PP No[1]. 7 Tahun 2010 Ttg PJT II (Translated - Final)

THE REPUBLIC OF INDONESIA GOVERNMENT REGULATION

NUMBER 7 YEAR 2010

CONCERNING

JASA TIRTA II PUBLIC CORPORATION


NUMBER 7 YEAR 2010

CONCERNING


TABLE OF CONTENTS

CHAPTER I GENERAL PROVISIONS..............................................................- 2 -

CHAPTER II CORPORATION ESTABLISHMENT............................................- 4 -

Part One Legal Basis of Establishment....................................................- 4 -

Part Two Working Area...............................................................................- 4 -

Part Three Task and Responsibility.............................................................- 5 -

Part Four Water Resources Management Cost.........................................- 8 -

Part Five Special Task................................................................................- 8 -

Part Six Execution of SPAM Development............................................- 10 -

CHAPTER III CORPORATION STATUTES.....................................................- 11 -

Part One Name, Location and Time Period............................................- 11 -

Part Two Purpose and Objective.............................................................- 11 -

Part Three Capital........................................................................................- 12 -

Part Four Corporation Management.........................................................- 14 -

Paragraph 1 Appointment and Discharge of Member of the Board of Directors....................................................................................- 14 -

Paragraph 2 Tasks, Rights and Obligations of the Board of Directors.....- 23 -

Paragraph 3 Meetings of the Board of Directors.........................................- 31 -

Paragraph 4 Member of the Board of Directors’s Conflict of Interest.......- 34 -

Part Five Supervision................................................................................- 35 -

Paragraph 1 Appointment and Discharge of the Board of Supervisors....- 35 -

Paragraph 2 Tasks, Rights and Obligations of the Board of Supervisors - 43 -

Paragraph 3 Meeting of the Board of Supervisors......................................- 47 -

Part Six Long Term Plan.........................................................................- 50 -

Part Seven Work Plan and the Corporation Budget..................................- 51 -

Part Eight Reporting...................................................................................- 52 -

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Part Nine Internal Supervision Unit..........................................................- 56 -

Part Ten Audit Committee and Other Committees................................- 57 -

Part Eleven Expenditure of Income and Spare Budget..............................- 58 -

Part Twelve Joint Venture, Merger, Taking Over, and Changing of the Legal Entity of the Corporation..........................................................- 59 -

Part Thirteen Liquidation of the Corporation................................................- 60 -

Part Fourteen The Corporation Fiscal Year....................................................- 61 -

Part Fifteen The Corporation Employees....................................................- 61 -

Part Sixteen Issues of Obligations and Other Debt Securities...................- 62 -

Part Seventeen Procurement of Goods and Services......................................- 63 -

Part Eighteen Income of the Board of Directors and the Board of Supervisors - 63 -

Part Nineteen The Corporation Documents....................................................- 64 -

Part Twenty Writing Off and Handing Over the Corporation Assets.........- 64 -

Part Twenty One Bankruptcy...............................................................................- 64 -

Part Twenty Two Compensation........................................................................- 65 -

CHAPTER IV CLOSING PROVISIONS............................................................- 65 -

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NUMBER 7 YEAR 2010

CONCERNING


WITH THE GRACE OF ALMIGHTY GOD

THE PRESIDENT OF THE REPUBLIC OF INDONESIA,

Considering: a. whereas by the legislation of Law no.19 Year 2003 concerning

State Owned Company and the Government Regulation no. 45

Year 2005 concerning the Establishment, Management, Control

and Liquidation of State Owned Company, the Government

Regulation no. 94 Year 1999 concerning Jasa Tirta II Public

Corporation has to be adjusted;

b. whereas to support the national development,

business development is considered necessary by increasing the

tasks and activities of Jasa Tirta II Public Corporation;

c. whereas based on the consideration as stated in a

and b, and to execute the provision of Article 41 clause (2) Law

no. 19 Year 2003 concerning State Owned Company, the

promulgation of Government Regulation concerning Jasa Tirta II

Public Corporation is considered necessary;

Bearing in mind:

1. Article 5 clause (2) of the 1945 Constitution of the Republic of Indonesia;

2. Law no. 19 Year 2003 concerning State Owned

Company (State Gazette of the Republic of Indonesia Year 2003 no. 70,

Additional State Gazette of the Republic of Indonesia no. 4297);

3. Government Regulation no. 45 Year 2005

concerning the Establishment, Management, Audit and Liquidation of State

Owned Company (State Gazette of the Republic of Indonesia Year 2005 no.

117, Additional State Gazette of the Republic of Indonesia no. 4556);

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DECIDED:

to promulgate:

GOVERNMENT REGULATION

CONCERNING JASA TIRTA II PUBLIC CORPORATION

CHAPTER I

GENERAL PROVISIONS

Article 1

As used in this Government Regulation:

1. Jasa Tirta II Public Corporation further addressed as Corporation means the

State Owned Company as stipulated under the Law no. 19 Year 2003

concerning State Owned Company, which whole financial capital is owned by

the State in the form of State treasures, separated and not divided into shares.

2 . Management means activities carried out by the Board of Directors in their

effort to obtain the means and objective of the Corporation.

3 . Supervision means activities carried out by the Board of Supervisors to

appraise the Corporation by comparison between real situation and supposed

situation, in financial aspect and/or operational technique aspect.

4. Liquidation means the closing of the Corporation promulgated under

Government Regulation.

5. Water resources exploitation means the effort of water resources utilization to

fulfill business needs.

6. Minister means the minister assigned and/or authorized to represent the

Government as the financial capital owner of the Corporation, in accordance

with the legislated stipulations.

7. Technical Minister means the minister authorized to stipulate water resources

sector policy.

8. Board of Directors means part of the Corporation responsible for the

Corporation management for the necessity and purpose of the Corporation and

represents the Corporation within or outside the court.

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9. Auditor means part of the Corporation which task is to audit and advice the

Board of Directors in carrying out the Corporation management activities.

10. Maintenance means activities to take care of water sources and water

resources facilities to ensure the sustainable function of water sources and

water resources facilities.

11. Water resources mean water, water source and the water force in it.

12. Water source means natural or artificial water bucket in, on or under the land

surface.

13. Water resources management means efforts to plan, execute, monitor and

evaluate the activities of water resources conservation, water resources

utilization and control of water destructive force.

14. River basin means the unity of water resources management in one or more

river catchment areas and/or small islands with an area less than or equal to

2,000 km2.

15. River catchment area means a land area as the unity of river and its

tributaries, function to naturally catch, store and flow the water originated from

rainfall to lakes or sea, where its boundary on land is the topographical

boundary and its boundary on sea is the wet area which is still affected by land

activities.

16. River means the flow of water starting from spring till the estuary, bounded on

the right and left side and along the flow by boundary line.

17. Power supply means power generation starting from the generating point to

the consumption point.

18. Drinking water supply system, further addressed as SPAM means the unity of

physical (technical) and non-physical system of drinking water facilities and

infrastructure.

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CHAPTER II

CORPORATION ESTABLISHMENT

Part One

Legal Basis of Establishment

Article 2

The Corporation established under Government Regulation no. 20 Year 1970

concerning Jatiluhur Authority Public Corporation, as has been repeatedly modified

and rearranged, the last under Government Regulation no. 94 Year 1999 concerning

Jasa Tirta II Public Corporation, the establishment will be continued based on this

Government Regulation.

Part Two

Working Area

Article 3

(1) Under this Government Regulation, the Government continues to assign the

Corporation to carry out tasks and responsibilities in the exploitation of water

resources in the river basin and part of tasks and responsibilities in water

resources management aspect in the Corporation working area.

(2) The Corporation working area as mentioned in clause (1) consists part of

Cidanau, Ciliman, Ciujung, Ciliwung, Cisadane and Citarum river basins.

(3) Part of river basins as mentioned in clause (2) consists of some river

catchment areas comprises Bekasi, Cikeas, Cileungsi, Cikarang,

Cijambe, Cisadang,. Cikarang-Bekasi-Laut, Cilemahabang, Citarum, Citarik,

Ciharus, Ciharuman, Cirasea, Cipamokolan, Cidurian, Cikapundung,

Citepus, Cisangkuy, Cijalupang, Ciwideuy, Cibeureum, Cimahi,

Cicangkawung, Ciminyak, Cijeruk, Cilanang, Cijambu, Cihea, Cibodas,

Cisokan, Cibalagung, Cikundul, Cibadak, Cilalawi, Cisomang, Cileuleuy,

Cimeta, Cibeet, Cikao, Cisubah, Ciherang, Cibeber, Citaraje, Cijure,

Cigangsa, Cikaranggelam, Cilamaya, Cijengkol, Lamaya, Cikeruh,

Cilandak, Ciasem, Cibarubus, Cimuja, Cinangka, Cikamiri,

Cibolang, Cihujung, Citapen, Cijengkol Asem, Cipunagara, Cipabelah,

Cicenang, Cileat, Cikembang, Cineramas, Cijere, Cijurey, Cikandung,

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Cilamatan, Cigadung, Cilalanang, Cipancuh, Cibinuang rivers and their

tributaries, including the water resources infrastructures which operationally

have been turned over to the Corporation.

(4) Modification of tasks as mentioned in clause (1) either increase or decrease,

will be stipulated in accordance with the legislated regulation.

Part Three

Task and Responsibility

Article 4

(1) Task and responsibility to carry out exploitation of water resources as meant in

Article 3 clause (1) consist of:

a. service and guaranty the water availability to fulfill the interest of water

resources exploitation by constantly prioritizing the fulfillment of water

demand for daily basic needs and irrigation for public agriculture in the

existing irrigation system;

b. surface water resources utility to fulfill hydropower generation needs, and

fulfillment of other exploitation needs; and

c. assistance in the issuance of permit consideration (recommendation) by the

Government regarding the utilization and exploitation of water resources.

(2) Task and responsibility to carry out part of task and responsibility in water

resources management aspect in the river basin as meant in Article 3 clause

(1) consist of:

a. operation and maintenance of water resources infrastructures comprising

water regulation effort including water drain and activities arrangement of

the closing and opening of water resources infrastructure gates, calibration

of discharge/gate/ structure measuring device, data collection, monitoring

and evaluation;

b. operation of primary irrigation system in North Jatiluhur and South Jatiluhur

Irrigation Areas consisting main structures, primary canals, its drainage

canals, diversion structures, intakes, offtakes and their appurtenant

structures;

c. operation of secondary canals consisting secondary canals, its drainage

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canals, diversion structures, intakes, offtakes and their appurtenant

structures;

d. maintenance of water source consisting efforts to conserve and protection

water source to maintain its conservation;

e. conduct maintenance of primary irrigation canals in North Jatiluhur and

South Jatiluhur Irrigation Areas;

f. carry out monitoring, calibration of discharge measurement device,

evaluation of water quantity and quality of the water sources under the

Corporation responsibility;

g. disseminate the monitoring and evaluation result as meant in letter f to

water resources consumers, community and water resources Board of

Directors;

h. assist the Government in the execution of water resources conservation

and control of water destructive force in accordance with the Corporation

ability;

i. flushing for river maintenance; and

j. provide guidance and information to the community to improve the

community empowerment.

(3) The Corporation will conduct its business activities based on the stipulation

stipulated under this Government Regulation and other legislated regulations.

(4) Exploitation of water resources as meant in clause (1) will be carry out by

constantly prioritizing the harmonious management principles between social

function, environmental function, and water resources economy function.

(5) Operation and maintenance as meant in clause 2 letter a to f will be carried out

in accordance with operation standard promulgated by the Technical Minister.

(6) Guidance to the Board of Directors and Board of Supervisors in carrying out

their task and responsibility as meant in clause (1) and clause (2) will be

stipulated by the Technical Minister.

Article 5

(1) Government’s Assets other than meant in Article 4 clause (2) which have been

turned over by the Technical Minister to the Corporation preceding the

effectiveness of this Government Regulation, will be reported by the Technical

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Minister to the Minister of Finance.

(2) The Government will forward the task to the Corporation to operate and carry

out the maintenance of the Government’s Assets as meant in clause (1) to be

operated by the Corporation in carrying out public service as the Government’s

task in the river catchment areas of part of Cidanau, Ciliman, Ciujung, Ciliwung,

Cisadane and Citarum river basins.

(3) The Corporation will get the authority to take benefit of the Government’s

assets as meant in clause (1) in which outcome will be used by the Corporation

for the operation and maintenance cost of the assets.

(4) Operation and maintenance cost as meant in clause (3) is the total cost to be

expended by the Corporation to manage and to optimize the benefit of

Government’s assets which have been turned over to the Corporation.

Article 6

For the assets as meant in Article 4 clause (2), letter a, letter b, letter c and letter e

and Article 5 clause (1), the Corporation may propose objection and/or deduction of

Land and Building Tax in accordance with the stipulation under the tax legislated

regulation.

Part Four

Water Resources Management Cost

Article 7

(1) The Corporation is authorized to collect, receive and use the water resources

management service cost to finance all the task and responsibility activities as

meant in Article 3 clause (1)

(2) The tariff of water resources management service cost for surface water

utilization for drinking water business, industry business, and hydropower

generation business will be determined by the Technical Minister based on the

Board of Director’s proposal.

(3) The determination of tariff other than meant in clause (2) will be determined by

the Board of Directors by taking into account the utilization cost formulation

according to the stipulation under the legislated regulations.

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(4) Further stipulations regarding the method of collection activities and the

revenue of water resources management service cost as meant in clause (1)

will be arranged by the Board of Directors.

Part Five

Special Task

Article 8

(1) The Government may grant emergency special task to the Corporation in

carrying out part of the Government task to conduct public benefit function.

(2) In the case where the task as meant in clause (1) is reviewed as financially not

feasible, the Government will be obliged to compensate all expenditures

including its expected margin to compensate required indirect cost to carry out

the meant task, finance under the State Income and Expenditure Budget

(APBN).

(3) Emergency special task as meant in clause (1) will be granted by the Technical

Minister in the activities related to public safety.

(4) Tasks other than meant in clause (3) shall be subject to the Minister’s approval.

(5) In carrying out the Government’s special task as meant in clause (1), the

Corporation has to strictly separate the accountancy.

Article 9

(1) The Corporation will conduct the general benefit of qualified and appropriate

water resources to fulfill the community living needs for public social service,

welfare and safety within the Corporation working area.

(2) Social service, welfare and public safety as meant in clause (1) comprises:

a. surface water supply for basic daily needs;

b. irrigation water supply for public agriculture in the

existing irrigation system;

c. flood control;

d. water resources conservation; and

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e. execute SPAM and sanitation development for

house holds.

(3) Execution of SPAM and sanitation development as meant in clause (2) letter e

shall be carried out outside of the service area of local government company

where the execution is taking place and shall be based on the approval of the

local government.

(4) The tariff determination for SPAM and sanitation development as meant in

clause (3) will be determined by the chief of the local government based on the

Board of Directors’s proposal, upon approval from the Board of Supervisors.

(5) For social service, welfare and public safety as meant in clause (2), the

Government within certain limits may provide management financial support to

the Corporation, which budget source is the State Income and Expenditure

Budget (APBN).

(6) In the financing for the execution of water resources public benefit as meant in

clause (1), the Corporation has to strictly make separation in the working plan

and the Corporation budget.

Part Six

Execution of SPAM Development

Article 10

(1) The Corporation shall execute SPAM development locally and / or regionally.

(2) The execution of SPAM development as meant in clause (1) will be carried out

by the Corporation down to the production unit, including its operational

equipments and facilities to fulfill the flow drinking water demand drinking water

regional company and/or other SPAM executors, based on the SPAM

development masterplan promulgated by the Government and/or local

government.

(3) The implementation of SPAM development execution as meant in clause (1)

will be carried out by the Corporation upon the cooperation agreement with the

regional drinking water company and/or other SPAM executors.

(4) The execution of SPAM development as meant in clause (3) and its operation

will be under the responsibility of the Corporation.

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(5) The Corporation may manage the SPAM infrastructures constructed by the

Government and/or as the cooperation result between the Government and the

company.

(6) The Corporation may execute SPAM development for drinking water service

directly to the consumer’s group outside of the service area of the local

government’s company where the SPAM development is taking place, in the

working area of the Corporation upon the approval of the local government.

(7) The tariff determination for drinking water supply service as meant in clause (6)

will be determine by the local government’s chief based on the Board of

Directors’s proposal, upon approval by the Board of Supervisors.

CHAPTER III

CORPORATION STATUTES

Part One

Name, Location and Time Period

Article 11

(1) The name of the corporation in Perusahaan Umum (Perum) Jasa Tirta II or

abbreviated as Perum Jasa Tirta II.

(2) The Corporation is located in Purwakarta, West Java, with its head office in

Jatiluhur, Purwakarta, West Java.

(3) The Corporation may establish branch or representative office in other place,

inside or outside Republic Indonesia as agreed by the Manager upon approval

by the Board of Supervisors.

Article 12

The Corporation is established for a period without limitation of time.

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Part Two

Purpose and Objective

Article 13

(1) The purpose and objective of the Corporation are to participate and support the

Government’s policy and program in economy aspect and national

development in general especially in field of Exploitation and Management of

Water Resources, and optimize the Corporation capability to produce material

and service based on the Corporation healthy management principles.

(2) To obtain the purpose and objective as meant in clause (1), the Corporation will

conduct the following business:

a. raw water supply for drinking water, industry, agriculture, flushing, ports,

hydropower generation, and fulfillment of other water requirements;

b. hydropower supply to State Electrical Company (PLN) and/or other than

PLN in accordance with the stipulation under the legislated regulation;

c. hydropower generation and distribution, drinking water, consultant service

in water resources technology, leasing of heavy equipment, and water

quality laboratory service; and

d. SPAM development.

(3) Other than the business activities as meant in clause (2), the Corporation will

conduct efforts on optimizing the Corporation’s capability potency for offices,

warehouses, tourism, hotels and resorts, sport and recreation, hospital,

telecommunication and energy power infrastructures, leasing and exploitation

of the Corporation’s facilities and infrastructures.

Part Three

Capital

Article 14

(1) The Corporation’s capital is a separated state asset and not divided into

shares.

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(2) The amount of Corporation’s capital is the total value of joined

state capital in the Corporation as meant in Article 2 where the total amount is

Rp164.547.635.935,00 (one hundred sixty four billion five hundred forty seven

million six hundred thirty five thousand and nine hundred thirty five rupiah) with

the following details:

a. an amount of Rp. 46,000,000,000.00 (forty six billion rupiah) based on

Government Regulation no. 42 Year 1990 concerning Perusahaan Umum

(Perum) Otorita Jatiluhur j.o Minister of Finance Decree no.

202/KMK.13/1992;

b. an amount of Rp 60,287,829,310.00 (sixty billion two hundred eighty seven

million eight hundred twenty nine thousand three hundred ten rupiah),

based on Government Regulation no. 78 Year 1998 concerning the

Increase of Joint State Capital of the Republic of Indonesia to the Capital

of Perusahaan Umum (Perum) Otorita Jatiluhur;

c. an amount of Rp18,439,506,625.00 (eighteen billion four hundred thirty

nine million five hundred six thousand six hundred twenty five rupiah),

based on the Government Regulation no. 90 Year 2000 concerning the

Increase of Joint State Capital of the Republic of Indonesia to the capital

of Perusahaan Umum (Perum) Jasa Tirta II; and

d. an amount of Rp 39,820,300,000.00 (thirty nine billion eight hundred twenty

million three hundred thousand rupiah), based on the Government

Regulation no. 4 Year 2009 concerning the Increase of Joint State Capital

of the Republic of Indonesia to the capital of Perusahaan Umum (Perum)

Jasa Tirta II.

(3) Any changes in the joint State capital in the Corporation, either addition from

the State Income and Expenditure Budget (APBN) or the deduction of State

capital will be stipulated under a Government Regulation

(4) Any changes in the joint State capital in the Corporation as an addition of State

capital from spare capitalization and other sources will be promulgated by the

Minister.

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Part Four

Corporation Management

Paragraph 1

Appointment and Discharge of Member of the Board of Directors

Article 15

The management of the Corporation will be carried out by a Board of Directors.

Article 16

(1) The member of Board of Directors will be appointed and discharged by the

Minister.

(2) In appointing a member of Board of Directors, the Minister may search for the

Technical Minister’s advice.

Article 17

(1) Distribution of tasks and rights of the member of Board of Directors will be

determined by the Minister.

(2) The Minister may delegate the rights as meant in clause (1) to the Board of

Supervisors.

Article 18

(1) Candidate of the Board of Directors member to be appointed as member of the

Board will be the candidate who has passed the fit and proper test done by

professional team and/or institution established by the Minister.

(2) The stipulation as meant in clause (1) will not be applied to the reappointment

of the similar position for the Board member which is considered capable to

carry out his/her task properly during his/her appointment period.

(3) The candidate of the Board of Directors which has passed the fit and proper

test as meant in clause (1) and the Board member which has been reappointed

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as meant in clause (2) will be obliged to sign a management contract prior to

his/her appointment as member of the Board of Directors.

Article 19

(1) Those who can be appointed as member of the Board of Directors are

individuals who are capable to take legal actions and have never been

declared bankrupt or become a member of Board of Directors or Committee or

Board of Supervisors which have been found guilty to cause a company or

Public Corporation declared bankrupt or persons which have never been

punished due to criminal act which caused state financial loss.

(2) Beside the fulfillment of the criteria as meant in clause (1), those who can be

appointed as member of the Board of Directors are individuals who meet the

criteria of expertise, integrity, leadership, experience, honesty, good attitude,

and possess a high dedication toward the Corporation improvement and

development.

(3) The fulfillment of the conditions as meant in clause (1) has to be proven by a

declaration letter signed by the candidate of the Board of Directors and will be

kept by the Corporation.

(4) The appointment of a member of Board of Directors which does not meet the

conditions as meant in clause (1) will be legally cancelled starting from the

finding date of the conditions unfulfillment by other member of the Board or by

the Board of Supervisors.

Article 20

(1) The number of members of the Board of Directors will be determined by the

Minister in accordance with the requirements.

(2) In the event where the number of Board of Directors member is more than one

person, one of them has to be appointed as President Director.

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Article 21

Member of the Board of Directors will be appointed for an appointment period of 5

(five) years and will be allowed to be reappointed for 1 (one) appointment period.

Article 22

(1) In the event of a vacuum position of a member of the Board of Directors, the

following stipulations will be arranged:

a. The Minister has to fill in the vacuum position not later than 30 (thirty)

days since the date of the vacuum position occurred.

b. during the period of the vacuum position of a member of the Board of

Directors and the Minister has not yet filled in the vacuum position of the

member of the Board as meant in letter a, Board of Supervisors will

appoint one of the other members of the Board or the Minister may

appoint another person to temporarily conduct the tasks of the vacuum

member of the Board with similar tasks, rights and obligations.

c. in the event where the vacuum position of a member of the Board of

Directors is due to the termination of the appointment period and the

Minister has not yet appointed a new member, the terminated member

may temporarily conduct the similar tasks and rights till the appointment

of definitive member of Board of Directors, and

d. the task executor of the vacuum member of the Board of Directors as

meant in letter b and letter c, other than the member of the Board which is

still in function, will receive salary and allowance similar to the vacuum

member of the Board, not including retirement compensation.

(2) In the event of vacuum of all positions of the Board of Directors, the following

stipulations will be arranged:

a. The Minister has to fill in the vacuum position not later than 30 (thirty)

days since the date of the vacuum position occurred.

b. during the period of the vacuum position of the Board of Directors and the

Minister has not yet filled in the vacuum position as meant in letter a, the

Corporation will be temporarily managed by the Board of Supervisors, or

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other persons appointed by the Minister with similar tasks, rights and

obligations;

c. to conduct the management as meant in letter b, Board of Supervisors

may execute all together or appoint one or more person among them to

execute;

d. in the event of vacuum of all positions of the Board of Directors is due to

the termination of the appointment period and the Minister has not yet

appointed their successors, all the terminated members of the Board of

Directors may be appointed by the Board of Supervisors or Minister to

carry out their job as members of the Board of Directors with similar

tasks, rights and obligations; and

e. the task executor of the vacuum member of the Board of Directors as

meant in letter b and letter c, other than Board of Supervisors will receive

salary and allowance and/or facilities similar to the vacuum member of

the Board of Directors, not including retirement compensation.

Article 23

(1) Any member of the Board of Directors has the right to resign from his/her

position by written notice to the Minister and copy to the Board of Supervisors

and other members of the Board of Directors.

(2) The resign notice as meant in clause (1) has to be received by the Minister not

later than 30 (thirty) days prior to the effective date of resignation.

(3) In the event of resignation where the resign notice as meant in clause (2)

mentions the effective date of resignation is less than 30 (thirty) days of the

acceptance date of the notice, the effective resignation date will be counted 30

(thirty) days after the notice acceptance date by the Minister.

(4) In the event of resignation as meant in clause (2) does not mention the

effective date of resignation, the meant resigned member of Board of Directors

will automatically resign starting 30 (thirty) days after the acceptance date of

resign notice by the Minister.

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Article 24

(1) Among members of the Board of Directors and between the members of Board

of Directors and members of the Board of Supervisors, no blood relative

relationship or marital relationship is allowed down to the third degree, neither

straight line nor side line.

(2) In the event where the situation as meant in clause (1) occurs, the Minister has

the right to discharge one of them.

Article 25

(1) Member of Board of Directors is not allowed to hold double position as:

a. member of Board of Directors in another State Owned Business

Enterprise, Regional Government’s Business Enterprise , or Private

Business Enterprise;

b. member of Commissioner Board or Board of Supervisors in State Owned


c. structural and other functional position in central or regional government

institutions;

d. other positions in accordance with the stipulations under the legislated

regulations; and/or

e. other positions that might create conflict of interest.

(2) A member of the Board of Directors who holds other position as meant in

clause (1), will end his appointment period as member of the Board of Directors

starting from the date when the double positioning occurs.

(3) In the case where an individual who will be appointed as a member of the

Board of Directors is holding a position which is not allowed to be duplicated

with the position in the Board of Directors as meant in clause (1), he/she will be

obliged to resign from his/her old position not later than 30 (thirty) days starting

from the date of his appointment as a member of the Board of Directors.

(4) If a member of the Board of Directors does not resign from his previous

position as meant in clause (3), his position as a member of the Board of

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Directors will be terminated by the passing of 30 (thirty) days as meant in

clause (3).

Article 26

(1) Member of the Board of Directors is not allowed to become political party

committee, candidate for legislative member, legislative member, candidate for

Regional Chief, candidate for Vice of Regional Chief, Regional Chief, and/or

Vice of Regional Chief.

(2) Political party committee, candidate for legislative member, legislative member,

candidate for Regional Chief, candidate for Vice of Regional Chief, Regional

Chief, and/or Vice of Regional Chief are not eligible to be appointed as a

member of the Board of Directors.

(3) In the event where a member of the Board of Directors becomes a political

party committee, candidate for legislative member, legislative member,


Chief, and/or Vice of Regional Chief, he/she will terminate his/her position as a

member of the Board of Directors starting from the date of his/her appointment

as a political party committee, candidate for legislative member, legislative

member, candidate for Regional Chief, candidate for Vice of Regional Chief,

Regional Chief, and/or Vice of Regional Chief.

Article 27

(1) A member of the Board of Directors may be discharged prior to the end of his

appointment period based on the Minister’s Decree with explanations of the

reasons.

(2) The discharge of a member of the Board of Directors as meant in clause (1) will

be carried out based on facts that the member of the Board of Directors

concerned among others:

a. is not able to fulfill his obligations as agreed in the management contract;

b. is not capable to carry out his/her task properly;

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c. does not follow the stipulations under the legislated regulations and/or

statute stipulations;

d involve in acts which cause loss to the Corporation and/or State;

e. conducts unethical and/or improper acts where as a member of the Board

of Directors of a state owned business enterprise is supposed to be

respected.

f. declared as guilty based on the court verdict under the fixed force of law;

or

g. resign.

(3) Other than the discharge reasons of the member of the Board of Directors as

meant in clause (2), for the sake of the importance and objective of the

Corporation, the Board of Directors may be discharged by the Minister based

on other reasons considered correct by the Minister.

(4) The plan to discharge a member of the Board of Directors as meant in clause

(1) will be informed to the member of the Board of Directors orally or written by

the Minister or the appointed official in charge.

(5) The decision of discharge due to the reasons as meant in clause (2) letter a to

letter d and clause (3) will be taken after the person concerned has been given

chance to defend himself/herself.

(6) The self defend as meant in clause (5) will be submitted in written form to the

Minister or the appointed official in charge not later than 14 (fourteen) days

since the date when the member of the Board of Directors concerned has been

informed as meant in clause (4).

(7) In the event where the discharged member of the Board of Directors has

defend him/herself or when being informed declares no objection on his/her

discharge plan, the time stipulation as meant in clause (6) is deemed fulfilled.

(8) While the discharge plan is still under process, the member of the Board of

Directors concerned is obliged to carry out his/her task as should be.

(9) The discharge with reasons as meant in clause (2) letter d and letter f is a

disgraced discharge.

Article 28

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(1) The position of a member of the Board of Directors will be terminated when:

a. passing away;

b. end of appointment period;

c. discharged based of the Minister’s decree;

and/or

e. does not anymore fulfill the conditions as a member of the Board of Directors

based on the stipulations under this Government Regulation and other

legislated regulations.

(2) The stipulation as meant in clause (1) letter d includes but not limited to the

prohibited double position and resignation.

(3) Member of the Board of Directors who terminates prior to or after the end of

his/her position period, except terminates due to death will remain responsible

for all his/her acts which responsibility has not been accepted by the Minister.

Article 29

The Board of Supervisors may discharge a member of the Board of Directors

temporarily when the member of the Board of Directors concerned acts against this

Government Regulation, indicated to cause Corporation loss, neglect his/her

obligations, or existence of emergency reasons for the sake of the Corporation, by

considering the following stipulations:

a. the decision taken by the Board of Supervisors to temporarily discharge the

member of the Board of Directors is in accordance with the decision

determination method of the Board of Supervisors;

b. the temporary discharge as meant in letter a has to be informed in written

notice to the member concerned with reasons which causes the act with copy

to the Minister and the Board of Directors;

c. the written notice as meant in letter b has to handed in a period not later than 2

(two) days after the date of the determination of the temporary discharge;

d. the temporarily discharged member of the Board of Directors will not be entitled

to conduct the Corporation Management and to represent the Corporation

neither inside nor outside of the court;

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e. within not later than 60 (sixty) days after the temporary discharge as meant is

letter d, the Minister has to decide whether to withdraw or to strengthen the

temporary discharge decision after the member of the Board of Directors

concerned has been given chance to defend himself/herself; and/or

f. if the 60 (sixty) days period as meant in letter e exceeds and the Minister is not

able to make any decision, the temporary discharge will then be cancelled.

Paragraph 2

Tasks, Rights and Obligations of the Board of Directors

Article 30

The Board of Directors will conduct all actions related to the Corporation

Management for the sake of the Corporation and in accordance with the purpose

and objection of the Corporation and representing the Corporation either inside or

outside the Court regarding all matters and occasions, with limitation as stipulated in

the legislated regulations, Statutes, and/or Minister Regulation.

Article 31

In carrying out tasks as meant in Article 30, the Board of Directors is entitled to:

a. determine the Corporation management policy;

b. arrange the handing over of the power of the Board of Directors to one or more

member of the Board of Directors to take decision upon the name of the Board

of Directors or represent the Corporation either inside or outside the court;

c. arrange the handing over of the power of the Board of Directors to one or some

Corporation employee either individually or altogether or to other person, to

represent the Corporation either inside or outside the court;

d. arrange the stipulations regarding the Corporation labour force including salary

decision, pension or old age security, and other income for the workers of the

Corporation based on the legislated regulations, with the condition where

salary decision, pension or old age security, and other income for the workers

21

of the Corporation which exceed the obligation as stipulated under the

legislated regulation, will be upon prior approval of the Minister;

e. to recruit and discharge the Corporation workers based on the Corporation

labour force regulation and legislated regulations;

f. to recruit and discharge secretary of the Corporation;

and

g. to conduct all actions and other deeds regarding the Corporation management

and asset ownerships, to bind the Corporation with other parties and/or other

parties with the Corporation, and represent the Corporation either inside or

outside of the court regarding all matters and all occasions, with limitation as

stipulated in the legislated regulation, Statutes, and/or Minister regulations

stipulated based on legislated regulations.

Article 32

In carrying out tasks as meant in Article 30, the Board of Directors will be obliged to:

a. manage and guarantee the execution of the Corporation efforts and activities

according to its purpose and objective and its business activities;

b. prepare on time the Corporation Long Term Plan, Work Plan and Corporate

Budget including its amendments, and submit them to the Board of Supervisors

and the Minister to obtain legalization form the Minister according to the

effective regulation;

c. provide presentation to the Minister regarding the Corporation Long Term Plan

including work plan and the Corporate budget;

d. prepare the Board of Directors minutes of meetings;

e. prepare annual reports as the form of the Corporation Management

responsibility and financial documents in accordance with the Law concerning

Corporation Documents;

f. prepare financial report based on the Financial Accountancy Standard and its

submittance to Public Accountant to be audited;

g. submit annual report including financial report to the Minister to be approved

and legalized;

h. provide explanation to the Minister regarding annual report;

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i. maintain Board of Supervisors minutes of meetings, Board of Directors minutes

of meetings, annual reports, the Corporation’s financial documents, and other

documents;

j. store at the Corporation location the Board of Supervisors and Board of

Directors minutes of meetings, annual reports, financial documents, and other

documents;

k. prepare accounting system according to Financial Accountancy Standard and

based on the principles of internal control, especially Management function,

recording, storage, and supervision;

l. provide periodic report following method and time according to the effective

stipulation, and other reports any time requested by the Board of Supervisors

and/or the Minister;

m. prepare the organization scheme of the Corporation, completed with its

descriptions and tasks;

n. provide explanation to the member of the Board of Supervisors and Minister all

inquiries or as requested;

o. prepare and determine the blue print of the Corporation organization; and

p. carry out other obligations in accordance with the stipulation which is regulated

under this Government Regulation and promulgated by the Minister based on

the legislated regulation.

Article 33

(1) In carrying out their tasks, the Board of Directors will be obliged to fully put their

force, ideas, attention and devotions to the Corporation tasks, obligation and

objective achievement.

(2) In carrying out their tasks, the member of the Board of Directors will be obliged

to obey the Corporation Statutes and legislated regulations, and will be obliged

to carry out the principles of professionalism, efficiency, transparency, self

standing, accountability, responsibility, and sensibility.

(3) In managing the Corporation, the Board of Directors will carry out guidance

given by the Minister which will not contradict the legislated regulations and/or

the Statutes.

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Article 34

(1) Any member of the Board of Directors will be obliged with their good intentions

and full responsibility to carry out their task for the sake of the Corporation

importance and business in accordance with the legislated regulations.

(2) Any member of the Board of Directors personally will be fully responsible for

the loss of the Corporation if the person concerned is guilty or careless in

carrying out his/her duties for the importance and business of the Corporation.

(3) Member of the Board of Directors will not be responsible for the loss as meant

in clause (2) when he/she can prove that:

a. the loss is not due to his/her fault or negligence;

b. has carried out the Management with good intentions and carefulness to

the importance and according to the purpose and objective of the

Corporation;

c. does not have any conflict of interest neither directly nor indirectly to the

Management actions which have caused the loss; and

d. has put acts to prevent the loss or the continuation of the loss.

(4) Any actions carry out by a member of the Board of Directors beyond the

decisions agreed in the Board of Directors meetings will become his/her

personal responsibility till the action concerned is approved in the Board of

Directors meeting.

Article 35

(1) The following acts of the Board of Directors will be subject to written approval

from the Board of Supervisors:

a. guarantying permanent assets to withdraw short term credits;

b. organizing cooperation with other business enterprise or parties in the

form of licensing, management contract, asset leasing, operation

cooperation, Build Operate Transfer (BOT), Build Own Transfer (BOwT),

Build Transfer Operate (BTO), and other cooperation within a certain

value or time period determined by the Minister;

24

c. accepting or providing intermediate term or long term loans, except for

loans (debts or receivables) due to business transaction, and loans

provided to subsidiary Corporation with a condition that the loan provided

to the subsidiary Corporation is reported to the Board of Supervisors;

d. writing off jammed receivables and dead goods stock from the book

keeping;

e. releasing moving permanent assets with economic life time commonly

valid in industry which in general is 5 (five) years;

and/or

f. determining the organization structure 1 (one) level below the Board of

Directors.

(2) In order to obtain the approval as meant in clause (1), the Board of Directors

will submit written proposal to the Board of Supervisors with all necessary

documents.

(3) Within not more than 30 (thirty) days after the receipt date of the Board of

Directors’s proposal, the Board of Supervisors will be obliged to give their

decision.

(4) In the event where the Board of Supervisors may still need information or

additional documents from the Board of Directors, the Board of Supervisors will

request the information and/or additional documents concerned from the Board

of Directors within the time range as meant in clause (3).

(5) Within not more than 30 (thirty) days after the receipt date of the information

and/or additional documents concerned from the Board of Directors, the Board

of Supervisors will be obliged to give their decision.

Article 36

(1) The following acts may only be carried out by the Board of Directors upon

written approval from the Minister:

a. guarantying permanent asset to withdraw intermediate term or long term

credit;

b. conduct capital participation to other corporation;

c. establish corporation subsidiary and/or joint venture corporation;

25

d. releasing capital participation to corporation subsidiary and/or joint

venture corporation;

e. conduct merger, fusion, taking over, separation, and liquidation of

corporation subsidiary and/or joint venture Corporation;

f. corporation binding as a guarantor;

g. organizing cooperation with other business enterprise or parties in the

form of licensing, management contract, asset leasing, operation

cooperation, Build Operate Transfer (BOT), Build Own Transfer (BOwT),

Build Transfer Operate (BTO), and other cooperation within a certain

value or time period exceeding the stipulation determined by the Minister

as meant in Article 35 clause (1) letter b;

h. halting the collection of written off jammed receivables;

i. releasing and writing off the Corporation permanent assets, except

moving permanent assets with economic life time commonly valid in

industry which in general is 5 (five) years;

j. determining the blue print of the organization of the Corporation;

k. determining and changing the logo of the Corporation;

l. conduct other acts and acts as meant in Article 35 clause (1) not yet

determined in the Corporation Work Plan and Budget;

m. establishing foundation, organization, and/or association related either

directly or indirectly to the Corporation which will have impact to the

Corporation;

n. allocation of fixed and routine Corporation cost for the foundation,

organization and/or association related either directly or indirectly to the

Corporation; and/or

o. proposing representative of the Corporation to be a candidate of the

member of Board of Directors and/or Board of Commissioners in a joint

venture and/or corporation subsidiary by providing significant contribution

to the Corporation and/or strategically valued as stipulated by the

Minister.

(2) To obtain written approval from the Minister as meant in clause (1), the Board

of Directors will submit written proposal to the Minister attached with written

comment from the Board of Supervisors and the necessary documents.

26

(3) To obtain written comment from the Board of Supervisors as meant in clause

(2), the Board of Directors will submit written proposal to the Board of

Supervisors attached with the necessary documents.

(4) Within not more than 30 (thirty) days upon the date of the receipt of the Board

of Directors’s proposal as meant in clause (3), the Board of Supervisor will be

obliged to give the written comments.

(5) In the event where the Board of Supervisors may still need information or

additional documents from the Board of Directors, the Board of Supervisors will

request the information and/or additional documents concerned from the Board

of Directors within the time range as meant in clause (4)

(6) In the event where the Board of Supervisors does not give written comments

and do not request any information and/or additional documents from the

Board of Directors within the time range as meant in clause (4), the Board of

Directors will submit written proposal to the Minister to obtain written approval

without written comments from the Board of Supervisors with an explanation

regarding the absence of the written comments from the Board of Supervisors.

(7) Within not more than 30 (thirty) days upon the date of the receipt of the

information and/or additional documents from the Board of Directors as meant

in clause (5), the Board of Supervisors will be obliged to give written

comments.

(8) In the event where within not more than 30 (thirty) days upon the date of the

receipt of the information and/or additional documents from the Board of

Directors as meant in clause (5) the Board of Supervisors do not give any

written comments, the Board of Directors will submit proposal to the Minister to

obtain written approval with explanation regarding the absence of written

comments from the Board of Supervisors.

Article 37

(1) Based on the Board of Supervisors’s proposal, the Minister may stipulate the

Board of Directors to act as meant in Article 35 without written approval from


27

(2) The Minister may delegate the authority to approve the acts of Board of

Directors as meant in Article 36 t the Board of Supervisors.

(3) Whenever required for the sake of the Corporation safety, the Minister may

stipulate other limitations to the Board of Directors.

Article 38

(1) To carry out task as meant in Article 30, unless decided different by the Board

of Directors, the President Director may and entitled to act for and on behalf of

the Board of Directors and representing the Corporation , with a condition that

all the acts of the President Director has been agreed in the Board of Directors

meeting.

(2) In the event of the absence or unavailability of the President Director due to

reasons not necessary proven to the third party, one of the Directors appointed

by the President Director will be entitled to act on behalf of the Board of

Directors.

(3) In the event where the President Director does not do any appointment, one of

the Directors will thus be appointed by and among the available member of the

Board of Directors, which will be entitled to act on behalf of the Board of

Directors.

(4) In the event where the appointment as meant in clause (3) does not carried

out, one of the Directors with the longest appointed member of the Board of

Directors will be entitled to act on behalf of the Board of Directors.

(5) In the case where the Director with the longest appointed member of the Board

of Directors is more than 1 (one) person, the Director as meant in clause (4)

which will be entitled to act on behalf of the Board of Directors will be the oldest

one.

Article 39

The Board of Directors will be entitled to appoint one or more person as his/her

representative to act a certain law by giving a special power as arranged in the

power of attorney.

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Article 40

(1) Distribution of tasks and rights of each member of the Board of Directors will be

determined by the Minister.

(2) The Minister may delegate his authority regarding distribution of tasks and

rights of the Board of Directors as meant in clause (1) to the Board of

Supervisors.

Paragraph 3

Meetings of the Board of Directors

Article 41

(1) All decisions of the Board of Directors will be taken in the meeting of the Board

of Directors.

(2) Decision of the Board of Directors may as well be taken outside the meeting of

the Board of Directors as long as all members of the Board of Directors agree

on the decided method and subject.

(3) In every meeting of the Board of Directors, minutes of meeting has to be

prepared, signed by the chairman of the meeting of the Board of Directors and

all members of the Board of the Directors attended, consists of discussed

matters and decided, including statements of disapproval from the Board of

Directors if any.

(4) Copy of the minutes of meeting as meant in clause (3) will be submitted to the

Board of Supervisors as information.

Article 42

(1) The Board of Directors will hold meetings when deemed necessary by one or

more member of the Board of Directors or upon written request from one or

more member of the Board of Supervisors or Minister with explanation on

matters to be discussed.

29

(2) The meeting of the Board of Directors will be held at the Corporation domicile,

at the business location of the Corporation, or other venues within the Republic

of Indonesia as determined by the Board of Directors.

(3) Invitation to the meeting of the Board of Directors will be done in written form

by the member of the Board of Directors entitled to represent the Corporation

and submitted not later than 3 (three) days prior to the meeting or in a shorter

time in emergency situation, not including the date of invitation and the date of

the meeting.

(4) In the meeting invitation, meeting agenda, date, time and venue has to be

stated.

(5) The meeting of the Board of Directors is valid and entitled to take any bounded

decision if attended by more than ½ (one half) of the total number of the

member of the Board of the Directors or its representative.

(6) In the event where the meeting of the Board of the Directors is held without any

written invitation, the meeting will be deemed valid and entitled to take any

bounded decision if attended by all members of the Board of Directors or its

representative.

(7) In the miscellaneous agenda, the meeting of the Board of Directors will not be

entitled to take any decision unless all member of the Board of Directors or its

legal representative attend and agree on the meeting agenda to become

miscellaneous agenda.

Article 43

(1) A member of the Board of Directors may be represented in the meeting only by

the other member of the Board of Directors based on written power of attorney

given for the specific need.

(2) A member of the Board of Directors may represent only one other member of

the Board of Directors.

Article 44

(1) Meeting of the Board of Directors will be chaired by the President Director.

30

(2) In the event where the President Director does not attend or not available, the

meeting of the Board of Directors will be chaired by a Director specially

appointed by the President Director.

(3) In the event where the President Director does not do any appointment, one of

the Directors appointed by and among the available members of the Board of

Directors will be entitled to chair the meeting of the Board of Directors.

(4) In the event where the appointment as meant in clause (3) is not carried out,

the longest appointed member of the Board of Directors will chair the meeting

of the Board of Directors.

(5)` In the case where the Director with the longest appointed member of the Board

of Directors is more than 1 (one) person, one of the oldest member of the

Board of Directors will be entitled to chair the meeting of the Board of Directors.

Article 45

(1) Decision in the meeting of the Board of Directors will be taken through

discussion to agree.

(2) In the event where the decision is unable to be taken through discussion to

agree, the decision will be taken through the common largest number of votes.

(3) Every member of the Board of Directors will be entitled to give 1 (one) vote and

1 (one) additional vote for the represented member of the Board of Directors.

(4) When the number of agree votes and disagree votes is equal, the decision of

the meeting will be in accordance with the chairman opinion by still paying

attention to the stipulation regarding the responsibilities as meant in Article 34

clause (2).

(5) In the event where the proposal is more than two alternatives and the result of

voting has not yet obtain one alternative with votes more than 1/2 (one half)

part of the total votes, re-selection will be carried out to two proposals with the

largest votes till one of the proposal can obtain more than 1/2 (one half) part of

the total votes.

(6) Abstain vote will be deemed as agree to the proposal raised in the meeting.

(7) Invalid votes will be deemed as unavailable and will not be counted in deciding

the number of votes raised in the meeting.

31

Paragraph 4

Member of the Board of Directors’s Conflict of Interest

Article 46

(1) Member of the Board of Directors will not be entitled to represent the

Corporation when:

a. a case in front of court occurs between the Corporation and the member of

the Board of Directors concerned; and/or

b. member of the Board of Directors concerned has a contradictive interest

against the Corporation interest.

(2) In the event where the condition as meant in clause (1), the Corporation will be

represented by on of the Directors appointed from and by the member of the

Board of Directors beside the member of the Board of Directors as meant in

clause (1).

(3) In the event where the conflict of interest involves all the member of the Board

of Directors, the Corporation will be represented by the Board of Supervisors of

somebody appointed by the Board of Supervisors.

(4) In the event where the condition as meant in clause (3) occurs and the Board

of Supervisors is not available, the Minister will appoint one or more person to

represent the Corporation.

(5) In the event where all members of the Board of Directors or Board of

Supervisors have a conflict of interest with the Corporation, the Minister will

appoint other party to represent the Corporation.

Part Five

Supervision

Paragraph 1

Appointment and Discharge of the Board of Supervisors

Article 47

Corporation supervision will be carried out by the Board of Supervisors.

32

Article 48

(1) Appointment and discharge of the member of Board of Supervisors will be

carried out by the Minister.

(2) Member of the Board of Supervisors may consist of the elements of the officials

under the Technical Minister, Minister of Finance, Minister, and chiefs of

department/ non department institutions which activities directly related to

those of the Corporation.

(3) The appointment of the member of Board of Supervisors from the elements as

meant in clause (2) will be carried out by keep paying attention to the condition

of the member of Board of Supervisors as stipulated under this Government

Regulation.

Article 49

(1) Those who can be appointed as member of the Board of Supervisors are

individuals who are capable to take legal actions and have never been

declared bankrupt or become a member of Board of Directors or Commissioner

or Board of Supervisors which have been found guilty to cause a company or

Public Corporation declared bankrupt or persons which have never been

punished due to criminal act which caused state financial loss..

(2) Beside the fulfillment of the criteria as meant in clause (1), those who can be

appointed as member of the Board of Supervisors are individuals who has the

integrity, dedication, knowledge in corporation management related to one of

the management function, suitable knowledge in the field of corporation

business, and able to provide sufficient time to carry out his/her job.

(3) The fulfillment of the conditions as meant in clause (1) has to be proven by a

declaration letter signed by the candidate of the Board of Supervisors and will

be kept by the Corporation.

(4) The appointment of a member of Board of Supervisors which does not meet

the conditions as meant in clause (1) will be legally cancelled starting from the

finding date of the conditions unfulfillment by other member of the Board of

Supervisors or Board of Directors.

33

Article 50

(1) The number of member of Board of Supervisors will be determined by the

Minister according to the requirements.

(2) In the event where the member of the Board of Supervisors is more than 1

(one) person, one of the member of the Board of Supervisors will be appointed

as the Chairman of the Board of Supervisors.

Article 51

(1) Member of the Board of Supervisors will be appointed for an appointment

period of 5 (five) years and will be allowed to be reappointed for 1 (one)

appointment period.

(2) The appointment of the member of Board of Supervisors will not be at the

same time with the appointment of the member of the Board of Directors.

Article 52

(1) In the event of a vacuum position of a member of the Board of Supervisors, the


a. the Minister has to fill in the vacuum position not later than 30 (thirty) days

since the date of the vacuum position occurred.

b. during the period of the vacuum position of a member of the Board of

Directors and the Minister has not yet filled in the vacuum position of the

member of the Board as meant in letter a, Board of Supervisors will

appoint one of the other members of the Board or the Minister may

appoint another person to temporarily conduct the tasks of the vacuum

member of the Board with similar tasks, rights and obligations.

c. in the event where the vacuum position of a member of the Board of

Directors is due to the termination of the appointment period and the

Minister has not yet appointed a new member of the Board of the

34

Supervisors, the terminated member may temporarily conduct the similar

tasks of the vacuum member of the Board of Supervisors concerned with

similar tasks and rights till the appointment of definitive member of Board

of Supervisors, and

d. the task executor of the member of the Board of Directors as meant in

letter b will receive honorarium and allowance or facilities similar to the

vacuum member of the Board, not including retirement compensation.

(2) In the event of vacuum of all positions of the Board of Supervisors, the


a. the Minister has to fill in the vacuum position not later than 30 (thirty) days

since the date of the vacuum position occurred.

b. during the period of the vacuum position of the Board of Supervisors and

the Minister has not yet filled in the vacuum position as meant in letter a,

the Minister will appoint one or more person to temporarily carry out the

tasks of the Board of Supervisors with similar tasks, rights and

obligations;

c. in the event of vacuum of all positions of the Board of Supervisors is due

to the termination of the appointment period and the Minister has not yet

appointed their successors, all the terminated members of the Board of

Directors may be appointed by the Minister to carry out their job as

members of the Board of Supervisors with similar tasks, rights and

obligations; and

e. the task executor of the member of the Board of Directors as meant in

letter b and letter c, other than Board of Supervisors will receive

honorarium and allowance and/or facilities similar to the member of the

Board of Directors, not including retirement compensation.

Article 53

(1) Any member of the Board of Supervisors has the right to resign from his/her

position by written notice to the Minister and copy to the other members of the

Board of Supervisors and the Board of Directors.

35

(2) The resign notice as meant in clause (1) has to be received by the Minister not

later than 30 (thirty) days prior to the effective date of resignation.

(3) In the event of resignation where the resign notice as meant in clause (2)

mentions the effective date of resignation is less than 30 (thirty) days of the

acceptance date of the notice, the effective resignation date will be counted 30

(thirty) days after the notice acceptance date by the Minister.

(4) In the event of resignation as meant in clause (2) does not mention the

effective date of resignation, the meant resigned member of Board of

Supervisors will automatically resign starting 30 (thirty) days after the

acceptance date of the resign.

(5) When the Minister does not decide in 30 (thirty) days or till the requested

effective date, the resigning member of the Board of Supervisors concerned

will be automatically resign in 30 (thirty) days after the date of acceptance of

resignation letter by the Minister.

Article 54

(1) Among members of the Board of Supervisors and between the members of

Board of Supervisors and members of the Board of Directors, no blood relative

relationship or marital relationship is allowed down to the third degree, neither

straight line nor side line.

(2) In the event where the situation as meant in clause (1) occurs, the Minister has

the right to discharge one of them.

Article 55

(1) Member of the Board of Supervisors is not allowed to hold double position as:

a. member of Board of Supervisors in another State Owned Business

Enterprise, Regional Government’s Business Enterprise, Private


b. other positions in accordance with the under the legislated regulations;

and/or

e. other positions that might create conflict of interest.

36

(2) Member of the Board of Supervisors who holds double position as meant in

clause (1), will end his appointment period as member of the Board of

Supervisors starting from the date when the double positioning occurs.

(3) In the case where an individual who will be appointed as a member of the

Board of Directors is holding a position which is not allowed to be duplicated

with the position in the Board of Supervisors as meant in clause (1), he/she will

be obliged to resign from his/her old position not later than 30 (thirty) days

starting from the date of his appointment as a member of the Board of

Supervisors.

(4) Member of the Board of Supervisors who does not resign from his previous

position as meant in clause (3), his position as a member of the Board of

Supervisors will be terminated by the passing of 30 (thirty) days as meant in

clause (3).

Article 56

(1) Member of the Board of Supervisors is not allowed to become political party




(2) Political party committee, candidate for legislative member, legislative member,


Chief, and/or Vice of Regional Chief are not eligible to be appointed as a

member of the Board of Supervisors.

(3) In the event where a member of the Board of Directors becomes a political

party committee, candidate for legislative member, legislative member,


Chief, and/or Vice of Regional Chief, he/she will terminate his/her position as a

member of the Board of Supervisors starting from the date of his/her

appointment as a political party committee, candidate for legislative member,

legislative member, candidate for Regional Chief, candidate for Vice of

Regional Chief, Regional Chief, and/or Vice of Regional Chief.

37

Article 57

(1) A member of the Board of Supervisors may be discharged prior to the end of

his appointment period based on the Minister’s Decree with explanations of the

reasons.

(2) The discharge of a member of the Board of Supervisors as meant in clause (1)

will be carried out based on facts that the member of the Board of Supervisors

concerned among others:

a. is not capable to carry out his/her task properly;

b. does not follow the stipulations under the legislated regulations and/or

statute stipulations;

c involve in acts which cause loss to the Corporation and/or State;

d. conduct unethical and/or improper acts where as a member of the Board

of Supervisors of a state owned business enterprise is supposed to be

respected;

e. declared as guilty based on the court verdict under the fixed force of law;

or

f. resigns.

(3) Other than the discharge reasons of the member of the Board of Supervisors

as meant in clause (2), for the sake of the importance and objective of the

Corporation, the member of the Board of Supervisors may be discharged by

the Minister based on other reasons considered correct by the Minister.

(4) The plan to discharge a member of the Board of Supervisors as meant in

clause (1) will be informed to the member of the Board of Supervisors orally or

written by the Minister or the appointed official in charge.

(5) The decision of discharge due to the reasons as meant in clause (2) letter a to

letter d and clause (3) will be taken after the person concerned has been given

chance to defend himself/herself.

(6) The self defend as meant in clause (5) will be submitted in written form to the

Minister or the appointed official in charge not later than 14 (fourteen) days

since the date when the member of the Board of Supervisors concerned has

been informed as meant in clause (4).

38

(7) In the event where the discharged member of the Board of Supervisors has

defend him/herself or when being informed declares no objection on his/her

discharge plan, the time stipulation as meant in clause (6) is deemed fulfilled.

(8) While the discharge plan as meant in clause (4) is still under process, the

member of the Board of Supervisors concerned is obliged to carry out his/her

task as should be.

(9) The discharge with reasons as meant in clause (2) letter c and letter e is a

disgraced discharge.

Article 58

(1) The position of a member of the Board of Supervisors will be terminated when:

a. passing away;

b. end of appointment period;

c. discharged based of the Minister’s decree;

and/or

f. does not anymore fulfill the conditions as a member of the Board of

Supervisors based on the stipulations under this Government Regulation

and other legislated regulations.

(2) The stipulation as meant in clause (1) letter d includes but not limited to the

prohibited double position and resignation.

(3) Member of the Board of Supervisors who terminates prior to or after the end of

his/her position period, except terminates due to death will remain responsible

for all his/her acts which responsibility has not been accepted by the Minister.

Paragraph 2

Tasks, Rights and Obligations of the Board of Supervisors

Article 59

The Board of Supervisors will conduct supervision on the management policy, the

managing process in general either regarding the Corporation or the Corporation

business being carried out by the Board of Directors, advising the Board of Directors

39

including the supervision on the execution of the Corporation Long Term Plan, work

plan and the Corporation budget, stipulations of the Statutes and the Minister’s

Decree, and legislated regulations, for the sake of the Corporation importance in

accordance with the purpose and objective of the Corporation.

Article 60

In carrying out tasks as meant in Article 59, the Board of Supervisors is entitled to:

a. look at the books, letters and other documents, inspect the cash for verification

and other marketable securities, and inspect the Corporation’s assets;

b. enter the yard, building, and office being used by the Corporation;

c. request information from the Board of Directors and/or other officials regarding

all matters related to the Corporation management;

d. know all policies and acts done and will be done by the Board of Directors;

e. ask the Board of Directors and/or other officials under the Board of Directors

within the knowledge of the Board of Directors to attend the meeting of the

Board of Supervisors;

f. appoint and discharge the secretary of the Board of Supervisors, when deemed

necessary;

g. temporarily discharge a member of the Board of Directors in accordance with

the stipulations under this Government Regulation;

h. establish other committee other than audit committee, when deemed

necessary by paying attention to the capability of the Corporation;

i. assign experts for certain matters and in a certain period of time on the

Corporation cost, when deemed necessary;

j. manage the Corporation in a certain condition for a certain period of time in

accordance with the stipulations under this Government Regulation;

k. attend the Board of Directors’s meeting and provide opinions to the discussed

matters; and

l. conduct the authority of other supervision as long as it does not contradict the

legislated regulations, Statutes, and/or the Minister’s Decree.

40

Article 61

In carrying out tasks as meant in Article 59, the Board of Supervisors will be obliged

to:

a. advice the Board of Directors in conducting the Corporation management;

b. observe and analyze and sign the Corporation Long Term Plan including work

plan and the Corporation budget prepared by the Board of Directors in

accordance with the stipulations under this Government Regulation;

c. provide opinion and suggestions to the Minister regarding the Corporation Long

Term Plan including Work Plan and the Corporation budget;

d. follow the activity development of the Corporation, provide opinion and

suggestions to the Minister regarding all matters considered important for the

Corporation management;

e. immediately report to the Minister when the Corporation performance tends to

decline;

f. observe and analyze periodic report and annual report prepared by the Board

of Directors and sign the annual report;

g. provide explanation, opinion, and suggestion to the Minister regarding annual

report, if required;

h. prepare annual work plan and include in the Corporation Work Plan and

Budget;

i. establish audit committee;

j. propose external auditor to the Minister;

k. prepare minutes of the Commissary Board meetings and store the copies;

l. provide reports regarding Supervision tasks being carried out during the recent

previous book year to the Minister; and

m. conduct the other obligations in the Supervision tasks and advising, as long as

they do not contradict the legislated regulations, Statutes, and/or the Minister’s

Decree.

Article 62

(1) In carrying out their tasks, the member of the Board of Supervisors will be

obliged to obey the Corporation Statutes and legislated regulations, and will be

41

obliged to carry out the principles of professionalism, efficiency, transparency,

self standing, accountability, responsibility, and sensibility.

(2) In supervising the Corporation, the Board of Supervisors will carry out guidance

given by the Minister as long as it does not contradict the legislated regulations

and/or the Statutes.

Article 63

(1) Any member of the Board of Supervisors will be obliged with their good

intentions and full responsibility to carry out their task for the sake of the

Corporation importance and business in accordance with the legislated

regulations.

(2) Any member of the Board of Supervisors personally will be fully responsible for

the loss of the Corporation if the person concerned is guilty or careless in

carrying out his/her duties for the importance and business of the Corporation.

(3) In the event where the Board of Supervisors consists of 2 (two) or more

members of the Board of Supervisors, the responsibility as meant in clause (2)

will unlimitable borne by each member of the Board of Supervisors;

(4) The member of the Board of Supervisors will not be responsible for the loss as

meant in clause (20) when it can proven that:

a. Supervision has been done with good intention and carefully for the

importance of the Corporation and in accordance with the purpose and

objective of the Corporation;

b. no personal interest neither directly nor indirectly to the Board of Directors

management which has caused the loss;

and

c. advice has been given to the Board of Directors to avoid the loss or the

continuation of the loss.

Article 64

To assist the smoothness of the execution of tasks, the Board of Supervisors may

appoint a secretary of the Board of Supervisors on the Corporation cost.

42

Article 65

When deemed necessary, the Board of Supervisors may get assistance from experts

in carrying out their tasks for certain matters and in a certain time period on the

Corporation cost.

Article 66

All cost required for the execution of the tasks of the Board of Supervisors will be the

responsibility of the Corporation and clearly included in the Work Plan and

Corporation Budget.

Paragraph 3

Meeting of the Board of Supervisors

Article 67

(1) All decisions of the Board of Supervisors will be taken in the meeting of the

Board of Supervisors.

(2) Decision of the Board of Supervisors may as well be taken outside the meeting

of the Board of Supervisors as long as all members of the Board of Supervisors

agree on the decided method and subject.

(3) In every meeting of the Board of Supervisors, minutes of meeting has to be

prepared, signed by the chairman of the meeting of the Board of Supervisors

and all members of the Board of the Directors attended, consists of discussed

matters and decided, including statements of disapproval from the Board of

Supervisors if any.

(4) The original of the minutes of meeting as meant in clause (3) will be submitted

to the Board of Directors to be stored and maintained.

Article 68

(1) The Board of Supervisors will hold a meeting at least once a month and in the

meeting the Board of Supervisors may invite the Board of Directors.

43

(2) Other than the meeting as meant in clause (1), the Board of Supervisors may

hold accidental meeting whenever needed by the Chairman of the Board of the

Supervisors, proposed by at least 1/3 (one third) of the total number of

members of the Board of Supervisors, or upon written request from the

Minister, with explanation on matters to be discussed.

(3) Meeting of the Board of Supervisors will be held at the Corporation domicile, at

the business location of the Corporation, or other venues within the Republic of

Indonesia as determined by the Board of Supervisors.

Article 69

(1) Invitation to the meeting of the Board of Supervisors will be done in written form

by the Chairman of the Board of Supervisors or member of the Board of

Supervisors appointed by the Chairman of the Board of Supervision and

submitted not later than 3 (three) days prior to the meeting or in a shorter time

in emergency situation, not including the date of invitation and the date of the

meeting.

(2) In the meeting invitation, meeting agenda, date, time and venue has to be

stated.

(3) Meeting invitation as meant in clause (1) is not required if all the members of

Board of Supervisors attended the meeting.

(4) The meeting of the Board of Supervisors is valid and entitled to take any

bounded decision if attended by more than ½ (one half) of the total number of

the members of the Board of the Supervisors or its representative.

(5) In the event where the meeting of the Board of the Supervisors is held without

any written invitation, the meeting will be deemed valid and entitled to take any

bounded decision if attended by all members of the Board of Supervisors or its

representative.

(6) In the miscellaneous agenda, the meeting of the Board of Supervisors will not

be entitled to take any decision unless all member of the Board of Supervisors

or its legal representative attend and agree on the meeting agenda to become

miscellaneous agenda.

44

Article 70

(1) A member of the Board of Supervisors may be represented in the meeting only

by the other member of the Board of Supervisors based on written power of

attorney given for the specific need.

(2) A member of the Board of Supervisors may represent only one other member

of the Board of Supervisors

Article 71

(1) Meeting of the Board of Supervisors will be chaired by the Chairman of the

Board of Supervisors.

(2) In the event where the Chairman of the Supervisors does not attend or not

available, the meeting of the Board of Supervisors will be chaired by a member

of the Board of Supervisors specially appointed by the Chairman of the Board

of Supervisors.

(3) In the event where the Chairman of the Board of Supervisors does not do any

appointment, one of the member of the Board of Supervisors appointed by and

among the available members of the Board of Supervisors will be entitled to

chair the meeting of the Board of Supervisors.

(4) In the event where the appointment as meant in clause (3) is not carried out,

the longest appointed member of the Board of Supervisors will chair the

meeting of the Board of Supervisors.

(5)` In the case where the member of the Supervisors with the longest appointed

member of the Board of Supervisors is more than 1 (one) person, one of the

oldest member of the Board of Supervisors will be entitled to chair the meeting

of the Board of Supervisors.

Article 72

(1) Decision in the meeting of the Board of Supervisors will be taken through

discussion to agree.

45

(2) In the event where the decision is unable to be taken through discussion to

agree, the decision will be taken through the common largest number of votes.

(3) Every member of the Board of Supervisors will be entitled to give 1 (one)

vote and 1 (one) additional vote for the represented member of the Board of

Supervisors.

(4) When the number of agree votes and disagree votes is equal, the decision

of the meeting will be in accordance with the chairman opinion by still paying

attention to the stipulation regarding the responsibilities as meant in Article 63

clause (2).

(5) Abstain vote will be deemed as agree to the proposal raised in the meeting.

(6) Invalid votes will be deemed as unavailable and will not be counted in

deciding the number of votes raised in the meeting.

Part Six

Long Term Plan

Article 73

(1) The Board of Directors will be obliged to prepare the draft of Long Term Plan

which will be the strategic plan containing the goal and objective of the

Corporation to be obtained in the time period of 5 (five) years.

(2) The Draft of Long Term Plan which has been signed by both the Board of

Directors and the Board of Supervisors will be submitted to the Minister to be

legalized as the Long Term Plan.

Article 74

The Long Term Plan as meant in Article 73 clause (2) will at least contain:

a. evaluation of the execution of the previous Long Term Plan;

b. the Corporation position during the preparation of Long Term Plan;

c. used assumption in the preparation of Long Term Plan;

d. determination of mission, goal, strategy, policy, and work program of the Long

Term Plan; and

46

e. policy of the Corporation business development.

Part Seven

Work Plan and the Corporation Budget

Article 75

(1) The Board of Directors will be obliged to prepare the draft of Work Plan and the

Corporation Budget containing annual clarification of the Long Term Plan.

(2) The draft of Work Plan and Corporation Budget as meant in clause (1) which

has been signed with the Board of Supervisors will be submitted to the Minister

at the latest 60 (sixty) days prior to start of the fiscal year to be legalized.

(3) The draft of Work Plan and Corporation Budget as meant in clause (1) has to

be legalized by the Minister not later than 30 (thirty) days after the fiscal year

start.

(4) In the event where the draft of Work Plan and Corporation Budget has not been

legalized by the Minister as meant in clause (3), the draft of Work Plan and

Corporation Budget concerned will be deemed valid to be executed as long as

the stipulation of the preparation method of the draft of Work Plan and

Corporation Budget has been fulfilled.

(5) If the Corporation is declared healthy in 2 (two) consecutive years, the authority

of the Minister to legalize the Work Plan and Corporation Budget as meant in

clause (3) may be delegated to the Board of Supervisors.

Article 76

(1) Amendment to the legalized Work Plan and Corporation Budget as meant in

Article 75 clause (3) will be done by the Minister.

(2) The amendment proposal for the Work Plan and Corporation Budget which has

been signed with the Board of Supervisors will be submitted to the Minister to

get approval.

47

(3) The Minister’s approval as meant in clause (1) has to be given not later than 30

(thirty) days after the date of acceptance of the amendment proposal from the

Board of Directors.

(4) In the event where the draft of the amendment of the Work Plan and

Corporation Budget has not been legalized by the Minister within the time

period as meant in clause (3), the draft of amendment of the Work Plan and

Corporation Budget concerned will be deemed valid to be executed as long as

the stipulation regarding the preparation method of the draft of amendment of

the Work Plan and Corporation Budget has been fulfilled.

(5) In the event where the legalization of the Work Plan and Corporation Budget

has been delegated to the Board of Supervisors, the authority to approve the

amendment of Plan and Corporation Budget will be decided by the Board of

Supervisors.

Article 77

The Work Plan and Corporation Budget as meant in Article 75 should contain at

least:

a. Mission, business goal, business strategy, Corporation policy, and work/activity

program;

b. Corporation budget detailed to the budget of each work/activity program;

c. Financial projection of the Corporation and the Corporation subsidiaries;

d. Work program of the Board of Supervisors; and

e. other matters which require Minister’s Decree.

Part Eight

Reporting

Article 78

(1) The Board of Directors will be obliged to prepare periodical reports containing

the execution the work plan and the Corporation Budget.

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(2) Periodical reports as meant in clause (1) comprise quarterly reports and annual

reports.

(3) Beside periodical reports as meant in clause (2), the Board of Directors may

eventually provide specific reports to the Board of Supervisors and/or the

Minister.

(4) The periodical reports as meant in clause (1) and the specific reports as meant

in clause (3) will be presented in the format, contents, and method of

preparation in accordance with the stipulation under the legislated regulations.

Article 79

(1) The Board of Directors will be obliged to submit quarterly reports to the Board

of Supervisors not later than 30 (thirty) days after the end of the meant

quarterly period.

(2) The quarterly reports as meant in clause (1) will be signed by all members of

the Board of Directors.

(3) In the event where a member of the Board of Directors does not sign the

quarterly report as meant in clause (2), a written explanation on the reason has

to be provided.

Article 80

(1) Not later than 5 (five) months after the closing of the fiscal year of the

Corporation, the Board of Directors will be obliged to submit annual report

including financial report which has been audited by the Minister to be

legalized.

(2) The Corporation annual report as meant in clause (1) will be signed by all

members of the Board of Directors and the Board of Supervisors.

(3) In the event where a member of the Board of Directors or the Board of

Supervisors does not sign the annual report as meant in clause (2), a written

explanation on the reason has to be provided.

(4) Annual report as meant in clause (1) should at least contain:

49

a. annual calculation comprising end balance of the recently past fiscal year

and income statement of the fiscal year including explanation on the

documents, and report regarding unrecorded rights of the Corporation in

the book keeping among others the written off receivables;

b. joint balance and joint income statement of the joint corporation in one

group, beside the balance and income statement of each corporation;

c.report regarding the condition and the running of the Corporation including

the achievement;

d. main activities of the Corporation and changes during the fiscal year;

e. detail of problems occurred during the fiscal year which influence the

Corporation activities;

f. report regarding Supervision tasks executed by the Board of Supervisors

during the recently past fiscal year;

g. named of the members of the Board of Directors and the Board of

Supervisors; and

h. salary and other allowances for the members of the Board of Directors and

honorarium and other allowances for the members of the Board of

Supervisors.

Article 81

(1) Annual statement of the Corporation as meant in Article 80 clause (4) letter a

will be prepared in accordance with the Financial Accounting Standard.

(2) In the event where the Financial Accounting Standard as meant in clause (1)

can not be done as it should be, explanation with reasons has to be provided.

Article 82

(1) The Board of Directors will be obliged to submit the annual statement to the

external auditor appointed by the Minister upon proposal from the Board of

Supervisors to be audited.

(2) Audit report as the result of audit by the external auditor as meant in clause (1)

will be submitted to the Minister in written format to be legalized.

50

(3) In the event where the obligation as meant in clause (1) has not been fulfilled,

legalization of the statement will not be able to be carried out.

(4) Annual statement as meant in clause (1) after being legalized by the Minister

will be announced in daily newspaper.

Article 83

(1) Approval on the annual statement and legalization of the Corporation annual

statement will be done by the Minister.

(2) In the event of where the prepared annual statement document is in fact untrue

and/or misleading, the member of the Board of Directors and the Board of

Supervisors will each be unlimitedly liable to the detrimented party.

(3) The members of the Board of Directors and the Board of Supervisors will be

relieved of their responsibility as meant in clause (2) when the condition

concerned is proven to be not their fault.

Article 84

Legalization as meant in Article 83 will dispense the Board of Directors and Board of

Supervisors from their responsibility on the management and supervision being

carried out during the past fiscal year, as long as the action is stated in the annual

report and annual statement by paying attention to the stipulation under the

legislated regulation.

Part Nine

Internal Supervision Unit

Article 85

(1) The Corporation will be obliged to establish Internal Supervision Unit.

(2) The Internal Supervision Unit as meant in clause (1) will be led by a chief

responsible to the President Director.

51

Article 86

The tasks of the Internal Supervision Unit are as the following:

a. to assist the President Director in conducting the Corporation operation and

financial, evaluate the Corporation control, management and execution,

including suggesting the improvements;

b. to provide reports regarding inspection result or the result of the execution of

the Internal Supervision Unit’s tasks as meant in letter a to the President

Director; and

c. to monitor further actions on the reported inspection result.

Article 87

(1) The President Director will submit the inspection result report of the Internal

Supervision Unit as meant in Article 86 letter b to all members of the Board of

Directors, to be acted further in the Board of Directors meeting.

(2) The Board of Directors will be obliged to pay attention and necessary steps

have to be taken immediately on all matters raised in every inspection result

report as prepared by the Internal Supervision Unit.

Article 88

Based on written request from the Board of Supervisors, the Board of Directors will

be obliged to provide explanation regarding the inspection result or the result of the

execution of the Internal Supervision Unit’s tasks as meant in Article 86 letter b.

Article 89

In carrying out their tasks, the Internal Supervision Unit will be obliged to maintain

the smoothness of tasks of other organization units in the Corporation in accordance

with each tasks and responsibilities.

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Part Ten

Audit Committee and Other Committees

Article 90

(1) The Board of Supervisors will be obliged to establish audit committee who will

work collectively and function to assist the Board of Supervisors in carrying out

their tasks.

(2) Establishment of audit committee will be carried out in accordance with the

stipulation under the legislated regulation.

(3) The tasks of Audit Committee are to:

a. assist the Board of Supervisors in ascertaining the affectivity of internal

control system and effectivity of the task execution of external auditor and

internal auditor;

b. evaluate the execution of activities and audit result carried out by the Internal

Supervision Unit and external auditor;

c. provide recommendations regarding the improvement of management

control system and its execution;

d. ascertain that satisfactory review procedure exists to all information issued

by the Corporation;

e. identify matters that need attention from the Board of Supervisors and other

tasks of the Board of Supervisors; and

f. carry out other tasks in accordance with the stipulation under the legislated

regulation and/or determined by the Board of Supervisors.

Article 91

(1) The Board of Supervisors may establish other committee to assist the tasks of


(2) The establishment and task execution of the other committee will be carried out

in accordance with the stipulation under the legislated regulation.

53

Part Eleven

Expenditure of Income and Spare Budget

Article 92

(1) Every fiscal year, the Corporation will be obliged to set aside a certain amount

of the net income to spare.

(2) The sparing of the net income as meant in clause (1) will be carried out until

the spare reaches at least 20% (twenty percent) of the Corporation capital.

(3) The spare budget up to the amount of 20% (twenty percent) of the Corporation

capital can only be spent to cover the Corporation loss.

(4) If the spare budget has exceeded the amount of 20% (twenty percent), the

Minister may decide to spend the surplus of the spare budget for the

Corporation needs.

(5) The Board of Directors will be obliged to manage the spare budget to get

income from the meant spare budget with good method by paying attention to

the stipulation under the legislated regulation.

(6) The income gained from the management of spare budget will be included in

the account statement.

Article 93

(1) The spending of net income of the Corporation including the spare amount for

the spare budget as meant in Article 32 will be determined by the Minister.

(2) The Minister may determine whether a part or the total net income of the

Corporation to be spend for dividend distribution and/or other distribution such

as tantiem for the Board of Directors and the Board of Supervisors, bonus for

the employees, or keep the net income in the Corporation spare among others

for the expansion of the Corporation business.

Article 94

When the account statement in a fiscal year shows the existence of loss which can

not be covered by the spare budget, the loss will still be stated in the Corporation

54

book keeping and the income of the Corporation will be deemed as none as long as

the stated loss has not been fully covered, without decreasing the stipulation under

the legislated regulation.

Part Twelve

Joint Venture, Merger, Taking Over, and Changing of the Legal Entity of the

Corporation

Article 95

(1) Joint venture, merger, taking over and changing of the legal entity of the

Corporation will be promulgated under the Government Regulation.

(2) Joint venture, merger, taking over and changing of the legal entity of the

Corporation will be carried out in accordance with the stipulation under the

legalized regulation.

Part Thirteen

Liquidation of the Corporation

Article 96

(1) Liquidation of the Corporation will be promulgated under a Government

Regulation.

(2) Liquidation of the Corporation will be carried out in accordance with the

stipulation under the legalized regulation.

Article 97

(1) In the event where the Corporation is liquidated, the Corporation will not be

able to do any legal action except when necessary to settle the Corporation

assets in the process of liquidation.

(2) The act of assets settlement as meant in clause (1) comprises:

a. registration and collection of the Corporation assets;

55

b. determination of the method of the Corporation assets distribution;

c. payment to the creditors;

d. payment of the Corporation assets balance as the result of liquidation to the

Minister; and

e. other required acts to be carry out in the execution of the Corporation

assets settlement.

Part Fourteen

The Corporation Fiscal Year

Article 98

The Corporation fiscal year is the calendar year, except if determined different by the

Minister.

Part Fifteen

The Corporation Employees

Article 99

(1) The Corporation employees are the Corporation workers whose appointment,

discharge, rights, and obligations determined by the Board of Directors based

on mutual working agreement in accordance with the stipulation under the

legislated labour regulation.

(2) Stipulations of civil service and position ecehlonization for civil servants will not

be effective in the Corporation.

Article 100

In the event where an employee of the Corporation is appointed as a member of the

Board of Directors of the Corporation, the Board of Directors of other State Owned

Business Enterprise, or the Board of Directors of the Corporation Subsidiary which

56

previous status was State Owned Business Enterprise, he/she will be retired as the

Corporation employee with the highest rank in the Corporation, starting fro the date

of appointment as a member of the Board of Directors, and entitled for the highest

pension rights in the Corporation.

Article 101

(1) Employee of the Corporation is not allowed to become political party




(2) In the event where the employee of the Corporation becomes political party



Vice of Regional Chief, the employee concerned will be automatically

terminated from his/her position as employee starting from the date of his/her

appointment as political party committee, candidate for legislative member,

legislative member, candidate for Regional Chief, candidate for Vice of

Regional Chief, Regional Chief, and/or Vice of Regional Chief.

Part Sixteen

Issues of Obligations and Other Debt Securities

Article 102

The issue of obligations and other debt securities by the Corporation will be

promulgated by the Minister by paying attention to the stipulation under the legislated

regulation.

57

Part Seventeen

Procurement of Goods and Services

Article 103

(1) Procurement of goods and services by the Corporation which use direct budget

from the State Income and Expenditure Budget either partly or wholly will be

carried out in accordance with the stipulations regarding the execution of the

State Income and Expenditure Budget.

(2) The Board of Directors of the Corporation will determine the method of goods

and services procurement, except for the goods and services procurement as

meant in clause (1), base on the general guidance promulgated by the Minister.

Part Eighteen

Income of the Board of Directors and the Board of Supervisors

Article 104

(1) The income amount and type of the Board of Directors and the Board of

Supervisors will be determined by the Minister by paying attention to the

stipulation under the legislated regulation.

(2) The determination of the income of the Board of Directors and the Board of

Supervisors will be carried out by considering the income, assets, target

achievement, financial capability, and the health level of the Corporation.

(3) Besides considering those as meant in clause (2), the Minister may as well

consider other relevant factors.

(4) Beside the income received as a member of the Board of Directors and the

Board of Supervisors as determined by the Minister, the member of the Board

of Directors and the member of the Board of Supervisors are prohibited to take

personal profit from the Corporation activities.

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Part Nineteen

The Corporation Documents

Article 105

The Board of Directors will be obliged to manage the Corporation documents in

accordance with the stipulations under the legislated regulation regarding

corporation documents.

Part Twenty

Writing Off and Handing Over the Corporation Assets

Article 106

Writing off and handing over the Corporation assets will be carried out in accordance

with the method stipulated under the Minister Regulation.

Part Twenty

One Bankruptcy

Article 107

(1) Submission of the proposal to declare the Corporation as bankrupt can only be

carried out by the Minister of Finance.

(2) In the even where the bankruptcy occurs due to the fault or carelessness of the

Board of Directors and the Corporation assets is not enough to cover the loss

due to the bankruptcy, each member of the Board of Directors will be

unlimitedly liable on the loss.

(3) Member of the Board of Directors who can prove that the bankruptcy is not due

to his/her fault or carelessness will not unlimitedly liable on the loss.

59

Part Twenty Two

Compensation

Article 108

Member of the Board of Directors and all the Corporation employees who due to

his/her acts against the law inflict loss to the Corporation will be obliged to recover

the inflicted loss.

CHAPTER IV

CLOSING PROVISIONS

Article 109

Upon the effectivity of this Government Regulation, the execution stipulations under

the Government Regulation no. 94 Year 1999 concerning Jasa Tirta II Public

Corporation (Perum) will remain effective as long as it does not contradict and has

not been replaced by a new stipulation based on this Government Regulation.

Article 110

Upon the effectivity of this Government Regulation, the Government Regulation no.

94 Year 1999 concerning Jasa Tirta II Public Corporation (Perum) shall be cancelled

and declared to be not longer effective.

Article 111

This Government Regulation in declared effective upon the date of legislation.

So that everyone may recognize, command this Government Regulation to be

announced in the State Gazette of the Republic of Indonesia.

60

Promulgated in Jakarta

Date January 8, 2010

THE PRESIDENT OF THE REPUBLIC OF INDONESIA,

signed

DR. H. SUSILO BAMBANG YUDHOYONO

Legislated in Jakarta

Date January 8, 2010

MENTERI HUKUM DAN HAK ASASI MANUSIA

REPUBLIK INDONESIA,

signed

PATRIALIS AKBAR

STATE GAZETTE OF THE REPUBLIC OF INDONESIA OF YEAR 2010 NUMBER 10

61