Compliance and Ethics | Company's Codes of Conduct

Corporate Governance

CODES OF CONDUCT

Compliance

Every employee of the Company must comply with applicable laws and regulations. The corporate standards of ethics are also built upon this principle.

Conflicts of Interest

Every employee of the Company must acknowledege that the Company’s interest comes first. Therefore, any conduct,whether personal, on behalf of the Company, or in relation to other parties, must not compromise or jeopardize the interest of the Company

Insider Trading and Exploitation of Opportunities

Every employee of the Company who, by virtue of chance or authority, obtains access to confidential information is prohibited from using or distributing that information for gaining financial profit through stock trade or any other types of activity. Furthermore, an employee of the Company is prohibited from using any asset, information or one’s position in the Company for improper personal gains, or to be in competition with the Company, whether directly or indirectly.

Fair Competition and Working Relationship

Every employee of the Company must compete in a fairly manner and commit themselves into developing a fair relationship with all parties.

Discrimination and Abuse

Every employee of the Company is prohibited from practicing discriminatory treatment toward anyone or any other party on the basis of ethnicity, religion, race and social class. The Company also does not tolerate physical or psychological abuse in any form within the Company.

Health and Safety

Every employee of the Company holds the responsibility of maintaining a safe and healthy working environment. This responsibility is fulfilled by consistently complying with all applicable health and safety regulations and standards in accordance with internal regulations as well as prevailing laws.

Use of Proper Accounting Practices

The Company requires that all data recording and reporting activities are carried out in a proper and accurate manner in order to support a reliable business decision-making process. This practice encompasses the implementation of ethical standards for employees, proper accounting practices, and the preparation of reports in an accurate, timely and comprehensible manner.

Trade Secrets and Confidentiality

Every employee of the Company is prohibited from disclosing, duplicating, keeping or using confidential information regarding the Company for personal gains or for the benefit of another party other than the Company without prior written consent from the Company. The information can include formulas, designs, images, blueprints, specifications, processes, equipment, researches, or any other forms of information. Furthermore, an employee is also prohibited from disclosing information related to the Company’s products, financial state, or any other information, except as determined necessary in carrying out one’s respective duties and responsibilities.

CHARTER OF BOD & BOC

Board of Commissioners Charter

In carrying its duties, the Board of Commissioners has the Board of Commissioners Charter which lays out the duties, responsibilities, powers, membership criteria, and work guidelines of every member.

Implementation of the Function of the Board of Commissioners

The Board of Commissioners comprises members with special expertise, including in the fields of law, finance, or any other aspects of business. The Company’s Board of Commissioners is also supported by two permanent committees in carrying its duties, namely the Audit Committee and the Nomination and Remuneration Committee. Furthermore, the Board of Commissioners can also acquire the counsel and services of professional consultants or advisors.

Board of Commissioners Membership Dismissal Policies

The GMS can temporarily dismiss a member of the Board of Commissioners if that member has acted in violation of the Company’s Articles of Association, or if there is an indication that the member has carried out actions that undermine the Company, neglected the respective member’s duties and obligations, or if the Company has other compelling reasons to dismiss that member. A member of the Board of Commissioners is also required to resign if that respective member has been proven to have been involved in a financial crime and/or has received a legally-binding decision over a financial crime.

Duties, Responsibilities and Powers of the Board of Commissioners

The Board of Commissioners in its function acts as a collective body. The duties, powers and responsibilities of the Board of Commissioners based on the Board of Commissioners Charter are as follows:

Controlling all management activities carried out by the Board of Directors, including in activities of planning and development, operations and budgeting, compliance to the Company’s Articles of Association, and implementation of the mandates and resolutions of the GMS.
The Board of Commissioners is not authorized to operate or manage the Company, except in situations where all members of the Board of Directors have been temporarily dismissed for one reason or another.
Providing counsel and opinion to the annual GMS with regard to corporate financial reports, development plans, appointment of external auditors, and any other important and strategic decisions related to the Company’s corporate actions.
Carrying out evaluations of corporate work plans and budgets; monitoring the Company’s development; coordinating with the Board of Directors upon signs that the Company is in tribulation so that the Board of Directors can immediately inform the shareholders; and providing recommendations with regard to solutions and steps for improvement.
Ensuring that the Company implements and maintains Good Corporate Governance practices.

The Board of Directors Charter

The Board of Directors is formed and carries out duties based on the Board of Directors Charter which in its drafting draws reference from the relevant regulations, and also based on the management needs of the Company.

Duties, Responsibilities and Powers of the Board of Directors

A brief description of the duties, powers and responsibilities of the Company’s Board of Directors as stipulated in the Board of Directors Charter are as follows:

Leading, managing and running the Company in accordance with the Company’s purpose.
Securing, managing and developing the Company’s assets.
Continously better-improving the Company’s efficiency in carrying out business activities.
In performing the aforementioned duties; preparing corporate development plans, the Company’s long-term strategic plans, the Company’s annual budget, and other plans related to the Company’s activities.
Implementing Good Corporate Governance principles throughout all aspects of the Company.
Implementing an effective internal control system in order to secure the Company’s investments and assets.

Membership Criteria and Composition

The basic criteria of a candidate for membership and the membership compositon of the Company’s Board of Directors refer to Financial Services Authority Regulation No. 33/POJK.04/2014. Based on this regulation and having considered the conditions of the Company and the diversity of skills, knowledge and experience needed, the Company currently has three directors and one officer of comparable duties to a director.

Policy on Financial Crime

In ensuring that the management of the Company’s wealth is carried out accountably and responsibly, the Board of Directors Charter stipulates that a member of the Board of Directors who has been proven to be involved in a financial crime and/or has received a legally-binding decision over a financialcrime is required to resign from the board.

Audit Committee

Membership Composition of the Audit Committee

The Company’s Audit Committee comprises several non-executive professionals where in at least one member has competence in the fields of accounting and finance. The Audit Committee acts independently and reports directly to the Board of Commissioners. The membership composition of the Audit Committee of the Company did not undergo change in 2021. Based on the competencies of each member, the current composition combines expertise and experience in the fields of finance, banking and risk management. The membership composition of the Audit Committee based on Circular Resolution of the Board of Commissioners No. 0217/ACM/L/KS/IX/2019, which has been reported to the Financial Services Authority on October 1, 2019, is as follows:

Independency of the Audit Committee

In carrying out functions and duties, the Audit Committee works professionally and maintains independence from the intervention and influence of any party that are not in line with applicable laws and regulations. In addition to maintaining independence in carrying out duties, members of the Audit Committee are also individuals of proven professional expertise and integrity. In accordance with the Audit Committee Charter, to become eligible for appointment as a member of the Audit Committee, a candidate must meet the following criteria:

An individual who is not linked with any public accountant’s office, legal consultancy office, or any other parties that have provided auditing, non-auditing or other consultancy services to the Company within 6 (six) months prior.
An individual who has not held powers and responsibilities that constitute planning, overseeing and controlling activities over the Company within 6 (six) months prior.
An individual who does not have any business relationship, whether directly or indirectly, related to the Company’s business activities.
An individual who does not have affiliation, whether horizontally or vertically, with any member of the Board of Commissioners and Board of Directors.

The independence of this committee has been reaffirmed by its members by signing a statement of independence on December 29, 2021.

Duties and Responsibilities of the Audit Committee

The duties and responsibilities of the Audit Committee as stipulated in the Audit Committee Charter are as follows:

Overseeing the effectivity of internal controlling and internal auditing processes

Internal controlling activities include any policies and practices implemented in carrying out oversight over the Company’s manufacturing, accounting, and regulatory compliance practices. The management jointly with the internal and external audit functions has the duty of reporting to the Audit Committee with regard to the effectivity and efficiency of the Company’s internal controlling activities.

2. Overseeing accounting and financial reporting activities

The Audit Committee has the specific responsibility of examining the Company’s quarterly and annual financial statements. Additionally, the Audit Committee can also discuss complex accounting estimates and the calculations thereof that are made by the management, as well as matters related to the implementation of new accounting principles and regulations.

3. Overseeing external auditors

The Audit Committee is the committee sanctioned to authorize the appointment of a public accountant’s office as external auditor, examine the quarterly financial statements of the Company, and issue opinions regarding the thoroughness of the Company’s annual reports. Furthermore, any replacement of external auditors can only be done so with the approval of the Audit Committee.

4. Overseeing regulatory compliance

The Audit Committee exclusively discusses matters related to litigation and compliance risk with the management. Such sessions are generally carried out after the committee has received report or briefing from the Company’s counselor at law.

5. Overseeing risk management activities

The Company has a set of functions for carrying out activities of assessing and managing risks that threaten the Company’s efforts in achieving objectives. The Audit Committee in this regard can carry out discussions over policies and practices for identifying, managing priorities, and preparing responses toward existing opportunities and risks.

CORPORATE SECRETARY

Ir. Rudy Sujanto, M.B.A.

Chief Financial Officer & Corporate Secretary

The position of Corporate Secretary has been held by Ir. Rudy Sujanto, M.B.A. since 2010. He has also been serving as the Company’s Chief Financial Officer since 2011.

The Corporate Secretary is a strategic position in the Company which in carrying out duties reports to the Chief Executive Officer. The position of Corporate Secretary in the Company refers to the general provisions, requirements, as well as duties and responsibilities stated in Financial Services Authority Regulation No. 35/POJK.04/2014 on Corporate Secretary of Issuers or Public Companies.

In general, the Corporate Secretary assists the Board of Directors in implementing Good Corporate Governance and is the main liaison between the Company and the stakeholders.

Further description of the position of Corporate Secretary is as follows:

The Corporate Secretary is a senior position in the Company above the level of manager in the corporate hierarchy.
The Corporate Secretary is a representative of the Company whose name is stated in the Company’s legal documents.
The Corporate Secretary has the responsibility of developing an efficient corporate administration system, particularly with regard to compliance with applicable laws and regulations.
The Corporate Secretary is required to keep every member of the Board of Directors informed about their legal responsibilities.
Shareholders may communicate with the Board of Directors or its members directly or through the Corporate Secretary.
The Corporate Secretary has the responsibility of examining all communications from shareholders to the Board of Directors or its members, and is authorized to exercise discretion in determining whether further examination or a response in the form of an answer or an action is required from the Board of Directors or its members.
The Corporate Secretary has the duty of assisting the Board of Directors in planning and better-improving the implementation of corporate governance in accordance with the needs of the Company and the expectations of the shareholders.
The Corporate Secretary may give feedback to the management with regard to the Company’s response to the dynamics of the shareholders and capital market.

In accordance with Financial Services Authority Regulation No. 35/ POJK.04/2014, other duties of the Corporate Secretary includes:

Implementing information disclosure with the public.
Submitting reports to the Financial Services Authority in a timely manner.
Holding and making documentation of General Meetings of Shareholders.
Holding and making documentation of Board of Directors meetings and/or Board of Commissioners meetings.

RISK MANAGEMENT

As a manufacturing company engaged in the ceramics industry, the Company has identified various risks that are inherent to the Company’s finances and operations. In view of this, the Company has implemented short-term management measures as well as prepared calculated long-term strategies in managing potential negative impacts. The risks include:

Market Risk

The Company anticipates risks related to market dynamics and the increasingly fierce competition in the ceramics industry by focusing on strengthening the Company’s product portfolio and supply chain efficiency. The two main strategies carried out by the Company in this regard include:

The Company is committed to continuously carrying out product innovation efforts so that consumers can obtain ceramic products with unique and superior design and quality.
The Company’s expansion strategies, in addition to having marketing effectivity as a factor for consideration, also take into account the variables of logistical cost and distribution cost. As such, each factory has been built in a location adjacent to available markets, and strategic for facilitating future expansion efforts. Through this strategy, the production cost can be minimized and the products can be more competitive.

Raw Materials Price and Availability Risk

The ceramics industry in Indonesia is exposed to certain vulnerabilities with regard to the price and availability of imported raw materials – and consequently also vulnerable to the exchange rate fluctuation of foreign currencies. The risk becomes a factor that can abruptly affect production costs. The Company resolves this by as much as possible utilizing local suppliers for production.

Another risk component is related to natural gas which is the main energy source for the ceramics industry. The certainty of natural gas availability, a reasonable purchasing price for natural gas, and government policies that arefavorable to the ceramics industry are the main requirements for the ceramics industry to be able to grow optimally.

The Company through, among others, the membership in the Indonesian Ceramics Industry Association (Asosiasi Aneka Industri Keramik Indonesia/ ASAKI), continues to urge the government to create a favorable business climate for the local ceramics industry through incentives related to tax andthe price of natural gas, the acceleration of infrastructure development, orthrough other policies under its authority.

Foreign Currency Exchange Rate Risk

The Company carries out the effort to mitigate the financial risks related to the exchange rate fluctuation of foreign currencies by as much as possible conducting payments using internal funds, payments are partially or wholly in advance, setting a fixed exchange rate, and conducting full repayment within a term of less than a year or accelerating full repayment in cases where external financing using foreign currency is needed.

Interest Rate Risk

To minimize financial risks brought upon by the fluctuation of interest rates, it has become the Company’s priority to accelerate the settlement of debts, and to utilize internal funds in financing development projects, investing in machinery and equipment, or in financing other main projects.