Has no shares including family outside PT TIMAH (Persero) Tbk

Own shares including family outside PT TIMAH (Persero) Tbk

2. Family Relationship

Not having a blood relation up to 3rd (3rd) degrees, either by linear or sideline,

including relationships arising out of marriage with other members of the Board

of Commissioners or with the Board of Directors

Having a blood relation up to third (3) level, either by linear or by line, including

relationships that arise due to marriage with other members of Board of

Commissioners or with the Board of Directors, namely:

Name of Member of Board of Commissioner/Director Position

Familiy Relationship

3. Multiple Position

Has multiple positions as;

Do not have multiple positions as:

a. Members of the Board of Directors of State-Owned Enterprises, State-

Owned Enterprises, and Private-owned Enterprises that may cause a

conflict of interest with my position at PT TIMAH (Persero) Tbk;

134

b. Other positions in accordance with the provisions of legislation,

administrators of political parties and/or candidates/legislative

members and/or may be heads/deputy heads of regional governments;

c. Other positions that may cause a conflict of interest with my position

at PT TIMAH (Persero) Tbk.

4. With full responsibility and sincerely exercise oversight over the management

of the Company and avoid any conflict of interest with PT TIMAH (Persero)

Tbk and update this statement annually and I convey to the Corporate

Secretary.

Jakarta, ......... 2014

Name:..

Position: ...........

135

SPECIAL LIST164

OF SHAREHOLD OWNERSHIP OF THE BOARD OF

COMMISSIONERS/DIRECTORS OF PT TIMAH (PERSERO) TBK

1. Shares Ownership of Members of the Board of Commissioners / Directors

Name of Board of Commissioners / Directors

Position

Shares ownership

PT Timah (Persero) Tbk

Other companies

Date Retrieved

Number of Shares

Shares Value

2. Family Ownership of Shares

Name

Family Relationships* with Members of the Board of Commissioners / Directors

Shares ownership

PT Timah (Persero) Tbk

Other companies

Date Retrieved

164

Law Number 40 of 2007 concerning Limited Liability Company Article 50 Paragraph (2), (3),

(4), and (5), Regulation of the Minister of State-Owned Enterprises No. PER-09/MBU/2012 on the

amendment to the Regulation of the Minister of State-Owned Enterprises No. PER-01/MBU/2011

on the Implementation of Good Corporate Governance (GCG) in SOEs Article 22, The Articles of

Association of PT TIMAH (Persero) Tbk Article 18 Paragraph (2) Letter b Point iii

136

Number of Shares

Shares Value

Note: Wife/Husband/Child/ Son or Daughter-in-law

Jakarta,…. 2014

Name:….

Position:…….

137

Attachment III

ACTION PROCEDURES OF THE BOARD OF DIRECTORS REQUIRING

THE APPROVAL OF THE BOARD OF COMMISSIONERS AND / OR

AGM

In conducting transactions, the Company shall observe the procedures for its

implementation, namely:

1. The Board of Directors prepares materials on activities requiring written

responses from the Board of Commissioners and/or the GMS;

2. The Board of Directors sends a draft/proposed material to the Board of

Commissioners and/or AGMS accompanied by analysis of legal aspects and

risks or independent party assessments;

3. The Board of Commissioners reviews the material submitted and if deemed

necessary it may request additional explanation to the Board of Directors and

within a period of at least 14 (fourteen) days after the date of receipt of a letter

from the Board of Directors;

4. Based on the explanation of the Board of Directors (if required) the Board of

Commissioners responds in the form of accepting or rejecting the proposal of

the Board of Directors no later than 14 (fourteen) days after the date of receipt

of the document;

5. If within 45 (forty five) days of receipt of the application or explanation and

documents from the Board of Directors, the Board of Commissioners has not

issued a decision, the Board of Commissioners shall be deemed to approve the

proposal of the Board of Directors;165

165

The Articles of Association of PT TIMAH (Persero) Tbk Article 18 Paragraph (8)

138

6. The Board of Commissioners shall make a written response to the proposed

matter of the Board of Directors to be submitted to the GMS, in the event of

requiring approval of the GMS, with a copy to the Board of Directors no later

than 5 (five) days after reviewing the materials or after receiving additional

explanations submitted by the Board of Directors;

7. The GMS provides a decision on the proposed material submitted by the Board

of Directors after considering the written response of the Board of

Commissioners no later than 7 (seven) days.

139

Attachment IV

Procedure of Admission or Provision of Medium/Long Term Loans

BOARD OF DIRECTORS


GMS

PROCESS

DOCUMENT

REFERENCE

RESULTS

Start

Submit proposal / proposal of acceptance or lending to the Board of

Commissioners together with supporting documents

• Feasibility of Proposals / Proposals

• Credit terms from the creditor (receipt) or the Company (granting)

• Credit ceiling

• Current credit position

• Plan the object of guarantee to be provided (acceptance) or received

(granting)

Provide feedback with accompanying directives and results of risk assessment

No

Response / approval

140

Yes

20% to 50% of the Company's equity

Material Value

Approval letter

Carry out receipts or lending

Reporting the implementation of receipt or lending to the Board of

Commissioners

> 50% of the Company's equity

Request approval of GMS for acceptance or granting of loans

Done

Approval of the GMS

Implementation reports

Yes

Response/Approval

No

• The feasibility of the proposal / proposal is attached with the required

completeness documents

• A copy of the offer letter signed by the Board of Directors

• Credit agreement

• Acceptance or Loan Agreement

• Response from the Board of Commissioners

• Approval letter

141

• Approval of acceptance or loan by the GMS

• Articles of Association of PT Timah (Persero) Tbk Article 18 Paragraph

(7) Letter g, Paragraph (8)

142

Attachment V

Company Binding Procedures As a Guarantor

PROCESS

---

BOARD OF DIRECTORS

Start

Apply to the Board of Commissioners regarding the Company's binding as a

guarantor

• List of other company's assets to be pledged

• List of assets that are being pledged

• Selection Result of Creditor candidate

• Appraisal Results Creditor

Selection of creditor candidates

Approval of the following approval of Creditor Candidate and other documents

---


Respond to the Company's binding plan as a guarantor accompanied by a

directive and result of risk assessment

No

Response

Yes

Provide a response / approval of the Company's binding within the specified time

143

No

Response / Agreement

Yes

Repair response

---

Submit a proposal and complete the Company's binding documents as guarantor

to the Board of Commissioners


Implemen the Company's binding as a Guarantor

Report the Company's binding to the Board of Commissioners

Material Value


Request approval from the GMS for the Company's binding as a guarantor

Done

---

Approval letter

Corporate Engagement Report

---

GMS

Approval of the GMS

Yes

Response / Approval

No

---

144

DOCUMENT

REFERENCE

RESULTS

• Approval Approval of the Company's binding as a guarantor

• List of assets to be pledged

• List of assets that are being pledged

• Result of selection of creditor candidates

• Appraisal results creditor

• Approval of the Company's binding license as a guarantor

---

• Response to the proposed binding of the Company as a guarantor

accompanied by directives and results of risk assessment

• Letter of approval of the Company's binding as a guarantor

---

• Approval by the GMS

---

Articles of Association of PT Timah (Persero) Tbk Article 18 Paragraph (7) Letter

f

145

Attachment VI:

Procedures for Elimination of Accounts Receivable Loss or Dead Inventory

PROCESS

---

BOARD OF DIRECTORS

Start

Proposed proposal for Elimination of Bad Debts or Dead Inventory

Proposed proposal for Elimination of Bad Debts or Dead Inventory


Material Value

---


Provide response / approval on proposal for write-off of bad debts and inventory

of dead goods within the stipulated time

No

Response / Agreement

Yes

Letter of Approval of write-off of bad debts or inventory of dead goods

---

Carry out the write-off of bad debts or inventory of dead goods

Report the implementation of write-off of bad debts or inventory of dead goods to

the Board of Commissioners

146

Done


Request approval to the GMS for write-off of bad debts or inventory of dead

goods

Approval of the GMS

Yes

Response/Agreement

No

Implementation Report

---

DOCUMENT

REFERENCE

RESULTS

• List of bad debts or inventory of dying goods and Monitoring of Bad

Debts or inventory of goods for the year

• Letter of Application for Removal of Receivables

---

• Results of the Board of Commissioners Review on the application for

write-off of bad debts or inventory of dead goods

• Letter of approval for write-off of bad debts or inventory of dead goods

---

• Approval of write-off of bad debts or inventory of dead goods by the GMS

---

147


l, Paragraph (8)

148

Attachment VII

Business Cooperation Procedures

PROCESS

---

BOARD OF DIRECTORS

Start

Apply business cooperation plan with material value

Approve the feasibility of proposals / proposals and review results to the Board of

Commissioners on business cooperation plans to obtain approval responses

• Proposal Feasibility

• Due Diligence Result of Business Partner Candidate

• Draft Agreement (MoU)

• And others

20% to 50% of the Company's Equity

Material Value

---


Respond to the Board of Directors' plan to conduct business cooperation

Response / Approval

Yes

No

149

Review the proposal and other supporting documents within the specified time

period

Response to improvement

Response / approval

Yes

No

Approval letter

---

Carry out business cooperation


Reporting the implementation of cooperation to the Board of Commissioners

Request approval from GMS for business cooperation

Done

---

GMS

Approval of the GMS

Yes

Response / Approval

No

Implementation Report

---

DOCUMENT

REFERENCE

RESULTS

150

• Application Letter for Business Cooperation Permit

• Business Cooperation Proposal

• Selection results of independent appraisal agencies

• Assessment results from independent appraisal agencies

• MoU with Business Partner

• Implementation Report to the Board of Commissioners

---

• The results of the Board of Commissioners reviewing the agreement

• Letter of approval of business cooperation

---

• Approval of business cooperation by GMS

---


e, Paragraph (8)

***