INDONESIA Law and Practice Contributed by: Ira A. Eddymurthy, A. Charlie R. Malessy, A. Ramadinan Saptara and Medita F. Siregar, SSEK Law Firm
a president director and a president commissioner must be appointed. 3.2 Board Members The Company Law does not assign specific roles to different members of the BOD. These roles may be assigned under the articles of association. 3.3 Board Composition Under the Company Law, limited liability companies in Indonesia are required to have at least one director and one commissioner. There are no statutory restric - tions on the number of directors and commissioners, but certain companies are required to have more than one director and commissioner. For instance, publicly traded companies and financing companies are required to have at least two directors and two commissioners. Banks and insurance companies are required to have at least three directors and three commissioners. 3.4 Appointment and Removal of Directors/ Officers The appointment and removal of members of the BOD and the BOC may only be determined by a resolution of the GMS. Directors and commissioners may be appointed for a specific term and may be reappointed. Each appointment is effective on the date specified by the GMS or, in the absence of such specification, on the date the GMS is deemed closed. Any individual may be appointed as a member of the BOD and the BOC provided they have legal capacity and have not, within the previous five years: • been declared bankrupt; • served as a member of the BOD or BOC of a company deemed responsible for that company’s bankruptcy; or • been criminally convicted of an offence causing financial loss to the state and/or a criminal offence relating to the financial sector. BOD and BOC members may be dismissed at any time through a GMS provided there is a valid reason for such dismissal. The director or commissioner con - cerned must be given the opportunity to present a defence against the proposed dismissal, unless that
director or commissioner does not object to the dis - missal. The dismissal becomes effective on the date the GMS is deemed closed or on any specific date determined by the GMS. A member of the BOD may also be suspended by the BOC for a specified reason. During the suspension, the BOD member is not authorised to perform directo - rial duties. Within 30 days of the suspension, a GMS must be convened to decide whether the suspension will be lifted or if the director will be permanently dis - missed. A company’s articles of association may further gov - ern the appointment, replacement and dismissal of BOD and BOC members. Unless specified otherwise in the articles of association, the GMS quorum and voting requirements for the appointment and dis - missal of BOD and BOC members shall be a simple majority. 3.5 Independence of Directors The Company Law does not recognise the concept of independent directors and, accordingly, does not generally require Indonesian companies to appoint independent directors. However, the Company Law does recognise the concept of independent commis - sioners, allowing a company’s articles of association to require the appointment of one or more independ - ent commissioners. The Company Law addresses potential conflicts of interest by prohibiting members of the BOD from act - ing as legal representatives of the company in certain matters in which they are conflicted. This is to ensure that representation is always in the company’s best interest, aligning with directors’ fiduciary duties. In addition, Law No 5 of 1999 regarding the Prohibition of Monopolistic Practices and Unfair Business Com - petition, as amended, explicitly prohibits individuals from concurrently serving as directors in other com - panies operating in the same market or closely related business industries. 3.6 Legal Duties of Directors/Officers The Company Law mandates that directors have the primary responsibility of managing the company in the
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