Corporate Governance (hereinafter referred to as CG) is a system designed to direct the management of the company in a professional manner based on the principles of transparency, accountability, responsibility, independence, fairness and equality. IDX as a facilitator and regulator of capital markets in Indonesia has a commitment to become the Stock Exchange of globally competitive.
Implementation of the commitments of CG or so called the Good Corporate Governance (GCG) as part of the Company's mission to create the competitive edge to attract investors and listed companies through the empowerment of stock exchange members and participants, the creation of value-added, cost efficiency and the implementation of good governance.
IDX has successfully implemented the guidelines, frameworks and principles of CG effectively and efficiently in the operations of the Company and is committed to make continuous improvement on the practices of CG in the future. Implementation of GCG will lead to the creation of accountability of the Company, fair and independent transactions, as well as reliability and quality of information to the public.
The purpose of IDX in implementing CG:
- As a guideline for the Board of Commissioners in conducting surveillance and providing suggestions to the Directors in managing the Company.
- As a guideline for the Directors in running the Company’s day to day businesses based on high moral values and with respect to the Statutes, business ethics, legislation and other applicable regulations.
- As a guideline for the management and employees in carrying out activities of BEI / everyday tasks in accordance with the principles of CG.
IDX strategies to ensure a successful of CG implementation:
- Consistently maintaining the Guidelines, Charters, and Procedures of Governance
IDX conducts periodical review process on the Guidelines, Charter, and Procedures. The objective is to increase the quality of the Guidelines, Charter, and Procedures so that IDX may perform better results. The updating of the Guidelines, Charter, and/or Procedures includes:
- Corporate Governance Code
As a commitment of GCG implementation at IDX is incorporating GCG implementation into the corporate mission. The key of a successful and sustainable implementation of GCG is the functioning of GCG main organs, namely General Meeting of Shareholders, Board of Commissioners, and Board of Directors. In addition, effective functioning of GCG supporting organs will reinforce the implementation of GCG immensely.
As a limited company which specifically regulated by the laws related to the Capital Market Act, implementation of GCG at IDX is different from other limited companies and IDX also complies with the Financial Services Authority’s (OJK’s) rules and regulations. Thus, the establishment of Corporate Governance Code takes into account IDX governance characteristics as both a regulator and facilitator of the Capital Market by following OJK’s rules and regulations. The Corporate Governance Code can be seen here.
IDX was established with the goal of supporting state policies in developing the Capital Market and to conduct stock trading activities which are orderly, fair, and efficient. The purpose, objectives, and activities of IDX are stipulated in detail in the company’s articles of association, which OJK has approved by referring to Regulation No. 2/POJK.04/2019 on the Procedures to Approve Stock Market Articles of Association.
- Code of Conduct
The consistent implementation of Code of Conduct is the most important in the effort to improve GCG implementation and strengthen corporate values and culture to create a healthy and conducive work environment.
As the regulator and facilitator of the Indonesian Capital Market, IDX is committed to become a healthy and globally competitive stock exchange. Code of Conduct has therefore been developed to serve as reference for managers and employees to develop and sustain a healthy, professional, and harmonious work relationship with fellow employees, Board of Commissioners, Board of Directors, Exchange Members, Listed Companies, partners, customers, government, and public. This will be achieved through alignment of aspects contained in Code of Conduct, vision, mission, and corporate values, namely Teamwork, Integrity, Professionalism, and Service Excellence (TIPS).
The Code of Conduct is intended to build a culture that highly regards team collaboration, integrity, honesty, independence, quality, responsibility, and professionalism from all IDX employees. Code of Conduct explains the basic ethical principles in general terms that will be applied as guideline in developing IDX’s policies and procedures. However, policies and procedures do not specifically address all situations that may arise. Therefore, the basic ethical principles in Code of Conduct are used as a basic reference to manage various situations that may arise while maintaining good corporate governance.
As commitment in implementing Code of Conduct, employees are required to read, understand, and sign a personal employee statement every two years, and perform all of the stipulations defined in Code of Conduct in their daily work.
- Board of Commissioners and Board of Directors Charter
Board of Commissioners and Board of Directors Charter is one of the GCG documents as the elaboration of BEI’s Code of Corporate Governance. It serves guidance which explains the roles of the Board of Commissioners and Board of Directors as well as the relationship between the two, in order to improve BEI’s performance and reputation.
The Charter sets in detail the organization of the Board of Commissioners and Board of Directors, which includes the appointment of members, tenure, and leave periods of board members. The Charter also elaborates the following:
a. Ethics of board members
b. Roles, responsibilities, and authorities of board members, including segregation of duties between Board of Commissioners and Board of Directors.
c. Limits of financial authority for Board of Commissioners and Board of Directors
d. Terms of Board of Commissioners meetings, Board of Directors meetings, and Board of Commissioners and Board of Directors meetings
e. Supporting Organs that are designed to aid Board of Commissioners and Board of Directors
f. Work relationship between:
- Board of Commissioners and Board of Directors
- Board of Directors and Shareholders
- Board of Directors and OJK
g. Secretary to the Board of Commissioners
This Charter also stipulates the appraisal of Board of Directors’ performance.
- Committees and Committee Charters
In carrying out their roles, the Board of Commissioners and Board of Directors are supported by various Committees to provide suggestions and inputs to both the Board of Commissioners and Board of Directors. Committees are independent and directly responsible to either the Board of Commissioners or Board of Directors and follow guidelines in their Committee Charters.
In general, a Committee Charter consists of Committee organization which includes membership requirements, appointment, and tenure. The Charter also includes:
a. Committee’s ethical standards
b. Roles and functions of Committees, including Committee meetings and reporting
c. Work relationship between Committees and supporting units, Board of Commissioners and Board of Directors
d. Performance appraisals
These Committees include:
a. Committees which assist the duties of the Board of Commissioners, namely:
- Audit Committee which is guided by Audit Committee Charter.
The establishment of the Committee is based on Article 121 of the Limited Liability Company Law no. 40 of 2007, OJK Regulation No. 55/POJK.04/2015 concerning the Establishment and Work Implementation Guidelines of Audit Committee, OJK Regulation No. 58/59/60/POJK.04/2016 concerning the Board of Directors and Board of Commissioners of the Indonesia Stock Exchange/Indonesian Clearing and Guarantee Corporation/Indonesian Central Securities Depository, and OJK Regulation No. 13/POJK.03/2017 concerning the engagement of Public Accountant services and Public Accounting Firms in Financial Services Activities, Chapter 5 concerning the Role of Audit Committee.
Audit Committee Charter is constantly updated in accordance with the conditions and needs of the organization. The latest Audit Committee Charter is Audit Committee Charter version 4.0 which was signed at the end of 2020. Audit Committee Charter provides guidelines for Audit Committee which explains the duties and functions of Audit Committee members in carrying out their duties as a supporting organ of Corporate Governance (GCG), by assisting the Board of Commissioners in a professional manner and in accordance with GCG principles and the ethical standards applied in the Company. Audit Committee Charter regulates matters including membership appointment and dismissal, duties and responsibilities, and authority of Audit Committee. Chairman of Audit Committee is currently held by Mr. Mohammad Noor Rachman and Mr. Heru Handayanto, Mr. Karman Pamurahardjo, Mr. Soemarso S. Rahardjo, Mr. Anis Baridwan, and Mrs. Nishnurtia Razak as its members. Schedule and agenda of Audit Committee meeting and attendance of meeting are contained in IDX Annual Report.
- Remunerasi Remuneration Committee is guided by the Remuneration Committee Charter.
In carrying out its duties, Remuneration Committee has a Remuneration Committee Charter which is used as a guideline for the implementation of the Committee duties and functions to assist the Board of Commissioners in reviewing the remuneration system for the Board of Commissioners and the Board of Directors and remuneration policies, as well as evaluating the remuneration system implemented by the Company. Remuneration Committee Charter regulates matters including membership appointment and dismissal, duties and responsibilities, and authority of Remuneration Committee. Chairman of Remuneration Committee is currently held by Mr. Pandu Patria Sjahrir and Mr. John A. Prasetio as its member. Schedule and agenda of Remuneration Committee meeting and attendance of meeting are contained in IDX Annual Report.
b. Committees to assist the duties of the Board of Directors, namely:
- Securities Trading Committee
- Listing Committee
- Exchange Members Disciplinary Committee
- Information Technology and Risk Management Steering Committee
- Investment Committee
- Budget Committee
- DPLK Committee
- Index Committee
The committees are guided by their respective Committee Charters. The names of the Committees members, as well as agendas and meetings attendance are presented in the IDX Annual Report.
- GCG Supporting Organs
Other than the Committees formed by the Board of Commissioners and the Board of Directors, there are other supporting organs that assist the main organs in implementing GCG, namely:
a. Internal Audit
Internal Audit is a supporting organ for GCG implementation which can provide independent and objective audit (assurance) and consulting services with the aim of increasing value and improving the Company's operations through a systematic approach by evaluating and improving the effectiveness of risk management, internal controls, and corporate governance processes. Head of Internal Audit, as well as the detailed duties and functions of Internal Audit are stated in the Board of Directors’ Decree. Currently the Head of Internal Audit is held by Mr. Hamzah Orbawan.
b. Corporate Secretary
Corporate Secretary is a function which established to interact with Shareholders and other stakeholders, maintain the reputation of the Company and is the custodian of the Company's documents.
Corporate Secretary has direct access to the Board of Directors and works in synergy with other divisions to obtain required information related to the implementation of its duties, including:
- Stakeholders Relationship
- Meetings of the Board of Directors and/or the Board of Directors with the Board of Commissioners
- The implementation of the Annual General Meeting of Shareholders (AGMS) and the Extraordinary General Meeting of Shareholders (EGMS), including summoning for the AGMS/EGMS and conveying the results of the AGMS/EGMS through press releases. The information of AGMS/EGMS invitation can be seen here.
- Company documents administration
- Introduction program for the Board of of Commissioners and Board of Directors
- Public Relationship
Corporate Secretary and duties of Corporate Secretary are stated in the Board of Directors’ Decree. Currently the Corporate Secretary is held by Mr. Yulianto Aji Sadono.
c. Risk Management
The main purpose of implementing risk management at IDX is to ensure that business activities carried out by the Company do not cause losses that exceed the Company's capacity, or which can disrupt the Company's business continuity.
In implementing risk management process, IDX performs a process of identifying, measuring, monitoring, and controlling risks for all material risk factors.
Implementation of risk identification, measurement, monitoring, and control is supported by:
- Timely management information system.
- Accurate and informative reports regarding the Company's financial condition, performance of functional activities and risk exposure of the Company.
In implementing Enterprise Risk Management, IDX has a Risk Management Division whose duties and functions are detailed in the Board of Directors’ Decree. Currently the Head of Risk Management Division is held by Mr. Yanuar Bhayu Setiawan.
- Sustainable socialization of the principles of CG to all employees
IDX has conducted a continuous process of socialization of the CG principles to all employees. It aims to internalize the application of CG to all employees so that in carrying out the Company’s operational activities, they always comply with the provisions of Corporate Governance.
- Assessment of the implementation of CG in IDX by a third party
IDX believes that the third party assessment will improve the quality of corporate governance.
- Management System Sertification