INDONESIA Law and Practice Contributed by: Ira A Eddymurthy and A Charlie R Malessy, SSEK Law Firm
the company. As discussed in 4.8 Consequenc- es and Enforcement of Breach of Directors’ Duties , personal liability of a director can be invoked if they are found guilty of misconduct or negligence in performing their duties or in other circumstances applicable to public companies. However, a director cannot be held personally liable for company losses if: • the loss was not caused by their fault or negligence; • they have managed the company in good faith and with due care, in the interests of and in accordance with the company’s purposes and objectives; • they do not have a direct or indirect conflict of interest in the management actions that caused the loss; and • they have taken actions to prevent the loss or its continuation. 4.10 Approvals and Restrictions Concerning Payments to Directors/ Officers In return for their service, members of the BOD may be granted remuneration and/or other enti - tlements. The authority to determine the amount of such remuneration and entitlements resides with the GMS, as outlined in Article 96, para - graph 1 of the Company Law. This authority can be delegated to the BOC, in which case the BOC will make the decision through a BOC meeting. It is important to note that the Company Law does not explicitly mandate the provision of remuneration and/or other entitlements. Conse - quently, the remuneration and/or other entitle - ments of BOD members are contingent solely upon the decision of the GMS or the BOC meet - ing, as applicable.
If the BOD comprises two or more members, the liability is joint and several, meaning each member responsible for the misconduct or neg - ligence is collectively liable. On behalf of the company, shareholders rep - resenting at least one-tenth of the total shares with voting rights may file a lawsuit against BOD members in a specific district court to seek com - pensation for the company’s losses. Additionally, members of the BOC or other BOD members also have the right to file claims on behalf of the company against any BOD member whose misconduct or negligence has caused losses to the company. Notwithstanding the above, in the context of public companies, and as elaborated in section 2.1 Hot Topics in Corporate Governance , Arti - cle 50 of OJK Reg, 45/2024 further stipulates that a resolution of the GMS or a decision by the OJK or a competent court may determine that a member of the BOD or BOC is personally liable for losses suffered by the public company if such losses arise due to: • the member’s bad-faith use of the company for personal gain; • the member’s involvement in unlawful acts involving the company; or • the member’s direct or indirect misuse of company assets, resulting in the company’s assets becoming insufficient to meet its liabilities. 4.9 Other Bases for Claims/Enforcement Against Directors/Officers As a principle, there is a clear separation between the personal assets and liabilities of the members of the BOD and those of the company. It is essential to determine whether a director is acting in a personal capacity or on behalf of
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