Becoming a Director or a Commissioner of a Limited Liability Company comes with a specific set of duties and responsibilities as stipulated by Indonesian Company Law. Learn more about what it all entails in our article.
Pursuant to Law No. 40 of 2007 concerning Limited Liability Company (“Company Law”), a Company have 3 (three) company organs with different duties and responsibilities in running the Company: (1) General Meeting of Shareholders or GMS (Rapat Umum Pemegang Saham or RUPS), (2) Board of Directors (Direksi), and (3) Board of Commissioners (Dewan Komisaris).
While the GMS consists of the shareholders of the Company with voting rights, the members of Board of Directors and the Board of Commissioners are appointed by the GMS. Pursuant to Article 92 (3) and Article 108 (3) of the Company Law, a Company must have at least 1 (one) Director in the Board of Directors, and 1 (one) Commissioner in the Board of Commissioner.
Understanding the duties and responsibilities of a Director and/or Commissioner is key for foreign investors to ensure that at both the early stage of Company establishment, and the management afterwards, the right people are put in the right place, with the right role.
WHAT IS THE ROLE OF DIRECTOR IN COMPANY?
The Board of Directors have duties and responsibilities or authorities delegated to them by the GMS and other responsibilities under the Company Law. This means, the GMS can determine the responsibilities of a Director, as long as it doesn’t breach the prevailing Company Law.
Some of the Director’s responsibility include preparing a business plan for the next financial year prior to commencement of the next financial year, and submitting the business plan to the Commissioner and GMS of the Company as regulated in the Articles of Association of the Company. Director also has the responsibility to notify the Minister of Law and Human Rights (the “MOLHR”) of any change to the composition of the Boards of Directors or Commissioners of the Company within 30 days as of the date of the resolution of the GMS in regards to the change.
In certain transactions such as the merger, acquisition, consolidation, segregation or dissolution of the Company, the Board of Directors also has a number of obligations regarding the transaction, such as to prepare the transaction plan, announce the proposed transaction in the newspapers, or act as the liquidator in the dissolution of the Company.
The members of the Board of Directors are the lawful representatives of a Company, in and out of the courts. In the event that Director consists of more than 1 (one) person, any member of the Board of Directors has the authority to represent the Company unless the Articles of Association specify otherwise.
Article 97 of Law of the Republic of Indonesia Number 40 of 2007 (“Company Law”) stated that every member of the Board of Directors is personally liable for any loss suffered by the Company if he/she acts wrongfully or fails to perform his/her duties in the manner stated above. If the Board of Directors consists of more than 1 (one) Director, the liability applies jointly among each of the members.
WHAT IS THE ROLE OF COMMISSIONER IN COMPANY?
The duties of the Board of Commissioners is to conduct general and/or specific supervision in compliance with the Articles of Association of the Company and to give advice to the Board of Directors as they seem fit. Please be informed that the Commissioner is not involved in the day-to-day operations of the Company, such actions being the responsibility of the Director. Therefore, the Commissioner cannot represent the Company in transaction deals and/or signing agreements, unless in certain situations as stipulated in the Company Law.
Besides supervising Company, Commissioner is also examine the annual report and approve the budget plan (as required by the Articles of Association of the Company) submitted by the Board of Directors. The Board of Commissioner must also assist or supervise the Board of Directors in the transactions, including approving the transaction plan.
Commissioner is also responsible of secretarial matters, which are as follows:
HOW CAN SMART CONSULTING HELP YOU?
To ensure a smooth investment and business operation from the legal perspective, but also still focus on maintaining your business in Indonesia and reach your revenue target, it is advised for you to find capable and trusted lawyers or legal consultants for advice and assistance in ensuring your legal compliance with prevailing corporate laws and regulations.
SMART Consulting is an Indonesian Corporate Legal Services firm. We have assisted local and multinational companies in their corporate legal matters, such as preparing board resolutions for both Directors and Commissioners, and also providing advisory services related to Indonesian Company Law. Our one-stop legal solution services concept allows us to assist our Clients from the establishment of the Company, to assisting Clients in maintaining their legal statutes and documents.
Contact Us Now to get your legal solution for your business goals, and still comply with the prevailing laws and regulations.