Aside from the Board of Directors and Board of Commissioners, another figure that is very important in the Indonesia Company Law is the General Meeting of Shareholders. Learn more about why they are important, and their special authority in running the Company.
When talking about the people who are running a Limited Liability Company (Perseroan Terbatas or PT or “Company”) in Indonesia, there are 3 (three) important figures with different authorities in the Company, which consists of the Board of Directors, the Board of Commissioners, and the last but not least, the General Meeting of Shareholders (“GMS”).
Both the Board of Directors and Board of Commissioners have easily identified roles: the Directors are responsible for the daily operation of the Company, while the Commissioners supervise the Directors. However, the GMS actually have a special authority different from Directors and Commissioners, which makes it a crucial part of the operation of the Company.
Here are the 4 (four) things you need to know about the General Meeting of Shareholders:
- IT’S A MEETING TO DETERMINE THE ACTIONS OF THE COMPANY
- IT’S HELD ON SPECIAL OCCASIONS (OR IF DEEMED NECESSARY)
- The Annual General Meeting of Shareholders, held every year at the latest within 6 (six) months after the Company Financial Year has ended; and
- The Extraordinary General Meeting of Shareholders, held anytime pursuant to the needs and interests of the Company. Examples include GMS held to amend the Articles of Association, GMS held to change Company Data, and even GMS held to grant certain approvals in the event the Company intends to do certain actions, such as lending and/or borrowing loans, or acting as guarantor for another party.
- IT’S HELD AT CERTAIN LOCATIONS
- The Company Domicile Address;
- Where the Company conducts its main business activity; or
- The Province Capital where the Company Domicile / Business Activity location is.
- IT’S ATTENDED BY THE ELIGIBLE SHAREHOLDERS
Self-described in the name, the General Meeting of Shareholders is what it is: a meeting between the shareholders, held to discuss and resolve certain agendas which have previously been informed amongst the shareholders.
The special authority of the General Meeting of Shareholders commence in this meeting, since the resolutions agreed at the General Meeting of Shareholders must be adhered to by the Board of Directors in running the Company. Including, any appointment or dismissal of the Board of Directors (or Commissioners) as deemed necessary by the General Meeting of Shareholders.
Mainly, the General Meeting of Shareholders is held in 2 (two) occasions:
The General Meeting of Shareholders must be held within the territory of the Republic of Indonesia, which means no meetings can be done abroad. Within the territory, the meeting must be held at:
Therefore, not all locations can be the location for General Meeting of Shareholders. However, there exists an alternative for shareholders that find it difficult to converge at one point to hold the mandatory General Meeting of Shareholders, which is to circulate a shareholders resolution document to be signed by all shareholders, also known as the Circular Resolution of Shareholder.
The General Meeting of Shareholders is attended by the eligible shareholders, a.k.a. the shareholders with voting rights. The absence of several shareholders does not mean that the General Meeting of Shareholders must be postponed: as long as the quota of attending shareholders required is fulfilled, the meeting can be adjourned.
To make a legally binding decision, the votes cast must also fulfill a certain quota from the attending shareholders. If the voting quota is not fulfilled, the General Meeting of Shareholders cannot decide on such resolution in the meeting.
Usually, members of Board of Directors and/or Board of Commissioners can attend the meeting if they themselves called upon the General Meeting of Shareholders. They can act as the Chairman of the Meeting, to make sure that the meeting is conducted properly and pursuant to the agenda as has been previously informed.
HOW CAN SMART ASSIST YOU?
To ensure a smooth investment and business operation from the legal perspective, but also focus on maintaining your business in Indonesia and achieve your targets, it is advised for you to find capable and trusted lawyers or legal consultants for advice and assistance with the prevailing laws and regulations.
SMART Consulting is a Corporate Legal Services firm. We have assisted local and multinational companies in handling their corporate matters, including preparing and drafting shareholders resolutions and general meeting of shareholders for our Clients, liaising with the relevant government authorities concerning the compliance of our Clients, and acting in an advisory capacity for the Client.
Contact Us Now to get the best legal solution for your business in Indonesia.