INDONESIA Law and Practice Contributed by: Ira A Eddymurthy and A Charlie R Malessy, SSEK Law Firm
4.11 Disclosure of Payments to Directors/Officers
due to their ownership of shares, shareholders, generally through the GMS, have significant influence over the company’s affairs. This is because shareholders holding shares with vot - ing rights can determine the appointment and dismissal of BOD members, who are responsible for the daily management of the company. Fur - thermore, shareholder approval is required for significant corporate actions, such as amending the company’s articles of association, approv - ing mergers and acquisitions and deciding on liquidation. Another key variable in discussing the relation - ship between shareholders and the company is the distribution of dividends as a form of return on shareholders’ investment. According to Article 71 of the Company Law, shareholders, through the GMS, have the authority to distribute the company’s net profits, including as annual dividends. However, this article stipulates that dividends can only be distributed if the company has a positive profit balance and the mandatory reserve requirements are met for a given fis - cal year. This indicates that dividends depend on the company’s profitability; if the company does not generate net profits, shareholders will not receive dividends. This underscores the link between the company’s financial performance and the benefits shareholders can receive from the capital they have invested in the company. 5.2 Role of Shareholders in Company Management As previously discussed in 5.1 Relationship Between Companies and Shareholders , according to the Company Law, the company’s BOD, not shareholders, is responsible for the management of the company. Thus, share - holders are not responsible for the day-to-day management of the company. However, share - holders, through the GMS, may influence the
The Company Law provides that the remu - neration payable to BOD and BOC members be included in the company’s annual report, wherein the annual report shall be submitted by the BOD to the GMS after it has been reviewed by the BOC. The Company Law does not require the separate disclosure of information regard - ing the remuneration, fees or benefits payable to the BOD or other officers of the company to the public. However, certain companies regulated by the OJK are obligated to make available their annual report to the public. Thus, acknowledging that the remuneration payable to BOD and BOC members must be included in the company’s annual report, certain companies will inevitably be required to disclose the remuneration of BOD and BOC members to the public. 5. Shareholders 5.1 Relationship Between Companies and Shareholders The Company Law adopts the principle of piercing the corporate veil, meaning that, simi - lar to the BOD and BOC, there is a separation between the assets and liabilities of the com - pany and those of its shareholders. This means shareholders cannot be held personally liable for the actions or obligations of the company. However, in the context of public companies, there are specific circumstances under which a controller may be held liable for losses suffered by the company, as outlined in section 2.1 Hot Topics in Corporate Governance . As a result, shareholders do not participate in the daily management of the company. However,
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