KNKG

CHAPTER 1 Creating a Sound Situation in Implementing Good Corporate Governance

Good corporate governance (GCG) is implemented to encourage the creation of efficient,
transparent and consistent market that is relevant to the constitution. In order to GCG being
implemented efficiently, collaboration between the three pillars (nation, business, and
society) are needed.
A. Role of the Nation
1. Showing effective coordination between the government in constructing the
regulation;
2. Engage with businesses and society in performing the rule-making rules;
3. Creating a healthy politics system;
4. Performing rules and regulation and law enforcement consistently;
5. Prevent corruption, collusion, and nepotism;
6. Arranging clear intergovernment coordination;
7. Implementing rules and regulation to protect witnesses and whistleblower;
8. Issuing regulation to support the implementation of GCG; and
9. Carry out the same rights and obligations.
B. Role of the Business World
1. Implementing the business ethics consistently;
2. Shows compliance in the business world towards the regulations;
3. Preventing corruption, collusion, and nepotism;
4. Increasing the quality of sustainable management structure and corporate work
ethics that are based on GCG; and
5. Perform the ombudsman function.
C. Role of the Society
1. Creates a social control;
2. Establish a good communication to the government and businesses to express
their opinion and complaints;
3. Comply to the regulations

CHAPTER 2 Principles of Good Corporate Governance

 A. Transparency In keeping objectivity in doing business, company must provide
relevant material information that is easily accessed and understood by stakeholders
B. Accountability Companies must be responsible for their performance
transparently and fairly
C. Responsibility Companies comply to the rules and regulations and carrying out
responsibility for society and environment
D. Independency Companies must be independently managed so that the companys
organ does not dominating each other and not be intervented by other party
E. Fairness Companies must consider the the shareholders and stakeholders interest

CHAPTER 3 Business Ethics and Behavioral Guidance

A. Corporate Values
1. Vision and mission
2. Needs to be adapted to business sector, character, and geographic location
3. Trustworthy, fair, and honest.
B. Business Ethics
1. Acted as a reference in carrying out interaction with stakeholders
2. Continuous application of corporate values and business ethics
3. Must have an agreement of business ethics formula that is constructed together.
C. Behavioral Guidance
1. Behavioral guidance function
2. Conflict of interest
3. Giving and receiving gifts and donations
4. Compliance to the regulation
5. Information confidentiality
6. Whistleblowing and whistleblowers protection

CHAPTER 4 Company Organ

Company organs, consisting of General Meeting of Shareholders (AGMS), Board of
Commissioners and Board of Directors, play an important role in the effective
implementation of GCG.
 Company organs must perform its functions in accordance with the provisions
applicable on the principle that each organ has an independence in performing its duties,
functions and responsibilities solely for the benefit of the company. Each duty, functions and
responsibilities are clearly stated in the KNKG.
General Principles:
A. General Meeting Shareholders
GMS is a forum for shareholders to take important decisions related to capital
invested in the company, taking into account the provisions of articles of association
and regulations. Decisions should be based on companys long term business
interest.
B. Board of Commissioners & Board of Directors
Organization of limited liability company in Indonesia adopts a two board system
consisting of Board of Commissioners and Directors. Although they have separate
authorities and responsibilities according to statue and regulations, they both have a
responsibility to maintain the company's long-term sustainability. To that end, Board
of Commissioners & the Board of Directors must have a common perception of the
company's vision, mission and values.
C. Board of Commissioners
The Board of Commissioners are responsible for supervising and providing advice to
the Board of Directors and ensures that the company implements GCG. The Board of
Commissioners shall not participate in making operational decisions and the position
of each member is equivalent.
D. Directors
The Board of Directors is responsible managing the company. Each member of the
Board of Directors can perform the duties and make decisions in accordance with the
division of duties and authority.

CHAPTER 5 Shareholders
As the owner of the capital, shareholders have certain rights and responsibilities of the
company which are in accordance with the laws and regulations of the company. In
exercising its rights and responsibilities, the shareholders must abide the following
principles:
Shareholders should be aware that in exercising their rights and responsibilities, they
must take account of the sustainability of the company
The company has to guarantee the fulfillment of rights and responsibilities of
shareholders on the basis of fairness in accordance with companys law and
regulations.
The guideline talks about shareholders responsibilities and rights as well as the companys
responsibility towards shareholder rights and obligations.
CHAPTER 6 Stakeholders
Stakeholders, in this term excluding the shareholders, are the parties that is being affected
by the actions of the company. Between company and stakeholders, there has to be a
relationship that is based on fairness and for the greater good. In this case, the scope of
stakeholders are limited to employees, business partners, and the society.
A. Companies guarantee that there will be no discrimination in order the employees to
have progress and to develop in their career.
B. Companies and business partners must work together to have a win-win solution
among them
C. Companies must take into account the public interest, especially the society and the
user of goods and services.

CHAPTER 7 Statement of the Implementation of GCG Guidelines

Each company is required to make a statement regarding the appropriateness of GCG
implementation with GCG Guideline in its annual report.
Moreover, the statement should be accompanied by a report regarding the structure
and mechanism of the companys organs as well as important information related to
GCG implementation.
To that end, all shareholders including regulators can see the extent of the GCG
guideline implementation.
CHAPTER 8 Practical Guidelines of the GCG Implementation
GCG implementation should be done systematically and continuously. To that end, a
practical guideline is needed as guide for firms in implementing GCG.
In the implementation, each company shall develop GCG guidelines of the company with
reference to these GCG Guidelines and Sector Guidelines.