Indonesia

6 Chapter Coporate Law

    • Structure of PT

       Organ of the Company means a General Meeting of Shareholders, the Board of Directors, and the Board of Commissioners.

       

      ·         General Meeting of Shareholders
      Hereinafter called “GMS,” means an Organ of the Company with the authority not vested in the Board of Directors nor the Board of Commissioners within the limits as provided for in this Law and/or the articles of association.
       
      ·         BoD (Board of Directors)
      Organ of the Company with the sole authority and responsibility for the management of the Company in the best interest of the Company within the objectives and purposes of the Company, and represents the Company both within and outside the court of law under the articles of association.
       
      ·         (BoC) Board of Commisioners
      Organ of the Company with duties to make general and/or specific supervision under the articles of association, as well as to provide advice to the Board of Directors.

    • General Meeting of Shareholders

       A GMS shall have the authority not vested in the Board of Directors nor the Board of Commissioners within the limits as provided for in this Law and/or the articles of association. In the forum for a GMS, shareholders are entitled to have access to information relevant to the Company from the Board of Directors and/or the Board of Commissioners to the extent relevant to the agenda of the meeting and not in contravention of the interest of the Company. In the case of the agenda of a miscellaneous item, a GMS is not entitled to adopt a resolution unless all of the shareholders are present and/or represented at the GMS and approve additions to the agenda of the meeting. A resolution of the added agenda of the meeting must be approved in a unanimous vote.
       
      A GMS shall be held at the domicile of the Company or at the place where the Company performs its main line of business as stated in the articles of association. A GMS of a Publicly Held Company may be held at the domicile of the stock exchange at the place where the shares of the Company are listed, and must be located within the teritory of the State of the Republic of Indonesia. If at a GMS all of the shareholders are present and/or represented and all of the shareholders approve a GMS to be held with specified agenda, a GMS may be held at any place wheresoever within the teritory of the State of the Republic of Indonesia, and may adopt a resolution if such a resolution is approved in aunanimous vote.
      GMS may also be conducted through teleconference media, video conference, or other electronic media facilities that enable all participants of the GMS to view and hear each other directly and to participate in the meeting. Requirements for quorum and requirements for adoption of a resolution shall be the requirements as governed by Company Law and/or as governed in the articles of association of the Company, and shall be counted on the basis of participation of the participants at the GMS.
      A GMS shall include an annual GMS and other GMS. Other GMS in practice is commonly known as an extraordinary GMS. An annual GMS must be held within 6 (six) months of the conclusion of the accounting year. During an annual GMS, all annual report documents of the Company must be submitted, which are :
      ·         a financial statement that consists of at least a year-end balance sheet of the proceeding year with a year-end balance sheet of the previous year as comparison, the profit and loss statement of the same proceeding year, cash flow report, and statement of changes in equity, as well as notes to the financial statements, shall be prepared on the basis of the Financial Accounting Standards. Financial Accounting Standards means the standards issued by the Organization of the Indonesian Professional Accountants that are acknowledged by the Government of the Republic of Indonesia. A balance sheet and profit and loss statement of the same proceeding year for a Company that is subject to audit must be submitted to the Minister under the laws and regulations.
      ·         a report on the activities of the Company, includes a report on the achievement or performance of the Company;
      ·         a report on the implementation of Corporate Social and Environmental Responsibility;
      ·         detailed issues arising during the accounting year that affect the line of business of the Company. Detailed issues includes disputes or cases in which the Company involves;
      ·         a report on the supervising duties that have been performed by the Board of Commissioners during the proceeding year;
      ·         the names of members of the Board of Directors and members of the Board of Commissioners;
      ·         salaries and allowances of the members of the Board of Directors, and salaries or honorariums and allowances of the members of the Board of the Commissioners of the Company in the proceeding year.
       
      An annual report shall be signed by all members of the Board of Directors and all members of the Board of Commissioners who are in office in the relevant accounting year, and shall be made available at the office of the Company from the date of the notice of the GMS for examination by the shareholders. If a member of the Board of Directors or the Board of the Commissioners fails to sign an annual report as intended, the relevant member must state the reasons therefor in writing, or such reasons shall be stated by the Board of Directors in a separate letter that is attached to the annual report. A member of the Board of Directors or member of the Board of Commissioners that fails to sign an annual report and fails to give the reasons in writing shall be deemed to have approved the substance of the annual report.
      Other GMS may be held at any time as deemed necessary in the interest of the Company.
       
      The Board of Directors shall hold an annual GMS and other GMS  as preceded by a call for a GMS. A GMS as intended by section (1) may be held at the request of:
      ·         1 (one) or more shareholders who jointly represent 1/10 (one tenth) or more of the total amount of shares having voting rights, unless the articles of association provide a less amount; or
      ·          the Board of Commissioners
      A request shall be submitted to the Board of Directors by Registered Mail together with the reasons therefor. Reasons upon which a request for holding a GMS is based inlcude, inter alia, the Board of Directors does not hold an annual GMS within the specified time period or the term of office of members of the Board of Directors and/or members of the Board of Commissioners will expire. A copy of Registered Mail submitted by the shareholders must be delivered to the Board of Commissioners. The Board of Directors must call a GMS within 15 (fifteen) days of the date the request for holding a GMS is received. If the Board of Directors fails to call a GMS :
      ·         a request for holding a GMS  shall be resubmitted to the Board of Commissioners; or
      ·         the Board of Commissioners shall call a GMS itself
      The Board of Commissioners must call a GMS within 15 (fifteen) days of the date the request for holding a GMS is received. A GMS that is held by the Board of Directors upon notice of a GMS shall discuss matters related to reasons and other agenda of the meeting as deemed necessary by the Board of Directors. A GMS that is held by the Board of Commissioners upon notice of a GMS shall only discuss matters related to reasons. A GMS that is held by a Publicly Held Company shall be subject to the Company Law to the extent the laws and regulations in the field of capital markets do not provide otherwise.
         If the Board of Directors or the Board of Commissioners does not call a GMS within 15 (fifteen) days of the date the request for holding a GMS is received time period, a shareholder that requests a GMS to be held may file an application with the chief justice of the district court with jurisdiction over the domicile of the Company to order to give authorization to the applicant to call a GMS him-/herself. A GMS may only discuss the agenda of the meeting as ordered by the chief justice of the district court. The provisions shall also apply to Publicly Held Companies with due regard to the requirements for announcement to hold a GMS and other requirements for holding a GMS as governed in laws and regulation in the field of capital markets. The chief of justice of the district court upon summons and hearing of the applicant, the Board of Directors and/or the Board of Commissioners, shall order to give authorization to hold a GMS if the applicant has summarily substantiated to have fulfilled the requirements and that the applicant has fair interest to hold a GMS. An order of the chief justice of the district court shall also contain the provisions on:
      ·         the type of GMS, agenda of a GMS at the request of the shareholders, period of calling a GMS, quorum for attendance, and/or the requirements for adoption of a resolution of the GMS, as well as appointment of the chairperson of the meeting, under or not bound by this Law or the articles of association; and/or
      ·         an injunction that requires the Board of Directors and/or the Board of Commissioners to be present at the GMS.
      An order of the chief justice of the district court on the authorization shall be final and binding in nature.
      The chief justice of the district court shall reject an application if an applicant fail to substantiate summarily that the requirements have been fulfilled and the applicant has fair interest to hold a GMS. If an order of the chief justice of the district court rejects an application, a legal remedy that may be filed shall be only cassation.
         The Board of Directors shall call the shareholders before holding a GMS. In certain cases, a call for a GMS may be made by the Board of Commissioners or shareholders by order of the chief justice of the district court. It is incumbent on the Board of Directors to call a GMS. The call for the GMS may be made by the Board of Commissioners if, inter alia, the Board of Directors fails to hold the GMS, if the Board of Directors is unavailable or a conflict of interest arises between the Board of Directors and the company.
      A call for a GMS shall be made within 14 (fourteen) days before the date a GMS is to be held, not counting in the date of notice and the date of a GMS. A period of 14 (fourteen) days means the minimum time limit to call a meeting. The articles of association thereupon shall not provide a time period of less than 14 (fourteen) days except for a second meeting or a third meeting under the Company Law. A call for a GMS shall be made by Registered Mail and/or an advertisement in a Newspaper. A notice of a GMS shall state the date, time, place and agenda of the meeting accompanied by notification that materials for discussion at the GMS are available at the office of the Company from the date the call for a GMS is made through the date a GMS is to be held. A Company must give copies of the materials to the shareholders, if requested, free of charge. If a call is made other than in accordance with the provisions that shall be made within 14 (fourteen) days before the date a GMS is to be held, not counting in the date of notice and the date of a GMS, and shall be made by Registered Mail and/or an advertisement in a Newspaper , and a notice is made other than in accordance with shall state the date, time, place and agenda of the meeting accompanied by notification that materials for discussion at the GMS are available at the office of the Company from the date the call for a GMS is made through the date a GMS is to be heldresolution of the GMS shall remain valid if all of the shareholders having voting rights are present or represented at a GMS, and the said resolution is approved in a unanimous vote.
         For Publicly-Held Companies, before calling a GMS, an announcement that there will be a call for a GMS must be made in advance with due regard to the laws and regulations in the field of capital markets. Such an announcement is intended to give an opportunity to the shareholders to propose additions to the agenda of the GMS to the Board of Directors. An announcement shall be made within 14 (fourteen) days prior to a call for a GMS.
         Each share issued shall bear one voting right, unless the articles of association provide otherwise. Unless the articles of association provide otherwise means the articles of association issue one share without a voting right. If the articles of association do not provide that matter, each share issued shall be deemed to bear one voting right. A voting shall not apply to :
      ·         shares of the Company that are possessed by the Company itself. Possessed itself means being possessed through the relation of ownership, buyback or pledge;
      ·         shares of the parent Company that are possessed by its subsidiary directly or indirectly; or
      ·         shares of the Company that are possessed by other Company, of which the shares have directly or indirectly been owned by the Company.
      A shareholder, either in person or represented by a power of attorney, is entitled to attend a GMS and exercise his/her rights in proportion to his/her shareholdings. The provisions before shall not apply to the shareholders having a share without a voting right. In the casting of votes, a vote cast by a shareholder shall apply to all of his/her shareholdings, and the shareholder with split voting is not entitled to authorize more than one representative for part of his/her shareholdings. In the casting of votes, at no time shall members of the Board of Directors, members of the Board of Commissioners, and employees of the relevant Company act as representatives of the shareholder. If a shareholder attends a GMS in person, such a granted power of attorney shall no longer be valid in the said meeting. The Chairperson of a meeting is entitled to determine who is entitled to attend a GMS with due regard to this Law and the articles of association of the Company. In addition to provisions, the laws and regulations in the field of capital markets shall also apply to Publicly Held Companies.
      A GMS may be held if more than ½ (one half) of the total amount of shares having voting rights are present or represented at the GMS, unless the Law and/or the articles of association provide for a greater quorum. Any manner other than in accordance with the provision of this section is only allowed if such is governed by this Law. The articles of association shall not determine a quorum less than the quorum provided for by this Law. If no quorum is present, a call for a second GMS may be made. If no quorum of the first GMS is present, the meeting shall remain called to order and be adjourned thereafter by taking minutes that explain the first GMS cannot proceed because a quorum is not present, and the call for the second GMS may be made thereafter.
      A call for a second GMS must state that the first GMS has taken place and failed to establish a quorum. A second GMS  shall be valid and entitled to adopt a resolution if at the GMS at least 1/3 (one third) of the total amount of shares having voting rights are present or represented, unless the articles of association provide for a greater quorum. If no quorum of a second GMS is present, a Company may petition the chief justice of the district court with jurisdiction over the domicile of the Company to order to determine a quorum for a third GMS at the request of the Company. If no quorum of the second GMS is present, the GMS shall remain called to order and adjourned thereafter by taking minutes of the GMS that explain the second GMS cannot proceed because a quorum is not present, and the petition may be filed thereafter with the chief justice of the district court to order to determine the quorum for the third GMS.
      A call for a third GMS must state that the second GMS has taken place and failed to establish a quorum, and that a third GMS is to be held with a quorum having been determined by the chief justice of the district court. An order by the chief justice of the district court on the determination of a quorum for a GMS shall be final and binding in nature. Final and binding in nature means that no appeal, cassation, or civil review may be filed against such an order. If the chief justice of the district court is unavailable, a quorum shall be determined by other official by whom the chief justice is represented. A call for a second and third GMS shall be made within 7 (seven) days before a second or third GMS takes place. A second and third GMS shall take place at least 10 (ten) days and within 21 (twenty-one) days after the preceding GMS has taken place.
         A resolution of the GMS shall be adopted by deliberation to reach a consensus. Deliberation to reach a consensus means the result of a consensus that is approved by the shareholders who are present or represented at the GMS. If a resolution by deliberation to reach a consensus is not reached, a resolution shall be valid if approved by more than ½ (one half) of the total amount of the votes cast unless the Law and/or the articles of association provide that a resolution shall be valid if approved by a greater number of the affirmative votes. Approved by more than ½ (one half) means that the motion concerning the agenda of the meeting must be approved by more than ½ (one half) of the total amount of the votes cast. If there are 3 (three) motions or candidates and none obtains more than ½ (one half) of the vote, voting for 2 (two) motions or candidates that have obtained a majority of the votes must be re-cast until one of the motions or candidates obtains more than ½ (one half) of the vote.
         A GMS to amend the articles of association may be held if at the meeting at least 2/3 (two thirds) of the total amount of shares having voting rights are present or represented at a GMS, and a resolution shall be valid if approved by at least 2/3 (two thirds) of the total amount of the votes cast, unless the articles of association provide for a greater quorum for attendance and/or for provisions on adoption of a resolution of the GMS. If no quorum is present, a second GMS may be held. A second GMS shall be valid and entitled to adopt a resolution if at the meeting at least 3/5 (three fifths) of the total amount of shares having voting rights are present or represented at the GMS and a resolution shall be valid if approved by at least 2/3 (two thirds) of the total amount of votes cast, unless the articles of association provide for a greater quorum for attendance and/or for provisions on adoption of a resolution of the GMS. Regarding a quorum for attendance and for provisions on the requirements for adoption of a resolution shall also apply to Publicly Held Companies to the extent not governed otherwise by the laws and regulations in the field of capital markets.
         A GMS to approve a Merger, Consolidation, Acquisition, or Division, filing of a petition for a Company to be declared bankrupt, extension of duration, and dissolution of a Company may be held if at the meeting at least ¾ (three fourths) of the total amount of shares having voting rights are present or represented at a GMS and a resolution shall be valid if approved by at least ¾ (three fourths) of the total amount of votes cast, unless the articles of association provide for a greater quorum for attendance and/or for the requirements for adoption of a resolution of the GMS. If no quorum is present, a second RUPS may be held. A second GMS shall be valid and entitled to adopt a resolution if at the meeting at least 2/3 (two thirds) of the total amount of shares having voting rights are present or represented at the GMS and a resolution shall be valid if approved by at least ¾ (three fourths) of the total amount of votes cast, unless the articles of association provide for a greater quorum for attendance and/or for the requirements for adoption of a resolution of the GMS. Regarding a quorum for attendance and/or for the requirements for adoption of a resolution of the GMS shall also apply to Publicly Held Companies to the extent not governed otherwise by the laws and regulations in the field of capital markets.
         For every GMS held, minutes of the GMS must be drawn up and signed by the chairperson of the meeting and by at least 1 (one) shareholder designated from amongst and by the participants of the GMS. The signing by the chairperson of the meeting and by at least by 1 (one) shareholder designated from amongst and by the participants of the GMS means to guarantee the certainty and accuracy of the content of the minutes of the GMS. Signature shall not be required if the minutes of the GMS are drawn up in a notarial deed. Shareholders may also adopt a binding resolution outside a GMS provided however that all of the shareholders with voting rights so approve in writing by signing said motion. Adoption of a resolution outside a GMS in practice is known as a motion for circulated resolution (circular resolution), such adoption of a resolution shall be made without holding a GMS in a physical manner, however the resolution shall be adopted by sending a written motion to all of the shareholders and such a motion is approved in writing by all of the shareholders. Binding resolution means the resolution that has the same legal force and effect as the resolution of the GMS.
       

    • Board of Directors

       Board of Directors means an Organ of the Company with the sole authority and responsibility for the management of the Company in the best interest of the Company within the objectives and purposes of the Company, and represents the Company both within and outside the court of law under the articles of association. The Board of Directors shall conduct the management of the Company in the best interest of the Company within the objectives and purposes of the Company. This provision assigns the Board of Directors to manage the Company that includes, inter alia, the day to day management of the Company. The Board of Directors shall be authorized to conduct the management  the policies deemed appropriate within the limits specified by this Law and/or the articles of association. Policies deemed appropriate means policies that are based on, inter alia, the expertise, available opportunities, and usage in the line of business of the similar type. The Board of Directors of the Company shall consist of 1 (one) member of the Board of Directors or more. Companies of which the line of business engages in raising and/or managing public funds, Companies that issue acknowledgments of indebtedness to the public, or Publicly Held Companies, must have at least 2 (two) members of the Board of Directors. If the Board of Directors consists of 2 (two) members of the Board of Directors or more, the division of duties and authorities of management amongst the members of the Board of Directors shall be determined by a resolution of the GMS. If the GMS does not so determine, the division of duties and authorities amongst the members of the Board of Directors shall be determined by a resolution of the Board of Directors. The Board of Directors as an organ of the Company that manages the Company should have a strong sense of urgency to management of the Company. Accordingly, if a GMS fails to determine the division of duties and authorities of members of the Board of Directors, it is reasonable if the Board of Directors determines the division on its own instead.
       
      Such as may be appointed a member of the Board of Directors shall be an individual who has the capacity of committing legal acts, unless within 5 (five) years prior to his/her appointment he/she has ever:
      ·         been declared bankrupt;
      ·         been a member of the Board of Directors or member of the Board of Commissioners who was declared at fault for the Company’s bankruptcy; or
      ·         been convicted for commission of a criminal offense that damages the state finance and/or the relevant financial sector. Financial sector means, inter alia, bank and nonbank financial institutions, capital markets, and other sectors dealing with public fund raising and management.
      The requirements shall not preclude the authorized technical agency determining additional requirements under the laws and regulations. Fulfillment of the requirements shall be documented with a letter that is kept on file with the Company. Letter means the statement letter made by the relecant candidate for a member of the Board of Directors with respect to the requirements for a member of Board of Directors and a letter from the competent agency with respect to the requirements.
         A member of the Board of Directors shall be appointed by a GMS. The authority of the GMS may not be vested in the other organs of the Company or other party. Initially, appointment of members of the Board of Directors shall be made by the founder in the deed of establishment. A member of the Board of Directors shall be appointed for a definite term and may be reappointed. The requirements for appointment of a member of the Board of Directors for “a definite term” means the member of the Board of Directors whose term of office expires shall not per se continue his/her previous office, except through re-appointment by a resolution of the GMS. For example, he/she is appointed for a 3 (three)- year term or 5 (five)-year term of the date of appointment, once that term expires, that former member of the Board of Directors shall no longer be entitled to act for and in the name of the Company, unless after reappointment by the GMS. The articles of association shall govern the procedures for appointment, replacement, and dismissal of a member of the Board of Directors, and may also govern the procedures for nomination of a member of the Board of Directors. A resolution of the GMS regarding appointment, replacement, and dismissal of a member of the Board of Directors shall also determine the effective date of the appointment, replacement, and dismissal. If a GMS does not determine the effective date of appointment, replacement, and dismissal of a member of the Board of Directors, the appointment, replacement, and dismissal of the member of the Board of Directors shall become effective from when the GMS is closed. If there are appointment, replacement, and dismissal of a member of the Board of Directors, the Board of Directors must notify the changes in the membership of the Board of Directors to the Minister for recording in the register of Company within 30 (thirty) days of the date of the resolution of the GMS. Changes in the membership of the Board of Director includes a change due to re-appointment of a member of the Board of Directors. If no notification as intended by section (7) has yet been made, the Minister shall reject any application filed or notification delivered to the Minister by the Board of Directors that has not been recorded in the register of Company. Notification shall not include notification that is delivered by the new Board of Directors of his/her own appointment.
         Non-fulfillment of the requirements for appointment of a member of the Board of Directors as intended by Article 93 will result in the appointment being void by operation of law from when other members of the Board of Directors or the Board of Commissioners has knowledge of such non-fulfillment of the requirements. Appointment of the member of the Board of Directors shall be void by operation of law from when the violation is known by other members of the Board of Directors or the Board of Commissioners on the basis of valid evidence, and the relevant member of Board of Directors shall be notified in writing once such a matter is known. A legal act that has been committed for and in the name of the Company by a member of the Board of Directors before his/her appointment is void shall remain binding and become the liability of the Company, and shall not detract from the liability of the relevant member of the Board of Directors for the losses of the company. Within 7 (seven) days of obtaining knowledge of it, other members of the Board of Directors or the Board of Commissioners must announce the void appointment of the relevant member of the Board of Directors in a Newspaper and shall notify the Minister for recording in the register of Company. Other members of the Board of Directors means the members of the Board of Directors other than the members of the Board of Directors of whom the appointment is void, and has the authority to represent the Board of Directors by the articles of association. If there is no member of the Board of Directors, the Board of Commissioner shall make the announcement. A legal act that is committed for and in the name of the Company by a member of the Board of Directors after his/her appointment has been void shall not be valid and become the personal liability of the relevant member of the Board of Directors. Provisions on the amount of salary and allowances of the members of the Board of Directors shall be stated by a resolution of the GMS. The authority of the GMS  may be vested in the Board of Commissioners. If the authority of the GMS is vested in the Board of Commissioners the amount of salary and allowances shall be determined by a resolution of the meeting of the Board of Commissioners.
         The Board of Directors shall be responsible for the management of the Company. Management must be required of every member of the Board of Directors in good faith and full responsibility. Every member of the Board of Directors shall be fully liable personally for the losses of the Company if the relevant member is at fault or negligent in the performance of his/her duties under the provisions. Full responsibility means having concern for the Company in a scrupulous and determined manner. If the Board of Directors consists of 2 (two) members of the Board of Directors or more, liability to fully liable personally for the losses of the company, shall apply jointly and severally to every member of the Board of Directors. A member of the Board of Directors may not be held liable for losses as if he/she can substantiate that:
      ·         the losses do not result from his/her fault or negligence;
      ·         he/she has conducted the management in good faith and prudence in the interest of the Company and within the objectives and purposes of the Company;
      ·         he/she raises no conflict of interest whether directly or indirectly in the acts of management that result in losses; and
      ·         he/she has taken preventive measures against the arising or continuation of losses.
      The provisions shall not detract from the right of other members of the Board of Directors and/or members of the Board of Commissioners to institute legal proceeding in the name of the company.
      In the name the Company, the shareholders by whom at least 1/10 (one tenth) of the total amount of shares with voting right is represented may institute legal proceedings in the district court against a member of the Board of Directors who due to his/her fault or negligence has resulted in losses to the Company.
      The Board of Directors shall represent the Company within and outside the court. The authority of the Board of Directors to represent the Company shall be unlimited and unconditional, unless provided otherwise by this Company Law, the articles of association, or a resolution of the GMS. If the membership of the Board of Directors consists of more than 1 (one) person, every member of the Board of Directors is entitled to represent the Company, unless provided otherwise in the articles of association. A resolution of the GMS may not be in conflict with this Law and/or the articles of association of the Company.
      A member of the Board of Directors is not authorized to represent the Company if:
      ·         there is an ongoing court case between the Company and the relevant member of the Board of Directors; or
      ·         the relevant member of the Board of Directors raises conflicts of interest with the Company.
      If a situation above arises, such as is entitled to represent the Company shall be:
      ·         other member of the Board of Directors who raises no conflict of interest with the Company;
      ·         the Board of Commissioners if all members of the Board of Directors raise conflicts of interest with the Company; or
      ·         other party appointed by the GMS if all members of the Board of Directors or the Board of Commissioners raise conflicts of interest with the Company.
      The Board of Directors must:
      ·         make a register of shareholders, special register, minutes of the GMS, and minutes of meetings of the Board of Directors;
      ·         make an annual report and financial documents of the Company as intended by Law concerning Corporate Documents; and
      ·         maintain all registers, minutes, and financial documents of the Company and other documents of the Company.
      All registers, minutes, financial documents of the Company, and other documents of the Company shall be on file at the domicile of the Company. Upon a written request of the shareholders, the Board of Directors shall authorize the shareholders to examine the register of shareholders, special register, minutes of the GMS and an annual report, as well as to obtain the copy of the minutes of the GMS and the copy of the annual report. The provisions do not preclude the laws and regulations in the field of capital markets providing otherwise.
         A member of the Board of Directors must report to the Company on the shares the relevant member of the Board of Directors and/or his/her family own in the Company and other Company for, thereafter, recording in the special register. A member of the Board of Directors that fails to perform his/her obligation and results in losses to the Company shall be personally liable for the said losses of the company.
         The Board of Directors must request approval of the GMS to:
      ·         transfer the assets of the Company, shall be a transaction of transfer of the net assets of the Company that occurs within 1 (one) book year or a longer period as governed by the articles of association of the Company; or
      ·         encumber the assets of the Company;
      Having value that exceeds 50% (fifty percent) of the net assets of the Company in 1 (one) transaction or more, whether or not related to each other.
      The provisions above shall not apply to the act of transfer or encumbrance of the Company’s assets, which the act is committed by the Board of Directors in the performance of the Company’s line of business under its articles of association. A legal act is committed without approval of the GMS shall remain binding on the Company to the extent the other party to such a legal act is in good faith. Provisions on a quorum for attendance and/or for provisions on adoption of a resolution of the GMS shall mutatis mutandis apply to a GMS to approve acts of the Board of Directors.
         The Board of Directors may authorize in writing 1 (one) employee of the Company or more or other person for and in the name of the Company to commit specific legal acts as specified in the power of attorney. Authority means the special authority for specific acts
      as referred to in the power of attorney.               
      Notwithstanding any provisions of Law concerning Bankruptcy and Suspension of Obligations for Payment of Debt, the Board of Directors is not authorized to file a petition for bankruptcy of own Company with the commercial court prior to approval of the GMS. If bankruptcy occurs through the fault or negligence of the Board of Directors and the bankruptcy estate is not sufficient to pay all obligations of the Company in the bankruptcy, every member of the Board of Directors shall be jointly and severally liable for all obligations unsettled from the bankruptcy estate. Liability shall also apply to the fault or negligent member of the Board of Directors who has ever been in office as member of the Board of Directors within 5 (five) years prior to pronouncement of a decision declaring bankruptcy. A member of the Board of Directors shall not be liable for bankruptcy of the Company if he/she can substantiate that :
      ·         the bankruptcy is through no fault or negligence of his/hers;
      ·         he/she has conducted the management in good faith, prudence, and full responsibility in the interest of the Company and within the objectives and purposes of the Company;
      ·         he/she raises no conflict of interest either directly or indirectly with the acts of management committed; and
      ·         he/she has taken preventive measures against the occurrence of bankruptcy.
      Provisions above shall also apply to the Board of Directors of the Company that is declared bankrupt based on the proceeding by a third party.
      A member of the Board of Directors may be dismissed at any time by a resolution of the GMS by stating the reasons therefor. A resolution to dismiss a member of the Board of Directors shall be adopted upon the relevant member having been given an opportunity to self-defend at the GMS. An opportunity to self-defend is not required if the relevant member does not object to the dismissal. If a resolution to dismiss a member of the Board of Directors is adopted by a resolution outside the GMS under the provision, such a member of the Board of Directors must first be notified of a plan for his/her dismissal and given an opportunity to self-defend prior to adoption of a resolution to dismiss him/her. Dismissal of a member of the Board of Directors shall be in effect from:
      ·         the closing of the GMS;
      ·         the date of resolution;
      ·         other date as designated in the resolution of the GMS;or
      ·         other date as designated in the resolution.
      A member of the Board of Directors may be suspended by the Board of Commissioners by stating the reasons therefor. Suspension shall be notified in writing to the relevant member of the Board of Directors. A member of the Board of Directors who is suspended is not authorized to perform duties. A GMS must be held within 30 (thirty) days of the date of suspension. At a GMS, the relevant member of the Board of Directors shall be given an opportunity to self-defend. A GMS shall revoke or affirm the resolution on the suspension. If a GMS affirms the resolution on the suspension, the relevant member of the Board of Directors shall be dismissed permanently. If a 30 (thirty)-day period has expired and no GMS is held, or the GMS fails to adopt a resolution, the suspension shall be void. For Publicly-Held Companies, the laws and regulations in the field of capital markets shall apply to a GMS.
      The articles of association shall govern the provisions on:
      ·         the procedures for resignation of the member of the Board of Directors;
      ·         the procedures for filling in the vacant position as member of the Board of Directors; and
      ·         the authorized party to conduct the management and to represent the Company if all members of the Board of Directors are unavailable or suspended.
       

    • Board of Commissioners

       Board of Commissioners means an Organ of the Company with duties to make general and/or specific supervision under the articles of association, as well as to provide advice to the Board of Directors.

      The Board of Commissioners shall supervise the management policy, the workability of the management in general with respect to both the Company and the business of the Company, and give advice to the Board of Directors. Supervision and advising shall be made in the interest of the Company and within the objectives and purposes of the Company. The Board of Commissioners shall consist of 1 (one) member or more. The Board of Commissioners that consists of more than 1 (one) member shall form a council, and every member of the Board of Commissioners may not act individually, but on the basis of the resolution of the Board of Commissioners. Companies the line of business of which are in connection with raising and/or managing public funds, Companies that issue acknowledgments of indebtedness to the public, or Publicly-Held Companies must have at least 2 (two) members of the Board of Commissioners.

      　A Company that engages in the line of shariacompliant business in addition to having a Board of Commissioners must have a Sharia Supervisory Board. The Sharia Supervisory Board shall consist of one sharia expert or more who is appointed by the GMS on the recommendation of the Indonesian Ulema Council. The Sharia Supervisory Board shall have the duties to give advice and recommendations to the Board of Directors as well as to supervise the activities of the Company to conform to the sharia principles.
      Such as may be appointed a member of the Board of Commissioners shall be an individual who has the capacity of committing legal acts, unless within 5 (five) years prior to his/her appointment, he/she has ever :
      ·         been declared bankrupt;
      ·         been a member of the Board of Directors or member of the Board of Commissioners who was declared at fault for the Company’s bankruptcy; or
      ·         been convicted for commission of a criminal offense that damages the state finance and/or the relevant financial sector.
      The requirements above shall not preclude the authorized technical agency determining additional requirements under the laws and regulations. Fulfillment of the requirements shall be documented with a letter that is kept on file with the Company.
         The Board of Commissioners shall be appointed by the GMS. Initially, appointment of members of the Board of Commissioners shall be made by the founder in the deed of establishment. A member of the Board of Commissioner shall be appointed for a definite term and may be reappointed. The articles of association shall govern the procedures for appointment, replacement, and dismissal of a member of the Board of Commissioners, as well as may also govern the nomination of a member of the Board of Commissioners. A resolution of the GMS regarding appointment, replacement, and dismissal of a member of the Board of Commissioners shall also determine the effective date of the appointment, replacement, and dismissal. If a GMS does not determine the effective date of appointment, replacement, and dismissal of a member of the Board of Commissioners, the appointment, replacement, and dismissal of the member of the Board of Directors shall become effective from when the GMS is closed. If there are appointment, replacement, and dismissal of a member of the Board of Commissioners, the Board of Directors must notify the changes to the Minister for recording in the register of Company within 30 (thirty) days of the date of the resolution of the GMS. If no notification has yet been made, the Minister shall reject any notification on the subsequent changes in the composition of the Board of Commissioners that is submitted to the Minister by the Board of Directors.
         Non-fulfillment of the requirements for appointment of a member of the Board of Commissioners will result in the appointment being void by operation of law from when other members of the Board of Commissioners or the Board of Commissioners has knowledge of such non-fulfillment of the requirements. Within 7 (seven) days of obtaining knowledge of it, the Board of Directors must announce the void appointment of the relevant member of the Board of Commissioners in a Newspaper and shall notify the Minister of it for recording in the register of Company, and shall not detract from the liability of the relevant member of the Board of Commissioners for the losses of the Company A legal act that has been committed by the Board of Commissioners for and in the name of the Board of Commissioners before his/her appointment is void shall remain binding and the liability of the Company.  Provisions on the amount of salary or honorarium and allowance of the members of the Board of Commissioners shall be provided for by the GMS.
         The Board of Commissioners shall be responsible for the supervision of the Company. Every member of the Board of Commissioners must perform the duties of supervision and advising to the Board of Directors in good faith, prudence, and full responsibility in the interest of the Company and within the objectives and purposes of the Company. Every member of the Board of Commissioners shall also be liable personally for the losses of the Company if the relevant member is at fault or negligent in the performance of his/her duties. The provision of this section emphasizes that if the Board of Commissioner is at fault or negligent in the performance of his/her duties, and so resulting in losses of the Company due to the management conducted by the Board of Directors, such a member of the Board of Commissioner shall also be responsible to the extent of his/her fault or negligence. If the Board of Commissioners consists of 2 (two) members of the Board of Commissioners or more, liability  shall apply jointly and severally to every member of the Board of Commissioners. A member of the Board of Commissioners may not be held liable for losses if he/she can substantiate that :
      ·         he/she has made supervision in good faith and prudence in the interest of the Company and within the objectives and purposes of the Company;
      ·         he/she lacks personal interest whether directly or indirectly in the acts of management of the Board of Directors that result in losses; and
      ·         he/she has given advice to the Board of Directors to prevent the arising or continuation of losses.
      If bankruptcy occurs through the fault or negligence of the Board of Commissioners in making supervision of the management conducted by the Board of Directors, and the assets of the Company are not sufficient to pay all obligations of the Company due to the bankruptcy, every member of the Board of Commissioners shall also be jointly and severally liable in conjunction with the Board of Directors for unsettled obligations. Liability shall also apply to the member of the Board of Commissioners who has no longer been in office within 5 (five) years prior to a decision declaring bankruptcy is pronounced. A member of the Board of Commissioners may not be held liable for bankruptcy of the Company if he/she can substantiate that :
      ·         the bankruptcy is through no fault or negligence of his/hers;
      ·         he/she has performed the supervisory duties in good faith and prudence in the interest of the Company and within the objectives and purposes of the Company;
      ·         he/she lacks personal interest either directly or indirectly in the acts of management of the Board of Directors that result in losses; and
      ·         he/she has given advice to the Board of Directors to prevent bankruptcy from occurring.
      The Board of Commissioners must:
      ·         make minutes of a meeting of the Board of Commissioners and retain their copies; The minutes of a meeting of the Board of Commissioners shall contain anything discussed and resolved at the meeting.
      ·         report to the Company on the shares he/she and/or his/her family own in the Company and other Company; and
      ·         submit a report to the GMS on the supervising duties that have been performed during the proceeding year.
       
      　The articles of association may provide the vesting of the authority in the Board of Commissioners to give consent or assistance to the Board of Directors in the commission of specified legal acts. If the articles of association provides the requirements for giving consent or assistance, without approval or assistance of the Board of Commissioners, specified legal acts shall remain binding on the Company to the extent other party to such legal acts is in good faith. Legal acts shall remain binding on the Company means the legal acts that are committed without the consent of the Board of Commissioners under the articles of association shall remain binding on the Company, unless the other party has been substantiated not in good faith. The provision as intended by this section may give rise to the personal liability of the member of the Board of Directors under this Law.
      　Under the articles of association or a resolution of the GMS, the Board of Commissioners may commit the act of management of the Company in a certain situation for a definite term. All provisions on the rights, authorities, and obligations of the Board of Directors towards the Company and the third party shall apply to the Board of Commissioners who in a certain situation for a definite term commits the act of management. Provisions on the dismissal of members of the Board of Directors shall mutatis mutandis apply to the suspension of members of the Board of Commissioners.
      　The articles of association of the Company may govern the existence of 1 (one) independent commissioner or more and 1 (one) delegated commissioner. An independent commissioner shall be appointed by a resolution of the GMS from amongst the parties not affiliated with the ultimate shareholders, the other members of the Board of Directors and/or members of the Board of Commissioners. A delegated commissioner shall form a member of the Board of Commissioners appointed by a resolution of the Board of Commissioners. Duties and authorities of a delegated commissioner shall be stated in the articles of association of the Company provided that they shall not be in contravention of the duties and authorities of the Board of Commissioners and shall not detract from the duties of management performed by the Board of Directors.
      　In the performance of duties of supervision, the Board of Commissioners may form a committee of which one or more members shall be the member(s) of the Board of Commissioners. A committee shall be responsible to the Board of Commissioners.
       

    • Share

       A share of a Company shall be issued in the name of the owner. The requirements for shares ownership may be stated in the articles of association with due regard to the requirements as the competent agency determines under the laws and regulations. If the requirements for share ownership are already stated and not fulfilled, a party that acquires such share ownership may not exercise the right in his/her capacity as a shareholder, and such shares shall not be allowed for in the calculation of quorum that must be established under this Law and/or the articles of association. The value of a share must be stated in rupiah currency. A share of no par value may not be issued. Provisions does not preclude regulation of issue of no-par-value shares by the laws and regulations in the field of capital markets.
       
      　The Board of Directors must maintain and keep a register of shareholders that contains at least :
      ·         the name and address of the shareholders;
      ·         the amount, number, date of acquisition of share owned by a shareholder, and its class if issued in more than one class of share;
      ·         the amount paid up on each share;
      ·         the name and address of the individual or legal entity that has a share pledge or as a fiduciary in shares and the date of acquisition of pledge or the date of registration of the fiduciary security;
      ·         information on the payment for a share in other form
       
      　In addition to a register of shareholders, the Board of Directors of the Company must maintain and keep a special register that contains information regarding the shares of members of the Board of Directors and the Board of Commissioners as well as of their family in the Company and/or in other Companies, as well as the date the share is acquired. A register of shareholders and a special register shall also record any change in the share ownership. A register of shareholders and a special register shall be made available in the domicile of the Company to enable viewing by the shareholders. If the laws and regulations in the field of capital markets do not govern otherwise, provisions shall also apply to Publicly-Held Companies. A shareholder shall be issued with proof of share ownership. A share shall confer the rights upon its owner to:
      ·         attend and cast a vote at the GMS; shall not apply to the classes of certain shares as provided for in this Law.
      ·         receive dividend payments and remaining assets after liquidation;
      ·         exercise his/her rights under this Law. Shall not apply to the classes of certain shares as provided for in this Law.
      Provisions above shall be applicable upon registration of a share in the register of shareholder in the name of its owner.
       
      　Each share shall confer an indivisible rights upon its owner. If 1 (one) share is owned by more than 1 (one) person, the right accruing from such a share is exercised by appointment of 1 (one) person as a joint representative. The articles of association shall provide 1 (one) or more classes of shares. Each share of the same class shall confer the same rights upon its holder. If there is more than 1 (one) class of share, the articles of association shall establish one of the among classes as an ordinary share. A class of share as intended by section (3) shall be inter alia:
      ·         a share with a voting right or without a voting right;
      ·         a share with a special right to propose a candidate for a member of the Board of Directors and/or for a member of the Board of Commissioners;
      ·         a share that after a definite period of time is withdrawn or exchanged for other class of share;
      ·         a share that confers upon its holder the right to receive a dividend in advance of a shareholder with other class with respect to distribution of dividends on a cumulative or non-cumulative basis;
      ·         a share that confers upon its holder the right to receive distribution of remaining assets after liquidation in advance of a shareholder with other class.
      The articles of association may state a share with a fraction of nominal values. An individual voting right shall not be conferred upon a holder of a share with a fraction of nominal values, except for the holder of a share with a fraction of nominal values, whether alone or together with another holder of a share with a fraction of nominal values, of which the classes of shares alike have a nominal value by 1 (one) nominal share from that class. The articles of association of the Company shall provide for assignment of the rights of a share under the laws and regulations.
       
       Assignment of the rights of a share must be made with a deed of assignment of rights. A deed of assignment of the rights or a copy thereof shall be submitted in writing to the Company. The Board of Directors must record assignment of the right of a share, date, and day of the assignment of the right in the register of shareholders or the special register, and shall notify the Minister of changes in the composition of shareholdings to be registered in the register of Company within 30 (thirty) days of the date of registration of the assignment of rights. If no notification has yet been made, the Minister shall reject any application for approval or notification made concerning the composition and the names of shareholders have not been notified to the Minister. Provisions on the procedures for assignment of the rights of a share traded in the capital markets shall be governed by the laws and regulations in the field of capital markets. The articles of association may govern the requirements for assignment of the rights of a shares, i.e.:
      ·         an obligation to first offer the shareholders with certain classes or the other shareholders;
      ·         an obligation to obtain prior approval from the Organ of the Company; and/or
      ·         an obligation to obtain prior approval from the competent agency under the laws and regulations.
      Requirements above shall not apply if assignment of the rights of a share is assignment of rights by operation of law, except the requirement is incidental to inheritance.
        If the articles of association require a selling shareholder to offer his/her shares to the shareholders with certain classes or the other shareholders, and if within 30 (thirty) days of the date the offer is made such a shareholder proves to not purchase, the selling shareholder may offer and sell his/her shares to a third party. Each selling shareholder who is required to offer his/her shares is entitled to withdraw the offer upon the expiration of 30 (thirty) days. An obligation to offer to the shareholders with certain classes or the other shareholders shall only apply 1 (one) time.
        Approval for assignment of the rights of a share that requires approval of the Organ of the Company or the rejection thereof must be granted in writing within 90 (ninety) days of the date the Organ of the Company receives the request for approval for assignment of rights. If the time period expires and the Organ of the Company fails to issue a written statement, the Organ of the Company is deemed to have approved the assignment of the rights of a share. If assignment of the rights of a share is approved by the Organ of the Company, such assignment of rights must be made under the provisions and made within 90 (ninety) days of the date the approval is granted.
        A share shall be a movable property and shall confer the rights upon its owner. A share may be encumbered with a pledge or a fiduciary security unless provided otherwise in the articles of association. A pledge of shares or fiduciary security over shares that has been registered under the laws and regulations must be recorded in the register of shareholders and the special register. A voting right of a share that is encumbered with a pledge or a fiduciary security shall remain attached to the shareholders.
        Every shareholder is entitled to institute legal proceedings against the Company in the district court if aggrieved by the acts of the Company deemed to be unjust and unreasonable as a result of a resolution of the GMS, the Board of Directors, and/or the Board of Commissioners. Legal proceedings shall be instituted in the district court with jurisdiction over the domicile of the Company.
       
        Every shareholder is entitled to request the Company to buy his/her shares at an appropriate price if no relevant shareholders approve the acts of the Company that damages the shareholders or the Company through :
      ·         amendments to the articles of association;
      ·         transfer or encumbrance of the assets of the Company worth exceeding 50% (fifty percent) of the net assets of the Company; or
      ·         a Merger, Consolidation, or Acquisition, or Division of the Company.
      If a share requested to be bought exceeds the limit of buyback by a Company the Company must seek the buying of the remaining shares by a third party.

    • Liquidation

       The New Company Law provides additional reasons for dissolving a company, other than by way of a resolution of the GMS, the expiry of the term of incorporation, or a court decision, namely:
       
      ·         with the revocation of a bankruptcy petition pursuant to a final and binding commercial court decision, the bankruptcy estate of the company is not sufficient;
      ·         the bankruptcy estate of the company is in an insolvent state as regulated under the
      ·         the revocation of the company’s business license which requires the company to be liquidated pursuant to applicable laws and regulations (this applies only to companies that hold specific business licenses such as insurance companies, banks, etc).
       
      Under the New Company Law, the dissolution of a company does not result in the termination of the company’s legal entity status. After dissolution, the company must also be liquidated.
      As under the previous Company Law, following the dissolution of a company, the company isprohibited from taking any legal action unless the action is required for liquidation purposes. If any action is undertaken after dissolution, the company, the Board of Directors and the Board of Commissioners will be jointly and severally liable for that legal action.
      The liquidation process under the New Company Law is similar to that provided under the previous Company Law and involves, among other matters, the following:
      ·         an announcement of the dissolution by the liquidator in a newspaper and the State Gazette and notification of the dissolution to the MOLHR (to be recorded in the Company Registry) within 30 days after the dissolution becomes effective. Failure to comply with these requirements will mean that the dissolution is not binding on third parties and that the liquidator is jointly and severally liable with the company for losses incurred by third parties;
      ·         the collection and registration of the company’s assets and indebtedness by the liquidator and the settlement of obligations with creditors;
      ·         the payment to creditors and, later, payment of remaining liquidation assets to the shareholders;
      ·         the reporting of the liquidation results to the GMS or the court, as applicable;
      ·         after the GMS or court ratification of the liquidation results, a notification of the liquidation results must be sent to the MOLHR and announced in a newspaper within 30 days from the date of the ratification of the liquidation results;
      ·         the recording of the termination of the legal entity status of the company by the MOLHR in the Company Registry; and
      ·         the announcement of the termination of the legal entity status of the company by the MOLHR in the State Gazette.