INDONESIA LAW AND PRACTICE Contributed by: Agus Ahadi Deradjat (Agung), Gustaaf Reerink, Adri Dharma, Karina Widyaputri and Ilma Sulistyani, ABNR Counsellors at Law
3.4 Management Structures Two-Tier Management Structure of PT Indonesian PTs adopt a two-tier management structure comprising: (i) a BOD, responsible for day-to-day management and representation of the company; and (ii) a BOC, responsible for supervisory and advisory functions. A PT must have at least one director and one commissioner. BOD The BOD is fully responsible for managing the company in accordance with its objectives and purposes, acting in the best interests of the com - pany. It is authorised to represent the company both in and outside of court, formulate policies, and oversee daily operations. The company’s AOA may designate specific director(s) to represent the BOD in acting on behalf of the company. The BOD’s authority to represent the company is generally unlimited and unconditional, unless restricted by the Company Law, the AOA, or a resolution of the General Meeting of Sharehold - ers (GMS). Any such resolution must not conflict with the law or the AOA. In practice, the AOA often stipulates reserved matters that require prior approval from the BOC or the GMS. Additionally, the BOD must oper - ate within the scope of the company’s stated business activities and comply with applicable licences and permits issued by relevant authori - ties. BOC The BOC’s primary role is to supervise the BOD’s management of the company and provide stra - tegic advice.
Unlike the BOD, BOC members do not have executive authority and may not act individu - ally. All supervisory and advisory actions must be taken collectively through formal BOC resolu - tions. However, in the absence of all members of BOD, the BOC may temporarily assume man - agement responsibilities for a limited period in accordance with the applicable laws and regu - lations. 3.5 Directors’, Officers’ and Shareholders’ Liability As a general principle under Indonesian Compa - ny Law, directors of a PT are not personally liable to third parties for corporate actions undertak - en in the course of their duties, provided such actions fall within the scope of their authority as defined by the company’s AOA, GMS resolu - tions, and applicable laws. However, the Company Law recognises the doc - trine of piercing the corporate veil, under which directors may be held jointly and severally liable to third parties for tortious acts if they act beyond the limits of their authority. A member of the BOD may be exempt from liability for company losses if they can demonstrate that: • the losses were not caused by their fault or negligence; • they managed the company in good faith and with prudence, in alignment with the com - pany’s objectives and purposes; and • they took reasonable steps to prevent the occurrence or continuation of losses, includ - ing efforts to obtain information about man - agement actions that led to such losses – such as through participation in BOD meetings. As the name implies, a PT offers limited liabil - ity protection to its shareholders. Shareholders
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