Appointment of Board of Directors and Board of Commissioners of the Limited Liability Company

Background

The Law Number 40 of 2007 on Limited Liability Company ("Company Law") regulates the provisions about one of the most important organs of the limited liability company (“Company”), that is, Board of Directors ("BOD") and Board of Commissioners (“BOC”). BOD is the Company organ which is in charge of the day-to-day man
agement and operation of the Company in the interest of the Company and in accordance with the Company’s purposes and objectives. Meanwhile BOC is the Company organ with the task of general and/or specific supervision in accordance with the Company’s articles of association and giving advice to the BOD.

Composition and Appointment of BOD and BOC

All the information about composition and procedures for appointment, replacement and dismissal of the BOD and BOC members shall be written in the Articles of Association ("AoA").

BOD and BOC, each shall consist of at least 1 (one) member, except for the type of business of the Company is related to the collection of and/or management of the public funds, Companies which issue letter of acknowledgment of indebtedness to the public, or public Company shall consist of at least 2 (two) members of BOD or BOC. In the event that BOC consists of more than 1 (one) member, it shall constitute as a council and no member of BOC may act separately, they should act on the basis of a resolution of BOC.

According to Article 93 paragraph (1) and Article 110 paragraph (1)  of Company Law, those who may be appointed as the members of BOD or BOC are individuals capable of performing legal actions, except those who in 5 (five) years prior to their appointment have been:

  1. declared bankrupt;
  2. members of BOD or BOC which have been declared to be responsible for a Company's bankruptcy;
  3. sentenced for a crime which caused losses to the state or were related to the finance sector.

However, the provisions on the requirements of the members of BOD and BOC as mentioned above are without prejudice to the possibility of the authorized technical agencies determining additional requirements pursuant to the prevailing laws and regulations.

Initially, the members of BOD and BOC are appointed by the founders of the Company as set out in its deed of establishment. Thereafter, the General Meeting of Shareholders (“GMS”) is in charge of appointing the members of BOD and BOC for a certain period, and members of BOD and BOC may be re-appointed, which implies that the members of BOD and BOC whose period has expired, do not automatically continue in their original position unless re-appointed by a GMS resolution. The procedure of the appointment of members of BOD and BOC shall be stipulated in the Company’s AoA.

In the event of the appointment, replacement, or dismissal of members of BOD and/or BOC, BOD must notify the Minister of Law and Human Rights (“Minister of Law”) within a period of not more than 30 (thirty) days as from the date of GMS resolution of the change in the members of BOD and/or BOC for the recording in the company registry.

The appointments of members of BOD and/or BOC which do not fulfill the requirements of qualifications are null and void as from the other members of BOD and/or BOC becomes aware of it, based on lawful evidence, and a written notice should be given to relevant members of BOD and/or BOC. The annulment of the appointment of the relevant members of BOD and/or shall be announced in a newspaper within 7 (seven) days after other members of BOD and/or BOC become aware of the situation, and a notification to the Minister of Law shall be provided to be recorded in the company registry.

Legal acts performed for and on behalf of the Company by the member of BOD in which that its appointments do not fulfill the requirements of qualifications and performed before the appointment as BOD is annulled, shall remain binding on and act as liability of the Company. However, legal acts performed for and on behalf of the Company by the member of BOD in which that its appointments do not fulfill the requirements of qualifications and performed after its appointment as BOD is annulled, shall be null and void and the personal liability of the said member shall apply.

The above provisions is also applied for BOC, thus, the legal acts performed for and on behalf of BOC, in which that its appointments do not fulfill the requirements of qualifications and performed before the appointment as BOC is annulled, shall remain binding on and act as liability of the Company.

However, those provisions shall not reduce the liability of the member of BOD and/or BOC concerned for the Company’s losses as regulated in Company Law.

Stephanie Portier

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