LIMITED LIABILITY COMPANY

(Perseroan Terbatas)

BOARD OF DIRECTORS &

BOARD OF COMMISSIONERS
LAW NO 40 / 2017 REGARDING LIMITED LIABILITY
COMPANIES
LIMITED LIABILITY COMPANY
LEGAL BASIS :
Law No 40 / 2007 Regarding Limited Liability
Company (Company Law);
Effective since 16th August 2007;
Replacing previous Law No 1 / 1995 Regarding
Limited Liability Company.
Chapter VII Article 92 to 121 Company Law,
focus on Board of Directors and Board of
Commissioners.
DEFINITION LIMITED LIABILITY COMPANY
Limited Liability Company (Company) means :
Legal entity;
Alliance of capital;
Established based on agreement;
Authorized capital divided into shares;
Fulfils the requirements in this Act and its
implementing regulations.

- Article 1 (1) Company Law -

COMPANY AS LEGAL ENTITY
1) Company possess their own assets;

2) Company possess their own responsibilities;

3) Company shall not act by themselves.

Company consist of Company Organs that represents the
Company.

Company Organs means General Meeting of Shareholders

(GMS), Board of Directors (BOD) and Board of Commissioners
(BOC). (Art 1 (2) Company Law)

Company Organs shall consists of person who capable in law.

BOARD OF DIRECTORS
1. Board of Directors (BOD) means :
Company Organs;
Full authority and responsibility for the management of Company;
In accordance with Companys purposes and objectives;
Represent the company inside and outside the court;
In accordance with the provision of article of association.
(Art 1 (5) Company Law)

2. BOD shall consist of 1 (one) or more members of directors.

(Art 92 (3) Company Law)
Note :
BOD shall consist at least 2 (two) members of directors for company
whose business related to :
a) The collection and/or management publics fund;
b) Company which issues acknowledgement of indebtedness;
c) Public company. (Art 92 (4) Company Law)
BOARD OF DIRECTORS
3. The division of tasks and authority between the BOD, could be
determined by GMS resolution or BOD resolution.
(Art 92 (5&6) Company Law)

4. Initially, members of BOD shall be appointed by the founders in

deeds of establishment.
(Art 94 (2) Company Law)

5. Furthermore, members of BOD shall be appointed by GMS.

(Art 94 (1) Company Law)

6. Members of BOD shall be appointed for a certain period and may

be re-appointed.
(Art 94 (3) Company Law)
BOARD OF DIRECTORS
7. Article of Association (AoA) shall provide procedures for :
a) appointment;
b) replacement; and
c) dismissal of BOD
May also provide procedures for nominating BOD.
(Art 94 (4) Company Law)

8. Effectiveness of appointment, replacement, dismissal BOD

determined in GMS resolution or if does not, it comes into effect as
from the close of GMS. (Art 94 (5&6) Company Law)

9. Within period of not more than 30 days from the date of GMS
resolution, related to appointment; replacement; dismissal of BOD,
the BOD must notify the Minister. Otherwise, the Minister shall
refuse any application submitted or notification delivered.
(Art 94 (7&8) Company Law)
REQUIREMENTS FOR BOD
Requirements for BOD : (Art 93 Company Law)
1. May be appointed as members of BOD are individuals capable of
performing legal action, except those who in 5 years previous to
their appointment have :
a) been declared bankrupt;
b) been members of BOD or BOC declared to be fault in causing a
company bankrupt;
c) been sentenced for crimes which caused losses to the state
and/or related to finance sector.

2. Another additional requirements may be determined by technical

agencies according to legislative regulation.

3. Fulfillment of the requirements shall be proven by a letter to be kept

by the company.
REQUIREMENTS FOR BOD
4. Appointment of BOD which did not fulfill the requirements mentioned,
shall be void by law since another BOD or BOC know the requirements
were not fulfilled. (Art 95 (1) Company Law)

5. Within period of not more than 7 days since it becomes known, another
BOD or BOC must publish the annulment of the appointment of BOD in
newspaper and inform the Minister for the record in the register of
company. (Art 95 (2) Company Law)

Before After
Legal action s responsibilities become directors
Legal actions become company responsibility
who concerned

Annulment of BOD Appointment

Recognize the requirements not fulfilled
6. Legal action responsibilities for BOD who not fulfill the requirements.
(Art 95 (3-5) Company Law)
ROLES OF BOD
1. Responsible for the management of company in
accordance with companys purposes and objectives
Fiduciary Duties Good Faith & Fully Responsible
(Act 97 (1&2) Company Law)
2. Representatives of the company inside or outside the
courts. (Act 98 (1) Company Law)
3. Compiling annual work plan before the start of the
coming financial year. (Act 63 (1) Company Law)
4. Convey annual report to GMS after studied by BOC
within period of not more than 6 months after the
company financial year ends.
(Act 66 (1) Company Law)
OBLIGATIONS OF BOD
1. Making the register of shareholders, special register, GMS minutes, and
BODs minutes of meetings. (Act 100 (1) Company Law)
2. Making reports to company with regard to shares owned by member
concerned of BOD and/or his/her family in the company and other
company for recorded in the special register.
(Act 101 (1) Company Law)
3. Making companys annual report and other financial documents.
(Act 100 (1) Company Law)
4. Maintaining all registers, minutes and companys financial documents.
(Act 100 (1) Company Law)
5. Asking GMS approval for :
a) assignment of company assets; and
b) making security for debt company assets.
Which constitutes more than 50% of company net assets in one or more
separate of inter-related transactions.
(Act 102 (1) Company Law)
BOD REPRESENTATION ON COMPANY
1. BOD shall represents company outside and inside the courts.
(Act 98 (1) Company Law)

2. If BOD consists of more than 1 person, any member has authority to represent company
unless the article of association specify otherwise.
(Act 98 (2) Company Law)

3. BODs authority to represent the company is unlimited and unconditional, unless company
law, article of association and GMS resolution specifies otherwise.
GMS resolution may not be contrary to the provision of company law and/or companys
article of association. (Act 99 (3&4) Company Law)

4. BOD do not have authority to represent company if : (Act 99 (1) Company Law)
a) There is a case between company and BOD related; or
b) BOD concerned has conflict of interest with the company.

5. In such events as mentioned above, the persons entitled to represent company are: (Act 99
(2) Company Law)
a) Other BOD who do not have conflict of interests to the company;
b) BOC, when all BOD have conflict of interests to the company; or
c) Other parties appointed by GMS, when all BOD or BOC have conflict of interests.
BOD UNDER COMPANY LAW
1. BOD shall be released from the liability of inaccurate and/or
misleading financial reports, if it is proven not due to their fault..
(Act 69 (4) Company Law)

2. BOD cannot be held liable for the losses of company (incl.

bankruptcy) if they can prove that :
a) The losses were not due to their fault or negligence;
b) Carried out the management in good faith and with prudence in
interest an in accordance with the purposes and objectives of
the company;
c) Do not have direct or indirect conflict of interest that caused
losses; and
d) Already took action to prevent losses from arising or continuing.
(Act 97 (5) & Act 104 (3) Company Law).
BOD RESPONSIBILITIES
1. In the event that the financial report provided turns out to
be inaccurate and/or misleading, BOD and BOC shall jointly
an severally liable to the parties harmed.
(Act 69 (3) Company Law)

2. Each members of BOD and BOC shall fully personally liable

for the companys losses if the directors concerned is at
fault or negligent in carrying out duties.
(Act 69 (4) Company Law)

3. If BOD consists of 2 (two) or more members, the liability

mentioned above shall be joint and several for each
member of BOD.
(Act 97 (4) Company Law)
BOD RESPONSIBILITIES
4. BOD who do not fulfill the obligation to make any
companys reports with regard to shares owned by member
concerned of BOD and/or his/her family in the company
and other company for recorded in the special register and
cause losses, shall be personally liable for the company
losses. (Act 101 (2) Company Law)

5. BOD may be dismissed at any time by virtue of GMS

resolution stating the reason therefor,
(Act 105 (1) Company Law)

6. BOD may be suspended by BOC, giving the reason therefor.

(Act 106 (1) Company Law)
BOD RESPONSIBILITIES
7. In relation of bankruptcy, either caused by the petition
from third party or caused by the fault or negligence of
BOD, and the bankrupt estate if insufficient to pay the
companys liabilities in bankruptcy, each member of
BOD shall jointly and severally liable for the whole
obligations not paid from the bankrupt estate.
(Art 104 (2&5) Company Law

8. The liability mentioned above, shall also apply to

members of BOD who ceased to serve in the 5 years
before the judgement declaring the company bankrupt
was uttered.
(Art 104 (3) Company Law)
BOARD OF COMMISSIONERS
1. Board of Commissioners (BOC) means :
Company Organs;
Task of general and/or specific supervision;
In accordance with the articles of association; and
Giving advice to BOD.
(Art 1 (6) Company Law)

2. BOC shall consist of 1 (one) or more members of commissioners.

(Art 108 (3) Company Law)
Note :
BOC shall consist at least 2 (two) members of commissioners for
company whose business related to :
a) The collection and/or management publics fund;
b) Company which issues acknowledgement of indebtedness;
c) Public company. (Art 108 (5) Company Law)
BOARD OF COMMISSIONERS
3. BOC consisting of more than and 1 (one) member shall constitute as council, and no
member of BOC may act alone but rather on the basis of BOC resolution.
(Art 108 (4) Company Law)

4. Companys article of association may provide 1 (one) or more Independent

commissioners and 1 (one) delegate commissioners. (Art 120 (2) Company Law)

5. The independent commissioners mentioned above, shall be appointed on the basis of

GMS resolution from parties not affiliated with main shareholders, BOD and/or other
BOC. (Art 120 (2) Company Law)

6. Delegate commissioners mentioned above, shall be a members of BOC appointed on

the basis of GMS resolution. (Art 120 (3) Company Law)

7. Initially, members of BOC shall be appointed by the founders in deeds of establishment.

(Art 111 (2) Company Law)

8. Furthermore, members of BOC shall be appointed by GMS.

(Art 111 (1) Company Law)

9. Members of BOC shall be appointed for a certain period and may be re-appointed.
(Art 111 (3) Company Law)
BOARD OF COMMISSIONERS
10. Article of Association (AoA) shall provide procedures for :
a) appointment;
b) replacement; and
c) dismissal of BOD
May also provide procedures for nominating BOC.
(Art 111 (4) Company Law)

11. Effectiveness of appointment, replacement, dismissal BOC

determined in GMS resolution or if does not, it comes into effect as
from the close of GMS. (Art 111 (5&6) Company Law)

12. Within period of not more than 30 days from the date of GMS
resolution, related to appointment; replacement; dismissal of BOC,
the BOD must notify the Minister. Otherwise, the Minister shall
refuse any application submitted or notification delivered.
(Art 111 (7&8) Company Law)
REQUIREMENTS FOR BOC
Requirements for BOC : (Art 110 Company Law)
1. May be appointed as members of BOD are individuals capable of
performing legal action, except those who in 5 years previous to
their appointment have :
a) been declared bankrupt;
b) been members of BOD or BOC declared to be fault in causing a
company bankrupt;
c) been sentenced for crimes which caused losses to the state
and/or related to finance sector.

2. Another additional requirements may be determined by technical

agencies according to legislative regulation.

3. Fulfillment of the requirements shall be proven by a letter to be kept

by the company.
REQUIREMENTS FOR BOC
4. Appointment of BOC which did not fulfill the requirements mentioned,
shall be void by law since another BOD or BOC know the requirements
were not fulfilled. (Art 112 (1) Company Law)

5. Within period of not more than 7 days since it becomes known, another
BOD or BOC must publish the annulment of the appointment of BOC in
newspaper and inform the Minister for the record in the register of
company. (Art 112 (2) Company Law)

Before After
Legal action s responsibilities become
Legal actions become company responsibility
commissioners who concerned

Annulment of BOC Appointment

Recognize the requirements not fulfilled
6. Legal action responsibilities for BOC who not fulfill the requirements.
(Art 95 (3-4) Company Law)
ROLES OF BOC
1. Responsible to supervise management
policies, the running of management in
general (both company and the business) and
give advice to the BOD.
(Act 108 (1) Company Law)

2. Each members of BOC shall perform in good

faith, prudence and responsibility the tasks of
supervising and giving advice.
(Act 114 (2) Company Law)
OBLIGATIONS OF BOC
1. BOC shall :
a) make minutes of meetings of BOC and keep copies
thereof;
b) report the company regarding share ownership by
them and/or their families in the company and
other company;
c) give GMS reports concerning their task of
supervision performed during the financial year just
past.
(Act 116 Company Law)
2. Article of association may determine the grant of
authority to BOC to give approval or assistance to BOD
in the performance of certain legal actions.
(Act 117 (1) Company Law)
BOC RESPONSIBILITIES
1. In the event that the financial report provided turns out to be inaccurate and/or
misleading, BOD and BOC shall jointly an severally liable to the parties harmed.
(Act 69 (3) Company Law)

2. Responsible to supervise management policies, the running of management in

general (both company and the business) and give advice to the BOD.
(Act 108 (1) Company Law)

3. Each members of BOD and BOC shall fully personally liable for the companys
losses if the directors concerned is at fault or negligent in carrying out duties.
(Act 69 (4) Company Law)

4. If BOD consists of 2 (two) or more members, the liability mentioned above shall be
joint and several for each member of BOD.
(Act 114 (4) Company Law)

5. On behalf of the company, shareholder representing at least 1/10 (one tenth) of

the total number of shares with voting rights may file suit through the district court
against the members of the BOD who by their fault or negligence gave rise to
losses for the company. (Act 97 (6) Company Law)
BOC RESPONSIBILITIES
6. In relation of bankruptcy, caused by the fault or
negligence of BOC, and the bankrupt estate if
insufficient to pay the companys liabilities in
bankruptcy, each member of BOC shall jointly and
severally liable together with BOD for obligations which
have not been paid off.
(Art 115 (1) Company Law)

7. The liability mentioned above, shall also apply to

members of BOC who ceased to serve in the 5 years
before the judgement declaring the company bankrupt
was uttered.
(Art 115 (2) Company Law)
BOC UNDER COMPANY LAW
1. BOC shall be released from the liability of inaccurate and/or
misleading financial reports, if it is proven not due to their fault.
(Act 69 (4) Company Law)

2. BOC cannot be held liable for the losses of company (incl.

bankruptcy) if they can prove that :
a) Carried out their supervision in good faith and with prudence in
interest an in accordance with the purposes and objectives of
the company;
b) Do not have direct or indirect personal interest in the action
BODs management which caused the losses; and
c) Already given the BOD advice to prevent losses arising or
continuing.
(Act 114 (5) & Act 115 (3) Company Law).
 THANK YOU
FOR YOUR ATTENTION