CAN AN EMPLOYEE REPRESENT THE COMPANY TO PERFORM ANY LEGAL ACTION?

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CAN AN EMPLOYEE REPRESENT THE COMPANY TO PERFORM ANY LEGAL ACTION?

CAN AN EMPLOYEE REPRESENT THE COMPANY TO PERFORM ANY LEGAL ACTION?

We commonly know that the Indonesia Limited Liability Company Law stated the Board of Directors and/or a Director has the right to represent the company whether in or out of the courts, such as entering into any agreement on behalf of the company.

However, what if in case that a company only has a single (1) member of Director, and while in an urgent occasion such Director is absent or being prevented to represent the company, which cause the company to be constrained to do any legal actions? Such condition surely put a restraint against the company’s operations.

If such case is happening to your company, basically a Director may delegate its authority to any other party (e.g: company’s employee), and these shall not annul the legitimacy of such legal action.  The delegation of authority from a Director as mentioned in this paragraph can be conducted by giving a written power of attorney to the proxy.

You may refer to Article 103 of Indonesia Limited Liability Company Law which stipulated that “A Board of Directors may give a written power of attorney to 1 (one) or more employees of the Company or to some other person(s) for and on behalf of the Company  to  perform  specific  legal  actions  as  described  in  the  power  of attorney”.

Furthermore, the granting of such power of attorney must be in writing as described in the elucidation of Article 103 of Indonesia Limited Liability Company Law which provide an elaboration concerning power of attorney “Power of attorney” means a special power of attorney for specific actions mentioned in the power of attorney”.

Then, what if a company has more than (1) person of Director? In this condition, basically the transfer of authority can still be conducted by directly granting power of attorney to the company’s employee.  Other than to the company’s employee, the delegation of authority may also be granted to any other Director(s) as referred in Indonesia Limited Liability Company Law that stated “Should the President Director or the Finance Director is absence or being prevented to represent due to any reason whatsoever, of which impediment no evidence to third party, then another member of the Board of Directors jointly with each of the Finance Director or President Director shall be entitled and authorized to act for and on behalf of the Board of Directors and representing the Company “.

This means that the delegation of authority from the President Director to another Director automatically apply without required a written power of attorney, as referred in Article 98 Paragraph 2 of Indonesia Limited Liability Company Law that stated “……in  the  event  that  a  Board  of  Directors  consists  of  more  than  1  (one) person,  any  member  of  the  Board  of  Directors  has  the  authority  to represent   the   Company …..”. This concept is known as colegial representation, hence the grant of Director’s Power of Attorney or a Special Power of Attorney is not required.

Therefore, a member of Board of Directors must comprehend the form and qualification of the delegation of authority, so that it shall not be legally null and void due to error in procedure.

HOW CAN SMART CONSULTING HELP YOU?

SMART Consulting is an Indonesian Corporate Legal Services firm. SMART has assisted Clients local and multinational companies in structuring their corporate structure, including matters related to the duties and responsibilities of Board of Directors of a Company. We also assist Clients regarding the Compliance and Corporate Legal Services.

Contact Us Now to get your legal solution for your business goals, and still comply with the prevailing laws and regulations.

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