INDONESIA Law and Practice Contributed by: Ira A. Eddymurthy, A. Charlie R. Malessy, A. Ramadinan Saptara and Medita F. Siregar, SSEK Law Firm
SSEK Law Firm Mayapada Tower I, 14th Floor Jalan Jenderal Sudirman Kav 28 Jakarta Selatan 12920 DKI Jakarta Indonesia
Tel: +62 212 953 2000 Fax: +62 215 212 039 Email: ssek@ssek.com Web: www.ssek.com
1. Corporate Governance Requirements 1.1 Corporate Forms and Governance Requirements Generally, Indonesian law recognises two main types of business organisation: those structured as non- incorporated business entities ( badan usaha ) and those operating as duly incorporated legal entities ( badan hukum ). Legal entities such as limited liability companies, foundations and co-operatives are inde - pendent legal personalities that may be held liable for actions taken as a corporate organisation. Business organisations in Indonesia typically operate as limited liability companies. 1.2 Corporate Governance Legislation and Regulation Corporate governance requirements applicable to Indonesian companies are principally regulated under Indonesia’s Law No 40 of 2007 regarding Limited Lia - bility Companies, as amended (the “Company Law”). In addition, specific corporate governance require - ments also apply to: • publicly traded companies; • companies operating within certain business sec - tors, such as oil and gas, banking, and financial services; and • state-owned enterprises. A limited liability company is also subject to its arti - cles of association, which must be determined by the founding shareholders at the time of the company’s
incorporation. A company’s articles of association may not contravene the Company Law. However, they may regulate matters in greater detail and devi - ate from certain default standards in the Company Law, provided they do not conflict with its mandatory provisions. 1.3 Companies With Publicly Traded Shares Publicly traded Indonesian companies are subject to Indonesia’s Law No 8 of 1995 regarding Capital Mar - kets, as amended, as well as to regulations of the Financial Services Authority ( Otoritas Jasa Keuangan – OJK) and the Indonesia Stock Exchange. 1.4 Stock Exchange Requirements Developments At the end of 2024, the OJK enacted OJK Regula - tion No 45 of 2024 concerning the Development and Strengthening of Issuers and Public Companies (“OJK Reg, 45/2024”). This regulation repeals, either wholly or partially, a number of previous regulations, includ - ing those governing the registration and delisting of public companies, rights issues and the disclosure of material information or facts. One of the key developments introduced by OJK Reg, 45/2024 is a refinement of corporate governance pro - visions, particularly regarding the disclosure of mate - rial information and facts and the responsibilities of controllers of public companies. Whereas the previous regime required public compa - nies to disclose material information within two busi - ness days, the new regulation mandates that such
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