Mar

02

Corporate Governance in Indonesia: Change of Directors and Commissioners

In addition to the General Meeting of Shareholders, there are a Board of Directors and Board of Commissioners that are also bodies of limited liability companies in Indonesia. The Board of Directors (BOD) is the company’s body that manages the day-to-day business, and the Board of Commissioners (BOC) supervises the director(s) and can step in and report to the shareholders if necessary. From time to time, companies will change their director or commissioner. Since the director and commissioner are not a regular employee, a specific procedure applies for such an amendment. The amendment process always involves appointing a new commissioner or director in the company, and may involve the dismissal of the current member of the BOD or BOC.

Furthermore, in general, there are no regulations that stipulate the required action to change the BOD or BOC prior. However, you must consider whether there is a requirement to obtain approval from third party before changing the composition of the BOD and/or BOC, which usually arises because of an agreement, for example, approval from creditor or other partner.

In general, the procedure to change the BOD and/or BOC are as follows:

  1. General Meeting of Shareholder (GMS)
    The shareholders of the company convene a GMS with minimum quorum being more than 50 percent of the shareholders with voting rights attending. In addition, resolutions in the GMS will only be valid if more than 50 percent of the shareholders with voting rights vote in favor of the resolutions or agree unanimously by way of shareholder circular resolution. The quorum for GMS can be higher if the Articles of Association stipulates otherwise.

  2. Deed of the statement of the GMS resolution
    The public notary will notarize the signed GMS resolution.

  3. Update the company data at the Ministry of Law and Human Rights
    Companies are unable to update the company data by themselves, and only a notary has the access to request the amendment of company data to the Ministry of Law and Human Rights. The notary will submit such request after the deed of change for the BOD or BOC is completed.

  4. Amendment of company licenses and registrations
    If the company needs to amend certain company licenses in case of a director change, the company shall update the licenses.

Schinder Law Firm has years of experience in the corporate practice, including changing the composition of company body. Should you wish to carry out the changes discussed in this article, feel free to drop us an email at info@schinderlawfirm.com.

Author: Dewi Susanti