Logo at Paul Hype Page Indoneisa

Commissioners and Directors in an Indonesian Company

Home>Guide/FAQ>Commissioners and Directors in an Indonesian Company

Commissioners and Directors in an Indonesian Company

2021-02-02T13:21:23+08:00August 16, 2019|0 Comments

In any company based in Indonesia, commissioners and directors are some of the most important people involved in the running of the company. They have the authority to perform certain tasks that nobody else within the company would be able to do so. Every company owner will have to become familiar with all information pertaining to commissioners and directors in Indonesia to avoid any possible complications which could otherwise have been avoided.

Indonesia’s Corporate Structure

According to Indonesia’s Company Law, all limited liability companies must have shareholders, a board of commissioners and, a board of directors. Each of these roles has different responsibilities in the company.

Shareholders in an Indonesian Company

Shareholders are the company owner. The shareholder of Indonesian company can be a foundation, a company, or an individual. The shareholder has the final say when it comes to decision making. If there are any changes in the company, such as transferring shares, increasing or reducing the company’s paid-up capital or authorized capital, changing of business location or business activity, changing the business entity (from the public to private, and vice versa), and the incorporation period for the company, approval must be received from the shareholders. If the company needs to appoint, replace, and dismiss directors, shareholders will be the person in charge to do so as well.

Any of these changes must be decided during the shareholders’ general meeting. To ensure the validity of the changes, the shareholder’s general meeting must meet the following requirements:

  • At least 50% of the shareholders with voting rights must attend the meeting. If the shareholder is absent, he/she can assign a representative with a legitimate power of attorney to sit in on behalf of him/her.
  • If less than 50% of the shareholders can turn up at the meeting, shareholders have the right to hold another meeting between 10-21 days. Only 33% of the voting shareholders need to sit in for this meeting.

Shareholders’ Liability in Indonesia

Should the company incur a loss, the shareholders are not accountable for the company’s losses that exceed the value share they possess. Even if the company faces a lawsuit, the shareholders are not personally guilty of the charges.

Visual Content

The solutions we offer for companies and their owners cover important areas such as incorporation, taxation, auditing, and work visas, among others.

Informative Content

We are always ready and willing to work with any genuine and legitimate company which requires our incorporation services or any other services we provide.

Packages

We offer company incorporation, consultancy services, auditing, taxation, immigration & compliance services.

Board of Commissioners in an Indonesian Company

All PT PMAs are obliged to have no less than one commissioner. A commissioner can be the shareholders in the company. However, it is not necessary for shareholding to be part of the commissioner.

Responsibility of commissioners

Supervise the company

The responsibility of the board of commissioner is to oversee the company and to provide solid advice to the board of directors in line with the company’s articles of association. The board of directors will subsequently use the advice given by the board of commissioners to run the company in the most effective way possible. The commissioners are not counted in the daily management of a company.

Approved annual financial statements of a company

Commissioners also approved the annual financial statements of a company.

Review next financial year budget

Another duty of commissioners is to review next financial year budget.

Requirements of Commissioners in Indonesia

As mentioned, all PT PMAs are required to have a minimum of one commissioner. Companies that have multiple commissioners are to select one of them for the role of president commissioner. The president commissioner, as is implied by the title, serves as the leader of the board of commissioners.

A commissioner does not have to be a resident or citizen of Indonesia. A commissioner who is neither a resident nor a citizen may be selected if the prospective non-resident commissioner is not currently serving as a resident commissioner in another Indonesian company. Should the commissioner in question be a foreigner who has a work permit that is valid in Indonesia and the work permit is sponsored by a different company, the commissioner will require another work permit.

If you are a foreigner who requires a work permit or work visa of any sort so that you can work in Indonesia, we at Paul Hype Page & Co can be of assistance. We will work with you to ensure that you receive your work permit in as simple and smooth a manner as possible. We will also see to it that all regulations are followed in every step from application to the obtaining of the work permit.

Board of Commissioners’ Liability in Indonesia

The liabilities of the members of the board of commissioners are specified in Article 108, Paragraph (1) of the Company Law If the company were to suffer financial losses, the commissioners who were directly involved with those losses will be held accountable if it can be determined that they conducted their duties in a manner which was negligent, irresponsible, unethical, or contrary to the stipulations specified in the company’s articles of association.

In cases that see more than one director being at fault, this liability is to be imposed equally and jointly upon each commissioner concerned. However, if there is sufficient evidence that the commissioners carried out their supervisory duties in the company’s best interest and in accordance with the company’s business objectives, they do not have any vested interests in the board of directors’ actions, and they provided the board of directors’ advice to prevent losses from occurring, then the commissioners will not be held liable for the losses.

Commissioners and Suspensions of Directors

Should it be deemed necessary, commissioners in an Indonesian company through the company’s board of commissioners have the power to impose a temporary suspension on any member of the board of directors. Such suspensions are regulated by Indonesia’s Law Number 40 of 2007. Once the board of commissioners has provided the reasons for the director’s suspension and informed the director to be suspended in writing, the director will be duly suspended and is therefore prohibited from carrying out any directorial duties during the period of the suspension. Within 30 days of the beginning of the suspension, a general meeting of shareholders (GMS) must be held. The director who has been suspended may offer a personal defense during this GMS. After GMS, the commissioners will choose to either uphold or withdraw the suspension. A non-decision on the part of the commissioners or a failure to hold a GMS within the prescribed time will be regarded as equivalent to a withdrawal of the suspension; therefore, such an outcome will permit the suspended director to return to the directorial role.

Directors in an Indonesian Company

In an Indonesian company, directors are part of the board of directors. The board of directors oversees all matters related to the management of the company. All decisions made by the directors of the company are to be in line with the company’s articles of association and all relevant company laws in Indonesia. The articles of association also mention the duration of which a director is to be in the position. Members of the board of directors are to be selected, replaced, or even dismissed during a GMS.

Requirements of Directors in Indonesia

Every company based in Indonesia must have at least one director. Companies that have more than one director must select one of these directors to serve as the president director of the company. The president directors, as is implied, is the leader of the directors. The liabilities and responsibilities of an Indonesian company’s directors are to be determined by using the methods of common corporate structures in Indonesia. In many situations, such determinations are made during a GMS.

Responsibilities of Directors

Directors are the legal representatives of a company. They have to act according to the company’s articles of association. A director of an Indonesian company also has certain important responsibilities to be fulfilled. Among these responsibilities are the following:

  • Filing of compliances
  • Submission of financial statements
  • Preparation of an annual work plan before the beginning of a company’s fiscal year
  • The signing of contracts between third parties and the company
  • Management of the company’s bank account
  • Submission of the company’s financial statement and yearly report
  • Maintenance of the list of shareholders as well as the minutes of any GMS.

However, a non-resident director is not permitted to sign documents on the company’s behalf. Only directors who are residents of Indonesia may do so.

Liabilities of Directors in an Indonesian Limited Liability Company

The liabilities of the members of the board of directors are specified in Article 97, Paragraph (3) of the Company Law. They are determined in a comparable way as the liabilities of commissioners. If it can be proven that directors who were directly involved with the financial losses of a company acted in a way that could be deemed to have been objectionable and contrary to the goals of the company, they will be made liable for these losses. Similar to the rules regarding liabilities imposed on commissioners, when multiple directors are to blame for the losses suffered by the company, all directors involved are to have the liability imposed equally and jointly upon them. However, if there is sufficient evidence that the financial losses suffered by the company were not caused by the negligence or poor judgement of the directors, the directors carried out their managerial duties in the company’s best interest and in accordance with the company’s business objectives, they do not have any conflict of interest with regard to the managerial actions which directly led to the financial losses, and they attempted to prevent the financial losses concerned from taking place, then the directors will not be held liable for the losses.

In any case, if your company has been enduring financial hardship, regardless of whose fault the losses were, you should contact us at Paul Hype Page & Co. We will help your company overcome any losses previously suffered by helping you formulate a sound financial plan. This plan should lead your company to improved profit levels so that it will once again earn revenue that will benefit both you and your company alike.

Conclusion

Competent and responsible directors and commissioners are important in leading any Indonesian company to success, whether financially or otherwise. The board of directors and board of commissioners ought to work together to ensure the continued well-being of the company. By doing so, the company will become stronger, more profitable, and more respected by the public. Furthermore, the tasks that can only be performed by commissioners and directors are crucial to the company’s success. Thus, even though their roles may differ, commissioners and directors are equally important to any company in Indonesia.

Commissioners and Directors in an Indonesian Company FAQs

Who can terminate a commissioner or a director in the company?2021-01-29T14:59:07+08:00

The shareholders have the right to terminate a commissioner or a director in the company. To terminate a commissioner or a director in the company, the shareholders must issue a letter of termination, a statement letter, and host a hearing

The process of terminating a commissioner or a director in the company is a hassle. Is there any way I can avoid the termination process?2021-01-29T14:58:54+08:00

Yes, there is a way to avoid the termination hassle. In the company’s articles of association, the shareholders can limit the term of office (one to five years) of the commissioner or the director. Once the commissioner or the director hit the maximum term, the commissioner or the director must vacate the role. In this way, the company does not have to go through the termination process.

Who is responsible for reviewing and approving the annual financial statement of the company? Board of Directors or Board of Commissioners?2021-01-29T14:45:28+08:00

The Board of Commissioners is responsible to review and approve the annual financial statement of the company.

Can foreigners be the commissioners in Indonesia?2021-01-29T14:42:51+08:00

As long as the foreigner possesses a work permit in Indonesia, he/she can be a commissioner in a foreign-owned company. However, any company which is completely owned by Indonesians is not allowed to hire a foreigner as the company’s commissioner.

Leave A Comment

Go to Top