INDONESIA Law and Practice Contributed by: Melissa Butarbutar, Ken Prasadtyo, Kevin Yehezkiel and Cindy Caroline, TnP Law Firm
8.4 Independent Outside Advice To perform its fiduciary duty, the board of direc - tors may, although it is not mandatory, seek advice from independent third parties prior to making decisions regarding the management of the company. The most common practice for the board of directors in this regard is consult - ing with external counsel, whether for legal, tax or financial matters. This approach not only pro - vides the board with a solid foundation for mak- ing decisions on behalf of the company but also helps the board identify potential risks early on, allowing the board to consider mitigation meas - ures at the outset. In the case of public companies, certain transac - tions may require the board of directors to seek advice from an independent appraiser, particu - larly to appraise the fair value of the object of the transaction. This may be required if the board of directors intends to carry out a merger or con - solidation transaction, or if the potential trans - action is categorised as a material transaction or an affiliated party transaction under the OJK regulations. 8.5 Conflicts of Interest In terms of private companies, under the Com - pany Law, members of the board of directors are prohibited from representing the company if they have conflicts against the company’s interest. If there are conflicts of interest, the company must be represented by: • other members of the board of directors who are not subject to conflicts of interest; • members of the board of commissioners, if all members of the board of directors are subject to conflicts of interest; and • another third party appointed by the general meeting of shareholders, if all members of the
board of directors and board of commission - ers are subject to conflicts of interest. As an additional note, in the case of public com - panies, the OJK also prohibits members of the board of directors from representing the public company if there are conflicts against the pub - lic company’s interest. That being said, if there are conflicts of interest, the above rule shall also apply to public companies. Conflict of Interest Transaction In terms of public companies, OJK Regulation No. 42/POJK.04/2020 on Affiliated Party Trans - actions and Conflict of Interest Transactions sets out certain particular requirements to be fulfilled by public companies intending to conduct a conflicts of interest transaction, as follows: • appoint an appraiser to determine the fair value of object of the conflict of interest trans - action and/or fairness of such transaction; • announce a disclosure of information on the conflict of interest transaction; • submit the above disclosure of information including its supporting documentation to the OJK; and • obtain prior approval of the general meeting of independent shareholders. 9. Defensive Measures 9.1 Hostile Tender Offers Hostile tender offers are not common in Indone -
sia, but no regulations prohibit them. 9.2 Directors’ Use of Defensive Measures
In the case of proposed mergers and acquisi - tions, there are no defensive measures availa- ble for directors of private or public companies.
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