In accordance with Indonesian Company Law No. 40 year 2007 (Undang-Undang Republik Indonesia nomor 40 Tahun 2007 tentang Perseroan Terbatas) a “Limited Liability Company” (PT-Perseroan Terbatas) means a legal entity which constitutes a coalition of capital established agreeable to a contract in order to carry out business activities with an authorized capital all of which is divided into shares.
A “Limited Liability Company” (PT-Perseroan Terbatas) constitute 3 (three) “Company Organs” namely General Meeting of Shareholders (GMS), Board of Directors and Board of Commissioners. All the organs of the company must work accordingly to achieve the company’s objectives and goals. Below we discuss the brief definition, Obligations and Liabilities of the Board of Directors.
The Board of Directors is the organ of the Company that has the authority and full responsibility to manage Company’s interests, in accordance with the purposes and objectives of the Company. Furthermore authority to represent the Company, either in or out the court and in accordance with the provisions of the articles of association of Company. The Board of Directors of an Indonesian Limited Liability Company must consist of minimum 1 (one) member except for the Company which engages in mobilizing public funds and issuing debt instrument which shall have a minimum of 2 (two) members of Board of Directors. Members of Board of Directors are appointed by General Meeting of Shareholders (GSM) for certain period of time and can be reappointed, replaced or dismissed by procedure stipulated in Indonesian Company Law.
Obligations and responsibilities of Board of Directors:
- Board of Director is responsible to manage the Company’s interests in the pursuit of its purposes and objectives.
- Establishment and maintenance of register of shareholders, special register, minutes of GMS and minutes of the Board of Directors meeting.
- Preparation and submission of an annual report to GSM which consist of:
- financial statements (current balance sheet, profit and loss statement, cash flows, equity changes etc.)
- details of Company’s activities.
- implementation of Social and Environmental Responsibility of Company;
- details on issues which occurs during the accounting year which is affecting the Company’s activities;
- supervisory duty that has been performed by the Board of Commissioners during the previous accounting year;
- salary and compensation for the members of Board of Directors, and salary or honorarium and compensation for the members of the Board of Commissioners of the Company for the previous year.
- The Board of Directors is obliged to request the GMS approval for transferring or securing the Company’s assets which constitutes of more than 50% (fifty percent) from the total net assets of the Company in 1 (one) transaction or more, either separate or inter-related.
- The Board of Directors may, in writing, grant a power of attorney to 1 (one) of the Company’s employee or more or to any other person for and on behalf of the Company to perform a certain legal action as described in the Power of Attorney.
Liabilities of Board of Directors:
The Board of Directors is to manage the company with good faith and full responsibility. Board of Directors is fully and personally liable over the loss of the Company if it resulted from its fault or negligence in performing its duties. In the event the Board of Directors consist of more than 1 (one) members, the liabilities are jointly and severally apply to each member of the Board of Directors. On the other hand Board of Directors is not liable for the losses which incurred:
- not resulted from fault or negligence of Board of Directors;
- if Board of Directors has performed the management of the Company with good faith and prudent and in the pursuit of Company’s purposes and objectives;
- if there is no conflict of interest, either directly or indirectly over the management that result to the loss; and
- if Board of Directors has taken a precaution measure to avoid the loss.