Annual General Meeting (AGM) in Indonesia

6 min read|Last Updated: December 29, 2022|

After incorporation, aside from the compliance requirements, there is a need to hold an Annual General Meeting (AGM) in Indonesia for limited liability companies. The AGM is usually conducted after the submission of the annual financial statements in Indonesia to internally review and analyse business performance.

Definition of an AGM 

An annual general meeting is a compulsory meeting held by shareholders of a company. In the AGM, the directors of the company are responsible of presenting the report about the company’s performance and strategies.

Additionally, during the AGM, all directors that have voting rights are tasked with the responsibility of voting on current issues. Examples of the issues they would vote on are:

  • selecting other members of the company’s board of directors,

  • pay any outstanding executive compensations,
  • pay all remaining dividends,
  • select an auditor for the company, or
  • complete any other executive tasks which are incomplete
Indonesia Incorporation Specialist Jacey

Differences Between an EGM and an AGM

Another type of meeting that is common to hear in the business world is Extraordinary General Meetings (EGM). These meetings are very different to AGMs as they are held when there is an urgent need to resolve a problem which must be resolved before the due date of the AGM.

Thus, the most distinct difference between AGM and an EGM is the fact that an AGM is called at a planned and scheduled time whereas an EGM is called to address pressing matters as soon as possible.

An EGM’s purpose is for shareholders to resolve an urgent issue which has arisen within the company. In most instances, an EGM will deal with one of the following matters:

  • Removal of one or more of the company’s directors from the position

  • Legal matter that requires the immediate action of shareholders, or

  • Any time-sensitive issue which must be settled before the next AGM is to be held

The two other significant differences between EGM and AGM in Indonesia are:

Annual General Meetings Extraordinary General Meetings
Only held during office hours & business days Can be held anytime
Called by only the board of directors Called through the request of a shareholder or a tribunal

How Companies Conduct Annual General Meetings (AGM) in Indonesia

In Indonesia, when an AGM is conducted, there is usually a preliminary meeting to allows the company’s directors to discuss the future direction of the company and to provide ample time to solve any problems within the company.

It is during such meetings that the directors of the company begin the processing of deciding who should be selected as the newest members of the Indonesian company’s board of directors.

Before an AGM in Indonesia may begin, the company must inform all shareholders who will attend the AGM the following details:

  • Date

  • Time

  • Location

  • Details of any new directors or shareholders

Indonesia Incorporation Specialist Jacey

During the AGM, there will be time allocated for the shareholders to ask any question to the directors of the company.

The shareholders who would like to raise any issue with the directors and management of the company may take advantage of the opportunity to ask questions to the directors.

Topics Which Must Be Discussed During an Indonesian Company’s AGM

Although there are a countless number of topics that may be discussed during an AGM, there are some topics that are commonly discussed in an AGM.

1. Minutes of the Previous AGM

The previous AGM’s minutes are presented and approved accordingly before the agenda of the AGM to be held may take effect.

2. Financial Statements

The management of the company must present its annual financial statements that record the financial position and development of the company for the approval of the shareholders.

3. Rectification or Approval of the director’s actions

Shareholders are free to express their satisfaction with specific actions of the company’s directors over the past year. This may include the director’s remuneration report and policies, the appointment of auditors and the analysis of the remunerations of the company’s directors and auditors

4. Voting of New Directors

Relevant members, inclusive of shareholders of the company will be able to elect new directors if the need arises.

5. Dividends Payment

The dividends owed to shareholders and other concerning parties will be declared during the AGM.

Ratification of Directors’ Actions

During an AGM of an Indonesian company, the shareholders of the company are expected to ratify and approve the decisions made by the board of directors over the previous year. Such actions usually include the payment of dividends.

AGMs serve as a period during which the executives and directors are expected to share their vision of the company’s future with the company’s shareholders.

If the situation arises, the shareholders are expected to select the newest members of the board of directors for the company’s future management and operations.

Several other matters which are sometimes discussed during an AGM of an Indonesian company include:

  • the approval of the directors’ remuneration report and policies,

  • the appointing of the companies’ auditors, and

  • the analysis of the remunerations of the company’s directors and auditors.

An AGM in Indonesia also provides a platform for the shareholder to grant authority to the directors for the allocation of new shares. It is during this time that the shareholders may choose to propose a general meeting other than an AGM; such a meeting would subsequently take place at a time and place of the shareholders’ choice.

Individuals Who Are Allowed to Call an Annual General Meeting (AGM) in Indonesia

Members of the board of directors are granted the right to call an AGM in any Indonesian company. However, shareholders who have a certain percentage of voting rights might choose to request that an AGM be held. Regardless of who calls for the AGM to be held, ample notice must be provided to those who are to attend the AGM before it is held.

Information to Be Included in the Annual General Meeting (AGM) Notice

An AGM notice is released well before an AGM takes place to inform the relevant shareholders and members that are required to be present in the AGM.

In an AGM notice, there are certain information which ought to be included for the knowledge of the shareholders. Among the information to be included are:

  • the date and time during which the AGM is to held,

  • the place where the meeting will be held, and

  • the general nature of the meeting

The notice of the AGM may be sent to the shareholders either in the form of writing or electronically through an email or a website post.

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FAQs

Can I employ foreign employees for my company in Indonesia?2021-11-22T12:28:15+08:00

Depending on the nature of your business, it is mostly acceptable to employ foreign employees for your company in Indonesia. It is wise to read up and educate yourself regarding the guidelines and requirements to do so. If you are in need of assistance, you may reach out to Paul Hype Page to assist you in the application for any work permit or visas.  

What are some things to note of Indonesia before travelling?2023-03-03T15:41:32+08:00

Indonesia’s national language is Bahasa Indonesia, although similar to Malay, it is not the same. Other than that, Javanese is also one of the most common primary language spoken. Indonesia is also not an Islamic state although it has own of the largest Muslim population in the world.

Despite Indonesia not being an official Islamic state, Islamic principles do influence political decisions. It also influences the culture in Indonesia, for example modesty in clothing.

When do I hold an AGM?2023-03-03T15:40:02+08:00

An AGM is held anytime between the release of the annual financial statement and 6 months after. It is wise to give ample time for the members to review the annual financial statement on their own before holding an AGM.

If there is an urgent matter that needs to be addresses, can I hold the AGM earlier than the release of the annual financial statements?2023-03-03T15:33:37+08:00

In the case that a meeting is required to be held prior to the release of the annual financial statement, an Extraordinary General Meeting may be held at any time or day with no restrictions unlike an AGM. This EGM may be called for by a shareholder, not only limiting the right to call for a meeting to the board of directors. 

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