Good Corporate Governance (GCG) is a company management system that reflects the synergistic relationship between management and shareholders, creditors, governments, suppliers and other stakeholders. The implementation of GCG in a Company is significant to ensure the Company’s sustainability and support the development of a healthy business environment and adding value to all stakeholders. By applying GCG principles, a Company can survive and remains tough in overcoming intense business competition. GCG is expected to be a better means to achieve Vision, Mission and Corporate Objectives.

GCG Principles, which consist of Transparency, Accountability, Responsibility, Independence and Justice must be implemented thoroughly and consistently and become the soul and spirit of every Insan Pupuk Kaltim. As a result, GCG will provide protection for stakeholders and ultimately GCG will help create a conducive environment for sustainable business growth.

Penerapan Tata Kelola Perusahaan Yang Baik (GCG) merupakan wujud kepatuhan Pupuk Kaltim terhadap Surat Edaran PT Pupuk Indonesia (Persero) sebagai Pemegang Sahan Pupuk Kaltim nomor SE-08/XI/2012 tanggal 27 November 2012 tentang Penerapan Tata Kelola Perusahaan Yang Baik (Good Corporate Governance) pada Anak Perusahaan PT Pupuk Indonesia (Persero)

Penerapan Tata Kelola Perusahaan yang baik di lingkungan Pupuk Kaltim bertujuan untuk:

1. Mengoptimalkan nilai Perseroan agar perusahaan memiliki daya saing yang kuat, baik secara nasional maupun internasional, sehingga mampu mempertahankan keberadaannya dan hidup berkelanjutan untuk mencapai maksud dan tujuan Perseroan.
2. Mendorong pengelolaan Perseroan secara profesional, efisien, dan efektif, serta memberdayakan fungsi dan meningkatkan kemandirian Organ Perseroan.
3. Mendorong agar Organ Perseroan dalam membuat keputusan dan menjalankan tindakan dilandasi nilai moral yang tinggi dan kepatuhan terhadap peraturan perundang-undangan, serta kesadaran akan adanya tanggungjawab sosial Perseroan terhadap Pemangku Kepentingan maupun kelestarian lingkungan di sekitar.
4. Meningkatkan kontribusi Perseroan dalam perekonomian nasional
5. Meningkatkan iklim yang kondusif bagi perkembangan investasi nasional.

KOMITMEN TATA KELOLA PERUSAHAAN

Pupuk Kaltim memiliki komitmen untuk menerapkan GCG dengan menerbitkannya Surat Keputusan Direksi No. 13/DIR/III.2012 mengenai penyempurnaan Struktur Organisasi Pupuk Kaltim dengan dibentuknya Unit Kerja Departemen Kepatuhan dan Manajemen Risiko sebagai unit kerja pengelola GCG yaitu Kepatuhan dan Manajemen Risiko.

Berdasarkan arahan Pemegang Saham sesuai surat No. U-1283/A00000.UM/2014 tanggal 5 September 2014 tentang Kebijakan Standarisasi Unit Kerja bidang Tata Kelola Perusahaan dan Manajemen Risiko, maka pada tanggal 8 Desember 2014 ditetapkan Surat Keputusan Direksi No. 50/DIR/X.2014 yang berlaku sejak tanggal 1 Oktober 2014 tentang Penyempurnaan Surat Keputusan Direksi Tentang Struktur Organisasi PT Pupuk Kalimantan Timur, Departemen Kepatuhan dan Manajemen Risiko berubah nama menjadi Departemen Tata Kelola Perusahaan dan Manajemen Risiko.

Dalam pelaksanaan penerapan GCG, maka Pupuk Kaltim telah menerbitkan Surat Keputusan Direksi (SKD) PT Pupuk Kaltim Nomor: 40/DIR/VII.2013 tanggal 8 Juli 2013 tentang Penerapan Tata Kelola Perusahaaan yang Baik (Good Corporate Governance) PT Pupuk Kaltim yang merupakan penyempurnaan SKD No. 4/DIR/II. 2010 tentang Penyempurnaan Kode Etik PT Pupuk Kalimantan Timur, yaitu:

- Menetapkan dan memberlakukan "Pedoman Tata Kelola Perusahaan Yang Baik (Code Of Good Corporate Governance) PT Pupuk Kalimantan Timur", sebagaimana Lampiran I Surat Keputusan Direksi ini, sebagai acuan utama bagi penerapan Tata Kelola Perusahaan Yang Baik (Good Corporate Governance) di PT Pupuk Kalimantan Timur.Selanjutnya, dalam Keputusan ini disebut "Pedoman GCG PKT",

- Menetapkan dan memberlakukan "Pedoman Dewan Komisaris dan Direksi (Board Manual) PT Pupuk Kalimantan Timur", sebagaimana Lampiran II, sebagai acuan utama bagi pedoman mengenai komitmen tata kelola hubungan antara Dewan Komisaris dan Direksi di PT Pupuk Kalimantan Timur.

PRAKTIK GCG YANG TELAH DILAKSANAKAN, YAITU:

- Semua transaksi penting yang memerlukan persetujuan PemegangSaham telah dilaksanakan sesuai ketentuan. Pemegang Saham telahmemberikan arahan kepada Direksi untuk melakukan berbagaiterobosan dalam merespon kondisi pasar.

- Dewan Komisaris telah memiliki Board Manual yang mengatur fungsi,pembagian tugas dan tanggung jawab.

- Direksi telah melakukan perubahan struktur organisasi, mengantisipasi perkembangan bisnis dan strategi, menerapkan manajemen risiko,melakukan self assesment risiko dan meningkatkan kapabilitasmanajemen mutu

- Sekretaris Perusahaan menyampaikan informasi kepada pemangkukepentingan secara berkala, jelas dan akurat, antara lain melaluimedia cetak maupun elektronik.

- Perusahaan telah membentuk Tim Self Assessment GCG danmelakukan asesmen berdasarkan parameter yang disusun BPKP.

Pupuk Kaltim saat ini telah memiliki Kebijakan dan Pedoman sebagai bentuk komitmen dalam penerapan GCG, antara lain:

PEDOMAN GOOD CORPORATE GOVERNANCE (GCG)

Good Corporate Governance (GCG) guidelines are the basis for the Directors and Management of PT Pupuk Kalimantan Timur to make decisions and policies in accordance with the principles of GCG, namely: transparency, accountability, responsibility, independence, and fairness. GCG guidelines are needed so that PT Pupuk Kalimantan Timur can survive in the face of increasingly fierce competition, GCG is expected to be a means to achieve the Company's vision and mission.

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The company’s Code of Conduct delineates the principles that will serve as guidance for PT Pupuk Kalimantan Timur (Pupuk Kaltim) as a company and the entire member of the Board of Commissioners, the Board of Directors and all employees or Insan Pupuk Kaltim to perform its duties, responsibilities and their respective authorities.

The implementation of Company Code of Ethics in Pupuk Kaltim is stated in the Decree of the Board of Directors of PT Pupuk Kaltim Number: 79 / DIR / XII.2016 dated December 30, 2016.

Determination and enforcement of documents as contained in the Attachment to this Decree of the Board of Directors, hereinafter referred as PT Pupuk Kalimantan Timur Code of Conduct, or Corporate Code of Conduct in short, is the main reference for the application of Code of Conduct in PT Pupuk Kalimantan Timur.

The objectives for the development of Corporate Code of Conduct are:

1. To develop good behavior in accordance with high ethical standards for the corporation, commissioners, directors and employees; and
2. To develop good relationships with external parties based on the principles of good corporate governance and the spirit of the company’s Code of Conduct

Furthermore, by applying the Corporate Code of Conduct Pupuk Kaltim is assured to obtain the long term benefits, such as:

1. Employees enjoy an honest, ethical and open working environment thereby enhancing the productivity and overall wellbeing of employees.
2. The company will own a good reputation, protection of lawsuits, if any, being prosper, gain success and have a sustainable business.
3. The public will generally enjoy a good relationship with the Company and is expected to improve the social and economic welfare of the community.

Pupuk Kaltim is committed to continually uphold the values stated in the Company Code of Conduct and Integrity Pact. In its implementation, the company also invites the participation of all communities and businesses to monitor the implementation of Company Code of Conduct and Integrity Pact.

Company Code of Conduct as a Corporate Guideline

Implementation of the Company’s Code of Ethics as Corporate Guideline

1. Integrity
2. Compliance with laws and legislation
3. Conflict of interest handling
4. Involvement in political activities
5. Product warranties
6. Financial Reporting
7. Advertising Promotions
8. Company's Commitment to Shareholders
9. The commitment of the Pupuk Kaltim to employees
10. Commitment to corporate ethics for employees
11. Commitment to business partners
12. Commitment to the environment, occupational health, and safety
13. Commitment to business competition
14. Commitment to relationships with customers and suppliers
15. Commitment to relationships with creditors
16. Commitment to corporate relations with the Government
17. Commitment to corporate relations with the community
18. Commitment to corporate ethics with mass Media
19. Commitment to corporate ethics with professional organizations
20. Individual Rights
21. Social societal roles
22. Communication
23. Intellectual property Rights (HAKI)

Corporate Code of Conduct for Individual Guidelines

Gratification

Gratification is the activity and or acceptance of Gifts/Souvenirs and Entertainment, whether received domestically or abroad, executed through electronic means or without electronic means, and conducted by Insan Pupuk Kaltim related to his/her position in Pupuk Kaltim, thus may cause a conflict of interest that affects the independence, objectivity, and professionalism of Insan Pupuk Kaltim.

To actualize a trustful, transparent and accountable business management in Pupuk Kaltim, Pupuk Kaltim implements a firm attitude towards gratification control involving Insan Pupuk Kaltim, although throughout its business activities, gratification is something that may be difficult to avoid by Insan Pupuk Kaltim. This attitude is imperative to be cultivated in Pupuk Kaltim environment to allow Insan Pupuk Kaltim to consistently maintain their dignity during business relationship with Stakeholders.

A Gratification Control Guideline was developed in line with Pupuk Kaltim Management Manual, the Code of Conduct and values applicable to Pupuk Kaltim. The guidelines are structured as a gratification control between Insan Pupuk Kaltim with third parties during their business activities. The monitored activities include acceptance, gratification giving and request as well as management unit and reporting mechanism. Gratification control is very important for the company because it can cause a conflict of interest that may affect the independence, objectivity and professionalism of Insan Pupuk Kaltim, which may lead to criminal bribery and prompt legal consequences that potentially harm the company image.

Guidelines for Gratification Control of PT Pupuk Kaltim is stated in Directors Decree Number: 55/ DIR/X.2015. Guidelines for Gratification Control of PT Pupuk Kaltim is the main reference for the implementation of Gratification Control in PT Pupuk Kaltim. The Decree list the followings:

1. Guidelines for Gratification Control of PT Pupuk Kaltim
2. Structure and Authorized Duties of Gratification Control Unit (UPG) of PT Pupuk Kaltim
3. Gratification Control Report Form of PT Pupuk Kaltim.

This Gratification Control Guidelines apply to Insan Pupuk Kaltim, which include Board of Commissioners, Board of Directors, and Employees of PT Pupuk Kaltim. The aims and objectives of the Company's Gratification Control Guidelines include:

1. Improve the understanding and compliance of all Insan Pupuk Kaltim to the provisions of gratification
2. Establish a conscious and understandable Company environment in handling/controlling all forms of gratification
3. As a Guideline for Insan Pupuk Kaltim to understand, prevent and overcome Gratification in the Company
4. As a Guideline for Insan Pupuk Kaltim in taking a firm stance on Gratification in the Company to realize a good company management
5. To actualize a Company management that is free of all forms of Corruption, Collusion and Nepotism (KKN)
6. To create a transparent and accountable environment which support the GCG within the Company.

Basic Principle of Gratification Control in Pupuk Kaltim

1. Giving Away Gift/Souvenir and Entertainment
   Insan Pupuk Kaltim is PROHIBITED either directly or indirectly to give Gifts/Souvenirs and or Entertainment to any party who has business relationship with or competitors of Pupuk Kaltim in the aim of obtaining information, or something that is not justified by applicable legislation, or to influence the targeted party to do and/or not to do anything relating to his/her position.
2. Accepting Gift/Souvenir and Entertainment
   Insan Pupuk Kaltim who due to his position and/or family members (nuclear family), is PROHIBITED to accept or request either directly or indirectly Gift/Souvenir and or Entertainment from any party who has business relationship with or competitor of Pupuk Kaltim in the aim of obtaining information, or something that is not justified by the applicable legislation, or to influence the party concerned to do and/or not to do anything relating to his/her position.

If Insan Pupuk Kaltim was offered/awarded a Gift/Souvenir and or Entertainment which is not in complieance to the provisions set out in this Manual, he/she is obliged to DO REJECTIFICIAL DIFFERENCE to the offer/gift, by explaining these policies and rules to the Third Party.

Protection of Reporting Entity

1. The complainant of Gratification shall be entitled to obtain safeguards from the Company in the form of:
   • Protection from non-objective and detrimental or offensive personnel actions toward the Reporting Entity such as (but not limited to) downgrading of the rank of position, decrease of appraisal, proposals for assignment/mutation or other career barriers;
   • Mutation/ transfer to the Reporting Entity in the event of intimidation or physical threat to the complainant;
   • Legal assistance in accordance with applicable provisions in the Company.
2. The safeguard measures referred to the number 1 (one) above are applied in the case of:
   • Intimidation, threats, discredit or other unusual treatment from both internal and external parties;
   • The Reporting Entity submits a written application to the Board of Directors through UPG.

Sanctions for Violations

Violation of the provisions written in the Gratification Control Guidelines will be subject to applicable criminal sanctions in the company and applicable legislation.

INTEGRITY PACT

Pupuk Kaltim also thrives to create a national business world that is clean, transparent and professional.

Currently, the Board of Commissioners, Board of Directors and employees of Pupuk Kaltim have signed the Integrity Pact Charter upon the Code of Conduct.

Integrity Pact Charter of Board of Commissioners, Board of Directors and Employees contains of these statements:

1. Use all the potential that I have to help accelerate the realization of a clean, transparent and professional corporate governance in order to participate in improving the future of the nation.
2. Earnestly implement the Integrity Pact of PT Pupuk Kalimantan Timur that includes Good Corporate Governance (GCG), Code of Conduct/Code of Ethics and the principles of healthy business practice and the implementation of proportional reward and punishment system.
3. Uphold the Basic Principles of Corporate Integrity that are honest, trustworthy, avoid conflicts of interest, and do not tolerate bribery.
4. Invites all officials and employees of PT Pupuk Kalimantan Timur to sign the Integrity Pact charter and implement them consistently and responsibly.
5. As a commitment to uphold the integrity and PT Pupuk Kalimantan Timur’s Code of Conduct, I am willing to accept sanctions and be processed according to the applicable law if I am proven guilty of doing dishonest acts, conflict of interest, act of stealing, corruption and accepting bribes.
6. Inviting business actors related either directly or indirectly with PT Pupuk Kalimantan Timur to sign the Integrity Pact in order to build the islands of Integrity in the business world.

Violation upon the Integrity Pact has consequences in accordance with applicable regulations.