Good Corporate Governance (GCG)

GCG Principles

PT Adaro Andalan Indonesia Tbk ("Adaro") continuously strives to implement good corporate governance ("GCG") by integrating environmental, social, and governance (ESG) aspects into its operational activities and business strategies. The implementation of GCG supports Adaro's sustainability and the achievement of its vision to become a leading Indonesian mining and energy group, which ultimately creates sustainable value for shareholders.

To implement GCG consistently and sustainably, Adaro has adopted 4 (four) governance pillars in accordance with the Indonesian General Guidelines for Corporate Governance (PUG-KI 2021), namely: ethical behavior, accountability, transparency, and sustainability, which are manifested in its various governance guidelines, including the Code of Conduct, the Board of Commissioners Charter, the Board of Directors Charter, the Audit Committee Charter, the Internal Audit Charter, and other policies.

Commitment to GCG Implementation Across All Levels of Adaro

The commitment to implementing GCG principles is supported by all levels within Adaro, from the Board of Commissioners, the Board of Directors, to the ranks below them.

With reference to the 4 (four) pillars of corporate governance, namely ethical behavior, accountability, transparency, and sustainability, Adaro maintains a commitment that:

1. The Board of Directors and the Board of Commissioners perform their roles and responsibilities independently to create sustainable value for the best long-term interests of the corporation and shareholders, while taking into account the interests of stakeholders.
   Members of the Board of Directors and the Board of Commissioners are selected and appointed in such a manner that the composition of the Board of Directors as the management organ and the composition of the Board of Commissioners as the supervisory organ are diverse, and each consists of Directors and Commissioners who possess the required commitment, knowledge, capabilities, experience, and expertise to properly fulfill the management role of the Board of Directors and the supervisory role of the Board of Commissioners. 
2. Remuneration is designed to effectively align the interests of members of the Board of Directors and the Board of Commissioners with the long-term interests of the corporation and sustainable value creation.
3. The Board of Directors and the Board of Commissioners maintain a close, open, constructive, professional, and mutually trusting working relationship for the best interests of the corporation.
4. Adaro acts ethically and responsibly and upholds organizational values and culture.
5. Adaro implements corporate governance practices integrated with the application of an internal control system, risk management, and an effective compliance management system to achieve corporate goals, vision, mission, objectives, and performance targets while conducting business with integrity.
6. Adaro makes accurate and timely disclosures regarding all material matters concerning the corporation as required by applicable laws and regulations.
7. Adaro protects and facilitates the exercise of shareholders' rights and ensures fair treatment of shareholders, including minority shareholders.
8. Adaro recognizes the rights of stakeholders established in applicable laws and regulations or based on agreed agreements and encourages active cooperation with stakeholders in creating wealth, employment, and financially sound business sustainability.

Structure of Adaro's Governance Organs

In accordance with the Law of the Republic of Indonesia Number 40 of 2007 concerning Limited Liability Companies as amended by the Government Regulation in Lieu of Law of the Republic of Indonesia Number 2 of 2022 concerning Job Creation as enacted into law under Law Number 6 of 2023 concerning the Enactment of Government Regulation in Lieu of Law of the Republic of Indonesia Number 2 of 2022 concerning Job Creation into Law ("UUPT"), Adaro's organs consist of the General Meeting of Shareholders ("GMS"), the Board of Directors, and the Board of Commissioners. Each organ holds a vital role in governance implementation and has its respective functions, duties, and responsibilities for the interest of Adaro in conducting business activities in line with the Articles of Association and applicable laws and regulations.

1. The GMS is an organ of Adaro that holds authority not granted to the Board of Directors or the Board of Commissioners, within the limits specified in the UUPT and/or the Articles of Association.
2. The Board of Commissioners is an organ of Adaro whose duty is to conduct general and/or special supervision in accordance with the Articles of Association and provide advice to the Board of Directors.
3. The Board of Directors is an organ of Adaro that holds full authority and responsibility for the management of Adaro for the interest of Adaro, in line with Adaro's purposes and objectives, and represents Adaro both in and out of court in accordance with the Articles of Association.

The following is the chart of Adaro's governance structure: