INDONESIA Law and Practice Contributed by: Ira A Eddymurthy and A Charlie R Malessy, SSEK Law Firm
3.3 Decision-Making Processes Generally, every decision made by each body of the company is taken in accordance with the decision-making mechanism applicable to such body, as regulated in the Company Law and/or the articles of association. However, it should be noted that the Company Law does not explicitly regulate how decisions in the BOD or the BOC for private companies are made. The Company Law does not prescribe any requirements regarding how the BOD or BOC conduct board meetings or make decisions therein. Therefore, in practice, the articles of association of each company may contain pro - visions regarding the conduct of board meetings and the decision-making procedures therein. Despite the above, it should be noted that, based on Article 98, paragraph 2 of the Com - pany Law, if the BOD consists of more than one member, then each member of the BOD has the right to act for and on behalf of the company unless otherwise specified in the articles of association. This means that specific directors may be authorised to take actions on behalf of the company without having to wait for a col - lective decision from the BOD, as long as they are appointed as authorised directors to repre - sent the company. In contrast, when the BOC makes certain decisions, these decisions must be made collectively by the BOC, and no indi - vidual member of the BOC can act to represent the BOC in making decisions. This is based on the principle stated in Article 108, paragraph 4 of the Company Law, which states that if the BOC consists of more than one member, then each member of the BOC cannot act individually but must act based on decisions made by the BOC as a whole.
company, the BOD must seek approval from the GMS. Generally, as the BOC only has the authority to supervise and provide advice to the BOD, it does not make decisions related to the management of the company. However, there are instances where decisions of the BOC are also required for the company to undertake certain actions. For example, if during a fiscal year the company intends to distribute interim dividends to share- holders (assuming the requirements under the Company Law for such action are fulfilled), the BOD cannot proceed with this action without the approval of the BOC. Additionally, the com - pany’s articles of association may give the BOC the authority to approve specific management actions to be taken by the company. Under the Company Law, the GMS holds author - ities that the BOD and BOC are not allowed to exercise and therefore shall make various key decisions for the company. These decisions include: • appointment of members of the BOD and BOC; • amendments to the company’s articles of association; • certain corporate actions such as acquisi - tions, consolidations, mergers and spin-off of the company. Similar to the BOC, the company’s articles of association may grant additional authorities to the GMS to approve specific actions to be taken by the company. • payment of annual dividends; • liquidation of the company; and
382 CHAMBERS.COM
Powered by FlippingBook