Pt Pertamina Financial Statement - PDF

					      BOARD OF DIRECTORS AND BOARD OF COMMISSIONERS JOINT
               AGREEMENT TO IMPLEMENT THE BOARD MANUAL



This Board Manual is one of the Good Corporate Governance soft structures
specifying the Code of the Corporate Governance and refers to the Company’s
Article of Association.

The Board Manual which is a Statement of the Board of Directors’ and the Board of
Commissioners’ Joint Agreement and is intended:

1. To be used as a reference / guideline relating to the main duty and function of
   each component;

2. To enhance the quality and effectivity of the inter components work relations;

3. To achieve transparency, accountability, responsibility, interdepency and
   fairness.

It is expected that the implementation of this Board Manual the working relationship
of the Company’s components to achieve the determined Vision and Mission of the
Company will go on harmoniously based on the principles of Good Corporate
Governance.

                              Jakarta, March 17, 2008

                          PT. PERTAMINA (PERSERO)



      ENDRIARTONO SUTARTO                            ARI H. SOEMARNO

    PRESIDENT COMMISSIONER                         PRESIDENT DIRECTOR




                                                                                     1
Table of Content

Chapter I Introduction

1.1 Aim and Purpose

1.2 Coverage

1.3 References



Chapter II Board of Commissioners

2.1. Board of Commissioners’ Duty, authority and Obligation

2.2. Board of Commissioners’ Work Distribution

2.3. Board of Commissioners’ meeting

2.4. Board of Commissioners’ Supporting Elements



Chapter III Board of Directors

3.1 Board of Directors’ Duty, authority and Obligation

3.2 Board of Directors’ Work Distribution

3.3 Board of Directors’ Meeting

3.4 Board of Directors’ Supporting Elements



Chapter IV Working Relation between the Board of Directors and the Board
of Commissioners.

4.1. Formal Meeting

4.2. Informal Meeting

4.3. Formal Communication

4.4. Informal Communication




                                                                       2
Chapter V Company’s Inter Components Activity

5.1. Shareholders’ Meeting

5.2. Act of Board of Directors Requiring Board of Commissioners’ written pproval

5.3. Board of Commissioners’ Authority



Chapter I INTRODUCTION.

1.1 Aims and Purposes.

   Board Manual is a text outlining the Board of Directors organization structure
   and that of the Board of Commissioners and their functional relations.

   This Board Manual is one of the Good Corporate Governance (GCG) soft-
   structures specifying the Code of Corporate Governance that refers to the
   Company Article of Association.

   The Board Manual which is a Statement of the Board of Directors’ and the
   Board of Commissioners’ Joint Agreement and is intended:

   1. As a reference / guideline for each component in performing its duty and
      functions,

   2. To enhance the quality and effectivity of working relations,

   3. To achieve the transparency, accountability, responsibility, interdepency
      and fairness.

1.2 Coverage

     This Board Manual regulates the working relations between the Board of
     Commissioners and the Board Directors within PT PERTAMINA
     (PERSERO) with reference to the Company Article of Association and the
     prevailing law and regulation.




                                                                                    3
   References

      1. Law No. 40 of 2007 on Limited Liability Corporation;

      2. Law No. 19 of 2003 on State Owned Enterprise;

      3. Government Regulation No. 31 of 2003 on Chance of Status of State
         Owned Oil and Gas Mining Enterprise become Limited Liability
         Company

      4. Government Regulation No. 45 of 2005 on Setting up, Management,
         Controlling and Dissolution of State Owned Enterprise;

      5. Decision Letter of State Minister for State Owned Enterprise No. Kep.-
         117/M-MBU/2002 on Implementation of Good Corporate Governance
         in State Owned Enterprise;

      6. Article of Association of PERTAMINA (PERSERO);

      7. Text of Code of Corporate Governance



Chapter II Board of Commissioners.

2.1. Duty, Authority, and Obligation of the Board of Commissioners’

    The duty of the Board of Commissioners is to supervise and advise the
    Board of Directors in managing the Company and in carrying out the
    Company’s Long Range Plan (RJPP), the Work Program and Budget
    (RKAP), in complying with the provisions of the Article of Association, the
    Shareholders’ meeting (RUPS), and the prevailing law and regulation.1

    In order to perform its duty, the Board of Commissioners has the rights: 2

    a. to look at the books, the letters and other documents; to verify the cash
       and other securities, and the Company’s assets;

    b, to have access to the Company ’s premise;

    c. to inquire the Board of Directors and or other officials relating to any
       issues on the management of Company;


                                                                                   4
d. to know all Company’s policies and Company’s actions made and to be
     made by the Board of Directors;

e. to ask the Board of Directors and its selected officials to present in the
     Board of Commissioners’ meeting;

f. to present at and provide comments in the Board of Directors’ meeting;
     and

g. With majority votes to suspense one or more members of the Board of
     Directors for doing actions contradict with the Company’s Article of
     Association or if there is an indication for doing thing incurring loss to the
     Company or negligence of obligations or for cause.3 Suspension must
     be notified in writing to the person being suspended and to the
     Shareholders stating the underlying reasons of the suspension. 57

In case the position in the Board of Director become vacant and the
successor is not yet available or is not taking office, the Board of
Commissioners has the authority to appoint any other member of the Board
of Directors to carry out the duty of the vacant position with the same
authority and to appoint other party to represent the Company in case there
is a conflict of interest between the Company and all members of the Board
of Directors.4

In performing its supervisory function the Board of Commissioners has the
obligation:

1.    To take and file minute of the Board of Commissioners’ meeting;5

2.    To report their shares and those of their family in the Company and /
      or the other Company 6;

3.    To report to the Shareholders’ meeting its supervisory activity carried
      out during the previous fiscal year; 7

4.    To establish the value limit of legal acts of the Board of Directors that
      requires written approval from the Board of Commissioners. 8



                                                                                  5
    5.   To decide the Board of Directors’ proposed legal acts requiring written
         approval9;

    6.   To write comment and suggestion for the Board of Directors’ proposed
         legal acts requiring the approval of Shareholders’ meeting.10

    7.   To advise the Board of Directors and give opinion or suggestion to the
         Shareholders’ meeting concerning the preparation and the execution of
         the Work Program & Budget that presents the annual execution of the
         Company’s Long Range Plan to comply with the provision of the Article
         of Association, the Shareholders’ meeting and the prevailing law and
         regulation.11



2.2 Board of Commissioners’ Work Distribution

    In performing its supervisory function, the Board of Commissioners has to
    establish an Audit Committee and other Committees determined by the
    Minister12. If required, the Board of Commissioner may acquire expert
    assistance for a certain period on Company’s expense. The Board of
    Commissioners determines the arrangement of work distribution among its
    members and may have a Secretary on Company’s expense.14.



2.3 Board of Commissioners’ Meeting

    2.3.1 Definition

    Board of Commissioners’ meeting is a meeting arranged by the Board of
    Commissioners at least once a month to discuss matters relating to its duty
    and responsibility.15

    2.3.2 Board of Commissioners’ Meeting

    Board of Commissioners’ meeting may be arranged at anytime as required
    by the Chief Commissioner or proposed by at least one third (1/3) of the




                                                                                   6
    members or requested in writing by the Shareholder having majority
    shares.16

    Board of Commissioners’ meeting is presented by its members and assisted
    by the Secretary to take minute. If necessary, the meeting may be
    presented by the member of the Board of Directors, the Corporate
    Secretary, the Committee or other invitees.



2.4. Board of Commissioners’ Supporting Element

    2.4.1 Audit Committee17

    The Audit Committee assists the Board of Commissioners to supervise the
    Board of Directors in managing the Company based on the principles Good
    Corporate Governance’s. The Audit Committee is independent, reports
    directly to the Board of Commissioners and ensures that:

    1. Financial statement and information released to the public are of high
          quality, reliable and is presented transparently and timely.

    2. Company has possessed an adequate internal control able to protect its
          assets;

    3. Company works effectively and efficiently and complies with prevailing
          law and regulation.



    Function of the Audit Committee is to assists the Board of Commissioners in
    supervising and advising the Board of Directors / Company Management
    by:

    1. Evaluating the plan and the execution of the activity and the result of the
          audit conducted by the internal Control Unit and the external Auditor to
          prevent unacceptable performances and reports.

    2. Recommending improvement of the Company management control
          system and its implementation.


                                                                                     7
3. Ensuring the availability of satisfactory information reviewing procedure
   on the publications published by the Company such as brochures,
   periodic and other financial statements and the forecasting submitted to
   the Shareholders.

4. Identifying the specific matter requiring the attention of the Board of
   Commissioners.

5. Performing other duty delegated by the Board of Commissioners as long
   as it is within the scope of the Board of Commissioner’s duty and
   obligation based on the prevailing law and regulation.

In addition to the above duty, the Audit Committee assists the Board of
Commissioners on matters relating to the:

1. Company’s Financial Statement;

2. Company’s and Partners’ Work Program and Budget and that of
Community Development;

3. Company’s Accounting Audit;

4. Community Complaints;

5. Fuel Subsidy/PSO

6. Company’s Payable

7. Company’s Receivable;

8. Subsidiary’s Performance

9. Writing off and releasing of Asset;

10. Purchasing/releasing of Securities and engaging in Participating
   Interest, etc.

Further information of Audit Committee may be seen in the Charter of Audit
Committee of PT PERTAMINA (PERSERO).




                                                                               8
2.4.2 Investment and Business Risk Committee18

The Investment and Business Risk Committee assists the Board of
Commissioner in monitoring the Board of Directors’ policies in managing the
Company and giving advice to the Board of Director relating to the
executing of the Company’s Long Range Plan and Word Program & Budget
based on the provisions of the Article of Association, the decision of the
Shareholders’ meeting and the prevailing law and regulation particularly the
one concerned with the investment and business risk.

The Missions of the Investment and Business Risk Committee are:

1. To realize sound supervision on the Company’s investment and business
   risks policy;

2. To produce accurate recommendations to enhance the quality of the
   Company investment and business risk management;

3. To convince the Shareholders that the Company manages the investment
   and the business risk properly.



The investment Committee and Business Risk Committee has the duty:

1. To evaluate the execution and the level of risk of the Company’s Long
   Range Plan and the Company’s Work Program & Budget;

2. To monitor the execution and analyze the result of performance of the
   Company’s Long Range Plan and Work Program & Budget;

3. To evaluate the Board of Directors’ proposed investment plan and risk
   level requiring the Board of Commissioners written response or
   approval;

4. To monitor the execution and analyze the result of investment;

5. To study the effectivity of investment policy and the management of
   Company from the aspect of risk management as input for the Board of
   Commissioner’s opinion.


                                                                             9
6. To provide Board of Commissioner with references and information
   relating to the Investment and Business Risk,

7. To give input and recommendation to the Board of Directors’ report in
   managing the Company,

8. To prepare annual work program of the Investment and Business Risk
   Committee’s and relate it to the Company’s similar program;

9. To perform other duty relating to the Investment and Business Risk as
   delegated by the Board of Commissioner;

10. To report the results of the Committee’s performance to the Board of
     Commissioners.



In addition to the above, the Investment and Business Risk Committee
assists the Board of Commissioners with matters relating to the:

1. Investment,

2. Establishment of Subsidiary,

3. Company’s Long Range Plan,

4. Operation Cooperation Contract,

5. Oil and Gas Work Area,

6. Asset Management,

7. Asset surety,

8. Upstream Business Activity,

9. Downstream Business Activity,

Further information of the Investment and Business Risk Committee may be
seen in the Charter of Investment and Business Risk Committee of PT
PERTAMINA (PERSERO).




                                                                           10
2.4.3. Remuneration and Nomination Committee19

The Remuneration and Nomination Committee assists the Board of
Commissioners in developing and controlling Company’s Remuneration and
Nomination system according the prevailing law and regulation. The duty
and function of the Remuneration and Nomination Committee are:

1. To prepare the PERTAMINA’S Board of Directors and Board of the
   Commissioners Salary and Allowance System (remuneration) for
   approval of the Board of Commissioners and Shareholders.

2. To evaluate every year the remuneration competitive level of the Board
   of Directors and the Board of Commissioners and recommend
   adjustment for approval of the Board of Commissioners’ and the
   Shareholders.

3. To review and evaluate the remuneration and the post employment
   benefit system of the employee of PT PERTAMINA (PERSERO) to
   meet with the principles of the Good Corporate Governance and submit
   the results to the Board of Directors through the Board of
   Commissioners.

4. To study and evaluate the plan and proposal for laying off the
   employees of PT PERTAMINA (PERSERO) by adopting the principles of
   Good Corporate Governance in order to maintain a sound Industrial
   Relations (industrial peace);

5. To study and evaluate the Share Ownership Plan/Stock Option of the
   Board of Directors and the Board of Commissioners and the employees.

6. To study and recommend salary and benefit system for the
   Commissariat’s employees and Honorarium of the Experts.

7. To study and give opinion on the proposed nomination of Subsidiary’s
   Board of Directors and the appointment of Incumbent two levels below
   the Board of Directors by the Board of Directors for written approval of
   the Board of Commissioners.


                                                                              11
In addition to doing the above, the Remuneration and Nomination
Committee assists the Board of Commissioners with matters relating to the:

1. Salary and benefit system of the Board of Directors and the Board of
      Commissioners of PT PERTAMINA (PERSERO)

2. Establishment of the Criteria and Election Procedure in selecting
      candidate for the Board of Directors.

3. Nomination of Subsidiary’s Board of Commissioner and Board of
      Directors and appointment of PERTAMINA Incumbent two levels below
      the Board of Directors by the Board of Directors.

4. Human Resources aspects/problems such as the remuneration and the
      retirement system, the Industrial relations problems and the compliance
      with the principles of Good Corporate Governance by the employees of
      PT PERTAMINA (PERSERO).

5. Salary and benefit system of the Commissariat’s employees and Experts
      honorarium.

Further information of the Remuneration and Nomination Committee may be
seen in its related Charter.



2.4.4. Good Corporate Governance Committee20

The Good Corporate Governance Committee is established to assist the
Board of Commissioner in monitoring the implementation of Good Corporate
Governance. The mission of the Good Corporate Governance Committee
is:

1. To assist the Board of Commissioners to develop and supervise the
      implementation of the principles of Good Corporate Governance an
      effort to enhance the Shareholders’ value.




                                                                            12
2. To recommend improvement of the implementation of the Good
   Corporate Governance according to the principles of Good Corporate
   Governance in the energy and petrochemical industries.

3. To enhance the Stakeholders Confidence that the Company is soundly
   and professionally managed and is trustable.

In performing its duty the Good Corporate Governance Committee:

1. Supports the periodic assessment of the practices of Good Corporate
   Governance within the Company in implementing the principles of Good
   Corporate Governance.

2. Recommends improvement of the system and completeness of Good
   Corporate Governance and monitor its implementation, particularly:

   •    The Code of Corporate Governance

   •    The Code of Conduct

   •    The Statement of Corporate Intent (SCI) and the Management
        Contract;

   •    The Board Manual.

3. Evaluates the implementation the Good Corporate Governance by the
   Main and Supporting Apparatus and gives input for improvement and
   implementation efforts.

4. Together with the related functions prepares the annual Good Corporate
   Governance implementation work program and report as part of the
   Company’s Annual Report.

5. Observes the best practices of the Good Corporate Governance
   implementation in other companies.

6. Other duty delegated by implementation Board of Commissioners.




                                                                         13
In addition to the above, according to the work distribution of the Board of
Commissioners, the Good Corporate Governance Committee assists the
Board of Commissioners with matters relating to:

1. The monitoring of the effectivity and guidance of the Good Corporate
      Governance implementation;

2. The Company Organization;

3. The Law and Regulation;

4. The Information Technology;

5. The SAP Implementation;

Further information of the Good Corporate Governance Committee may be
seen in its related Charter.



2.4.5. Secretariat of Board of Commissioners

The Secretariat of the Board of Commissioners is established by and
responsible to the Board of Commissioners. The Board of Commissioners
may appoint a Secretary to assist the board with the secretarial works such
as:

1. Carry out the secretarial administration of the Secretariat ;

2. Prepare the Board of Commissioners’ meeting and the Board of
      Commissioners’ joint meeting with, the Shareholders, the Board of
      Directors and the other related stakeholders;

3. Supply the Board of Commissioners and Commissariat’s Committees
      with data / information relating to:

      •   the follow up monitoring of the Board of Commissioners’ decision,
          recommendation and direction;

      •   the texts and reports relating to the Board of Directors’ activity in
          managing the Company ;


                                                                                  14
        •    the administrative support and monitoring of matters requiring the
            Board of Commissioners’ approval or recommendation relating to the
            Board of Directors’ activity in managing the Company.

     4. Compile the technical data originated from the Committees within the
        Secretariat’s section and from the Experts for the interest of Board of
        Commissioner.



Chapter III Board of Directors

3.1. Duty, Authority and Obligation of the Board of Directors

     The main duty of the Board of Directors is:

1. To manage the Company and act as Director for the Company’s interest and
   objective and represent the Company in and out of Court of Law;21

2. To manage and maintain the Company’s assets;22

3. To represent the Company both in and out of Court of Law, to take every and
courteous acts in managing and possessing of Company ’s assets and to bind
the Company with other parties or otherwise within the limitations as stated in
sections 8, 9 and 11 of this chapter;23



In performing the mentioned main duty, the Board of Directors, collegially through
the Board of Directors’ meeting has the authority:

1. To determine the Company ’s vision, mission and strategy;

2. To determine the basic policy of the corporate, the finance, the organization
   and human resources strategy and the Company’s information and
   communication technological system (enterprise ICT systems);



3. To propose the steps of managing the Company that require written approval
   of and or response from the Board of Commissioners and approval of the


                                                                                   15
   Shareholders’ meeting and to carry them out according to the provision of the
   Article of Association and the approvals of Board of Commissioners and
   Shareholders’ meeting;24

4. To make effort to achieve the financial, operational and administrative
   indicator target as an evaluation to measure the Company’s health based on
   the performance categories as determined in the Shareholders’ meeting in
   approving the Work Program and Budget.

5. To determine the performance target and evaluation of the Company, the
   Directorates, the Operation and Business units through the Company’s
   organizational mechanism and that of the Subsidiary including the strategic
   plan and dividend distribution policy through the mechanism of and according
   to the applicable guidelines to the subsidiary.

6. To determine the proposal for and the revision of the Company’s Long Range
   Plan and the Work Program & Budget and according to the applicable
   regulation.

7. To approve the investment project according to the Board of Directors’
   authorization and monitor and correct its execution.

8. To determine the cooperation or contracts or use / procurement of asset that
   exceeds the value authorized to the Director as regulated in the financial
   policy,

9. To determine the financial policy that requires periodic evaluation from the
   Board of Directors such as the Cash Management, the Expenditure and the
   Payment Authority.

10. To determine the organization structure and Company’s official up to certain
   level through the Board of Directors’ decision.




                                                                                  16
3.2 Structure and Work Distribution of the Board of Directors

3.2.1. President Director

1. Directs and controls the Company’s Policy, Vision, Mission and Strategy.

2. Directs the Board of Directors’ members to carry out the decision of the board.

3.Cordinates the solving of the Company external problems, planning policy,
  controlling, achievement of Company’s long range target, auditing policy,
  cultural enhancement, Company’s image and Good Corporate Governance.

4. Arranges and presides the periodic Board of Directors’ meeting as determined
  or other meetings whenever necessary as proposed by the Board of Directors.


5. Approves all Board of Directors’ decisions

6. Represents the Company both in and out of Court of Law as determined in the
   Board of Directors’ meeting;

7. Assigns other member of the Board of Directors to act on Board’s behalf.

8. Determines the Board of Directors’ decision in case the number of agree and
   not agree vote in the Board of Directors’ meeting is equal.

9. Selects and gives every information to stakeholders about the Company.

10. In the absence of President Director, Deputy President Director will act on
   behalf of the President Director.



3.2.2. Deputy President Director

1. Directs, controls and coordinates the Upstream, Processing, and Marketing
   and Trade Directorates to achieve the Company’s performance target and
   coordinates the solving of Company’s internal operational management
   problems.




                                                                                  17
2. Arranges and presides the periodic operational coordination meeting as an
   effort to improve the working performance and reports the result to all
   members of the Board of Directors.

3. Assists the President Director in solving the Company problems and other
   matters according to the Board of Directors’ decision.

4. performs the duty and authority of President Director in managing the
   Company during his/her absence.



3.2.3. Upstream Director

1. Manages and optimizes the effort to increase the oil and natural gas
   resources and reserves, oil and natural gas production, transportation of
   crude oil and gas, selling of crude oil and piped gas, storage of crude oil,
   expansion of oil and gas and geothermal energy business as own operation
   activity or cooperation contract according to the strategy determined by the
   Board of Directors.

2. Directs and controls the upstream business activity including the effectivity and
   efficiency of supporting business and functions of the support management.

3. Directs and controls the implementation of the Board of Directors’ policy and
   decision in carrying out the upstream business activity.

4. Leads and directs the business development according to the corporate
   strategic plan.

5. Makes business decisions within the scope of his/her the authority.

6. Directs and determines the policy on the organization, human resources,
   finance, safety-health-environment, information technology and quality
   management in line with the corporate policy.

7. Prioritizes the investment opportunities and determines the capital budget and
   the operational activity according to the Board of Directors’ approval.




                                                                                   18
8. Coordinates and controls the execution of all projects under his / her authority
   within the upstream business operations.

9. Directs the employee development in line with the applicable guideline.



3.2.4 Processing Director

1. Manages and optimizes the procurement and transportation of crude oil;
   processing of crude oil26 and gas to become fuel and non-fuel products,
   storage of crude oil and oil and gas products, development of oil and gas and
   related business activity performed through own operational activity or
   cooperation contract in line with the strategy determined by the Board of
   Directors.

2. Directs and controls the processing business activity and the effectivity and
   efficiency of the supports business and functions.

3. Leads and supervises the execution of the policy and decision of the Board of
   Directors in the processing business activity.

4. Leads and directs business development in line with the corporate strategic
   plan.

5. Makes business decision within the scope of the Authority.

6. Determines the organization, the human resources, the finance, the safety-
   health-environment, the information technology and quality management
   policies in line with corporate policies.

7. Prioritizes the investment opportunities and determines the capital budget and
   the operational activity according to the approval of the Board of Directors.

8. Coordinates and controls the execution of all projects under his/her authority
   within the upstream business operation

9. Direct the employee development activity according to the prevailing guideline.




                                                                                    19
3.2.5. Marketing and Trade Director.

1. Manages and optimizes the efforts in the marketing and trade and distribution
   of fuel and non fuel products including the procurement and transportation of
   fuel, storage of fuel and non fuel, expansion of marketing and trade and
   related business such as shipping, performed through own operational activity
   or cooperation contract in line with the strategy determined by the Board of
   Directors.

2. Directs and controls the marketing and trade business activity including the
   effectivity and efficiency of the support business and functions.

3. Directs and supervises the implementation the Board of Directors policy and
   decision in the marketing and trade business activity.

4. Directs and directs the development of business according to the corporate
   strategic plan.

5. Makes decision on the Marketing and Trade Directorate business decision
   within the scope of the authority.

6. Directs and decides the organization, the human resources, finance, the
   safety-health-environment protection, and the information technology and
   the quality management policy in line with the corporate policy.

7. Prioritizes the investment opportunity, determines the capital budget and the
   marketing and trade business operations activity according to the Board of
   Directors’ approval.

8. Coordinates and controls the execution of all projects in his/her authority within
   the marketing and trade business operations.

9. Directs employee development activity according to the prevailing guideline.




                                                                                  20
3.2.6. Finance Director.

1. Leads and controls the issuance of policy, management and reporting of
   corporate wise finance covering the functional activity of the comptroller, risk
   management, treasury and financing, subsidiary’s portfolio, upstream finance,
   processing and trade finance in order to enhance the Company’s
   performance and financial level.

2. Performs and controls all financial policies in line with the Board of Directors’
   decision and makes the financial function of the Central Corporate,
   Directorates and Business Group and Unit effective and efficient.

3. Determines and coordinates the Work Program and Budget, the accounting
   control on cost of revenue and profit and the corporate wise investment level.

4. Consolidates, controls and supervises the preparation and execution of the
   Company’s cash-flow based on the Work Program and Budget as part of the
   efficiency enhancement effort.

5. Directs and improves the Company’s finance administration covering the
   budget policy, treasury and accounting, risk management and investment and
   financing.

6. Manages the financial investment portfolio and financial decision to create
   maximal added value and achieve the Company’s objective in line with the
   decision of the Board of Directors.

7. Periodically, reviews and improves the financial policies and procedures by
   establishing the Company’s financial administration system and procedure in
   line with the technological development, changes in economy and regulatory
   and manages the other financial related general issues.

7. Direct the development of employees in line with the prevailing guideline.




                                                                                       21
3.2.7 General Affairs and Human Resources Director.

1. Manages and develops the corporate policy, management of service and
  facility covering the organizational policy and system, human resources,
  safety-health-environment protection (SHE), quality management and
  management of business supports and security and coordinates of company’s
  transformation in line with the strategy determined by the Board of Directors.

2. Controls the General Affairs Directorate and human resources activity and
   make the services and general affairs functions efficient and effective.

3. Directs the preparation of corporate policy in line with the corporate strategic
   plan.

4. Makes decision on the corporate human resources and organization according
   to the decision and policy of the Board of Directors’ and the Company’s
   organization steering committee.

5. Makes business decisions within the scope of his/her authority

6. Leads and directs the development of information technology within the IT
   enterprise wide system to support business innovation. Coordinates the
   supervision of the General Affairs Directorate’s and Human Resources’
   projects

7. Leads and directs the Company reorganization and transformation activity and
   development of employees according to applicable guideline.



3.3. Board of Directors’Meeting27

3.3.1 Definition

Board of Directors’ meeting is a meeting held the Board of Directors within the
frame work of managing the Company.




                                                                                      22
3.3.2 The Holding of Board of Directors’ meeting

The Board of Directors calls the Board meeting any time is deemed necessary
by one or more of the Board of Director’s members or on a written request from
one of more Board of Commissioners’ members or from the Shareholders
possessing majority shares by mentioning matters to be discussed.28

3.3.3. Board of Directors’ Meeting Invitation

The Invitation to the Board of Directors’ meeting is made in writing by the
member of the board having the rights to represent the Company and to be
submitted within at least 3 (three) days before the meeting time or on a shorter
time in emergency situation.29

The meeting Invitation is not required whenever all members present in the
meeting.30

Mechanism of the Board of Directors’ meeting if presented by Board of
Commissioners will be described further in the Chapter IV of this Manual.



3.4. Supporting Elements.

3.4.1. Corporate Secretary31

1. Serves as liaison between Board of Directors, and Board of Commissioner,
   Shareholders, Government or related Agency, community and other
   stakeholders.

2. Carries out the secretarial administration for the Board of Directors and the
   Company including the handling and safekeeping of the Company’s related
   documents such as the Shareholders’, the Board of Directors’ and the Joint
   meeting minutes, the Special Lists and any other documents.

3. Carries out the multimedia communication strategy including the coordination
   of the publishing of the Annual Report, the Company’s Profile and the
   corporate brochures.




                                                                                   23
4. Compiles all important Company related information from any working-units
   and determine the criteria of information that may be released to the
   stakeholders.

5. Represents the Board of Directors to deal with the internal or external
   Company parties according to given assignment and guidance.

6. Coordinates the Good Corporate Governance development and enforcement
   practices and ensures that the Company’s Annual Report contains the GOOD
   CORPORATE GOVERNANCE implementation.



3.4.2. Internal Control Unit (SPI).32

1. Prepares and carries out the strategy, policy and plan of the internal control
   activity.

2. Audits the operation and compliance practices in all Company activity to
   strengthen the effectivity of internal control, risk management and GOOD
   CORPORATE GOVERNANCE implementation.

3. Conducts special audit to disclose the cases bearing the indications of
   misusing of authority, embezzlement, corruption and fraud.

4. Provides the consultancy service to all the lines of management regarding the
   effort to enhance the effectivity of the internal control, the efficiency of the risk
   management and other activity related to the enhancement of Company’s
   performance.




                                                                                      24
Chapter IV Work Relationship between Board of Commissioners and Board
of Directors

4.1. Formal Meeting

Formal meeting is a meeting held by the Board of Commissioners or the Board of
Directors. The Board of Commissioners or the Board of Directors may call
Formal meeting.



4.1.1. Presence of the Board of Directors in the Board of Commissioners’
Meeting.

The Board of Commissioners holds the meeting at least once a month and may
invite the Board of Directors to present.33

The present of the Board of Directors in the meeting is whenever the Board of
Commissioner invite one of its members in the meeting to give the explanation,
input or for a discussion.



Procedure:34

1. The Board of Commissioners sends invitation to the Board of Directors at
    least five (5) days before the meeting starts. The Invitation may be by letter /
    memorandum or facsimile and the meeting agenda is attached accordingly.

2. Based on the agenda of the meeting, the Board of Directors determines its
    member/s to present in the meeting and confirms the Board of
    Commissioners at least two (2) work days before the meeting times.

3. The Board of Commissioners holds the meeting and presented by the Board
    of Directors. The Board of Commissioners’ Secretary takes minute and
    distributes same to the meeting participants.




                                                                                  25
4.1.2. Presence of Board of Commissioners in Board of Directors’ Meeting.

• The Presence of the Board of Commissioners in the Board of Director’s
  meeting by invitation of the Board of Directors

 The Board of Directors may invite the Board of Commissioners or one of its
  members to attend the meeting to give explanations, input or discuss matters
  important for the Board of Directors to carry out its function.

 The Member of the Board of Commissioners, either collectively or individually
  has the rights to present in the Board of Directors’ meeting any time to give
  his/her opinions on matters being discussed.35



  Procedure:

  1. The Board of Directors sends the invitation to the Board of Commissioners
      of at least five (5) days before the meeting time. The Invitation may be by
      letter / memorandum or facsimile and by attaching the meeting agenda
      accordingly.

  2. Based on the agenda of the meeting, the Board of Commissioners
      determines its member/s to present in the meeting and confirms the Board
      of Directors at least two (2) work days before the meeting time.

  3. The Board of Directors holds the meeting presented by Board of
      Commissioners. The Corporate Secretary takes minute and distributes
      same to the meeting participants.



• The Presence of the Board of Commissioners in the of Directors’
  meeting on its own request

 The Board of Directors, by mentioning the matters to be discussed may call a
  meeting any time whenever is deemed necessary by one or more of its
  members or at written request from one or more members of the Board of
  Commissioners or the Shareholders possessing the majority share.36


                                                                                  26
The presence of the Board of Commissioners in the Board of Directors’ meeting
can be at the request of Board of Commissioner or one of its members to give
opinions on the issues being discussed.



Procedure:

1. The Board of Commissioners requests the Board of Director to present in its
   meeting.

2. The Board of Directors holds the board meeting, attended by the Board of
   Commissioners, take minutes and distribute same to the meeting participants.



4.1.3 The Board of Commissioners and the Board of Directors Joint
Meeting

The Joint meeting is held whenever is deemed necessary by anyone party and if
it is deemed necessary, internal or external informant may be invited to attend.

Procedure:

1. Whenever is needed or at the request of the Board of Commissioners, the
   Board of Directors may calls a Joint meeting and sends invitation to the Board
   of Commissioners and if necessary to the informants via the Corporate
   Secretary at least five (5) working days before the meeting time and by
   attaching the agenda of the meeting accordingly.

2. a. The Board of Commissioners receives the invitation and sends
   confirmation and response to the meeting agenda by letter/memo or facsimile
   at least five (5) working days before the meeting time.

2. b. The Informant receives the invitation and sends confirmation letter/memo or
   facsimile to present at least seven (7) working days before the meeting time.

3. The Board of Directors holds the Joint meeting and the Corporate Secretary
   takes minute and distributes same to the meeting participants.




                                                                                   27
4.1.4. Company’s Orientation Program for Fresh Official. 37

The Orientation program is intended to familiarize new official with the
Company’s conditions in order the new incumbent has a comprehensive
knowledge about the Company’s organization and operations.

The President Director is responsible to conduct the orientation program for new
official within the Board of Directors’ and the Board of Commissioners’
organizations. In the absence of the President Director or the new official is
President Director him/herself, the Chief Commissioner is responsible to conduct
the orientation program.

The new official should be provided with at least;

1). the Introduction to Company’s Operations

2). the Law and Regulation relating to the Company’s business operations

3). the aspects of Good Corporate Governance within the Company



4.2 Informal Meeting

Informal meeting is a meeting between the member/s of the Board of
Commissioners and the Board of Directors beyond the formal meeting forum.
This meeting may also be attended by members of other elements or both
parties attend completely to discuss matters informally.

Due to its informal nature, such meeting is not intended to make decision except
to find a common opinions through informal discussion that has no binding
power to both parties.




                                                                                 28
4.3 Formal Meeting

Formal communication is an inter communication between or among several
elements in complying with the formal arrangement in submitting reports and or
exchanging of data, information and related supporting analysis as regulated in
the Article of Association and or the Company’s best practices.



4.3.1. Periodic Report

Purpose:

The Periodic report is a report submitted by the Board of Directors to the Board
of Commissioners specifying the execution of the Company’s Work Program and
Budget during a certain period of time for the consumption of Shareholders’
meeting.38 This report specifies quarterly and annual realization of the
Company’s Work Program and Budget.

The Board of Directors must prepare at a determinated time the Company’s Long
Range Plan including other plans relating to the execution of the Company’s
business activity for the approval of the Board of Commissioners and the
Shareholders’ meeting.39



Procedure:

1. The Periodic report on the realization of the Company’s Work Program and
   Budget should be submitted in written text or electronic record (paperless).

2. The Quarterly Company’s Work Program and Budget realization report should
   be submitted at longest one (1) month after the end of quarter period. The
   response from Board of Commissioners should be submitted one (1) month
   after receiving the report.

3. The annual Company’s Work Program and Budget realization report should be
   submitted at longest three (3) months after the current year. The response




                                                                                   29
   from Board of Commissioners should be submitted within two (2) months after
   receiving the report.

4. The written Report should be in fivefold, while the report and its attachment
   made electronically follows Company’s best practice as in performing
   Executive Information Systems (EIS);

5. the Board of Commissioners may request additional necessary explanations
   from the Board of Directors and in turn the Board of Directors if necessary will
   improve the report accordingly.

6. The report should also be submitted to the State Minister for State Owned
   Enterprise as Shareholder.



4.3.2. Special Report

Purpose:

Special Report is the report from the Board of Directors to the Board of
Commissioners in addition to the periodic quarterly and annual Company Work
Program & Budget report requested by the Board of Commissioners or
submitted on the initiative of the Board of Directors.

Procedure:

1. The Board of Commissioners may send a written request to the Board of
   Directors for special report on certain basic issues and states when it is
   required.

2. After analyzing the scope of the issues, the Board of Directors estimates the
   time required to submit the report and thereafter deliver it at the agreed upon
   time.

3. Reports made on the initiative of the Board of Directors may be submitted any
   time to the Board of Commissioners stating whether or not response is
   required.




                                                                                   30
4. Written Report should be in fivefold, while the report and its attachment made
   electronically follows the best Company’s practice as in Executive Information
   Systems (EIS

5. The Board of Commissioners may request additional necessary explanations
   from the Board of Directors and the Board of Directors if necessary will
   improve the report accordingly.



4.3.3. Handling of Letters and Memos

Purpose:

Letters and memos are intercomponents formal correspondences between the
components relating to the carrying out their main duty and function. Letters and
Memos are used to give information, request opinion and advice, request for
special written response and request of approval from the Board of Directors’ to
the Board of Commissioners.

Similarly, letters/memos are the means of the Board of Commissioners to
delivers information, give response, opinion and advice, special written response
and confirmation of approval to the Board of Directors’ request.



Procedure:

1. The Letters and memos may be made in written text (hard copy), electronic
   record (computer-media) or email according to the guideline in the
   PERTAMINA’s Integrated Letters Administration (PATP).

2. The Corporate and the Board Commissioner’s Secretaries monitor and direct
   the flow of the letters and memos and remind the concerned parties in case of
   deviation in time handling.

3. To maintain the security and confidentiality of the document, each concerned
   units should take corrective, preventive, detection actions to decrease the
   number of written documents.


                                                                                 31
This may be done by converting any written documents immediately to the
electronic record (using scanning machine) and by secure keeping of documents
and tight arrangement of infrastructure (server, working terminal and network)
and rights of access.



4.3.4. Notification of Corporate Formal Activity

Any formal ceremonial and significant activity within the Board of Directors and
the Board of Commissioners (corporate) level should be informed to the
concerned officials of the two Components. Such information may be posted on
the activity monitoring agenda which is part of the electronic office system (e-
Office)

The formal ceremonial activity includes the formal visit program to the
Company’s area of operations or to accompany the official from other
Government agency.



4.4 Informal Communication

Informal communication is a communication between the Board of Directors’ and
Board of Commissioners’ elements or between one and other elements beyond
the formal communication as regulated in the Article of Association and a the
applicable law and regulation.

In addition to written personal letter/note (hard copy), the informal communication
is supported by the e-Office such as;

   •      Personal e-mail, ;

   •      Group chatting and

   •      Knowledge Management Systems




                                                                                   32
Chapter V Company Inter Components Activity

5.1. Holding of Shareholders’ Meeting

The Shareholders’ meetings is a meeting held by the Board of Directors at the
request of the Board of Commissioners or Shareholders possessing 1/10 of the
total share, presented by the Shareholders, meets the quorum, to make
important decisions relating to the capital invested in the Company and / or for
which the Board of Directors and the Board of Commissioners have no authority.

The Article of Association, chapter 24 section 1 states that whenever it is not
determined otherwise, the Chief Commissioners chairs the Shareholders’
meeting. In the absence of the Chief Commissioner due to any reasons for which
no evident is required to be shown to the 3rd party, any member the Board of
Commissioners presents in and is appointed by the meeting chairs the meeting.
In case, all of members of the Board of Commissioners are not present in the
meeting due to any reason for which no evident is required to be shown to the 3rd
party, the President Director chairs the meeting. If the President Director does
not present due to any reason for which no evident is required to be shown to the
3rd party, the meeting is to be chaired by any member of the Board of Directors
presents in the meeting. In case all members of the Board of Directors are not
present due to any reason for which no evident is required to be shown to the 3rd
party, the meeting will be chaired by any body elected from the meeting
participants.



The types of Shareholders’ meeting are:

1. Annual Shareholders’ Meeting 40

Annual Shareholders’ meeting is a meeting held each year to approve Work
Program and Budget, Company’s Long Range Plan and Annual Report prepared
by the Board of Directors.




                                                                                   33
2. Extra Ordinary Shareholders’ Meeting 41

The Board of Directors and or the Board of Commissioners hold the Extra
Ordinary Shareholders’ meeting anytime whenever is deemed necessary.

The objective of the meeting is to authorize the Board of Directors to take a
management action that both the Board of Directors and the Board of
Commissioners have no authorization.

The Extra ordinary Shareholders’ meeting may be carried out through the
circular, namely the Shareholders make their decision without meeting being
held.



5.1.2. Annual Shareholders’ Meeting to Approve Work Program and
Budget42

The Shareholders’ meeting held by the Board of Directors and presented by the
Board of Directors, the Board of Commissioners and the Shareholders is to
discuss and approve the Work Program and Budget prepared by the Board of
Directors.

The Work Program and Budget is the blue print to be used by the Board of
Directors in managing the Company during the current year.

The Work Program and Budget at least consists: 43

1. The Company’s vision and mission, the business target, the business strategy
   and policy and work program.

2. The Budget specified for each work program/activity.

3. The Company’s and Subsidiaries’ financial projection.

4. Other matters requiring the decision of the Shareholders’ meeting.




                                                                                34
Procedure:

1. The Board of Directors in its board meeting consolidates the proposed Work
   Program and Budget and thereafter submits it to the Board of Commissioners
   and the Shareholders’ meetings at the longest on October 31 prior to new
   budget year.

2. If deemed necessary, the Board of Commissioner submits the suggestion or
   advice to the Board of Directors at the longest on December 1 or one (1)
   month after receiving the proposed Work Program and Budget.

3. If the suggestion and advice are accepted, the Board of Directors will revise
   the Work Program and Budget and submit it again to the Board of
   Commissioners and the Shareholders’ meeting at the longest on December
   31 or one (1) month after receiving the suggestions and advices.

4. The Board of Directors sends invitation for the Shareholders’ meeting to
   approve the Work Program and Budget at longest fourteen (14) calendar
   days prior to the meeting starts.

5. The Board of Directors holds the Shareholders’ meeting before January 31.

6. The Board of Commissioners gives its opinions to the Shareholders’ meeting
   on the proposed Work Program and Budget.

7. The Shareholders’ meeting approves the proposed Work Program and
   Budget.

Revision, especially to the upstream activity can be made after obtaining the final
approval of BPMIGAS.



5.1.3. Annual Shareholders’ Meeting to Approve Annual Report

Shareholders’ meeting is held every year as an annual meeting to discuss the
annual activity and financial responsibility.44

This meeting is held by the Board of Directors, presented by the Board of
Directors and the Board of Commissioners and the Shareholders.


                                                                                   35
The objective of the Shareholders’ meeting is to evaluate the performance of the
Board of Directors in carrying out the previous yearly Work Program and Budget
in comparison to the one already approved in complying with the prevailing law
and regulation and to release each members from the responsibility of the Board
of Directors and the Board of Commissioners (et aquit de charge), without
releasing their responsibility for criminal act, mistake or negligence incurring loss
to third parties that can not be compensated by the Company’s assets.

The Annual Report is prepared to give an overview and accountability on the
Company’s performance activity during one year period to be approved by the
Shareholders’ meeting and as a publication for other Stakeholders.

The annual report is prepared in Indonesian language and/or English45 and
contains:

• Financial reports presenting at least the ending year balance sheet in
   comparison to the one of the previous year covering (including the profit and
   loss statement, the cash flow, the equity and related information),

• Consolidated balance sheet from a group of companies,

• Report on the Company’s operations and results achieved,

• Company main activity and related change,

• Problems that have impact to the Company activity,

• Names of member of the Board of Directors and the Board of Board of
   Commissioners

• Salary and other benefit of the members of the Board of Directors and the
   honorarium and benefit of the Board of Commissioners

• Report of Corporate Social Responsibility and Environmental.




                                                                                  36
Procedure:

1. The Board of Directors prepares the draft of Annual Report in January and
     March period.

2.    The Draft is sent to the Board of Commissioners at the longest in the
     beginning of April.

3.   The Board of Commissioners studies the draft and suggests improvements
     if necessary.

4.   The Board of Commissioners returns the draft to the Board of Directors at
     the longest thirty calendar days (30) after receiving the draft.

5.   The Board of Directors calls the Board of Director and the Board of
     Commissioners joint meeting to discuss the draft of Annual Report.

6.   The Board of Commissioners and the Board of Directors hold         Joint
     Meeting.

7.   The Board of Commissioners and the Board of Directors sign the Annual
     Report to be proposed to the Shareholders’ meeting.

8.   The Board of Directors send invitation for the yearly Shareholders’ meeting
     at longest fourteen (14) days before the meeting starts.

9.   The Board of Directors holds the Shareholders’ meeting at the longest in
     June.

10. The Shareholders’ meeting makes its decision on the Annual Report.



5.1.4. Annual Shareholders’ meeting to Approve Company’s Long Range
       Plan

The Board of Directors must prepare Company’s Long Range Plan, Work
Program and Budget and other plans relating to the Company’s business activity
and submit them to the Board of Commissioners and the Shareholders for the
approval of Shareholders’ meeting.46



                                                                                 37
This meeting is held by the Board of Directors and presented by the Board of
Directors, the Board of Commissioners and the Shareholders to discuss and
approve the Company’s Long Range Plan as a guideline for the Board of
Directors to manage the Company during the course of the next five years.



The Company’s Long Range Plan at least consists:

1. Evaluation of the previous Company ’s Long Range Plan

2. Company’s current position

3. Adopted assumptions in preparing the Company ’s Long Range Plan

4. Determined Vision, Mission, Target, Strategy, Policy, Work Program of the
    Long Range Plan and Financial Projection.



The Objective of the Company’s Long Range Plan is:

1. To define the Company’s Vision and Mission.

2. To determine the priorities to be achieved and the required performance

3. To prepare the strategic plan to enhance the Company’s competitive level in
    achieving the Company’s vision, mission, and target.



Procedure:

1. The Board of Directors prepares the draft of the Company’s Long Range Plan
     at the longest in March ending.

2. The Draft is sent to the Board of Commissioners.

3    The Board of Commissioners studies the draft and suggests improvements if
     necessary.

4    The Board of Commissioners returns the draft to the Board of Directors at the
     longest thirty calendar days (30) after receiving.



                                                                                 38
5    The Board of Directors sends the invitation for the Joint Board of Director and
     Board of Commissioners meeting to discuss the draft.

6    The Board of Commissioners and Board of Directors hold the Joint Meeting.

7    The Board of Commissioners and Board of Directors sign the Company’s
     Long Range Plan to be proposed to the Shareholders’ meeting.

8     The Board of Directors sends the invitation for the Shareholders meeting at
    the longest fourteen (14) days before meeting starts.

9       The Board of Directors holds the Annual Shareholders’ meeting at the
      longest in June.

10. The Shareholders’ meeting makes its decision on the proposed Company’s
      Long Range Plan.



5.1.5. Annual Shareholder’s meeting to Appoint Public Accountant Office
(KAP) 47

Appointment of Public Accountant Office is the activity to appoint external auditor
to evaluate Company’s financial performance.

The appointed Public Accountant Office must have the international reputation
(reputable) and meets the professional standard requirement of Public
Accountant.



Procedure:

1. The Board of Commissioners prepares the terms of Reference (TOR) and a
    short list of the available recommended Public Accountant Office and sends
    them to the Board of Directors at the longest at the end of August.

2. The Board of Directors sets up a Procurement Committee consisting of the
    procurement and other concerned functions to obtain the Public Accountant
    Office service under the monitoring of the Audit Committee.



                                                                                  39
3. The Procurement Committee processes the bids in line with the prevailing
  regulation at the longest within forty two (42) calendar days.

4. The Procurement Committee proposes the bids winner to the Board of
  Directors.

5. The Board of Directors sends the proposed bid winner to the Board of
  Commissioners and Shareholders’ meeting

6. The Board of Directors sends invitation to call an Annual Shareholders’
  meeting at the longest within fourteen (14) calendar days before the meeting
  starts.

7. The Board of Directors holds the Annual Shareholders’ meeting in January.

8. The Shareholders’ meeting makes its decision on the proposed Public
  Accountant Office.



5.1.6. Extra Ordinary Shareholders’ Meeting to Approve Board of Directors
       Legal Acts.48

The purpose of this Shareholders’ meeting is to give the Board of Directors’ the
authority to take legal acts or other actions important to the Company’s
performance.

The proposal for the legal acts submitted to the Shareholders’ meeting should be
supported by the Board of Commissioners’ written response.

The legal acts of the Board of Directors that require the approval of the
Shareholders’ meeting are:

a. Acquiring fully or partly or participating in the other Company or bodies
   or setting up new company with the nominal value equal to or more
   than two point five (2.5) % of the Company ’s revenue or five (5)% of
   Company’s equity.

    Acquiring or participating in a participation interest is to take part in the
    ownership of a certain oil and gas / geothermal energy work area.


                                                                                    40
    Taking part in other company or body is to buy part of the shares issued by
    the company.

   Setting up new company means to set up a new subsidiary by owning more
   than 51% of its share while the setting up of new company within the frame
   work of participating interest is regarded as approved by the Shareholders’
   meeting at the time of taking participating interest.



b. Releasing part or all of the Company ’s shares in other Company or
Bodies or in Participating Interest including merging, acquisition and
dissolving of subsidiary having the nominal value equal to or more than
two point five (2.5) % of the Company’s revenue or five (5)% of the
Company’s equity.

Withdrawing from the participating interest is to release the ownership of share in
a certain oil and gas /geothermal Work Area.

Withdrawing from the other Company or body means to sell or transfer the share
in the other company. To merge, acquire, dissolve subsidiary are the acts to re-
structure the business of the subsidiary.



c. Obtaining mid and long term loan having nominal value equal to or more
  than two point five (2.5) % of the Company’s revenue or five (5)% of the
  Company’s equity;

   Mid and long term loan is the loan given by the creditor such as bank,
   financial institution, non bank institution and investment Company for a period
   of one (1) year. The loan is made based on a stand alone loan agreement
   agreed by the Company and the Creditor.




                                                                                  41
d. Lending mid or long term loan involving nominal value equal to or more
   than two point five (2.5) % of the Company’s revenue or five (5)% of the
   Company’s equity;

   Lending a non operational mid / long term loan means the giving of the loan
   with an agreement to pay within a period of not longer than one (1) year.



e. Releasing and writing off movable fixed assets with the economic age
   longer than five (5) years and having nominal value equal to or more
   than two point five (2.5) % of the Company’s revenue or five (5)% of the
   equity;

   Releasing and writing off moving fixed assets having more than five (5) years
   economic age means any action to write off moving fixed assets such as
   machine or ship that according to the industrial general practices have five (5)
   years economic value but technically and economically they create no benefit
   but cost to Company or due certain situation such assets have to be written
   off.



f. Releasing and writing off non moving fixed assets having nominal
   value equal to or more than two point five (2.5) % of the Company
   revenue or five (5)% of the equity;

   Releasing and writing off non-moving fixed assets means to write off non-
   moving fixed assets such as land and building that have no economic value
   but cost to Company or due to certain situation such assets have to be written
   off.




                                                                                 42
g. Using fixed assets as surety for mid / long term loan involving a
     nominal value equal to or more than two point five (2.5) % of the
     Company’s revenue or five (5)% of the          equity;

     To use part of the Company’s fixed or moving assets as surety to take out the
     mid or long term loan from the bank, the financial institution, the non bank
     institution and the investment Company to finance the Company’s operations.



h. Engaging in operational cooperation with the other enterprise, not the
     in Company’s line of business for a period of not longer than ten (10)
     years with the agreement value equal to or more than two point five (2.5)
     % of the Company’s revenue or five (5)% of the equity;

     The operational cooperation not in the Company’s line of business is a form
     of cooperation where other party operates part or all of the Company assets
     and resources to run a non oil and gas and geothermal related business
     based on an agreed terms and conditions.



i. Engaging in the cooperation contract to run a business not in
     Company’s line of business for a period of longer than ten (10) years
     with the agreement value equal to or more than two point five(2.5) % of
     the Company’s revenue or five (5)% of the equity;

     Management cooperation contract is cooperation where the Company
     provides assets, resources and fund while the management is assigned to
     the business partner.



j.   Engaging in the Build and Operate and Transfer (BOT), Build and
     Operate and Owned (BOO), the Build and Rent and Transfer (BRT)
     cooperation contract with the agreement value equal to or more than
     two point five(2.5) % of the Company’s revenue or five (5)% of the
     equity;


                                                                                    43
   Build, Operate and Transfer (BOT) cooperation contract is a cooperation to
   build and operate the facility for a certain period of time financed by the
   business partner and the whole asset is transferred to the owner of the
   land/asset at the end of the cooperation agreement.



   Build, Operate and Owned (BOO) cooperation contract is a cooperation to
   build and operate facility during a determined period of time financed by the
   business partner while the Company uses part or all of the facility and partner
   will own all the facility at the end of the cooperation agreement.



Build, Rent and Transfer/BRT cooperation contract is a cooperation where the
business partner builds the facility for the Company and during a determined
period time the Company will use part or all of it based on toll fee and all facility
will be owned by the Company at end of the cooperation agreement.



k. Making any other agreement creating a significant financial impact and
   having the agreement value equal to or more than two point five(2.5) %
   of Company’s revenue or five (5)% of equity;

   Other agreement that creates a significant financial impact to the Company is
   the agreement not determined in the Article of Association and in this Board
   Manual and valued at equal to or more than two point five (2.5) % of the
   Company’s revenue or five (5)% of the equity;



 l. Binding the Company as guarantor bearing financial impact equal to or
   more than two point five (2.5) % of Company’s revenue or five (5)% of
   Company’s equity;




                                                                                        44
   Binding the Company as guarantor is a legal act taken by the Company to
   guarantee other company taking out loan from the creditor or taking other
   actions requiring the company’s financial guaranty as requested by its
   principal.



m. Writing off the stagnant receivable worth equal to or more than two
   point five (2.5) % of the Company’s revenue or five (5)% of the equity;

   Writing off the stagnant receivable is the Board of Directors’ decision to write
   off the receivable that has been stagnant for 3 years after the due date and
   exceeds certain amount as determined by the Shareholders’ meeting.



n. Releasing and writing off the dead stock worth equal to or more than
   two point five (2.5) % of the Company’s revenue or five (5)% of the
   equity;

   Dead stocks are parts of material supply that meets the following criteria:

   •   The parent unit does no longer exist

   •   Has been idle for five (5) years and no prospect for future use, except as
       insurance item.



o. Discontinuing asking for the stagnant receivable amounting to equal to
   or more than two point five (2.5) % of the Company’s revenue or five
   (5)% of the Company’s equity;

   Writing off the stagnant receivable is the Board of Directors’ decision to write
   off the stagnant receivable not being paid in three (3) years after the due
   date.

This extra ordinary Shareholders’ meeting may be carried out through the
circular, namely the Shareholders make their decision without meeting being held
but requires written response form the Board of Commissioner.


                                                                                  45
Procedure:

1. The Board of Directors prepares the proposal for activity that require written
  response from the Board of Commissioners and the Shareholders’ meeting.

2. The Board of Director sends the proposal to the Board of Commissioners and
  the Shareholders’ meeting.

3. The Board of Commissioners studies the proposal and if it is deemed
  necessary may requests additional explanation but not more than once and at
  the longest fourteen (14) calendar days after receiving the proposal.

4. The Board of Directors send additional explanations, if any, at the longest
  fourteen (14) calendar days after receiving the request from the Board of
  Commissioners.

5. The Board of Commissioners, after studying the proposal and additional
  explanation from the Board of Directors makes written response and submit it
  to the Shareholders’ meeting with copy to the Board of Director at the longest
  within five (5) calendar days.

6. The Shareholders’ meeting gives its decision to the proposal after considering
   the Board of Commissioners written response.



5.2 Act of the Board of Directors Requiring the Board of Commissioners’
     Written Approval.49

In taking certain actions for which the Board of Directors has no full authority,
prior approval of Board of Commissioners must be required.

The act of the Board of Director that require prior written approval of the Board of
Commissioners are:




                                                                                    46
a. Taking out the short-term loan from the bank or other financial institution
   more than the certain amount determined by the Board of
   Commissioners

   The short term loan is a loan needed for working capital particularly to buy the
   crude oil, import fuel and anticipate the late payment from the partners,



b. Giving non operational short term loan exceeds certain amount
   determined by the Board of Commissioners

   The ‘non operational loan’ is a loan that has no direct relation with the
   Company’s core business, such as the loan to the subsidiary not doing the oil
   business.



c. Buying and selling the security in stock exchange / financial institution
   exceeds certain amount planned in the Work Program and Budget.

   Buying and selling the Securities is any action in changing of the ownership
   by securing or releasing the securities such as the shares in other company,
   Dana Reksa or the obligation in stock exchange / other financial institution.

   Buying or selling security issued by Government such as obligation and Bank
   of Indonesian (BI) certificate or buying Company’s security for the interest of
   the Company are excepted.



d. Using fixed assets as surety for the mid term loan having the nominal
   value more than the certain amount determined by Board of
   Commissioner:

   Using a portion of the Company’s asset, such as the movable or non movable
   assets as surety to get the short time loan from the bank, financial institution,
   non bank financial institution or the investment Company needed for the
   Company’s operations.


                                                                                   47
e. Releasing and writing off movable fixed assets having more than five
   (5) years economic age with yearly book value more than the amount
   determined by Board of Commissioners .

   Releasing and writing off the movable fixed assets having five (5) years
   economic age is any action to write off moving the fixed assets such as
   machine or ship that according to general industrial practices have economic
   value up to five (5) years but technically and economically it creates no
   benefit but cost to Company or due certain situation such assets have to be
   written off.



f. Writing off stagnant receivable having the value of more than certain
   amount determined by the Board of Commissioners.

  Writing off the stagnant receivable is the Board of Directors’ decision to write
   off the receivable not being paid within 3 years after the due date.



g. Releasing and writing off dead stock valued at more than certain
   amount determined by the Board of Commissioner.

   Dead stock is part of the supply that meets one of the following criteria.

   •   The Parent unit does no longer exist

   •   Has been idle for five (5) years and has no using prospect, except as
   insurance item.



h. Making Operational Cooperation not in the Company’s line of business
   for a period of five (5) up to ten (10) years

   Operational cooperation not in the Company’s line of business is a
   cooperation that has no direct relation with the company’s core business,



                                                                                 48
   such as the cooperation in the management of Supporting Business (APU)
   i.e. to build hotel on PERTAMINA’s land.



i. Renting out Company’s assets not related to the Company’s line of
   business for a period of five (5) up to ten (10) years.

   Company’s asset not belonging to the Company’s line of business are those
   that are not used for the Company’s operations such as the renting out of the
   Business Support Asset.



j. Engaging in Business Management Cooperation Contract not in
   Company’s line of business for a period of five (5) up to ten (10) years.

   Business management cooperation contract not belonging to the Company’s
   line of business is a contract that has no direct relation with the Company’s
   core business, such as the cooperation contract in managing the Business
   Support Assets (APU), Golf court and Office management.



k. Establishing and restructuring of the organization two (2) level below the
   Board of Directors (Unit Manager/Operation Site)

   The positions in the organization two (2) levels below the Board of Directors
   are Deputy Director up to Vice President and Business Unit General
   Manager.



l. Nominating member of the Board of Directors and / or the Board of
   Commissioners to represent the Company in subsidiary.

   To nominate individual as member of the Board of Directors and / or the
   Board of Commissioners in the subsidiary processed according to the
   guideline of appointing the Board of Director and the Board of Commissioner
   in subsidiary.


                                                                                   49
m. the Board of Directors’ acts as mentioned in point 5.1.6 with nominal
   agreement value less than two point five (2.5) percent of Company ’s
   revenue or five (5) percent of the Company’s equity.



n. Opening Company’s branch, representative or business unit in other
   place.50

   The branch, the representative or the business units are business units in
   addition to those units already available, either domestic or overseas that use
   PT PERTAMINA (PERSERO)’s name.



o. Managing Reserved Fund51

   In case the reserved fund has exceeded 20% above the invested capital and
   approved by Shareholders’ meeting, the Board of Directors must manage the
   fund properly to gain profit according to the prevailing law and regulation and
   with the approval of the Board of Commissioners.

Procedure:

1. The Board of Directors prepares the proposal for the activity that require
   written response from the Board of Commissioners.

2. The Board of Directors sends proposal to the Board of Commissioners.

3. The Board of Commissioners studies the proposal and if necessary requests
  additional explanation but not more than once (1) time at the longest fourteen
  (14) calendar days after receiving the list.

4. The Board of Directors send additional explanations, if any, at the longest
  fourteen (14) calendar days after receiving the Board of Commissioners’
  request.




                                                                                 50
5. The Board of Commissioners gives the written approval and sends same to
  the Board of Directors at the longest five (5) days after receiving and studying
  the given additional explanations.



5.3 Authority of the Board of Commissioners

To perform its duty, the Board of Commissioners has the following decision
authority:



5.3.1 To determine the value limits of legal act of the Board of Directors’
requiring the Board of Commissioners’ written approval.

As determined by the Article of Association, the Board of Commissioners
determines the value limits of authority for each function to perform its duty and
supervise the Board of Directors taking certain legal acts in managing the
Company.

This decision is made based on the Board of Commissioners’ meeting after
hearing the opinion of the Board of Directors’ and is effective for one (1) budget
year.



5.3.2. To appoint the Board of Directors or somebody to represent the
Company in case of vacant position in the Board of Directors. 53

Pending to the Shareholders’ meeting to install new Board of Director, the Board
of Commissioners appoints the member of the Board Directors to fill in the vacant
position left by any member of the Board of Director due to death or permanently
absent or being punished with absolute legal force for more than one (1) year.

In case all of the positions in the Board of Directors become vacant, the Article of
Association Chapter 10, section 12 states that: ‘at anytime due to whatever
reasons the Company has no members in the Board of Directors’, the Board of




                                                                                     51
Commissioners has the obligation to perform the functions of the Board of
Directors temporarily.



The Procedure for appointing temporarily Board Directors54 is as follows:

When the position of the member of the Board of Directors, due to any reason
become vacant;

a. Shareholders’ meeting must be held at the longest in thirty days (30) days
   after the position become vacant.

b. During the position being vacant not because of the ending of tenure or the
   successor is not available or not starting office, the Board of Commissioner
   appoints any other member of the Board of Directors, or the Shareholders’
   meeting or the Shareholder having majority shares appoints other person to
   performs the function of the vacant position with the same authority.



5.3.3. To suspend one or more members of the Board of Directors.55

One or more members the Board of Directors can be suspended from duty for
doing action strongly suspected to contradict with the Company’s Article of
Association or neglecting of obligations or due to emergency reason including
being punished with the absolute legal force not longer than one (1) year.

Suspension of the member of the Board of Directors should meet with the
following conditions:

1. The Board of Commissioners with the majority votes has the rights to suspend
   one or more members of Board of Directors for doing actions contradict with
   the Company’s Article of Association or is suspected to doing thing that incurs
   loss to the Company or neglecting of obligations or due to the emergency
   reason. 56




                                                                                  52
2. The suspension must be notified in writing to the suspended person and to the
   Shareholders by stating the reasons for the suspension. 57

3. The notification of suspension should be delivered at the longest within two
   (2) after the suspension being determined. 58

4. Within thirty (30) days after the suspension, the Board of Commissioners is
   obliged to hold the Shareholders’ meeting to decide whether the suspended
   member of Board of Directors will be permanently terminated or returned to
   his/her position. The suspended person is allowed to present in the
   Shareholders’ meeting to defend him/her. 59

5. Unless the Shareholders’ meeting is called within thirty (30) days the said
  suspension become legally void.



5.3.4. To appoint Other Party to Represent the Company due to the
Conflict of Interest between the Company and All Members of the Board of
Director.61

The Board of Commissioners has the rights to appoint other party to represent
the Company in and out of Court of law, in case there is conflict of interest
between the Company and all of the Board of Directors’ members.

It is expected that the implementation of this Board Manual, the working
relationship of the Company’s three (3) components to achieve the determined
Vision and Mission of the Company will go on harmoniously based on the
principles of Good Corporate Governance.



                               *********************




                                                                                  53
Foot Notes:

1 AA Chapter 16 section (1)
2 AA Chapter 16 sections (3) and (5)
3 AA Chapter 16 section (6)
4 AA Chapter 10 section (19)
5 Law 40/2007 Chapter 116 letter a and AA Chapter 18 section (3)
6 Law 40/2007 Chapter 116 letter b
7 Law 40/2007 Chapter 116 letter c
8 AD Chapter 11 section (8) letter a, b, d, e, f and g
9 AD Chapter 11 section (8) and section (11)
10 AD Chapter 11 section (11)
11 AA Chapter 17 letter a
12 Law 40/2007 Chapter 121 and Law 19/2003 Chapter 70 section (1) up to (4)
13 AA Chapter 16 section(4) and Government Regulation No. 45
14 AA Chapter 15 section (18)
15 AA Chapter 18 section 4
16 AA Chapter 18 section 6
17 Board of Commissioners’ Decision of No.02/KPTS/K/DK/2004 date June 11,
   2004
18 Board of Commissioners’ Decision No.07/KPTS/K/DK/2006, April 4, 2006
19 Board of Commissioners’ Decision No.18/KPTS/K/DK/2006 April 25, 2006
20. Decision of State minister of State Owned Enterprise No S-367/MBU/2005,
   date September 30, 2005 and Decision of Board of Commissioners
   No.21/KPTS/K/DK/2005, date October 13, 2005.
21 AA Chapter 11section 1a and Law No. 40/2007 Chapter 98 section 1
22 AA Chapter 11section 1b
23 AA Chapter 11section 6
24 AA Chapter 16 section 3.c
25 President Director’s Decision No. Kpts-54/C00000/2007-S0, date November
   7, 2007




                                                                              54
26 Up to now there is not a special policy with regard to the procurement of crude
   oil
27 AA chapter 13
28 AA Chapter 13 section 4
29 AA Chapter 13 section 6
30 AA Chapter 13 section 8
31 AA Chapter 12 section 5
32 Decision Letter of State Minister for State Owned Enterprise No.117/M-
   MBU/2002 Chapter 22
33 AA Chapter 18 section 4
34 AA Chapter 18 section 7
35 AA Chapter 16 section 3.f
36 AA Chapter 13 section 4
37 Decision of State Minister for State Owned Enterprise No.KEP-117/M-
   MBU/2002 Chapter 34
38 Decision of Shareholders’ meeting, Company’s Work Program and Budget
   2008 letter c
39 AA Chapter 12 letter b figure 2
40 AA Chapter 21
41 AA Chapter 22 section 1
42 AA Chapter 21 section 1 letter b
43 Decision Letter of the State Minister for State Owned Enterprise No.KEP-
   101/MBU/2002,date June 4, 2002 Chapter 3
44 AA Chapter 21 section 1 letter a
45 Law No. 40/2007 Chapter 66
46 AA Chapter 12 letter b figure 2
47 Decision of State Minister for State Owned Enterprise No.KEP-117/M-
   MBU/2002 Chapter 25
48 AA Chapter 11 section 11
49 AA Chapter 11 section 8 and 11
50 AA Chapter 27



                                                                               55
50 AA Chapter 1 section 2
51 AA Chapter 27
52 AA Chapter 11 section 8 and 11
53 AA Chapter 10 section 19 letter a and b
54 AA Chapter 10 section 19 letter a and b
55 AA Chapter 16 section 6
56 AA Chapter 16 section 6
57 AA Chapter 16 section 7
58 AA Chapter 16 section 8
59 AA Chapter 16 section 9
60 AA Chapter 16 section 11
61 AA Chapter 11 section 24 letter b




                                             56

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:338
posted:7/21/2011
language:English
pages:56
Description: Pt Pertamina Financial Statement document sample