Forum for Corporate Governance in Indonesia (FCGI) PriceWaterhouse Coopers (PwC) Corporate Governance Self Assessment Checklist

Purpose of this questionnaire

This questionnaire has been developed by FCGI and PwC as a self assessment tool for Indonesian companies to review and evaluate the quality of their governance practices. It is intended that this questionnaire can be used by any company, regardless of whether they are a state owned entity, a listed company or a private company, and regardless of the industry in which the company operates.

Limitations
The results of this questionnaire should be treated with caution. Good corporate governance is not only a question of having appropriate procceses in place in the company, those processes must also be operating effectively. Judgement is therefore required in interpreting the score that is achieved when answering the questions in the survey, which largely require "yes" or "no" answers. Secondly, because the questionnaire is intended to cover a broad range of companies, it is necessarily wide in its scope, and it does not necessarily address all possible issues of corporate governance that should be considered by companies in particular industry groups and/ or regulatory regimes. Finally, as with any self-assessment system, the quality of the evaluation depends greatly on the knowledge, experience and objectivity of the person or people responsible for completing the questionnaire.

1.0 Shareholder Rights Shareholder Rights and Responsibilities: the effectiveness of the company in protecting the rights of all of its shareholders, including its ability to prevent majority shareholders from diluting the value and interests of minority shareholders The applicable answers determine the score between brackets 1.1 Is the annual meeting of shareholders conducted within 6 months after the accounting year end in accordance with the regulation chapter 65 (2) of the company law? Are all shareholders given at least 28 days notice of the annual shareholders' meeting by announcement in at least two daily newspapers? Are additional efforts made to encourage all shareholders to attend and vote during the annual shareholder meeting? Are additional efforts made to encourage other shareholders to attend and vote during special shareholder meetings? Are all shareholders given the right to subscribe when the company's Board increases its share capital by less than 5%? Are all shareholders given the right to subscribe when the company's Board issues convertible bonds? How easy is it for your shareholders to participate in voting at the shareholders meeting? Is voting by mail allowed? Can anybody serve as a proxy? What proportion of shareholders is required for the approval of the following items? Amendment of funding documents Score

Yes (2)

No (0)

1.2

Yes (2)

No (0)

1.3

Yes (2)

No (0)

1.4

Yes (2)

No (0)

1.5

Yes (2)

No (0)

1.6

Yes (2)

No (0)

1.7 1.8

Yes (2) Yes (2)

No (0) No (0)

1.9

<1/2 (0)

1/2-2/3 (1)

>2/3-3/3 (2)

1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17

Merger, and major sale or acquisition of assets Large related-party transactions, etc Appointment of directors and auditors Removal of directors Removal of auditors Remuneration of board members New share issuance Not giving a preemptive right to existing shareholders when shares or convertible bonds are issued The role of shareholders in practice in nominating candidates and electing outside directors of your firm Are director candidates disclosed before the shareholders meeting?

<1/2 (0) <1/2 (0) <1/2 (0) <1/2 (0) <1/2 (0) <1/2 (0) <1/2 (0)

1/2-2/3 (1) 1/2-2/3 (1) 1/2-2/3 (1) 1/2-2/3 (1) 1/2-2/3 (1) 1/2-2/3 (1) 1/2-2/3 (1)

>2/3-3/3 (2) >2/3-3/3 (2) >2/3-3/3 (2) >2/3-3/3 (2) >2/3-3/3 (2) >2/3-3/3 (2) >2/3-3/3 (2)

<1/2 (0)

1/2-2/3 (1)

>2/3-3/3 (2)

1.18

Yes (2) 1.19 Can minority shareholders (holding more than a certain level of shares) nominate candidates at the shareholders meeting or prior to the meeting (to have the company disseminate relevant information)? Is cumulative voting practiced in your firm? - introduced, and has been exercised at least once - introduced, but has not occurred so far - the firm opted out (by the articles of incorporation, etc) Would it be possible that the director candidates proposed by management of your firm fail to be elected at the shareholders meeting?

No (0)

Yes (2)

No (0)

1.20

(2) (1) (0)

1.21

(2)

(1)

(0)

Sometimes Information about the latest annual shareholders meeting How long did the meeting last?

Rarely

Unthinkable

1.22

(0) 1-30 minutes

(1) 31-120 minutes

(2) > 120 minutes

1.23

What percentage of the shareholders attended the last General Meeting of Shareholders?

(0) <= 50%

(2) > 50%

1.24

Do you agree with the following statements for your firm? Shareholders are provided with adequate information on agenda items of shareholders meeting Adequate time is given for asking questions and placing issues at the shareholders meeting Shareholders' preemptive right in the issuance of shares or convertible bonds (so that they can maintain their fractional ownership) are adequately protected in the company's articles of incorporation or in the process of shareholder approval Related-party transactions are fully discussed with adequate information at the shareholders meeting (with interested shareholders abstaining from voting) It is not difficult to know how much equity ownership the major shareholders control (including the equity shares of companies they control) Is each substantial change in the corporate governance structure of the company or in the Company's compliance with the Indonesian Code of Corporate Governance submitted to the General Meeting of Shareholders for discussion under a separate agenda item?

Disagree (0)

Agree (1)

Fully agree (2)

1.25

Disagree (0)

Agree (1)

Fully agree (2)

1.26

Disagree (0)

Agree (1)

Fully agree (2)

1.27

Disagree (0)

Agree (1)

Fully agree (2)

1.28

Disagree (0)

Agree (1)

Fully agree (2)

1.29

Yes (2)

No (0)

1.30

Is the policy of the Company on reserves and on dividends (the level and purpose of the reserves, the amount of the dividend and the type of dividend and the proposal for the distribution for the dividend) and any changes to this policy dealt with and explained as a separate agenda item at the General meeting of Shareholders? Yes (2) No (0)

1.31

Is there adequate opportunity for shareholders to receive and review the financial reports in order to ask for questions to be put on the Agenda at the annual shareholders' meeting? Is there adequate time given during the annual shareholers' meeting for shareholders to ask questions? Does the annual meeting of shareholders decide the following items? - appointment of BoC and BoD? - evaluation of BoC and BoD performance? - compensation of BoD and BoC? - appointment of external auditors?

Yes (2)

No (0)

1.32

Yes (2)

No (0)

1.33

Yes (2) Yes (2) Yes (2) Yes (2)

No (0) No (0) No (0) No (0)

Total score Weighted score (total score divided by maximum possible score (72) then multiplied by weighting of 20%)

2.0 Corporate Governance Policy Board Structure and Governance: the ability of the Board of Commissioners to provide independent oversight of management performance and hold management accountable to shareholders and other relevant stakeholders The applicable answers determine the score between brackets 2.1 Does your company have a written code of corporate governance, which includes: - Responsibilities of the BoD - Responsibilities of the BoC - Principles for the selection of members of the BoD - Principles for the selection of members of the BoC - Responsibilities of the Remuneration System of BoD and BoC - Principles in Dealing with Conflicts of Interest - Powers of the General Meeting of Shareholders - Provisions of information to the General Meeting of Shareholders - The audit of the financial reporting and the position of the internal auditor function, the external auditor, the BoD and the BoC - The role, appointment, remuneration and assessment of the function of External Auditor 2.2 Does your firm disclose the following information? If yes, by what means? <More than one choice can be made.> Score

Yes (2) Yes (2) Yes (2) Yes (2) Yes (2) Yes (2) Yes (2) Yes (2)

No (0) No (0) No (0) No (0) No (0) No (0) No (0) No (0)

Yes (2)

No (0)

Yes (2)

No (0)

Web: company's web page (2 points)

AR: annual report (1 points)

RR: report to regulatory agencies (1 points) No: no disclosure (0 points) - Self- dealing (related-party) transactions - Directors selling or buying shares in their company - Resume/background of directors - Remuneration of directors - Fees paid to external auditors, advisors, and other related parties - Major contingent liabilities such as cross-guarantees of debt repayment - Policies on risk management - Significant changes in ownership - Governance structures and policies (explicit corporate governance rules and visions) - The extent to which the firm's corporate governance practices conform to the established standards 2.3 Is the BoC, to the extent permissable under the law, specifically made responsible for ensuring adherence to the code of corporate governance? Does the company have a Corporate Secretary or a compliance officer whose task is to ensure full compliance of the company with existing laws and regulations and internal procedures? Is the Corporate Secretary also assisting the BoC ? Can the Corporate Secretary only be dismissed with the consent of the BoC ? Web (2) Web (2) Web (2) Web (2) Web (2) AR (1) AR (1) AR (1) AR (1) AR (1) RR (1) RR (1) RR (1) RR (1) RR (1) No (0) No (0) No (0) No (0) No (0)

Web (2)

AR (1)

RR (1)

No (0)

Web (2) Web (2)

AR (1) AR (1)

RR (1) RR (1)

No (0) No (0)

Web (2)

AR (1)

RR (1)

No (0)

Web (2)

AR (1)

RR (1)

No (0)

Yes (2)

No (0)

2.4

Yes (2) Yes (2) Yes (2)

No (0) No (0) No (0)

2.5 2.6

2.7 2.8 2.9 2.10

Does the company have a written code of conduct / ethics? Is the code of conduct distributed to all employees ? Is the code of conduct available on the company's website? Alert Policy Do all employees have the possibility of reporting alleged irregulaties of a general, operational and financial nature in the Company to the President Director, The Chairman of the Board of Commissioner, or another designated official, without jeopardising their legal position? Conflict of interest - Must all transactions between the Company and individuals or legal entities be agreed on terms that are customary for arm's-length transactions in the branch of business in which the Company and its Subsidiaries operate? - Do decisions to enter into transactions in which there are material conflists of interest between members of the BoD and the Company require the approval of the BoC?

Yes (2) Yes (2) Yes (2)

No (0) No (0) No (0)

Yes (2)

No (0)

2.11

Yes (2)

No (0)

Yes (2)

No (0)

2.12

Does the code of conduct take into account the following issues? - business ethical standards in dealing with customers, vendors and other relevant parties - company expectations of management and employees - the privacy of information about outsider companies - the privacy of information about employees - the importance of compliance with laws and regulations - compliance with laws and regulations - engagement of shareholders

Yes (2) Yes (2) Yes (2) Yes (2) Yes (2) Yes (2) Yes (2)

No (0) No (0) No (0) No (0) No (0) No (0) No (0)

- consumer interests (if applicable)

Yes (2)

No (0)

- environmental protection - employment - human rights - contributions to sustainable development - business integrity - no political engagement - fair competition - monitoring, reporting and independent verification of the Code 2.13 Are all employees required to confirm periodically in writing that they have complied with the code of conduct

Yes (2) Yes (2) Yes (2) Yes (2) Yes (2) Yes (2) Yes (2) Yes (2)

No (0) No (0) No (0) No (0) No (0) No (0) No (0) No (0)

Yes (2)

No (0)

Total score Weighted score (total score divided by maximum possible score (114) then multiplied by weighting of 15%)

3.0 Corporate Governance Practices The applicable answers determine the score between brackets Score 3.1 How often per year do the BoC and the BoD meet? (0= 0 points; 1-3= 1 points; 4 or more= 2 points) How many members sit on the BoD? (0-4=0 points; 5-12=1 points; 13 or more=2 points) Is there a separate By-Law regulating the procedures for the BoD meeting and its decision-making? Does the BoD have effective meeting procedures (for example, are meeting agendas and board papers distributed in advance)? 3.5 3.6 Are the BoD meetings minuted? Do the By-Laws contain procedures on preventing conflicts of interest between Directors and the company? How many times a year does the BoD conduct formal meetings? (if 0-1=0 points; 2-6=1 points; 7 or more=2 points) How many members sit on the BoC? (0-2=0 points; 3-12=1 points; 13 or more=2 points) Is there a separate By-Law regulating the procedures for the BoC meeting and its decision-making? Does the BoC have effective meeting procedures (for example, are meeting agendas and board papers distributed in advance)? 3.11 3.12 Are the BoC meetings minuted? Do the By-Laws contain procedures on preventing conflicts of interest between Commisioners and the compay? Yes (2) Yes (2) No (0) No (0) Yes (2) Yes (2) No (0) No (0)

3.2

3.3

Yes (2)

No (0)

3.4

Yes (2)

No (0)

3.7

3.8

3.9

Yes (2)

No (0)

3.10

Yes (2)

No (0)

3.13

How many times a year does the BoC conduct formal meetings? (if 0-1= 0 points; 2-6=1 points; 7 or more=2 points) How many members of the BoC are Independent *? (if none=0 points; less than 20%=1 points; 20% or more=2 points) * Not a former Director or currently having an important relationship with the company or receiving financial compensation other than the regular BoC remuneration How many members of the BoC have a short term financial interest*? * Financial interest is defined as owning shares, warrants, convertible bonds or debt to the company as well as any business relationship such as a supplier or customer of the company - in the company (if none= 2 points; 1-50%= 1 points; 51-100%= 0 points) - or its affiliates? (if none= 2 points; 1-50%= 1 points; 51-100%= 0 points)

3.14

BoC

3.15

3.16

Are there any potential conflicts of interest between the company and the members of its BoC or BoD? Does the company have a list of the shares owned by the members of the BoD and BoC? Does the company have a list of the shares owned by the families of the members of the BoD and BoC? Consistent with the prevailing laws, does the company have an internal written policy regarding BoD members having concurrent positions as directors in other companies? Check which of these committees (if any) are actively functioning in your company: - Audit Committee (for supervising the external and internal auditors)

Yes (2)

No (0)

3.17

Yes (2)

No (0)

3.18

Yes (2)

No (0)

3.19

Yes (2)

No (0)

3.20

2 points

- Compensation Committee (for reviewing BoC, BoD & management compensation) - Nomination Committee (for selecting BoD and BoC members) - Compliance Committee (for adherence to laws and regulations) - Risk Management Committee (for control and management of risk) - Executive Committee (for reviewing management decisions) - Insurance Committee (for reviewing the insurance policies of the company) - Other (please specify) 3.21 3.22 3.23 Is there a formal performance appraisal system for the BoD? Is there a formal performance appraisal system for the BoC? How often is the performance appraisal review of the BoD? (if any=2 points) How often is the performance appraisal review of the BoC? (if any=2 points) When is the timing of changes to the BoD? (if any=2 points) When is the timing of changes to the BoC? (if any=2 points) Is there an internal nomination process for the BoC? Is there an internal nomination process for the BoD? Are candidates given a written appointment letter as Commissioners? every ____ years every ____ years Yes (2) Yes (2) Yes (2) Yes (2)

2 points

2 points

2 points

2 points 2 points 2 points Not scored No (0) No (0)

per year

3.24

per year

3.25 3.26 3.27 3.28 3.29

No (0) No (0)

Yes (2)

No (0)

3.30 3.31

Are candidates given a written appointment letter as Directors? What are the types of compensation given to Directors? - Salary independent of performance - Bonus dependent on performance - Stock options with limitation on exercise period - Other (pls specify) What are the types of compensation given to Commissioners? - Salary independent of performance - Bonus dependent on performance - Stock options with limitation on exercise period - Other (pls specify) How often does the BoD actively monitor the results of the business? (if 0-3= o points; 4-11=1 points; 12 or more=2 points) Does the BoC give input to the BoD on matters of strategy? Does the BoC give input to the BoD on matters of policy? Does the BoC give input to the BoD on matters concerning company performance? Are the vision and mission, business plan and strategic plan the responsibility of the BoD? Do the BoD and BoC identify and select external specialists when needed expertise is not possessed by existing directors or staff? Are members of the BoD and BoC given introduction training? Are members of the BoC and BoD provided with the opportunity of ongoing training? Are the members of the BoD appointed by the General Meeting of Shareholders?

Yes (2)

No (0)

2 points 2 points 2 points Not scored

3.32

2 points Negative 2 points 2 points Not scored

3.33

per year Yes (2) Yes (2) No (0) No (0)

3.34 3.35 3.36

Yes (2)

No (0)

3.37

Yes (2)

No (0)

3.38

Yes (2) Yes (2)

No (0) No (0)

3.39 3.40

Yes (2)

No (0)

3.41

Yes (2)

No (0)

3.42

What is the term of appointment for the BoD?

(2) 1-2 years

(1) 3-4 years

(0) 5 years or more

3.43

Is there any rotation plan for the BoD in order to avoid as much as possible the situation in which many BoD members retire at the same time? Is there a clear division of tasks within the BoD? Does the BoC have to approve the following: - the operational and financial objectives of the Company - the strategy designed to achieve the objectives - determining and amending the parameters to be applied in relation to the strategy (for example in respect of the financial ratios), and - the appointment of the BoD member as CFO - the allocation of duties of the BoD to individual members of the BoD - all transactions between the Company and natural or legal persons who hold at least 10% of the shares in the Company that are of material significance to the Company and/or such persons - a resolution on the operational and financial aims of the Company, the strategy designed to achieve the aims, and the parameters to be applied in relation to the strategy - all transactions in which there are conflicts of interest with BoD members - all transactions in which there are conflicts of interest with BoC members - the appointment and removal of the Corporate Secretary - the remuneration policy for senior management in general

Yes (2) Yes (2)

No (0) No (0)

3.44 3.45

Yes (2) Yes (2)

No (0) No (0)

Yes (2) Yes (2)

No (0) No (0)

Yes (2)

No (0)

Yes (2)

No (0)

Yes (2)

No (0)

Yes (2)

No (0)

Yes (2) Yes (2) Yes (2)

No (0) No (0) No (0)

- the annual capital investment budget, all acquisitions and disposals of business activities whose sales exceed a predetermined amount in the year prior to the acquisitions or disposal - all financial statements before publication - all other acts that require the approval by legislation, the Company's Articles of Association, the By-Laws of the BoD, the By-Laws of the BoC, the Indonesian Corporate Governance Code, or any other applicable legislation - any changes to the Company's administrative procedures with regard to decision making by the BoD and the BoC 3.46 Is Company's Risk Management structure and activities defines the overall policies? 3.47 Is Company's Risk Management structure and policies identifies the element of risk asessment? 3.48 Is Company's Risk Management structure and policies identifies the element of control activities? Total score Weighted score (total score divided by maximum possible score (144) then multiplied by weighting of 30%)

Yes (2) Yes (2)

No (0) No (0)

Yes (2)

No (0)

Yes (2)

No (0)

Yes (2)

No (0)

Yes (2)

No (0)

Yes (2)

No (0)

4.0 Disclosure Policies and Practices Disclosure: the accuracy and timeliness with which the company discloses its financial position, condition and prospects, and other non-financial information, and also the ability of existing and prospective investors to access this information. Disclosure of non-financial matters, includes such matters as the companys ownership structure, corporate governance and ethics guidelines, which should be a matter of public record. The applicable answers determine the score between brackets Score 4.1 Does your company provide shareholders and investment analysts equal access to information that may affect share price? 4.2 Does the company publish its financial results and management analysis for distribution to analysts? 4.3 Does the company post its financial results and management analysis on the internet? 4.4 How frequently does the company conduct analyst briefings? (If 1-3 times=1 points; 4 or more=2 points) 4.5 Do the reports prepared for the annual shareholders meeting contain only basic information of sufficient details to enable investment analysts to assess the financial and non-financial performance of the corporation?

Yes (2) No (0)

Yes (2) No (0)

Yes (2) No (0)

per year

(2) (1) (0) more than sufficie only nt avera basic detail ge info info

4.6 Does the annual report describe the following: - risk management systems - business goals and strategies Yes (2) No (0) Yes (2) No (0)

- cross-shareholdings and cross debt guarantees - management assessment of business climate and risks - names of Commissioners and Directors -Commissioners and Directors compensation rates - principal external jobs held by the Commissioners

Yes (2) No (0)

Yes (2) No (0) Yes (2) No (0)

Yes (2) No (0)

Yes (2) No (0)

- corporate governance practices of the company - material claims and court cases - related party transactions - existing and potential conflicts of interest - shareholding of Commissioners, Directors or their family members in the company or its related companies 4.7 List of information to be included in the Annual Report - publication of all transactions between the company and legal or natural persons who hold at least ten percent of the shares in the company

Yes (2) No (0) Yes (2) No (0) Yes (2) No (0) Yes (2) No (0)

Yes (2) No (0)

Yes (2) No (0)

- a list of all existing or potential anti-takeover measures and also an indication of the circumstances in which it is expected that these measures may be used 4.8 Does the company track changes in its ownership structure so that any and all voting blocks are known? 4.9 If "Yes", where is this information disclosed?

Yes (2) No (0)

Yes (2) No (0) Not scored

Total Score

Weighted score (total score divided by maximum possible score (40) then multiplied by weighting of 20%)

5.0 Audit The applicable answers determine the score between brackets Score 5.1 Does your company have an Audit Committee? 5.2 How many members does your Audit Committee have? (if 0-1=0 points; 2-3=1 points; 4 or more=2 points) 5.3 Is there an Audit Charter that specifies the qualifications, responsibilities, and procedures of the Audit Committee? 5.4 Is there an Audit Charter addressing the authority to conduct special investigations? 5.5 How many of these members are independent *? (if any=1 points; if majority=2 points) * independence is defined here as having no financial interest in the company or significant relationships with major shareholders, management, suppliers or customers 5.6 Does the Audit Committee have regular meetings? 5.7 Does the Audit Committee report regularly to the BoC? 5.8 Does the Audit Committee have regular meetings with the external auditors? 5.9 Please rate the quality of: - Internal Audit - Audit Committee Yes (2) No (0) Yes (2) No (0)

Yes (2)

No (0)

Yes (2)

No (0)

Yes (2)

No (0)

Yes (2)

No (0)

Very High Average Very Low (2) (1) (0) (2) (1) (0)

- External Audit

(2)

(1)

(0)

Total Score Weighted score (total score divided by maximum possible score (22) then multiplied by weighting of 15%)

6.0

Results
The table below shows the summary scores from the 5 separate sections of the preceding questionnaire. While all questions in each section have scored equally, the sections themselves have been weighted to reflect the relative importance of each area.

Summary Scores 1. Shareholder Rights 2. Corporate Governance Policies 3. Corporate Governance Practices 4. Disclosures 5. Audit Total score

Company Scores Weightings Weighting Scores (in %age) 20% 15% 30% 20% 15% 100%

Interpretation:
1. 0-49%: Your Company needs to look at its CorporateGovernance system because the overall score is below standard 2. 50-59%: Your Company's overall Corporate Governance score meets the basic standards, but should seriously consider improvement on issues where the score is low 3. 60-80%: Your Companys overall Corporate Governance score is good, but could be further improved 4. 81-100%: Your company's Corporate Governance score is excellent

A Word of Caution:
The assessment is based on the judgement of the respondents and list of issues that are valid for most companies. Therefore, the results are determined by the liability of the replies and the relevant of the questionnaire. The questionnaire is therefore a simplification of the reality, although the score is a good indicator of the company's quality of Corporate Governance. The result of this survey for your company provides a good basis for taking a closer look at the measures that can be taken to improve the company's Corporate Governance. PricewaterhouseCoopers (PwC) and Forum for Corporate Governance in Indonesia (FCGI) will be very happy to assist you in this.

g questionnaire. een weighted

urther improved

6.0 General Information for Classification of the Company The following questions are facts about your corporation and its ownership Name of the company: Name of preson who completed/ authorised this questionnaire: Position in the company: Your e-mail address or other contact details:

6.1 What is the net assets of your corporation at the latest balance sheet date? - less than or equal to 200,000,000 Rupiah - more than 200,000,000, less or equal to 10 trillion Rupiah - more than 10 trillion Rupiah 6.2 What industry does your corporation belong to? - financial (Bank, Insurance, Other Financial Institution) - manufacturing - services - utility/energy - other (please specify:___________________________________________) 6.3 Is your company: a listed company? Yes No

6.4 Please focus on the present controlling shareholders of your corporation (if any): - a State Owned Enterprise? Yes No - a family controlled company? Yes No - a subsidiary of Multinational company? Yes No 6.4.1 How many directors in the Board represent this controlling group? 6.4.2 Are the Chairman of the Commissioners and the President Director either affiliated with or appointed by the controlling shareholders? Yes No CEO only Chairman only NA