ELUCIDATION OF LAW OF THE REPUBLIC OF INDONESIA NUMBER 40 OF 2007 CONCERNING LIMITED LIABILITY COMPANIES

ELUCIDATION OF
LAW OF THE REPUBLIC OF INDONESIA
NUMBER 40 OF 2007
CONCERNING
LIMITED LIABILITY COMPANIES

BY THE GRACE OF ALMIGHTY GOD
THE PRESIDENT OF THE REPUBLIC OF INDONESIA
I. GENERAL
The national economy, which is operated on a basis of economic
democracy with principles of community, efficiency, justice, sustainability,
environmental awareness, independence and safeguards for balanced
progress and national economic unity has the aim of creating prosperity
for society. Increasing development of the national economy needs the
support of an act regulating limited liability companies which can secure a
conducive climate for the business world. To date limited liability
companies have been governed by the Limited Liability Companies Act
No. 1 of 1995, which replaced legislative regulations originating from the
colonial period. However, in their development, the provisions in that Act
are viewed as no longer complying with legal developments and the needs
of society because the economic situation and progress in science,
technology, and information are developing so swiftly, particularly in the
era of globalisation. Besides, the increase in demand from society for quick
service, legal certainty and the demand for development of the business
world in accordance with principles of good corporate governance demand
the improvement of the Limited Liability Companies Act No. 1 of 1995.
This Act accommodates various provisions concerning Companies, both in
the form of the addition of new provisions, the improvement of others and
the keeping of old provisions evaluated as still relevant. To further clarify
the essence of Companies, this Act makes explicit that a Company is a legal
entity which constitutes an alliance of capital established pursuant to a
contract in order to carry on business activities with an authorised capital
all of which is divided into shares and which fulfils the requirements
stipulated in this Act and its implementing regulations.
In the context of complying with society’s demand for swift service, the Act
provides procedures for the electronic:
1. submission of applications for and the granting of ratification of
legal entity status;
2. submission of applications for and the granting of approval for the
amendment of articles of association;
3. delivery of notifications and receipt of notifications of amendments
to articles of association and/or notification of and receipt of
notification of other changes to data
by legal entity administration system information technology services
besides manual systems still being possible in certain circumstances.
With regard to applications for ratification of Companies as legal entities,
it is made explicit that such applications constitute the authority of the
founders jointly which they can exercise themselves or they can empower a
notary to exercise.
A Company’s deed of establishment which has been ratified and deed of
amendment of the articles of association which has been approved and/or
notified to the Minister must be recorded in the register of Companies and
announced in the Supplement to the State Gazette of the Republic of
Indonesia made by the Minister. In the matter of grants of status as a legal
entity, approvals and/or receipts of notification of amendments to the
articles of association, and changes to other data, this Act has not
connection with the Mandatory Company Registration Act.
To further clarify and make explicit provisions involving Company Organs,
this Act amends provisions involving the holding of General Meetings of
Shareholders (GMS) by using technological developments. Thus, a GMS
can be held by electronic media such as teleconferences, video
conferences, or other electronic media facilities. This Act also clarifies and
makes explicit the tasks and responsibilities of the Board of Directors and
Board of Commissioners. This Act provides for independent and delegated
commissioners.
In accordance with the development of business activities based on sharia
principles, this Act obliges Companies doing business on the basis of
sharia principles to have a Sharia Supervisory Board as well as a Board of
Commissioners. The Sharia Supervisory Board’s task will be to give the
Board of Directors advice and suggestions and to supervise the Company’s
activities so that they will be in accordance with sharia principles.
The provisions in this Act regarding Companies’ capital structure remain
the same, i.e., it consists of authorised capital, subscribed capital, and
paid-up capital. However, Companies’ authorised capital has been
changed to be at least Rp. 50,000,000 (fifty million rupiah), while there is
an obligation to fully pay up subscribed capital. With regard to buying
back shares issued by the Company, it can be done in principle with the
proviso of a 3 (three)-year time limit for the Company to own shares which
it has bought back. Especially for the use of profits, this Act makes explicit
that the Company may allocate profits and set aside the mandatory reserve
if the Company has a positive profit balance.
This Act provides for Environmental and Social Responsibility aimed at
creating sustainable economic development in order to improve the
quality of life and environment, which will be beneficial for the Company
itself, the local community and society in general. This provision is
intended to support the ties of Company relationships which are
harmonious, balanced and in accordance with the environment, values,
norms and culture of the local community, and so it stipulates that
Companies whose business activities are in the field of and/or related to
natural resources must put into practice Environmental and Social
Responsibility. In order to carry out this obligation of Companies, the
Environmental and Social Responsibility activities must be budgeted for
and calculated as Company costs to be performed with due attention to
decency and fairness. Such activities must feature in Companies’ annual
reports. If a Company does not put into practice Environmental and Social
Responsibility, the Company involved will be liable to sanctions in
accordance with the provisions of legislative regulations.
This Act makes explicit provisions with regard to the winding-up,
liquidation and expiry of the Company’s status as a legal entity with due
attention to the provisions in the Bankruptcy and Suspension of Payments
Act.
In the context of the implementation and development of this Act, a team
of company law review experts will be formed whose task will be to give
input to the Minister in relation to Companies. To ensure the credibility of
this team of experts, the membership of the team will consist of various
elements from the government, academics, the professions, and the
business world.
As a comprehensive regulation which covers various aspects of
Companies, it is to be hoped that this Act will meet society’s demands of
the law and give further legal certainty for the business world in particular.
II. ARTICLE BY ARTICLE
Article 1
Sufficiently Clear
Article 2
Sufficiently Clear
Article 3
Paragraph (1)
The provisions in this paragraph make explicit the character
of a Company that shareholders are only liable for the
amount paid up on all of the shares they own and it does not
cover their personal assets.
Paragraph (2)
In certain circumstances it is not impossible for limited
liability to be eliminated if it is proved that the matters stated
in this paragraph have occurred.
It is possible for shareholders’ liability in the amount of all
the shares they own to be eliminated if it is proven that,
among others, there has been a mixing of the shareholder’s
personal assets and the Company’s assets so that the
Company was established purely as a tool to be used by the
shareholder to reach his personal aims as contemplated in
subparagraphs a and d.
Article 4
The fact that this Act, their articles of association and the provisions
of other legislative regulations apply to Companies does not detract
from the obligation of each Company to comply with the principles
of good faith, decency, and fairness and the principle of good
corporate governance in running the Company.
“Other legislative regulations” means all legislative regulations
related to the existence and running of Companies, including their
implementing regulations, among others banking, insurance and
financial institution regulations.
In the event that there is found to be any conflict between the
articles of association and this Act, this Act prevails.
Article 5
The Company’s domicile also constitutes the Company’s head
office.
The Company must have an address in accordance with its domicile
which must be mentioned in, amongst others, correspondence, and
at which the Company can be contacted.
Article 6
If the Company is established for a limited period, the length of that
period must be explicitly stated; for example, 10 (ten) years, 20
(twenty) years, 35 (thirty-five) years, and so on. Similarly, if the
Company is established for an unlimited period, this must be
explicitly stated in the articles of association.
Article 7
Paragraph (1)
“Person” means an individual Indonesian or foreign citizen
or an Indonesian or foreign legal entity. The provision in this
paragraph makes explicit the principle effective under this
Act that basically as legal entities, Companies must be
established pursuant to a contract and therefore they must
have more than 1 (one) shareholder.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
In the event that a Consolidation of all of the assets and
liabilities of a consolidating Company become the capital of
the Company resulting from the Consolidation and the
founders do not subscribe shares, the founders of the
Company resulting from the Consolidation are the
consolidating Companies and the names of the shareholders
of the Company resulting from the Consolidation are the
names of the shareholders of the consolidating Companies.
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Paragraph (6)
The legal relationships and losses of the Company for which
shareholders are personally liable are legal relationships and
losses which arise after the 6 (six) months have passed.
“Party concerned” means the public prosecutor’s office in the
public interest, the shareholder, the Board of Directors, the
Board of Commissioners, the Company’s employees,
creditors and/or other stakeholders.
Paragraph (7)
Because of their special status and characteristics, the
requirement for the number of founders for the Companies
contemplated in this paragraph are provided for in separate
legislative regulations.
Subparagraph a
“State Limited Liability Company” means a business
entity belonging to the State in the form of a Company
whose capital is divided into shares as provided for in
the State Owned Enterprises Act.
Subparagraph b
Sufficiently Clear.
Article 8
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Subparagraph a
In establishing a Company clarity with regard to the
nationality of the founders is necessary. Basically,
Indonesian legal entities in the form of a Company
must be established by Indonesian citizens or
Indonesian legal entities. Nevertheless, foreign
citizens or foreign legal entities are given the
opportunity to establish Indonesian legal entities in
the form of Companies in so far as the statute
regulating the Company’s field of business allows or
the establishment of the Company is provided for by a
separate statute.
In the event that the founders are foreign legal
entities, the number and date of ratification of the
founder legal entity is that of the document equivalent
thereto, such as a certificate of incorporation.
In the event that a founder is a State or Regional legal
entity, then a Government Regulation regarding
investment in the Company or a Bye-Law regarding
regional investment in the Company is necessary.
Subparagraph b
Sufficiently Clear
Subparagraph c
“Subscribed shares” means the number of shares
subscribed by the shareholders at the time of the
establishment of the Company.
If the amount paid up exceeds the nominal value so as
to give rise to a difference between the value actually
paid and the nominal value, the difference must be
recorded in the financial reports as a share premium.
Paragraph (3)
Sufficiently clear
Article 9
Paragraph (1)
“Legal entity administration system information technology
services” means the services rendered to the public in the
process of ratifying the Company as a legal entity.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Article 10
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
In this provision “directly” means at the same time as the
submission of the application is received.
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Paragraph (6)
“Signed electronically” means a signature which is affixed to
or included in electronic data by the authorised official and
proves the authenticity of the data in the form of an
electronic picture of the authorised official’s signature made
by medium of a computer.
Paragraph (7)
See the elucidation of paragraph (3)
Paragraph (8)
The application contemplated in this paragraph will not be
subject to any additional charge.
Paragraph (9)
Sufficiently Clear
Paragraph (10)
Sufficiently Clear
Article 11
Sufficiently Clear
Article 12
Paragraph (1)
In this provision “legal acts” means among others legal acts
performed by the prospective founders with other persons
which will be considered with the ownership and paying up
of the prospective founders’ shares in the Company.
Paragraph (2)
“Attached” means uniting the document made by means of
attaching and sewing the document as a unity with the deed
of establishment.
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Article 13
Paragraph (1)
This provision provides procedures which must be followed
to transfer to a Company the rights and/or obligations which
arise out of acts of the prospective founders performed
before the Company is established by means of explicit
acceptance or taking over of the rights and obligations
arising out of the legal acts.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Article 14
Paragraph (1)
“Legal act on behalf of the Company” means a legal act where
the Company is stated to be a party to the legal act or where
the Company is stated to be a party with an interest in the
legal act.
This provision is intended to make explicit that the members
of the Board of Directors may not perform legal acts on
behalf of a Company which has not yet obtained the status of
a legal entity without the approval of all of the founders, the
other members of the Board of Directors and the members of
the Board of Commissioners.
Paragraph (2)
“The founders concerned shall be liable for such legal acts
and the legal acts shall not be binding on the Company”
means the founders who perform the act will be personally
liable therefor and the Company will not be liable for the
legal act performed by the founders.
Paragraph (3)
Sufficiently Clear
Paragraph (4)
“Attended” means the shareholders are present in person or
represented on the basis of a power of attorney.
Paragraph (5)
Sufficiently Clear
Article 15
Paragraph (1)
Subparagraph a
Sufficiently Clear
Subparagraph b
Sufficiently Clear
Subparagraph c
See the elucidation of Article 6
Subparagraph d
Sufficiently Clear
Subparagraph e
Sufficiently Clear
Subparagraph f
Sufficiently Clear
Subparagraph g
Sufficiently Clear
Subparagraph h
“The procedures for the appointment” includes
procedures for election, among others oral election or
elections by folded ballot papers and election of
candidates individually or as a package.
Subparagraph i
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Article 16
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
In the event that no abbreviation “Tbk” is written, it means
that the Company is a private Company.
Paragraph (4)
Sufficiently Clear
Article 17
Paragraph (1)
The provision in paragraph (1) does not close off the
possibility of a Company being domiciled in a village (desa)
or subdistrict (kecamatan) provided the articles of
association state the name of the city (kota) or regency
(kabupaten) of the village or subdistrict. For example: PT A
is domiciled in Bojongsari Village, Pandaan Subdistrict,
Pasuruan Regency.
Paragraph (2)
Sufficiently Clear
Article 18
The purpose and objective constitute the Company’s primary
business.
The business activities constitute the activities performed by the
Company in the context of achieving its purpose and objective,
which must be clearly detailed in the articles of association, and
such details may not conflict with the articles of association.
Article 19
Sufficiently Clear
Article 20
Paragraph (1)
The curator’s consent must be given before the resolution to
amend the articles of association is adopted. This is intended
to avoid the possibility of refusal by the curator resulting in
the resolution to amend the articles of association becoming
void.
Paragraph (2)
Sufficiently Clear
Article 21
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Subparagraph a
Sufficiently Clear
Subparagraph b
Sufficiently Clear
Subparagraph c
See the elucidation of Article 6
Subparagraph d
Sufficiently Clear
Subparagraph e
Sufficiently Clear
Subparagraph f
Amendments to the articles of association for a
change of the Company’s status from private company
to Public Company or vice versa involve amendments
to the whole of the provisions of the articles of
association and so the Minister’s approval will be
given to amendment of the whole of the articles of
association.
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Paragraph (5)
"Must be stated in a notarial deed” means it must be in the
form of a deed of declaration of resolutions of meeting or
deed of amendment to the articles of association.
Paragraph (6)
Sufficiently Clear
Paragraph (7)
Sufficiently Clear
Paragraph (8)
Sufficiently Clear
Paragraph (9)
In the event of the application still being submitted, the
Minister must refuse the application or notification.
Article 22
Paragraph (1)
The provisions in this paragraph do not detract from the
provisions contemplated in Article 21 paragraph (7).
Example: A Company was established for a period of 50
(fifty) years and will expire on 15 November 2007 in
accordance with the provisions contemplated in Article 22
paragraph (1). If the Company’s period of incorporation is to
be extended, the application for approval of the amendment
to the articles of association with regard to the extension of
the period must be submitted to the Minister no later than
on 15 September 2007.
In the event that the GMS adopts the resolution to extend the
period on 1 August 2007 and it is declared in a Notarial deed
on 7 August 2007, the application must be submitted to the
Minister no later than on 7 September 2oo7.
In the event that the GMS for the extension of the period is
held on 20 August 2007, the extension of the period must be
declared in a Notarial deed and the application must be
submitted to the Minister no later than on 15 September
2007 in accordance with the provision contemplated in
Article 22 paragraph (1).
Paragraph (2)
Sufficiently Clear
Article 23
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
“This Act determines otherwise” means amongst others as
contemplated in Articles 25 and 26 of this Act which provide
for conditions which must be fulfilled before the Minister’s
Decree comes into effect or where a later date is determined
in the Minister’s Decree, which contains a condition
precedent which must be fulfilled first or a later date.
Article 24
Sufficiently Clear
Article 25
Sufficiently Clear
Article 26
Subparagraph a
Sufficiently Clear
Subparagraph b
“a later date determined” means a date after the date of the
Minister’s approval.
Subparagraph c
“A later date determined in the deed of Merger or the deed of
Acquisition” means the date which the parties have agreed
on and which is later than the date of the Minister’s receipt
of the notification of the amendment to the articles of
association.
Article 27
Sufficiently Clear
Article 28
Sufficiently Clear
Article 29
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Subparagraph a
Sufficiently Clear
Subparagraph b
Sufficiently Clear
Subparagraph c
“Changes in the Company’s data” means amongst
others data concerning transfers of rights over shares,
the replacement of members of the Board of Directors
and Board of Commissioners, or the winding up of the
Company.
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Paragraph (6)
Sufficiently Clear
Article 30
Sufficiently Clear
Article 31
Sufficiently Clear
Article 32
Paragraph (1)
Sufficiently Clear
Paragraph (2)
“Certain business activities” means amongst others banking,
insurance or freight forwarding business.
Paragraph (3)
The provisions in this paragraph are necessary to anticipate
changes in the economic situation.
Article 33
Paragraph (1)
Sufficiently Clear
Paragraph (2)
“Lawful evidence of deposit” means, amongst others,
evidence of deposit by the shareholders into a bank account
under the name of the Company, data from financial reports
audited by an accountant, or the Company’s balance sheet
signed by the Board of Directors and Board of
Commissioners.
Paragraph (3)
This provision makes explicit that it is not possible to pay up
shares by means of instalments.
Article 34
Paragraph (1)
In general shares will be paid up in the form of money.
Nevertheless, the possibility is not closed off that shares will
be paid up in some other form, whether tangible or
intangible goods, which have a monetary value and which
are in fact received by the Company.
The paying up of shares in some other form apart from
money must be accompanied by details giving the value or
price, type or kind, status, domicile etc. as considered
necessary for the sake of clarity regarding such paying up.
Paragraph (2)
The reasonable value shall determined in accordance with
the market value. If no market value is available, the
reasonable value will be specified based on appraisal
techniques most suitable to the characteristics of the
payment based on the best relevant information.
“An expert not affiliated” means an expert who does not
have:
a. a family relationship because of marriage or descent up to
the second degree, horizontally or vertically, with any of
the Company’s officers, members of the Board of
Directors, members of the Board of Commissioners, or
shareholders;
b. a relationship with the Company because of one or
members of the Board of Directors or Board of
Commissioners being the same;
c. a direct or indirect controlling relationship with the
Company;
d. shares in the Company in the amount of 20% (twenty per
cent) or more.
Paragraph (3)
The intent of the announcement of the paying up of shares in
the form of immoveable property in a Newspaper is that it be
publicly known and an opportunity be given to interested
parties to submit any objection to the surrender of such
property to pay up share capital if, for example, it becomes
known that the property does not belong to the payor.
Article 35
Paragraph (1)
The need for the consent of a GMS as contemplated in this
paragraph is to make explicit that setting off can only be
done with the consent of the GMS because by consenting to
the setting off, the other shareholders’ right to priority in
subscribing new shares is automatically waived.
Paragraph (2)
By the provision in this paragraph, interest and penalties
which are owed and even due and payable cannot be set off
to pay up shares because they are not actually received by the
Company.
Subparagraph a
Sufficiently Clear
Subparagraph b
The meaning in this paragraph is that the party
serving as the underwriter or guarantor of the
Company’s debt has satisfied the Company’s debt and
so has a receivable against the Company.
Subparagraph c
The meaning in this paragraph is that the Company’s
obligation to pay a debt in its capacity as underwriter
or guarantor to eliminate the creditor’s receivable may
be set off against the paying up of shares issued by the
Company.
Paragraph (3)
Sufficiently Clear
Article 36
Paragraph (1)
In principle, the issuance of shares is an endeavour to raise
capital and so the obligation to pay up shares should be
charged to some other party. For the sake of certainty, this
Article specifies that Companies are not allowed to issue
shares for themselves to own.
This prohibition also includes a prohibition on crossholdings
which occur if a Company owns shares issued by
some other Company which directly or indirectly owns
shares in that Company.
The definition of direct cross-holding is if the first Company
owns shares in a second Company without any ownership in
one or more “intermediate Companies” and in reverse the
second Company owns shares in the first Company.
The definition of indirect cross-holding is the ownership by
the first Company of shares in a second Company via
ownership in one or more “intermediate Companies” and in
reverse the second Company owns shares in the first
Company.
Paragraph (2)
Share ownership which results in the ownership of shares by
the Company itself or ownership of shares by means of crossholdings
is not prohibited if the ownership of shares was
obtained by transfers by operation of law, by grant, or by
bequest because in such cases there was no issuance of
shares which needed to funds to be paid up from another
party and so they do not breach the prohibition
contemplated in paragraph (1).
Paragraph (3)
Sufficiently Clear
Paragraph (4)
“Securities company” has the meaning defined in the Capital
Markets Act.
Article 37
Paragraph (1)
Re-purchases of shares by Companies must not cause
reductions in capital unless the shares are withdrawn.
Subparagraph a
“Net assets” means all of the Company’s assets minus
all of the Company’s obligations according to the most
recent financial report ratified by the GMS within the
last 6 (six) months.
Subparagraph b
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
The intent of the provision of the 3 (three)-year period in this
paragraph is that the Company may specify whether the
shares will be sold or withdrawn by means of a reduction in
capital.
Article 38
Sufficiently Clear
Article 39
Paragraph (1)
“Implementation” means the determination of the time and
procedure for the re-purchase of shares and the number of
shares to be re-purchased, but does not include matters
which are the task of the Board of Directors in re-purchasing
shares, such as making payments, storing the share
certificates, and making a record in the register of
shareholders.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Article 40
Sufficiently Clear
Article 41
Paragraph (1)
“Companies’ capital” means authorised capital, subscribed
capital, and paid up capital.
Paragraph (2)
In this paragraph “implementation” means the
determination of the time of, procedure for, and amount of
the increase in capital, which must not exceed the maximum
limit determined by the GMS, but does not include matters
which are the task of the Board of Directors in increases in
capital, such as receiving the amounts paid up for the shares
and making a record in the register of shareholders.
Paragraph (3)
Sufficiently Clear
Article 42
Paragraph (1)
Sufficiently Clear
Paragraph (2)
In this paragraph “the shares with voting rights” means the
total number of shares with voting rights issued by the
Company.
“Unless larger numbers are determined in the articles of
association” means the quorum determined in the articles of
association may be higher than the quorum determined in
this paragraph.
Paragraph (3)
Sufficiently Clear
Article 43
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Subparagraph a
“Shares directed to the Company’s employees” means
amongst others shares issued in the context of an
ESOP (employee stocks option program) of the
Company with all the rights and obligations attaching
thereto.
Subparagraph b
Sufficiently Clear
Subparagraph c
“Reorganisation or restructuring” means amongst
others Mergers, Consolidations, and Acquisitions,
setting off of receivables, or a Demerger.
Paragraph (4)
The meaning of “Period of 14 (fourteen) days” includes the
deadline for shareholders to subscribe the shares of other
shareholders who do not exercise their rights.
Article 44
Paragraph (1)
“Reduce the Company’s capital” means reduction of the
authorised capital, subscribed capital, and paid up capital.
Reductions in subscribed and paid up capital may occur by
means of withdrawal of shares already issued for deletion or
by means of a reduction in the nominal value of shares.
Paragraph (2)
Sufficiently Clear
Article 45
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Article 46
Sufficiently Clear
Article 47
Paragraph (1)
“Withdrawal of shares” implies that the shares are
withdrawn from circulation in the context of a reduction in
the subscribed and paid up capital.
Paragraph (2)
“Withdrawal of shares” means the withdrawal of shares with
the result of the removal of the shares from circulation.
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Article 48
Paragraph (1)
The intent of this provision is that Companies are only
allowed to issue shares under the name of their owner and
Companies may not issue endorsable shares.
Paragraph (2)
“Authorised agency” means the agency authorised by virtue
of a statute to supervise Companies doing business in a
particular field, for example, Bank Indonesia is authorised to
supervise Companies in the field of banking, and the
Minister of Energy and Mineral Resources is authorised to
supervise Companies in the field of energy and mining.
Paragraph (3)
“May not exercise rights as shareholder” means, for example,
the right to be recorded in the register of shareholders, the
rights to attend and cast votes in GMS, or the right to receive
allocated dividends.
Article 49
Sufficiently Clear
Article 50
Paragraph (1)
Subparagraph a
sufficiently clear
Subparagraph b
sufficiently clear
Subparagraph c
“Amount paid up” means an amount which is at least
equal to the nominal value of the share.
Subparagraph d
sufficiently clear
Subparagraph e
sufficiently clear
Paragraph (2)
“Special register” means a source of information regarding
the size of the ownership and interest of the members of the
Company’s Board of Directors and Board of Commissioners
in the Company concerned or in other Companies so that any
conflict of interest which may arise can be kept as small as
possible.
“Their families” means their spouses and children.
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Paragraph (5)
“Not providing otherwise” does not mean that there is no
obligation to compile a register of shareholders and special
register for Public Companies, but rather that legislative
regulations in the field of capital markets may determine
criteria for data which must be entered in the register of
shareholders and special register.
Article 51
Arrangements for the form of proof of ownership of shares shall be
determined in the articles of association in accordance with need.
Article 52
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Under this provision, the shareholders are not allowed to
divide up the rights over 1 (one) share at their own will.
Paragraph (5)
Sufficiently Clear
Article 53
Paragraph (1)
“Classifications of shares” means the grouping of shares
based on the same characteristics.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
“Ordinary shares” means shares with the right to vote to
adopt resolutions in GMS regarding all matters related to the
management of the Company, the right to receive dividends
allocated, and the right to receive the remainder of assets in
liquidation.
The voting rights owned by holders of ordinary shares may
also be owned by holders of shares with other classifications.
Paragraph (4)
The various types of classification of shares do not always
show that the classifications are each independent and
separate from one another, but may constitute a merger of 2
(two) or more classifications.
Article 54
Paragraph (1)
Fractions of shares will only be possible if provided for in the
articles of association.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Article 55
Sufficiently clear
Article 56
Paragraph (1)
“Deed” means a deed made before a notary or an
unnotarised deed.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
“Inform the minister of the change in the composition of
shareholders” also includes changes in the composition of
shareholders because of inheritance, Acquisition or
Demerger.
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Article 57
Paragraph (1)
Sufficiently Clear
Paragraph (2)
“Assignment of rights by operation of law” means amongst
others assignment of rights by inheritance or assignment of
rights as a result of Merger, Consolidation or Demerger.
Article 58
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
“Shall only apply once” means that the Company’s articles of
association may not specify offering the shares more than
once before offering them to third parties.
Article 59
Sufficiently clear
Article 60
Sufficiently clear
Article 61
Paragraph (1)
Suits filed must basically contain a request that the Company
cease the harmful action and take specific steps to deal with
the consequences which have already arisen and to prevent
similar action at a later date.
Paragraph (2)
Sufficiently Clear
Article 62
Paragraph (1)
Subparagraph a
Sufficiently Clear
Subparagraph b
“Net assets” means the net assets according to the
latest balance sheet ratified within the last 6 (six)
months.
Subparagraph c
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Article 63
Sufficiently clear
Article 64
Paragraph (1)
Sufficiently Clear
Paragraph (2)
“Unless specified otherwise in legislative regulations” means
if the legislative regulations specify that approval of the work
plan must be given by the GMS, the articles of association
cannot specify that the work plan must be approved by the
Board of Commissioners or vice versa. Similarly, if legislative
regulations specify that the work plan must obtain the
approval of the Board of Commissioners or the GMS, the
articles of association cannot specify that it would be
sufficient for the work plan to be delivered to the Board of
Commissioners or GMS by the Board of Directors.
Article 65
Sufficiently clear
Article 66
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Subparagraph a
sufficiently clear
Subparagraph b
“A report on the Company’s activities” includes a
report on the Company’s results or performance.
Subparagraph c
sufficiently clear
Subparagraph d
“Details of problems” includes disputes or cases
involving the Company.
Subparagraph e
sufficiently clear
Subparagraph f
sufficiently clear
Subparagraph g
sufficiently clear
Paragraph (3)
“Financial accounting standards” means the standards
established by the Indonesian Organisation of Accounting
Professionals recognised by the Government of the Republic
of Indonesia.
Paragraph (4)
Sufficiently Clear
Article 67
Paragraph (1)
“Signature of the annual report” is a form of accountability of
the members of the Board of Directors and members of the
Board of Commissioners in the performance of their duties.
In the event that it is mandatory for the Company’s financial
report to be audited by a public accountant, the annual
report meant is the annual report containing the audited
financial report.
Paragraph (2)
“Reasons therefor in writing” means that the GMS can use it
as material for consideration in evaluating the report.
Where members of the Board of Directors and members of
the Board of Commissioners do not give any reasons because
among others the person concerned has died, the reason
shall be stated by the Board of Directors in a separate letter
attached to the annual report.
Paragraph (3)
Sufficiently Clear
Article 68
Paragraph (1)
The obligation to deliver the financial report to a public
accountant for auditing arises from the nature of the
Company concerned.
The obligation to deliver the financial report for external
supervision is upheld on the assumption that public
confidence must not be disappointed, and similarly for
Companies which for their financing hope for funds from the
capital markets.
Subparagraph (a)
“The Company’s business to collect and/or manage
the public’s funds” means among others banks,
insurance companies, and mutual funds.
Subparagraph (b)
“Acknowledgements of indebtedness” means among
others bonds.
Subparagraph (c)
sufficiently clear
Subparagraph (d)
See elucidation of Article 7 paragraph (7)
subparagraph a
Subparagraph (e)
sufficiently clear
Subparagraph (f)
sufficiently clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
The intent of publication is in the context of accountability
and transparency to the public.
Paragraph (5)
Sufficiently Clear
Paragraph (6)
Sufficiently Clear
Article 69
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
The financial reports produced must reflect the actual
situation of the assets, liabilities, capital and business
proceeds of the Company. The Board of Directors and Board
of Commissioners are fully liable for the accuracy of the
contents of the Company’s financial reports.
Paragraph (4)
Sufficiently Clear
Article 70
“Net profits” means earnings for the current year minus taxes.
“Positive balance of profits” means the Company’s net profits in the
current financial year have covered the Company’s accumulated
losses from previous financial years.
The Company shall form a mandatory reserve and other reserves.
The reserve contemplated in paragraph (1) is the mandatory
reserve.
The mandatory reserve is a certain amount which must be set aside
by the Company each financial year and used to cover the
Company’s possible future losses.
The mandatory reserve need not always be in the form of cash, but
may take the form of other assets which are easily liquidated and
cannot be allocated as dividends.
“Other reserves” means reserves beyond the mandatory reserve
which may be used for various needs of the Company, for example
for business expansion, allocation of dividends, social purposes and
so forth.
The provision that at least 20% (twenty per cent) of the subscribed
and paid up capital is considered a suitable amount for the
mandatory reserve.
Article 71
Paragraph (1)
The GMS resolution in this paragraph must give due
attention to the Company’s interests and fairness.
The GMS resolution may determine that part or all of the net
profits be used for the allocation of dividends to the
shareholders, the reserves, and/or other allocations such as
profit sharing incentives (tantieme) for members of the
Board of Directors and Board of Governors, and bonuses for
employees.
The giving of incentives and bonuses related to the
Company’s performance must be budgeted for and
calculated as costs.
Paragraph (2)
“All net profits” means the grand total of net profits for the
financial year concerned after deduction of the Company’s
accumulated losses from previous financial years.
Paragraph (3)
In the event that the Company’s net profits in the current
financial year do not cover the whole of the Company’s
accumulated losses from previous financial years, the
Company may not allocate dividends because the Company
still has a negative balance of net profits.
Article 72
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Paragraph (5)
An example of interim dividends which must be returned
would be as follows:
An interim dividend of Rp. 1,000 (one thousand rupiah) per
share is allocated. The Company suffers losses and does not
have a positive balance of profits and so there is no dividend
to be allocated. Therefore Rp. 1,000 (one thousand rupiah)
per share must be returned.
If the Company suffers losses, but the Company has retained
earnings and a positive balance of profits, the GMS may
determine, for example, a dividend of Rp. 200 (two hundred
rupiah) per share. Therefore, each share must return Rp.
1,000 (one thousand rupiah) minus Rp. 200 (two hundred
rupiah), i.e., Rp. 800 (eight hundred rupiah).
Paragraph (6)
Sufficiently Clear
Article 73
Paragraph (1)
Sufficiently Clear
Paragraph (2)
The collection of dividends contemplated is the nominal
amount of the dividends not including interest.
Paragraph (3)
The amount of the dividends not collected and becoming the
right of the Company shall be booked in the post for the
Company’s other income.
Article 74
Paragraph (1)
This provision is directed towards creating Company
relationships which are harmonious, balanced and in
accordance with the environment, values, norms and culture
of the local community.
“Companies doing business in the field of natural resources”
means Companies whose business is managing and
exploiting natural resources.
“Companies doing business in relation to natural resources”
means Companies who do not manage and do not exploit
natural resources but whose business activities have an
impact on the functional capacity of natural resources.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
“Liable to sanctions in accordance with the provisions of
legislative regulations” means liable to all forms of sanction
provided for in the relevant legislative regulations.
Paragraph (4)
Sufficiently Clear
Article 75
Paragraph (1)
Sufficiently Clear
Paragraph (2)
The provision in this paragraph is intended to regard the
shareholders’ right to obtain information in relation to
agenda items without prejudice to the shareholders’ right to
obtain other information in relation to the shareholders’
rights provided for in this Act, among others, the
shareholders’ right to see the register of shareholders and
special register contemplated in Article 50 paragraph (4) and
the shareholders’ right to obtain the materials for the
meeting immediately after the invitation to the GMS
contemplated in Article 82 paragraphs (3) and (4).
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Article 76
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
“The condition contemplated in paragraph (3)” means that
the GMS must be held within the territory of the Republic of
Indonesia.
Paragraph (5)
Sufficiently Clear
Article 77
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
“Approved and signed” means approved and signed
physically or by electronic means.
Article 78
Paragraph (1)
“Other GMS” means what is common practice known as an
extraordinary GMS.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Article 79
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
“Reason which serves as the basis for the request for the
GMS to be held” means amongst others because the Board of
Directors has not held the annual GMS in accordance with
the deadline specified or the period of office of the members
of the Board of Directors and/or members of the Board of
Commissioners is about to expire.
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Paragraph (6)
Sufficiently Clear
Paragraph (7)
Sufficiently Clear
Paragraph (8)
Sufficiently Clear
Paragraph (9)
Sufficiently Clear
Paragraph (10)
Sufficiently Clear
Article 80
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
“Court order with regard to the quorum to be present and
provisions for the adoption of GMS resolutions” particularly
applies to third GMS, while for first and second GMS, the
provisions contemplated in Articles 86, 87, 88, and 89 or
the Company’s articles of association apply to the provisions
on the quorum to be present and the requirements for the
adoption of resolutions.
“Form of GMS” means the annual or other GMS.
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Paragraph (6)
“Shall be final in nature and have absolute legal effect”
means that no appeal, cassation or civil review can be lodged
against the court order. The intent of this provision is that
the implementation of the GMS is not delayed.
Paragraph (7)
The only legal avenue possible if the court order refuses the
application is cassation, while civil review is not possible.
Paragraph (8)
Sufficiently Clear
Article 81
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Invitations to the GMS are an obligation of the Board of
Directors. Invitations to the GMS may be issued by the Board
of Commissioners in the event among others that the Board
of Directors does not convene the GMS as specified in Article
79 paragraph (6), in the event that the Board of Directors is
prevented from doing so or there is a conflict of interests
between the Board of Directors and the Company.
Article 82
Paragraph (1)
The “period of 14 (fourteen) days” is the minimum period for
invitations to a meeting. Therefore, the articles of association
may not specify a period of less than 14 (fourteen) days
except for the second or third meeting in accordance with the
provisions of this Act.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Article 83
Paragraph (1)
The announcement is intended to give shareholders the
opportunity to propose additions to the GMS agenda to the
Board of Directors.
Paragraph (2)
Sufficiently Clear
Article 84
Paragraph (1)
“Unless the articles of association determine otherwise”
means if the articles of association issue a share without a
vote. In the event that the articles of association do not so
determine, it may be assumed that each share issued carries
one vote.
Paragraph (2)
By this provision, shares in the Company which are directly
or indirectly controlled by the Company do not carry a vote
and are not counted in determining the quorum.
Subparagraph a
“Controlled by the Company itself” means controlled
by ownership, re-purchase, or pledge.
Subparagraph b
Sufficiently Clear
Subparagraph c
Sufficiently Clear
Article 85
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
The provision in this paragraph constitutes a realisation of
the principle of mutual deliberation to reach a consensus
acknowledged in this Act. Therefore, split voting is not
allowed.
For Public Companies, the different votes cast by custodian
banks or stock companies representing shareholders in
mutual funds doe not constitute different votes as
contemplated in this paragraph.
Paragraph (4)
In determining the quorum for the GMS, the shares of
shareholders represented by members of the Board of
Directors, members of the Board of Commissioners, and
employees of the Company as proxies will be included in the
count, but in voting they will not have the right to vote as
proxies for shareholders.
Paragraph (5)
Sufficiently Clear
Paragraph (6)
Sufficiently Clear
Paragraph (7)
Sufficiently Clear
Article 86
Paragraph (1)
Deviation from the provisions in this paragraph are only
possible in the events specified in this Act. Articles of
Association are not permitted to specify a smaller quorum
than the quorum specified by this Act.
Paragraph (2)
In the event that the quorum for the first GMS is not
achieved, the meeting must still be opened and then closed
with minutes being made that explain that the first GMS
could not proceed because the quorum was not achieved and
furthermore an invitation to a second GMS may be issued.
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Paragraph (5)
In the event that the quorum for the second GMS is not
achieved, the meeting must still be opened and then closed
with minutes being made that explain that the second GMS
could not proceed because the quorum was not achieved and
furthermore an application may be filed with the Chief Judge
of the District Court to determine the quorum for a third
GMS.
Paragraph (6)
In the event that the Chief Judge of the District Court is
prevented, the determination shall be made by another
official representing the Chief Judge.
Paragraph (7)
“Shall be final and have absolute legal effect” means that no
appeal, cassation, or civil review may be filed against the
determination.
Paragraph (8)
Sufficiently Clear
Paragraph (9)
Sufficiently Clear
Article 87
Paragraph (1)
“Deliberation to reach a consensus” means the result of an
agreement approved by the shareholders present or
represented in a GMS.
Paragraph (2)
“Approved by more than ½ (one half)” means that the
proposal on the agenda item must be approved by more than
½ (one half) of the number of votes cast. If there are 3
(three) proposals or candidates and none of them receives
more than ½ (one half) of the votes, voting on the 2 (two)
proposals or candidates who obtained the most votes must
be repeated so that one of the proposals or candidates will
obtain more than ½ (one half) of the votes.
Article 88
Sufficiently Clear
Article 89
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
“A quorum to be present and/or provisions concerning
requirements for the adoption of second GMS resolutions
which are higher” means higher than those stipulated in this
paragraph but not higher than those stipulated in paragraph
(1).
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Article 90
Paragraph (1)
The signature by the chair of the meeting and at least 1 (one)
shareholder appointed by and from the participants in the
GMS is intended to ensure the certainty and accuracy of the
contents of the GMS minutes.
Paragraph (2)
Sufficiently Clear
Article 91
“Adopt resolutions outside GMS” means what is known in practice
as circular resolutions.
Such resolutions shall be adopted without a GMS being held
physically, but the resolutions shall be adopted by means of sending
in writing the proposal to be resolved upon to all shareholders and
the proposal shall be approved in writing by all of the shareholders.
“Binding resolutions” means resolutions which have the same legal
force as GMS resolutions.
Article 92
Paragraph (1)
This provision gives Boards of Directors the task of
managing Companies, which among others covers the dayto-
day management of the Company.
Paragraph (2)
“Any policy that seems appropriate” means policies which
among others are based on expertise, opportunities
available, and customary in the world of similar businesses.
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Paragraph (6)
The Board of Directors as the Company organ which
manages the Company clearly understands the Company’s
management needs. Therefore, if the GMS does not
determine any division of tasks and authority of members of
the Board of Directors, it would be reasonable for this
determination to be made by the Board of Directors itself.
Article 93
Paragraph (1)
The period of 5 (five) years shall be calculated from when the
person concerned is declared to be at fault on the basis of a
court decision which has absolute legal effect making the
Company bankrupt or if sentenced as from when he/she
finishes serving his/her sentence.
Subparagraph a
Sufficiently Clear
Subparagraph b
Sufficiently Clear
Subparagraph c
“Finance sector” means among others bank and non
bank financial institutions, capital markets, and other
sectors related to the collection and management of
the public’s funds.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
“Letter” means a declaration made by the prospective
member of the Board of Directors concerned in relation to
the requirements of paragraph (1) and a letter from the
authorised agency in relation to the requirements in
paragraph (2).
Article 94
Paragraph (1)
The authority of the GMS may not be delegated to other
Company Organs or other parties.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
The requirement of appointment of the members of Boards
of Directors for “a certain period” is intended so that
members of the Board of Directors whose period of office has
expired do not automatically continue in their original
position unless re-appointed by a GMS resolution. For
example, for a period of 3 (three) years or 5 (five) yeas from
the date of appointment, and then as from the expiry of that
period, the ex-members of the Board of Directors concerned
are no longer entitled to act for and on behalf of the
Company except after being re-appointed by the GMS.
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Paragraph (6)
Sufficiently Clear
Paragraph (7)
“Change in the members of the Board of Directors” includes
changes because of the re-appointment of the members of
the Board of Directors.
Paragraph (8)
“Application” means applications for approval of
amendments to the articles of association as contemplated in
Article 21 paragraph (2).
“Notification” means notification of amendments to the
articles of association as contemplated in Article 21
paragraph (3) and notifications concerning other Company
data which must be notified to the Minister in accordance
with the provisions of this Act.
Paragraph (9)
Sufficiently Clear
Article 95
Paragraph (1)
The appointment of the member of the Board of Directors
shall be void by operation of law as from when the breach of
the provisions contemplated in Article 93 becomes known to
the other members of the Board of Directors or the Board of
Commissioners based on lawful evidence and the member of
the Board of Directors concerned shall be informed thereof
in writing when it becomes known.
Paragraph (2)
“Another member of the Board of Directors” means a
member of the Board of Directors beyond the member of the
Board of Directors whose appointment is void and who has
the authority to represent the Board of Directors in
accordance with the articles of association. If there is no such
member of the Board of Directors, the Board of
Commissioners shall make the announcement.
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Article 96
Paragraph (1)
“The amount of the salary and allowances for members of
the Board of Directors” means the amount of the salary and
allowances for each member of the Board of Directors.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Article 97
Paragraph (1)
Sufficiently Clear
Paragraph (2)
“Full liability” means giving the Company meticulous and
dedicated attention.
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Subparagraph a
Sufficiently Clear
Subparagraph b
Sufficiently Clear
Subparagraph c
Sufficiently Clear
Subparagraph d
“Took action to prevent the losses from arising or
continuing” also includes steps to obtain information
about actions of management which could cause
losses, among others through the forum of meetings
of the Board of Directors.
Paragraph (6)
In the event that the actions of the Board of Directors cause
losses to the Company, the shareholders who fulfil the
conditions stipulated in this paragraph may represent the
Company to file suit or claims through the courts.
Paragraph (7)
Suits submitted by the Board of Commissioners come within
the task of the Board of Commissioners to perform the
functions of supervision of management of the Company by
the Board of Directors. To file suit the Board of
Commissioners does not need to act jointly with the other
members of the Board of Directors and the authority of the
Board of Commissioners is not limited to the case where all
of the members of the Board of Directors have a conflict of
interest.
Article 98
Paragraph (1)
Sufficiently Clear
Paragraph (2)
This Act basically follows a collegial representative system,
which means that each member of the Board of Directors has
the authority to represent the Company. Nevertheless in the
interests of the Company, the articles of association may
determine that the Company be represented by a particular
member of the Board of Directors.
Paragraph (3)
Sufficiently Clear
Paragraph (4)
“May not be contrary to this Act” means, for example, that
the GMS does not have the authority to decide that it is
sufficient for the Board of Directors in encumbering or
transferring a majority of the Company’s assets to have the
approval of the Board of Commissioners or the approval of a
GMS with a quorum of less than ¾ (three quarters).
“May not be contrary to the articles of association” means,
for example, that the articles of association may determine
that to borrow sums above Rp. 1,000,000,000 (one billion
Rupiah), the Board of Directors must have the approval of
the Board of Commissioners, in which case the GMS does
not have the authority to adopt a resolution that for loans of
sums above Rp. 500,000,000 (five hundred million Rupiah)
the Board of Directors must obtain the approval of the Board
of Commissioners without first amending the provisions of
the articles of association.
Article 99
Sufficiently Clear
Article 100
Paragraph (1)
Subparagraph a
The register of shareholders and special register must
be in accordance with the provisions contemplated in
Article 50.
GMS minutes and minutes of meetings of the Board of
Directors shall contain all proceedings and resolutions
in a meeting.
Subparagraph b
Sufficiently Clear
Subparagraph c
“Others of the Company’s documents” means among
others minutes of meetings of the Board of
Commissioners, and the Company’s permits.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Article 101
Any acquisition and change in share ownership must be reported.
Reports of Boards of Directors with regard to this issue must be
recorded in the special register contemplated in Article 50
paragraph (2).
For the meaning of “his/her family”, see the elucidation of Article
50 paragraph (2).
Article 102
Paragraph (1)
“Company assets” means all moveable and immoveable
tangible and intangible goods belonging to the Company.
“In 1 (one) or more separate or inter-related transactions”
means one or more transactions which cumulatively result in
the passing of the 50% (fifty per cent) threshold.
The evaluation of more than 50% (fifty per cent) of net assets
shall be based on the book value according to the most recent
balance sheet ratified by the GMS.
Paragraph (2)
Unlike transactions for the assignment of assets,
transactions securing Company assets for debts as
contemplated in paragraph (1) subparagraph b are not
limited in time but attention must be given to the amount of
Company assets still secured within a particular period.
Paragraph (3)
“Actions assigning or using as security Company assets”
means for example the sale of houses by a real estate
business, the sale of interbank negotiable instruments and
the sale of inventory by distribution or trading companies.
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Article 103
“Power of attorney” means a special power of attorney for specific
actions mentioned in the power of attorney.
Article 104
To prove the fault or negligence of the Board of Directors, a suit
must be submitted to the commercial court in accordance with the
provisions in the Bankruptcy and Suspension of Payments Act.
Article 105
Paragraph (1)
GMS resolutions to dismiss members of Boards of Directors
may be made on the grounds that the Director concerned no
longer fulfils the requirements as member of the Board of
Directors determined in this Act, among others by
committing actions damaging to the Company or for some
other reason judged appropriate by the GMS.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
The defence in this paragraph shall be made in writing.
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Article 106
Paragraph (1)
Bearing in mind that the dismissal of members of Boards of
Directors by GMS takes time to implement, while the
Company’s interests may not admit of any delay, the Board
of Commissioners as the supervisory organ is naturally given
the authority to suspend.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
The GMS shall be preceded by an invitation to the GMS
made by the Company Organ that suspended the Director.
Paragraph (5)
Sufficiently Clear
Paragraph (6)
Sufficiently Clear
Paragraph (7)
Sufficiently Clear
Paragraph (8)
Sufficiently Clear
Paragraph (9)
Sufficiently Clear
Article 107
Subparagraph (a)
The procedures for resignation of members of the Board of
Directors provided in the articles of association shall be by
submitting an application to resign which must be submitted
within a certain period of time. When the period of time has
expired, the member of the Board of Directors concerned
shall cease to serve in his position without any GMS approval
being necessary.
Subparagraph (b)
Sufficiently Clear
Subparagraph (c)
Sufficiently Clear
Article 108
Paragraph (1)
Sufficiently Clear
Paragraph (2)
“In the Company’s interests and in accordance with the
Company’s purpose and objectives” means that the
supervision and giving advice by Boards of Commissioners
shall not be in the interest of certain parties or groups but in
the interest of the Company as a whole and in accordance
with the Company’s purpose and objectives.
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Unlike a Board of Directors, which makes it possible for each
member of the Board of Directors to act alone in carrying out
the tasks of the Board of Directors, each member of a Board
of Commissioners may not act alone in carrying out the tasks
of the Board of Commissioners except on the basis of a
resolution of the Board of Commissioners.
Paragraph (5)
Companies whose business activities are related to the
collection and/or management of the public’s funds,
Companies who issue acknowledgements of indebtedness to
the public, and Public Companies need supervision by a
greater number of members of the Board of Commissioners
because they involve the interests of the public.
Article 109
Sufficiently Clear
Article 110
Paragraph (1)
Subparagraph a
Sufficiently Clear
Subparagraph b
Sufficiently Clear
Subparagraph c
See the elucidation of Article 93 paragraph (1)
subparagraph c.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
“Letter” means a statement made by the prospective member
of the Board of Commissioners concerned in relation to the
requirements of paragraph (1) and a letter from the
authorised agency in relation to the requirements of
paragraph (2).
Article 111
Sufficiently Clear
Article 112
Paragraph (1)
“The other members of the Board of Commissioners” means
members of the Board of Commissioners beyond the
member of the Board of Commissioners whose appointment
has been nullified.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Article 113
Sufficiently Clear
Article 114
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
The provisions in this paragraph affirm that if the Board of
Commissioners is at fault or negligent in performing its
duties and so causes losses to the Company because of the
management carried out by the Board of Directors, the
members of the Board of Commissioners shall share in the
liability to the extent of their fault or negligence.
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Paragraph (6)
Sufficiently Clear
Article 115
Sufficiently Clear
Article 116
Subparagraph a
Minutes of meetings of Boards of Commissioners shall
contain all proceedings and resolutions of the meeting.
Subparagraph b
Any such change in share ownership shall also be reported.
For the meaning of “their families” see the elucidation of
Article 50 paragraph (2).
Subparagraph c
The report of the Board of Commissioners regarding this
matter shall be recorded in the special register contemplated
in Article 50 paragraph (2).
Article 117
Paragraph (1)
“Give approval” means give written approval from the Board
of Commissioners.
“Assistance” means the action by the Board of
Commissioners of accompanying the Board of Directors in
performing particular actions.
The granting of approval or assistance to the Board of
Directors by the Board of Commissioners in the performance
of certain legal actions as contemplated in this paragraph
does not constitute actions of management.
Paragraph (2)
“The legal action shall still be binding on the Company”
means legal actions performed without the approval of the
Board of Commissioners in accordance with the provisions
of the articles of association shall still be binding on the
Company unless it can be proven that the other party is not
acting in good faith. The provision contemplated in this
paragraph may waive the personal liability of the members of
the Board of Directors in accordance with the provisions of
this Act.
Article 118
Paragraph (1)
This provision is intended to give the Board of
Commissioners authority to carry out the management of the
Company in the event that there is no Board of Directors.
“In specified situations” means among others the situations
contemplated in Article 99 paragraph (2) subparagraph b
and Article 107 subparagraph c.
Paragraph (2)
Sufficiently Clear
Article 119
Sufficiently clear.
Article 120
Paragraph (1)
Sufficiently Clear
Paragraph (2)
The Independent Commissioners in the code of good
corporate governance are “external Commissioners”.
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Article 121
Paragraph (1)
“Committees” means amongst others an audit committee,
remuneration committee, and nomination committee.
Paragraph (2)
Sufficiently Clear
Article 122
Sufficiently clear.
Article 123
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Subparagraph a
Sufficiently Clear
Subparagraph b
Sufficiently Clear
Subparagraph c
The procedures for conversion of shares shall
stipulate a fair price for the shares in the merging
Company and a fair price for the shares in the
surviving Company to determine a ratio for the
exchange of shares in the context of conversion of
shares.
Subparagraph d
The draft amendment of the articles of association in
this matter is only mandatory as part of the proposal
if the Merger will cause amendments to the articles of
association.
Subparagraph e
“The last 3 (three) financial years of each of the
Companies” means those which in all cover 36 (thirtysix)
months.
Subparagraph f
Sufficiently Clear
Subparagraph g
Sufficiently Clear
Subparagraph h
Sufficiently Clear
Subparagraph i
Sufficiently Clear
Subparagraph j
Sufficiently Clear
Subparagraph k
Sufficiently Clear
Subparagraph l
Sufficiently Clear
Subparagraph m
Sufficiently Clear
Subparagraph n
Sufficiently Clear
Subparagraph o
Sufficiently Clear
Paragraph 3
Sufficiently Clear
Paragraph 4
“Certain Companies” means Companies which have special
lines of business, among others bank and non bank financial
institutions.
“Relevant government agencies” means among others Bank
Indonesia for Mergers of banking companies.
Paragraph 5
Sufficiently Clear
Article 124
Sufficiently clear.
Article 125
Paragraph (1)
The Acquisitions contemplated in this Article do not
prejudice the provisions contemplated in Article 7.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Paragraph (5)
“Acquiring party” means the Company, other non Company
legal entity, or individual.
Paragraph (6)
Subparagraph a
Sufficiently Clear
Subparagraph b
Sufficiently Clear
Subparagraph c
Sufficiently Clear
Subparagraph d
The procedure for conversion of shares shall
determine a fair price for the shares of the Company
to be acquired and a fair price for the exchange shares
to determine a ratio for the exchange of shares in the
context of the conversion of shares.
Subparagraph e
Sufficiently Clear
Subparagraph f
Sufficiently Clear
Subparagraph g
Sufficiently Clear
Subparagraph h
Sufficiently Clear
Subparagraph i
Sufficiently Clear
Subparagraph j
Sufficiently Clear
Subparagraph k
Sufficiently Clear
Paragraph (7)
The Acquisition of shares of other Companies directly from
shareholders need not be preceded by making a draft
Acquisition, but shall be done directly through negotiation
and agreement by the acquiring party and the shareholder
subject to the articles of association of the Company to be
acquired.
Paragraph (8)
Sufficiently Clear
Article 126
Paragraph (1)
This provision makes explicit that no Merger, Consolidation,
Acquisition, or Demerger can be done if it will harm the
interests of the parties specified.
Furthermore, in Mergers, Consolidations, Acquisitions, or
Demergers the possibility of a monopoly or monopsony
occurring in various forms detrimental to the public must be
avoided.
Paragraph (2)
Shareholders who do not agree with the Merger,
Consolidation, Acquisition, or Demerger are entitled to ask
the Company that their shares be bought at a fair price for
the shares from the Company as contemplated in Article 123
paragraph (2) subparagraph c and Article 125 paragraph (6)
subparagraph d.
Paragraph (3)
Sufficiently Clear
Article 127
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Publication is intended to give the parties concerned the
opportunity to find out about the plan and submit objections
if they feel their interests will be harmed.
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Paragraph (6)
Sufficiently Clear
Paragraph (7)
Sufficiently Clear
Paragraph (8)
Sufficiently Clear
Article 128
Sufficiently clear.
Article 129
Sufficiently clear.
Article 130
Sufficiently clear.
Article 131
Sufficiently clear.
Article 132
Sufficiently clear.
Article 133
The publication is intended for interested third parties to know that
the Merger, Consolidation, or Acquisition has taken place.
In this case the publication must be made within a period of not
more than 30 (thirty) days as from the date of:
a. the approval of the Minister for the amendment to the articles
of association in the event of a Merger;
b. receipt by the Minister of notification in the event of an
amendment of the articles of association as contemplated in
Article 21 paragraph (3) or where there is no accompanying
amendment of the articles of association;
c. ratification by the Minister of the deed of establishment of the
Company in the event of a Consolidation.
Article 134
Sufficiently clear.
Article 135
Paragraph (1)
Subparagraph a
Sufficiently Clear
Subparagraph b
“A partial Demerger” is commonly called a spin-off.
Paragraph (2)
“Pass by operation of law” means pass by general title so that
no deed of assignment is necessary.
Paragraph (3)
Sufficiently Clear
Article 136
Sufficiently clear.
Article 137
Sufficiently clear.
Article 138
Paragraph (1)
Before filing a petition for inspection of a Company, the
petitioner must have asked the Company directly with regard
to the data or information needed. In the event that the
Company refuses or does not pay any attention to the
request, this provision gives a remedy which can be followed
by the petitioner.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Paragraph (6)
Sufficiently Clear
Article 139
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
“Expert” means a person with expertise in the field to be
inspected.
Paragraph (4)
Sufficiently Clear
Paragraph (5)
“All documents” means all books, records, and letters related
to the Company’s activities.
Paragraph (6)
Sufficiently Clear
Paragraph (7)
Sufficiently Clear
Article 140
Paragraph (1)
Sufficiently Clear
Paragraph (2)
The petitioner may determine further action against the
Company on the basis of the report on the outcome of the
inspection.
Article 141
Paragraph (1)
In determining the cost of inspection for the inspectors, the
Chief Judge shall base it on the inspectors’ level of expertise
and the ability to pay of the Company and the scope of the
Company.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Charging the contemplated reimbursement of costs shall be
determined by the court with due attention to the outcome of
the inspection.
Article 142
Paragraph (1)
Subparagraph a
Sufficiently Clear
Subparagraph b
Sufficiently Clear
Subparagraph c
Sufficiently Clear
Subparagraph d
Sufficiently Clear
Subparagraph e
Sufficiently Clear
Subparagraph f
“The revocation of the Company’s business permits
such that the Company must enter into liquidation”
means there are provisions which do not allow the
Company to do business in other fields after its
business permits have been revoked, such as in
banking business permits or insurance business
permits.
Paragraph (2)
Unlike the winding up of a Company as a result of a Merger
and Consolidation, which need not be followed by
liquidation, the winding up of a Company under the
provisions of paragraph (1) must always be followed by
liquidation.
Subparagraph a
“Liquidation by a curator” means liquidation specially
carried out in the case of Companies wound up under
the provision of paragraph (1) subparagraph e.
Subparagraph b
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Paragraph (6)
The appointment of a liquidator does not mean that the
members of the Board of Directors and Board of
Commissioners are dismissed, unless the GMS dismisses
them.
Those with the authority to suspend liquidators and
supervise them are members of Boards of Commissioners in
accordance with the provisions in the articles of association.
Article 143
Paragraph (1)
Because Companies which are being wound up are still
acknowledged as legal entities, such Companies may be
declared bankrupt and the liquidator will then be replaced by
a curator.
A declaration of bankruptcy will not alter the status of a
Company which is being wound up and therefore the
Company must be liquidated.
Paragraph (2)
Sufficiently Clear
Article 144
Sufficiently Clear
Article 145
Sufficiently Clear
Article 146
Paragraph (1)
Subparagraph a
Sufficiently Clear
Subparagraph b
Sufficiently Clear
Subparagraph c
“The grounds that it is not possible for the Company to
continue” means, amongst others:
a. the Company has been doing any business (has been
non active) for 3 (three) or more years, as proven by
notification delivered to the taxation authorities;
b. the addresses of most of the shareholders are not
known despite invitation through advertisement in a
Newspaper and so the GMS cannot be held;
c. the ratio of shareholdings in the Company is such that
the GMS cannot adopt lawful resolutions, for
example, because 2 (two) factions of shareholders
each has 50% (fifty per cent) of the shares; or
d. the Company’s assets have declined to such an extent
that the Company can no longer continue in business
with its existing assets.
Paragraph (2)
Sufficiently Clear
Article 147
Paragraph (1)
The calculation of the 30 (thirty)-day period shall run from the
date of:
a. the winding up by the GMS when the Company is wound up
by the GMS; or
b. the court order which has obtained absolute legal effect when
the Company is wound up pursuant to a court order.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Calculation of the 60 (sixty)-day period shall run from the
date of the latest announcement notifying creditors, for
example if the announcement in a Newspaper is on 1 July
2007, while the announcement in the State Gazette of the
Republic of Indonesia is on 3 July 2007, the date of the latest
announcement would be 3 July 2007.
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Article 148
Sufficiently Clear
Article 149
Paragraph (1)
Subparagraph a
Sufficiently Clear
Subparagraph b
“In the plan for division of the assets resulting from
the liquidation” includes a breakdown of the size of
debts and the plan for their payment.
Subparagraph c
Sufficiently Clear
Subparagraph d
Sufficiently Clear
Subparagraph e
“Other action necessary in the implementation of the
settlement of assets” means among others filing a
petition for bankruptcy because the Company’s debts
are greater than the Company’s assets.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Article 150
Sufficiently Clear
Article 151
Sufficiently Clear
Article 152
Paragraph (1)
“Liquidators shall be accountable” means liquidators must
give an accountability report on the liquidation they have
carried out.
Paragraph (2)
Sufficiently Clear
Paragraph (3)
Sufficiently Clear
Paragraph (4)
Sufficiently Clear
Paragraph (5)
Sufficiently Clear
Paragraph (6)
Sufficiently Clear
Paragraph (7)
Sufficiently Clear
Paragraph (8)
Sufficiently Clear
Article 153
Sufficiently Clear
Article 154
Paragraph (1)
Basically the provisions in this Act apply to Companies doing
certain businesses in the field of capital markets, such as
Public Companies or stock exchanges. However, bearing in
mind that such Companies have particular characteristics
which are different from those of Companies in general, it is
necessary to leave open the possibility of special
arrangements for such Companies.
These special arrangements are with regard to, amongst
others, the system for paying up capital, matters related to
buying back shares in Companies, and voting rights and
convening of GMS.
Paragraph (2)
“Basic principles of Company law” means the basic legal
principles related to the essence of Companies and Company
Organs.
Article 155
Sufficiently Clear
Article 156
Sufficiently Clear
Article 157
Paragraph (1)
Sufficiently Clear
Paragraph (2)
Sufficiently Clear
Paragraph (3)
“Companies which have already obtained the status of legal
entities under legislative regulations” means Companies with
the status of legal entity which were established on the basis
of Commercial Code and the Limited Liability Companies
Act No. 1 of 1995.
Paragraph (5)
Sufficiently Clear
Article 158
Under this provision, ownership of shares by such other Companies
must be assigned to other parties not subject to the prohibitions
contemplated in Article 36 within a period of 1 (one) year as from
the coming into effect of this Act.
Article 159
Sufficiently Clear
Article 160
Sufficiently Clear
Article 161
Sufficiently Clear