SUMMARY OF

WEEK 2
Kelompok 7:
Maghfira Iza H - 1706072405
Ruth Angeli C. Wullur - 1806134556
Hadila Franciska - 1706058672
Structure of Board Governance
in the Private Sector & Public Sector
Example: Board Governance in Private Sector
Japan Bank for International Corporation (JBIC) Corporate Governance
Example: Board Governance in Public Sector
Federal Reserve System (US)

Simplified structure:

Congress

Federal Federal
Board of
Open Market Reserve
Governors
Committee Banks
The characteristics and role of the board

Corporate Law No. 40 of 2007 on Limited Liability Companies

BOARD OF DIRECTORS

The Board of Directors shall undertake its duty to manage the Company for the interest of
the Company in the pursuit of its purposes and objectives (article 92)
The Board of Directors shall represent the Company, in or outside the courts of justice
(article 98)
The Board of Directors shall be obliged to (article 100):
a) establish and maintain a register of shareholders, special register, minutes of GMS
and minutes of the Board of Directors meeting;
b) prepare an annual report as referred to in Article 66 and financial document of the
Company as stipulated under the Law on Company Documentation; and
c) maintain all lists, minutes, and financial document of the Company as referred to in
letter a, and letter b, and other Company’s documents.
The characteristics and role of the board

BOARD OF COMMISSIONER
The Board of Commissioners shall conduct supervision over the management policy, the
implementation of the management in general, either regarding the Company or its business,
and provides advice to the Board of Directors (article 108).
Each member of the Board of Commissioners shall be obliged with good faith, prudent and full
of responsibility to perform his supervisory duty and provide advices to the Board of Directors
as referred to in Article 108 paragraph (1) for the interest of the Company and shall be in
accordance with the purpose and objective of the Company (article 114).
RESPONSIBILITIES OF THE BOARD

According to OECD 2015, responsibilities of the board are:

Together with guiding corporate strategy, the board is chiefly responsible for monitoring
managerial performance and achieving an adequate return for shareholders, while preventing
conflicts of interest and balancing competing demands on the corporation. In order for boards
to effectively fulfil their responsibilities they must be able to exercise objective and
independent judgement.
Another important board responsibility is to oversee the risk management system and systems
designed to ensure that the corporation obeys applicable laws, including tax, competition,
labour, environmental, equal opportunity, health and safety laws. In some countries,
companies have found it useful to explicitly articulate the responsibilities that the board
assumes and those for which management is accountable.
Board members should act on a fully informed basis, in good faith, with due diligence and
care, and in the best interest of the company and the shareholders.
The board should fulfil certain key functions, including:
1. Reviewing and guiding corporate strategy, major plans of action, risk management policies
and procedures, annual budgets and business plans; setting performance objectives;
monitoring implementation and corporate performance; and overseeing major capital
expenditures, acquisitions and divestitures.
2. Monitoring the effectiveness of the company’s governance practices and making changes
as needed.
3. Selecting, compensating, monitoring and, when necessary, replacing key executives and
overseeing succession planning.
4. Aligning key executive and board remuneration with the longer term interests of the
company and its shareholders
5. Ensuring a formal and transparent board nomination and election process.
6. Monitoring and managing potential conflicts of interest of management, board members
and shareholders, including misuse of corporate assets and abuse in related party
transactions
Effectiveness of the board
1. The Composition of the Board The board and its committees should have the appropriate
balance of skills, experience, independence, and knowledge of the company to enable them to
discharge their respective duties and responsibilities effectively.
2. Appointments to the Board There should be a formal, rigorous, and transparent procedure for
the appointment of new directors to the board.
3. Commitment All directors should be able to allocate sufficient time to the company to
discharge their responsibilities effectively.
4. Development All directors should receive induction on joining the board, and should regularly
update and refresh their skills and knowledge.
5. Information and Support The board should be supplied in a timely manner with information
in a form and of a quality appropriate to enable it to discharge its duties.
6. Evaluation The board should undertake a formal and rigorous annual evaluation of its own
performance and that of its committees and individual directors.
7. Re-election All directors should be submitted for re-election at regular intervals, subject to
continued satisfactory performance.
Indicators of Effectiveness of the Board

High-performance boards must achieve three core objectives (Epstein and Roy,
2006):
1. Provide superior strategic guidance to ensure the company’s growth and
prosperity;
2. Ensure accountability of the company to its stakeholders, including
shareholders, employees, customers, suppliers, regulators and the
community;
3. Ensure that a highly qualified executive team is managing the company.
Appointment and election of the board
To elect the members of the board is a basic shareholder right. For the election process to
be effective, shareholders should be able to participate in the nomination of board
members and vote on individual nominees or on different lists of them

The board has an essential role to play in ensuring that this and other aspects of the
nominations and election process are respected.

1. The board or a nomination committee has a special responsibility to make sure that
established procedures are transparent and respected.
2. The board has a key role in defining the general or individual profile of board
members that the company may need at any given time, considering the appropriate
knowledge, competencies and expertise to complement the existing skills of the
board.
3. The board or nomination committee has the responsibility to identify potential
candidates to meet desired profiles and propose them to shareholders, and/or
consider those candidates advanced by shareholders with the right to make
nominations. There are increasing calls for open search processes extending to a
broad range of people
Who May Be Who Appoints the
Appointed? Board?
Indonesian Corporate Act 40 Year 2007 Individuals
● Initially the board is appointed by the founders in
capable of performing legal actions
he deeds of establishment
● Subsequently the authority is transferred to the
Exceptions: those who in the 5 (five) years previous to GMS
their appointment have: ● Members of Boards of Directors or Board of
Commissioners shall be appointed for a certain
● been declared bankrupt period and may be re-appointed
● been members of a Board of Directors or a Board ● The procedure for appointment of members of
of Board of Directors or Board of Commissioners
● Commissioners declared to be at fault in causing must be stipulated in the articles of association.
Company to be declared bankrupt
● been sentenced for crimes which caused losses
to the
● state and/or were related to the finance sector.

Appointment of member that did not meet the

provisions of the Indonesian Corporate Act 40
Year 2007 was VOID (with evidence)
Board charter

A board charter is a policy document that clearly defines the respective roles, responsibilities and
authorities of the board of directors (both individually and collectively) and management in setting
the direction, the management and the control of the organisation.

In developing a board charter as a key governance policy, it is important the board has the
opportunity to discuss, elaborate and formulate the charter as part of the process. Broadly
speaking, there are five stages to develop a board charter with a sixth stage for the board to
undertake annually:
Appointment and Election of The
Board
- RUPS/RUPST Disputes 2018
- Tiga Pilar Sejahtera Food Tbk
Outline

01 Case Introduction Appointment and

03
Election of the
Corporate Board
02 Governance Structure
of The Company 04 Evaluation

05 Recommendations
CASE
INTRODUCTION
COMPANY PROFILE
PT Tiga Pilar Sejahtera Food is a company that was founded on January 26, 1990.
Vision : “To become a Nation-wide visionary company that builds Indonesia, to become great
and successful in the “food and related businesses” which is reputable and contribute to
improve social welfare”
Mission :
● To provide quality goods and services and innovative in “food and related businesses”
which is able to create added value for all our customers.
● To become a great company by building a double track system in our organization: “The
good people and the good system”.
● To build a culture of discipline and learning People to maximize the strength of our
employees and our organization.
● To posses strength as multinational company, with agility as a small business company.
● To uphold the values of professionalism and Good Corporate Governance.
● To consistently provide benefits above market standards on Shareholders’ funds.
Business Activity:

According to the Company’s Articles of Association, TPSF performs its business

activities in holding company activities. Through its subsidiaries, the Company has run
its business in trading, industrial and power plant sectors. Such activities are carried out
by Food Division or TPS Food.

Product and Services:

In the implementation of its operational performance, TPS Food produces basic food
and consumer food. Basic food is a type of product that has to be processed before
being consumed. Such product is commonly used by housewife and vendors as cooking
ingredients for foods to be served to end-consumers. Meanwhile, consumer food is a
type of product that can be directly consumed by end consumers.
CASE SUMMARY
1. The company losing potential revenue of IDR 2 trillion per year and selling PT Indo Beras Unggul (IBU).
This happens because PT Indo Beras Unggul (IBU) accause for steaming rice from farmers who enjoy
government subsidies to be processed and repackaged into premium rice.Since then, the rice business that
previously contributed 50% of TPS Food's revenue, has stopped operating.
2. Taro snack food financial problems
The company has so far failed to pay for sukuk ijarah I in 2013 with a principal amounting to Rp300 billion
and maturing on April 5, 2018 and bonds I in the same year with an issuance value of Rp600 billion, due on
April 5, 2018.
3. The financial statements for the 2017 financial year were rejected by investors and shareholders because of
allegations of misappropriation of funds.
4. In the future, TPS Food management said it would focus on the business in the Food division. However, TPS
Food's business focus is only on the types of noodles and dry vermicelli, and Taro snacks. This business has
been the driving force behind the company for the past 2 years.
5. Improvements in company performance currently depend on what steps the company management will take.
This is because the homework that must be done is also not easy to say, increasing production returns,
paying off debts and completing financial reports that have not been released since the beginning of last
year.
Timeline

1959 2011 2014 2015 2016

TPS Food Perusahaan Perusahaan sudah Kinerja sangat Perusahaan

didirikan di mengakuisisi mengakuisisi baik; pendapatan melepas
Jawa Tengah merek ‘Taro’ sejumlah perusahaan tertinggi kepemilikan
dibawah TPS Food, perusahaan pada GOLL
TPS Rice, dan TPS tercatat pada Rp (divisi Palm Oil)
Palm Oil 6,01 triliun

2019 2018 2017

Investigasi EY terhadap Saham dihentikan Di RUPST, pemegang Perusahaan Dituding

lapkeu 2017 perdagangannya saham menolak tidak mampu mencurangi
menyebutkan dugaan (suspensi) oleh menyetujui lapkeu membayar konsumen beras,
penggelembungan BEI (5 Juli 2018) 2017; beserta obligasi & sukuk perusahaan
beberapa akun lapkeu komisaris, mereka ijarah TPS Food I menutup divisi
serta aliran dana dan meminta pergantian yang sudah TPS Rice
transaksi yang tidak manajemen jatuh tempo
jelas
Corporate Governance Structure of The Company
Evaluation
Based on PT Tiga Pilar Sejahtera Food Annual Report 2018, in the process of Good Corporate
Governance Implementation within the Company, PT Tiga Pilar Sejahtera Food has several
internal guidelines used, among others:
1) Board of Directors and Board of Commissioners Manuals
2) Audit Committee Charter
3) Nomination and Remuneration Committee Charter
4) Corporate Governance and Risk Management Committee Charter
5) Internal Audit Charter
6) Decision letter of the Board of Directors on the Implementation of Business Ethics and Work
Ethics
7) Journey to Greatness book
Principles that PT Tiga Pilar Sejahtera Food violates

1. Transparency.

Based on the principle of transparency, PT Tiga Pilar Sejahtera Food should

disclosure the Company information and material facts in timey, clear, accurate
and accessible manners to the public. But in facts, PT Tiga Pilar Sejahtera Food
didn’t give the accurate information about their Financial Statement. In the Ernst
& Young Indonesia (EY) Fact-Based Investigation Report to AISA's new
management dated March 12, 2019, it is suspected that the mark-up has occurred
in the AISA Group's accounts receivable, inventories and fixed assets. The financial
statements for the 2017 financial year were even rejected by investors and
shareholders because of allegations of misappropriation of funds.
Principles that PT Tiga Pilar Sejahtera Food violates

2. Independency.

Based on the principle of Independency, PT Tiga Pilar Sejahtera should paying mutual
respect to rights, obligations, duties, authorities and responsibilities among the
Company’s organs, and all of them should continue to avoid conflict of interest in the
decision-making process and influence from any party against the applicable laws and
regulations and healthy corporate principles. But in facts, it was discovered that the old
board of directors inflated Rp4 trillion in funds and then there were also findings of
alleged revenue inflations of Rp662 billion and another Rp329 billion in EBITDA (profit
before interest, tax, depreciation and amortization) of the issuer's food business entity.
Principles that PT Tiga Pilar Sejahtera Food violates

3. Responsibility.

Based on the principle of responsibility, PT Tiga Pilar Sejahtera Food

should adhering to the Articles of Association and applicable laws and
regulations, performing corporate social responsibility and its information
disclosure obligation according to the established regulations. But in facts,
there were relationships and transactions with affiliated parties that did
not use an adequate disclosure mechanism to relevant stakeholders. EY
suspects this to have the potential to violate the Decree of the Capital
Market and Financial Institution Supervisory Agency (Bapepam-LK) No.
KEP-412 / BL/2009 concerning Affiliated Transactions and Conflict of
Interest on Certain Transactions.
Recommendations

Violation of the principles of Good Corporate Governance committed by PT Tiga Pilar

Sejahtera Food above is the cause of the case that occurred. If PT Tiga Pilar Sejahtera
Food implements the existing Good Corporate Governance according to the existing
regulations and guidelines, it is unlikely that the problem such above will occur.
THANKYOU
Reference:
1) CNBC Indonesia
2) Financial Services Authority Regulations number 51
3) PT Tiga Pilar Sejahtera Food Annual Report 2017, 2018 and 2019