Background

The purpose of the issuance of Government Regulation Number 47 of 2012 on Social and Environmental Responsibility of Limited Liability Company (“GR No. 47/2012“) is to implement the provisions of Article 74 of Law Number 40 of 2007 on Limited Liability Company (“Company Law“) and Article 15 letter (b) of Law Number 25 of 2007 on Capital Investment (“Capital Investment Law“) on Corporate Social Responsibility (“CSR“).

Principle Provisions  of GR No. 47/2012.

As the legal subject, the company has a social and environmental responsibility. Under the GR No. 47/2012, social and environmental responsibility is the obligation of the company that conducts its business activities in the field of and/or related to natural resources, where the obligation is performed within or outside the company. Social and environmental responsibility is carried out by the Board of Directors of the company’s annual work plan after receiving approval from the Board of Commissioners or the General Meeting of Shareholders (“GMS“) in accordance with the articles of association of the company, unless otherwise stipulated in the prevailing laws and regulations. The company’s annual work plan is a plan that includes activities and budget which is required in the implementation of social and environmental responsibility.

The company who is conducting its business activities in the field and/or relating to natural resources, must consider the appropriateness and reasonableness in preparing and setting action plans and budgets referred to in Article 4 paragraph (2) GR No. 47/2012. Budget for the implementation of social and environmental responsibility is carried out by the company and it is calculated as the cost of the company. The implementation of social and environmental responsibilities shall be contained in the Company’s annual report and will be held accountable to the GMS.

The company who is not carrying out social and environmental responsibilities as stipulated in Article 3 GR No. 47/2012 will be penalized in accordance with the provisions of the legislation. Article 8 paragraph (1) GR No. 47/2012 stated that the social and environmental responsibilities as mentioned in Article 3 GR No. 47/2012 does not preventthe company to participate in implementing the social and environmental responsibilities as mentioned in Article 2 GR No. 47/2012, and Article 8 paragraph (2) GR No. 47/2012 states that the company who participate in implementing the social and environmental responsibilities as mentioned in Article 8 paragraph (1) may be given an award by the authority. The GR No. 47/2012 is issued on the 4^thApril 2012.

Raymond Hutagaol