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Forum for Corporate Governance in Indonesia (FCGI)

PriceWaterhouse Coopers (PwC)


Corporate Governance Self Assessment Checklist
Purpose of this questionnaire
This questionnaire has been developed by FCGI and PwC as a self assessment tool for Indonesian
companies to review and evaluate the quality of their governance practices. It is intended that this questionnaire can be used by any company,
regardless of whether they are a state owned entity, a listed company or a private company, and regardless of the industry in which the
company operates.
Limitations
The results of this questionnaire should be treated with caution. Good corporate governance is not only a question of having appropriate procceses
in place in the company, those processes must also be operating effectively. Judgement is therefore required
in interpreting the score that is achieved when answering the questions in the survey, which largely require "yes" or "no" answers.
Secondly, because the questionnaire is intended to cover a broad range of companies, it is necessarily wide in its scope, and it does not necessarily
address all possible issues of corporate governance that should be considered by companies in particular industry groups and/ or regulatory regimes.
Finally, as with any self-assessment system, the quality of the evaluation depends greatly on the knowledge, experience and objectivity
of the person or people responsible for completing the questionnaire.
1.0 Shareholder Rights
Shareholder Rights and Responsibilities: the effectiveness of the company in protecting the rights of all of its shareholders,
including its ability to prevent majority shareholders from diluting the value and interests of minority shareholders
The applicable answers determine the score between brackets
Score
1.1
Is the annual meeting of shareholders conducted within 6 months
after the accounting year end in accordance with the regulation
chapter 65 (2) of the company law? Yes (2) No (0)
1.2
Are all shareholders given at least 28 days notice of the annual
shareholders' meeting by announcement in at least two daily
newspapers? Yes (2) No (0)
1.3
Are additional efforts made to encourage all shareholders to attend
and vote during the annual shareholder meeting? Yes (2) No (0)
1.4
Are additional efforts made to encourage other shareholders to
attend and vote during special shareholder meetings? Yes (2) No (0)
1.5
Are all shareholders given the right to subscribe when the
company's Board increases its share capital by less than 5%? Yes (2) No (0)
1.6
Are all shareholders given the right to subscribe when the
company's Board issues convertible bonds? Yes (2) No (0)
How easy is it for your shareholders to participate in voting at
the shareholders meeting?
1.7
Is voting by mail allowed? Yes (2) No (0)
1.8
Can anybody serve as a proxy? Yes (2) No (0)
What proportion of shareholders is required for the approval of
the following items?
1.9
Amendment of funding documents <1/2 (0) 1/2-2/3 (1) >2/3-3/3 (2)
1.10
Merger, and major sale or acquisition of assets <1/2 (0) 1/2-2/3 (1) >2/3-3/3 (2)
1.11
Large related-party transactions, etc <1/2 (0) 1/2-2/3 (1) >2/3-3/3 (2)
1.12
Appointment of directors and auditors <1/2 (0) 1/2-2/3 (1) >2/3-3/3 (2)
1.13
Removal of directors <1/2 (0) 1/2-2/3 (1) >2/3-3/3 (2)
1.14
Removal of auditors <1/2 (0) 1/2-2/3 (1) >2/3-3/3 (2)
1.15
Remuneration of board members <1/2 (0) 1/2-2/3 (1) >2/3-3/3 (2)
1.16
New share issuance <1/2 (0) 1/2-2/3 (1) >2/3-3/3 (2)
1.17
Not giving a preemptive right to existing shareholders when shares
or convertible bonds are issued <1/2 (0) 1/2-2/3 (1) >2/3-3/3 (2)
The role of shareholders in practice in nominating candidates
and electing outside directors of your firm
1.18 Are director candidates disclosed before the shareholders meeting?
Yes (2) No (0)
1.19
Can minority shareholders (holding more than a certain level of
shares) nominate candidates at the shareholders meeting or prior to
the meeting (to have the company disseminate relevant
information)? Yes (2) No (0)
1.20
Is cumulative voting practiced in your firm?
- introduced, and has been exercised at least once (2)
- introduced, but has not occurred so far (1)
- the firm opted out (by the articles of incorporation, etc) (0)
1.21
Would it be possible that the director candidates proposed by
management of your firm fail to be elected at the shareholders
meeting? (2) (1) (0)
Sometimes Rarely Unthinkable
Information about the latest annual shareholders meeting
1.22
How long did the meeting last? (0) (1) (2)
1-30 minutes 31-120 minutes > 120 minutes
1.23
What percentage of the shareholders attended the last General
Meeting of Shareholders? (0) (2)
<= 50% > 50%
Do you agree with the following statements for your firm?
1.24
Shareholders are provided with adequate information on agenda
items of shareholders meeting Disagree (0) Agree (1) Fully agree (2)
1.25
Adequate time is given for asking questions and placing issues at
the shareholders meeting Disagree (0) Agree (1) Fully agree (2)
1.26
Shareholders' preemptive right in the issuance of shares or
convertible bonds (so that they can maintain their fractional
ownership) are adequately protected in the company's articles of
incorporation or in the process of shareholder approval Disagree (0) Agree (1) Fully agree (2)
1.27
Related-party transactions are fully discussed with adequate
information at the shareholders meeting (with interested
shareholders abstaining from voting) Disagree (0) Agree (1) Fully agree (2)
1.28
It is not difficult to know how much equity ownership the major
shareholders control (including the equity shares of companies they
control) Disagree (0) Agree (1) Fully agree (2)
1.29 Is each substantial change in the corporate governance structure of
the company or in the Company's compliance with the Indonesian
Code of Corporate Governance submitted to the General Meeting of
Shareholders for discussion under a separate agenda item? Yes (2) No (0)
1.30 Is the policy of the Company on reserves and on dividends (the level
and purpose of the reserves, the amount of the dividend and the
type of dividend and the proposal for the distribution for the
dividend) and any changes to this policy dealt with and explained as
a separate agenda item at the General meeting of Shareholders? Yes (2) No (0)
1.31
Is there adequate opportunity for shareholders to receive and review
the financial reports in order to ask for questions to be put on the
Agenda at the annual shareholders' meeting? Yes (2) No (0)
1.32
Is there adequate time given during the annual shareholers' meeting
for shareholders to ask questions? Yes (2) No (0)
1.33
Does the annual meeting of shareholders decide the following
items?
- appointment of BoC and BoD? Yes (2) No (0)
- evaluation of BoC and BoD performance? Yes (2) No (0)
- compensation of BoD and BoC? Yes (2) No (0)
- appointment of external auditors? Yes (2) No (0)
Total score
Weighted score (total score divided by maximum possible score
(72) then multiplied by weighting of 20%)
2.0 Corporate Governance Policy
Board Structure and Governance: the ability of the Board of Commissioners to provide independent oversight of
management performance and hold management accountable to shareholders and other relevant stakeholders
The applicable answers determine the score between brackets
Score
2.1
Does your company have a written code of corporate governance,
which includes:
- Responsibilities of the BoD Yes (2) No (0)
- Responsibilities of the BoC Yes (2) No (0)
- Principles for the selection of members of the BoD Yes (2) No (0)
- Principles for the selection of members of the BoC Yes (2) No (0)
- Responsibilities of the Remuneration System of BoD and BoC Yes (2) No (0)
- Principles in Dealing with Conflicts of Interest Yes (2) No (0)
- Powers of the General Meeting of Shareholders Yes (2) No (0)
- Provisions of information to the General Meeting of Shareholders Yes (2) No (0)
- The audit of the financial reporting and the position of the internal
auditor function, the external auditor, the BoD and the BoC Yes (2) No (0)
- The role, appointment, remuneration and assessment of the function of
External Auditor Yes (2) No (0)
2.2 Does your firm disclose the following information? If yes, by what
means?
<More than one choice can be made.>
Web: company's web page (2 points) AR: annual report (1 points)
RR: report to regulatory agencies (1 points) No: no disclosure (0 points)
- Self- dealing (related-party) transactions Web (2) AR (1) RR (1) No (0)
- Directors selling or buying shares in their company Web (2) AR (1) RR (1) No (0)
- Resume/background of directors Web (2) AR (1) RR (1) No (0)
- Remuneration of directors Web (2) AR (1) RR (1) No (0)
- Fees paid to external auditors, advisors, and other related Web (2) AR (1) RR (1) No (0)
parties
- Major contingent liabilities such as cross-guarantees of debt Web (2) AR (1) RR (1) No (0)
repayment
- Policies on risk management Web (2) AR (1) RR (1) No (0)
- Significant changes in ownership Web (2) AR (1) RR (1) No (0)
- Governance structures and policies (explicit corporate governance
rules and visions) Web (2) AR (1) RR (1) No (0)
- The extent to which the firm's corporate governance practices conform
to the established standards Web (2) AR (1) RR (1) No (0)
2.3
Is the BoC, to the extent permissable under the law, specifically made
responsible for ensuring adherence to the code of corporate
governance? Yes (2) No (0)
2.4
Does the company have a Corporate Secretary or a compliance officer
whose task is to ensure full compliance of the company with existing
laws and regulations and internal procedures? Yes (2) No (0)
2.5 Is the Corporate Secretary also assisting the BoC ? Yes (2) No (0)
2.6 Can the Corporate Secretary only be dismissed with the consent of Yes (2) No (0)
the BoC ?
2.7
Does the company have a written code of conduct / ethics? Yes (2) No (0)
2.8
Is the code of conduct distributed to all employees ? Yes (2) No (0)
2.9
Is the code of conduct available on the company's website? Yes (2) No (0)
2.10
Alert Policy
Do all employees have the possibility of reporting alleged irregulaties of
a general, operational and financial nature in the Company to the
President Director, The Chairman of the Board of Commissioner, or
another designated official, without jeopardising their legal position? Yes (2) No (0)
2.11
Conflict of interest
- Must all transactions between the Company and individuals or legal
entities be agreed on terms that are customary for arm's-length
transactions in the branch of business in which the Company and its
Subsidiaries operate? Yes (2) No (0)
- Do decisions to enter into transactions in which there are material
conflists of interest between members of the BoD and the Company
require the approval of the BoC? Yes (2) No (0)
2.12 Does the code of conduct take into account the following issues?
- business ethical standards in dealing with customers, vendors and
other relevant parties Yes (2) No (0)
- company expectations of management and employees Yes (2) No (0)
- the privacy of information about outsider companies Yes (2) No (0)
- the privacy of information about employees Yes (2) No (0)
- the importance of compliance with laws and regulations Yes (2) No (0)
- compliance with laws and regulations Yes (2) No (0)
- engagement of shareholders Yes (2) No (0)
- consumer interests (if applicable) Yes (2) No (0)
- environmental protection Yes (2) No (0)
- employment Yes (2) No (0)
- human rights Yes (2) No (0)
- contributions to sustainable development Yes (2) No (0)
- business integrity Yes (2) No (0)
- no political engagement Yes (2) No (0)
- fair competition Yes (2) No (0)
- monitoring, reporting and independent verification of the Code Yes (2) No (0)
2.13
Are all employees required to confirm periodically in writing that they
have complied with the code of conduct Yes (2) No (0)
Total score
Weighted score (total score divided by maximum possible score (114)
then multiplied by weighting of 15%)
3.0 Corporate Governance Practices
The applicable answers determine the score between brackets
Score
3.1
How often per year do the BoC and the BoD meet? (0= 0 points;
1-3= 1 points; 4 or more= 2 points)
3.2
How many members sit on the BoD? (0-4=0 points; 5-12=1
points; 13 or more=2 points)
3.3
Is there a separate By-Law regulating the procedures for the
BoD meeting and its decision-making? Yes (2) No (0)
3.4 Does the BoD have effective meeting procedures (for example,
are meeting agendas and board papers distributed in advance)? Yes (2) No (0)
3.5
Are the BoD meetings minuted? Yes (2) No (0)
3.6
Do the By-Laws contain procedures on preventing conflicts of
interest between Directors and the company? Yes (2) No (0)
3.7
How many times a year does the BoD conduct formal meetings?
(if 0-1=0 points; 2-6=1 points; 7 or more=2 points)
3.8
How many members sit on the BoC? (0-2=0 points; 3-12=1
points; 13 or more=2 points)
3.9
Is there a separate By-Law regulating the procedures for the
BoC meeting and its decision-making? Yes (2) No (0)
3.10 Does the BoC have effective meeting procedures (for example,
are meeting agendas and board papers distributed in advance)? Yes (2) No (0)
3.11
Are the BoC meetings minuted? Yes (2) No (0)
3.12
Do the By-Laws contain procedures on preventing conflicts of
interest between Commisioners and the compay? Yes (2) No (0)
3.13
How many times a year does the BoC conduct formal meetings?
(if 0-1= 0 points; 2-6=1 points; 7 or more=2 points)
3.14 How many members of the BoC are Independent *? (if none=0
points; less than 20%=1 points; 20% or more=2 points)
BoC
* Not a former Director or currently having an important
relationship with the company or receiving financial
compensation other than the regular BoC remuneration
3.15 How many members of the BoC have a short term financial
interest*?
* Financial interest is defined as owning shares, warrants,
convertible bonds or debt to the company as well as any
business relationship such as a supplier or customer of the
company
- in the company (if none= 2 points; 1-50%= 1 points; 51-100%=
0 points)
- or its affiliates? (if none= 2 points; 1-50%= 1 points; 51-100%=
0 points)
3.16 Are there any potential conflicts of interest between the company
and the members of its BoC or BoD? Yes (2) No (0)
3.17
Does the company have a list of the shares owned by the
members of the BoD and BoC? Yes (2) No (0)
3.18
Does the company have a list of the shares owned by the
families of the members of the BoD and BoC? Yes (2) No (0)
3.19 Consistent with the prevailing laws, does the company have an
internal written policy regarding BoD members having concurrent
positions as directors in other companies?
Yes (2) No (0)
3.20
Check which of these committees (if any) are actively
functioning in your company:
- Audit Committee (for supervising the external and internal
auditors) 2 points
- Compensation Committee (for reviewing BoC, BoD &
management compensation) 2 points
- Nomination Committee (for selecting BoD and BoC
members) 2 points
- Compliance Committee (for adherence to laws and
regulations) 2 points
- Risk Management Committee (for control and management
of risk) 2 points
- Executive Committee (for reviewing management decisions) 2 points
- Insurance Committee (for reviewing the insurance policies of
the company) 2 points
- Other (please specify) Not scored
3.21
Is there a formal performance appraisal system for the BoD? Yes (2) No (0)
3.22
Is there a formal performance appraisal system for the BoC? Yes (2) No (0)
3.23
How often is the performance appraisal review of the BoD? (if
any=2 points) per year
3.24
How often is the performance appraisal review of the BoC? (if
any=2 points) per year
3.25
When is the timing of changes to the BoD? (if any=2 points) every ____ years
3.26
When is the timing of changes to the BoC? (if any=2 points) every ____ years
3.27
Is there an internal nomination process for the BoC? Yes (2) No (0)
3.28
Is there an internal nomination process for the BoD? Yes (2) No (0)
3.29
Are candidates given a written appointment letter as
Commissioners? Yes (2) No (0)
3.30 Are candidates given a written appointment letter as Directors? Yes (2) No (0)
3.31 What are the types of compensation given to Directors?
- Salary independent of performance 2 points
- Bonus dependent on performance 2 points
- Stock options with limitation on exercise period 2 points
- Other (pls specify) Not scored
3.32 What are the types of compensation given to
Commissioners?
- Salary independent of performance 2 points
- Bonus dependent on performance Negative 2 points
- Stock options with limitation on exercise period 2 points
- Other (pls specify) Not scored
3.33 How often does the BoD actively monitor the results of the
business? (if 0-3= o points; 4-11=1 points; 12 or more=2 points)
per year
3.34
Does the BoC give input to the BoD on matters of strategy? Yes (2) No (0)
3.35
Does the BoC give input to the BoD on matters of policy? Yes (2) No (0)
3.36
Does the BoC give input to the BoD on matters concerning
company performance? Yes (2) No (0)
3.37
Are the vision and mission, business plan and strategic plan the
responsibility of the BoD? Yes (2) No (0)
3.38 Do the BoD and BoC identify and select external specialists
when needed expertise is not possessed by existing directors or
staff?
Yes (2) No (0)
3.39
Are members of the BoD and BoC given introduction training? Yes (2) No (0)
3.40
Are members of the BoC and BoD provided with the opportunity
of ongoing training? Yes (2) No (0)
3.41
Are the members of the BoD appointed by the General Meeting
of Shareholders? Yes (2) No (0)
3.42 What is the term of appointment for the BoD? (2) (1) (0)
1-2 years 3-4 years 5 years or more
3.43 Is there any rotation plan for the BoD in order to avoid as much
as possible the situation in which many BoD members retire at
the same time?
Yes (2) No (0)
3.44
Is there a clear division of tasks within the BoD? Yes (2) No (0)
3.45 Does the BoC have to approve the following:
- the operational and financial objectives of the Company Yes (2) No (0)
- the strategy designed to achieve the objectives Yes (2) No (0)
- determining and amending the parameters to be applied in
relation to the strategy (for example in respect of the financial
ratios), and Yes (2) No (0)
- the appointment of the BoD member as CFO Yes (2) No (0)
- the allocation of duties of the BoD to individual members of the
BoD Yes (2) No (0)
- all transactions between the Company and natural or legal
persons who hold at least 10% of the shares in the Company
that are of material significance to the Company and/or such
persons Yes (2) No (0)
- a resolution on the operational and financial aims of the
Company, the strategy designed to achieve the aims, and the
parameters to be applied in relation to the strategy Yes (2) No (0)
- all transactions in which there are conflicts of interest with BoD
members Yes (2) No (0)
- all transactions in which there are conflicts of interest with BoC
members Yes (2) No (0)
- the appointment and removal of the Corporate Secretary Yes (2) No (0)
- the remuneration policy for senior management in general Yes (2) No (0)
- the annual capital investment budget, all acquisitions and
disposals of business activities whose sales exceed a
predetermined amount in the year prior to the acquisitions or
disposal Yes (2) No (0)
- all financial statements before publication Yes (2) No (0)
- all other acts that require the approval by legislation, the
Company's Articles of Association, the By-Laws of the BoD, the
By-Laws of the BoC, the Indonesian Corporate Governance
Code, or any other applicable legislation Yes (2) No (0)
- any changes to the Company's administrative procedures with
regard to decision making by the BoD and the BoC Yes (2) No (0)
3.46 Is Company's Risk Management structure and activities defines
the overall policies? Yes (2) No (0)
3.47 Is Company's Risk Management structure and policies identifies
the element of risk asessment? Yes (2) No (0)
3.48 Is Company's Risk Management structure and policies identifies
the element of control activities? Yes (2) No (0)
Total score
Weighted score (total score divided by maximum possible score
(144) then multiplied by weighting of 30%)
4.0 Disclosure Policies and Practices
Disclosure: the accuracy and timeliness with which the company discloses its financial position,
condition and prospects, and other non-financial information, and also the ability of existing and prospective
investors to access this information. Disclosure of non-financial matters, includes such matters as the companys
ownership structure, corporate governance and ethics guidelines, which should be a matter of public record.
The applicable answers determine the score between brackets
Score
4.1 Does your company provide shareholders and
investment analysts equal access to information
that may affect share price?
Yes (2) No (0)
4.2
Does the company publish its financial results and
management analysis for distribution to analysts? Yes (2) No (0)
4.3
Does the company post its financial results and
management analysis on the internet? Yes (2) No (0)
4.4
How frequently does the company conduct analyst
briefings? (If 1-3 times=1 points; 4 or more=2
points) per year
4.5 Do the reports prepared for the annual
shareholders meeting contain only basic
information of sufficient details to enable investment
analysts to assess the financial and non-financial
performance of the corporation?
(2) (1) (0)
more
than
sufficie
nt
detail
avera
ge info
only
basic
info
4.6 Does the annual report describe the following:
- risk management systems Yes (2) No (0)
- business goals and strategies Yes (2) No (0)
- cross-shareholdings and cross debt guarantees Yes (2) No (0)
- management assessment of business climate
and risks Yes (2) No (0)
- names of Commissioners and Directors Yes (2) No (0)
-Commissioners and Directors compensation
rates Yes (2) No (0)
- principal external jobs held by the
Commissioners Yes (2) No (0)
- corporate governance practices of the company Yes (2) No (0)
- material claims and court cases Yes (2) No (0)
- related party transactions Yes (2) No (0)
- existing and potential conflicts of interest Yes (2) No (0)
- shareholding of Commissioners, Directors or
their family members in the company or its
related companies Yes (2) No (0)
4.7
List of information to be included in the
Annual Report
- publication of all transactions between the
company and legal or natural persons who hold
at least ten percent of the shares in the company Yes (2) No (0)
- a list of all existing or potential anti-takeover
measures and also an indication of the
circumstances in which it is expected that these
measures may be used Yes (2) No (0)
4.8
Does the company track changes in its ownership
structure so that any and all voting blocks are
known? Yes (2) No (0)
4.9
If "Yes", where is this information disclosed? Not scored
Total Score
Weighted score (total score divided by maximum
possible score (40) then multiplied by weighting of
20%)
5.0 Audit
The applicable answers determine the score between brackets
Score
5.1 Does your company have an Audit Committee? Yes (2) No (0)
5.2 How many members does your Audit Committee
have? (if 0-1=0 points; 2-3=1 points; 4 or more=2
points)
5.3 Is there an Audit Charter that specifies the
qualifications, responsibilities, and procedures of
the Audit Committee?
Yes (2) No (0)
5.4 Is there an Audit Charter addressing the authority
to conduct special investigations? Yes (2) No (0)
5.5 How many of these members are independent *? (if
any=1 points; if majority=2 points)
* independence is defined here as having no
financial interest in the company or significant
relationships with major shareholders,
management, suppliers or customers
5.6 Does the Audit Committee have regular meetings? Yes (2) No (0)
5.7 Does the Audit Committee report regularly to the
BoC? Yes (2) No (0)
5.8 Does the Audit Committee have regular meetings
with the external auditors? Yes (2) No (0)
5.9 Please rate the quality of: Very High Average Very Low
- Internal Audit (2) (1) (0)
- Audit Committee (2) (1) (0)
- External Audit (2) (1) (0)
Total Score
Weighted score (total score divided by maximum
possible score (22) then multiplied by weighting of
15%)
6.0 Results
The table below shows the summary scores from the 5 separate sections of the preceding questionnaire.
While all questions in each section have scored equally, the sections themselves have been weighted
to reflect the relative importance of each area.
Summary Scores Company Scores Weightings Weighting Scores
(in %age)
1. Shareholder Rights 20%
2. Corporate Governance Policies 15%
3. Corporate Governance Practices 30%
4. Disclosures 20%
5. Audit 15%
Total score 100%
Interpretation:
1. 0-49%: Your Company needs to look at its CorporateGovernance system
because the overall score is below standard
2. 50-59%: Your Company's overall Corporate Governance score meets the basic standards,
but should seriously consider improvement on issues where the score is low
3. 60-80%: Your Companys overall Corporate Governance score is good, but could be further improved
4. 81-100%: Your company's Corporate Governance score is excellent
A Word of Caution:
The assessment is based on the judgement of the respondents and list of issues that are valid
for most companies. Therefore, the results are determined by the liability of the replies
and the relevant of the questionnaire. The questionnaire is therefore a simplification of the reality,
although the score is a good indicator of the company's quality of Corporate Governance.
The result of this survey for your company provides a good basis for taking a closer look at
the measures that can be taken to improve the company's Corporate Governance.
PricewaterhouseCoopers (PwC) and Forum for Corporate Governance in Indonesia (FCGI)
will be very happy to assist you in this.
The table below shows the summary scores from the 5 separate sections of the preceding questionnaire.
While all questions in each section have scored equally, the sections themselves have been weighted
3. 60-80%: Your Companys overall Corporate Governance score is good, but could be further improved
6.0 General Information for Classification of the Company
The following questions are facts about your corporation and its ownership
Name of the company:
Name of preson who completed/ authorised this questionnaire:
Position in the company:
Your e-mail address or other contact details:
6.1 What is the net assets of your corporation at the latest balance sheet date?
- less than or equal to 200,000,000 Rupiah
- more than 200,000,000, less or equal to 10 trillion Rupiah
- more than 10 trillion Rupiah
6.2 What industry does your corporation belong to?
- financial (Bank, Insurance, Other Financial Institution)
- manufacturing
- services
- utility/energy
- other (please specify:___________________________________________)
6.3 Is your company: a listed company? Yes No
6.4 Please focus on the present controlling shareholders of your corporation (if any):
- a State Owned Enterprise? Yes No
- a family controlled company? Yes No
- a subsidiary of Multinational company? Yes No
6.4.1 How many directors in the Board represent this controlling group?
6.4.2 Are the Chairman of the Commissioners and the President Director either affiliated with or appointed by
the controlling shareholders?
Yes CEO only NA
No Chairman only