INDONESIA Law and Practice Contributed by: Ira A Eddymurthy and A Charlie R Malessy, SSEK Law Firm
4.6 Legal Duties of Directors/Officers As outlined in the preceding sections, Article 92, paragraph 1 of the Company Law man - dates that company directors have the primary legal responsibility to manage the company in the company’s best interests, ensuring that their actions are in alignment with their fiduci - ary duties as well as the company’s purposes and objectives. Additionally, Article 98, para - graph 1 of the Company Law assigns the BOD the responsibility of representing the company in both legal and non-legal matters. 4.7 Responsibility/Accountability of Directors The members of the BOD are entrusted to act in the best interest of the company, ensuring their actions align with the company’s objectives and purposes. In fulfilling their duties, BOD members may also consider the advice provided by the BOC, provided such advice similarly aligns with the company’s best interests and objectives. Ultimately, BOD members are obligated to serve solely in the best interest of the company, with - out consideration of the interests of other parties or bodies. 4.8 Consequences and Enforcement of Breach of Directors’ Duties Under Article 97 of the Company Law, members of the BOD are required to perform their duties in good faith and with full responsibility. Generally, BOD members are not personally liable for com - pany losses, provided their actions are conduct - ed in the company’s interest and in accordance with the provisions of the company’s articles of association. However, BOD members may be personally liable for company losses if they are found guilty of misconduct or negligence in per - forming their duties. In such instances, claims can be filed against the breaching BOD mem - bers by other company organs.
there is no requirement for the appointment of independent directors in Indonesian companies. This also applies to public companies, as stip - ulated by OJK Reg, 33/2014, which does not mandate the presence of independent directors for public companies. However, the Company Law does acknowledge the concept of independent commissioners. Article 120 of the Company Law states that the articles of association of a company may provide for the appointment of one or more independ - ent commissioners. Although the Company Law permits the inclusion of independent commis - sioners, it does not make it obligatory. In con - trast, for public companies, Article 20 of OJK Reg, 33/2014 specifies that if a BOC of a public company consists of two members, one must be appointed as an independent commissioner. If the BOC has more than two members, 30% of the total members must be independent com - missioners. On the issue of conflicts of interest, Article 99 of the Company Law addresses potential conflicts by prohibiting members of the BOD from acting as legal representatives of the company if they are conflicted in such matters. This is to ensure that representation is always in the company’s best interest, aligning with their fiduciary duties. In addition to the above, Law No 5 of 1999 con - cerning the Prohibition of Monopolistic Practices and Unfair Business Competition, as amended by the Job Creation Law, addresses potential conflicts of interest for BOD members. It explic - itly prohibits individuals from concurrently serv - ing as directors in other companies operating in the same market or closely related business industries.
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