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Attachment to the Joint Decision Letter of
the Board of Commissioners & the Board of Directors
KEP/001 /DK
SKB. No. Dated January 3, 2001
KP/001 /DIR
Corporate Governance Handbook
Corporate Governance
Chapter I
Introduction and Basic Principles
Company in the social context and the definition of
Corporate Governance
Corporate Governance is a process, structure and
cultures employed to direct and manage the Company's
business and social interests in order to improve the
business welfare of the Company and accountability in
the Company, with the ultimate goal of creating values
to the Shareholders in the long run, and at the same
time observing interests of other stakeholders.
The Company has an important role in the society and
the state. In carrying out its function as one of the
pillars of society and economy of a country, the Company
shall have power to ensure its long-term existence. The
Company must seek a balance between the interests of the
Shareholders, and the interest of other stakeholders,
in order that in the long-term the two interests will
not be conflicting with each other.
The Company's positive performance is the main factor
that ensures the continuity of the Company and enhances
Halaman : 1
Attachment to the Joint Decision Letter of
the Board of Commissioners & the Board of Directors
KEP/001 /DK
SKB. No. Dated January 3, 2001
KP/001 /DIR
Corporate Governance Handbook
the economic value of the Company. In its efforts to
create superior performance, the Company must take
various forms of risks. With respect to these risks, the
Company must work within the framework of law and business
ethics in which the Company operates and also the internal
code of conduct of the Company.
In its implementation, the Corporate Governance must
ensure the Company's ability to create a superior per-
formance and to increase economic value to the Share-
holders and stakeholders, and at the same time ensure
the Company operates in compliance with the law, business
ethics and internal code of conduct of the Company in
disciplined manner.
Basic Principles of the Corporate Governance
1. Accountability
Company and its management must work with high
The
accountability. The Company and its management must
be held responsible for making sure that all of
their actions in compliance with the law, business
ethics and also for making sure that all of their
measures are carried out in the interests of the
Shareholders and stakeholders of the Company.
2. Responsibility
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Attachment to the Joint Decision Letter of
the Board of Commissioners & the Board of Directors
KEP/001 /DK
SKB. No. Dated January 3, 2001
KP/001 /DIR
Corporate Governance Handbook
The Company and its management must act under the
prudential principles and being aware of all the
risks and negative implications that may be caused
by their actions. The Company and its management
must always take into consideration interests of
all stakeholders in carrying out their functions and
establishing the policies or making the decisions.
3. Fairness
The Company and its management must act with due
observance of the principle of fairness to all
parties. All the Company's policies and decisions
shall be taken by considering the principle of
fairness to the related parties, either directly
or indirectly.
4. Transparency
The Company and its management must ensure that all
policy-setting and decision-making has been carried
out transparently and all stakeholders have access
to balanced and accurate information.
5. Discipline
The Company and its management must ensure that the
Company is managed properly in accordance with the
basic principles of Good Corporate Governance
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Attachment to the Joint Decision Letter of
the Board of Commissioners & the Board of Directors
KEP/001 /DK
SKB. No. Dated January 3, 2001
KP/001 /DIR
Corporate Governance Handbook
especially the concern and the involvement of the
management in terms of assets maintenance, return of
funds to the shareholders, protection of interest of
the stakeholders, such as employees of the suppliers,
creditors, etc. as well as of the shareholders.
6. Independence
The Company and its management must ensure that the
Company is independent in making decisions because
it has a good supervisory mechanism, i.e. with the
existance of Indpenden Commissioner and committees
under the Board of Commissioners who are responsible
for assisting the Board of Commissioners in super-
vising the Board of Directors acts and measures,
such as the Audit Committee.
7. Social Awareness
The Company and its management must have a general
policy that emphasizes the attitude of social aware-
ness, such as there are no discriminative policies
on the basis of gender, race, religion etc. as
well as the care about the environmental conser-
vation and the poor.
Corporate Governance is a code of conduct for the Company's
stakeholders, in particular the Board of Directors, the
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