Topic to Discuss

• The Basic Rules of PT

Perseroan Terbatas •

•
Classification of PT
Organs of PT (General Meeting of Shareholders, Board of Directors, Board
of Commissioners) - Fiduciary Duties of the Board
Bagus SD Nur Buwono
• Capitalization of PT
(IUP – FH UGM (2022)
• Legal Protection for the Minority Shareholders and Creditors.
• Financial Aspects of PT

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Basic Rules of PT • PT is an association of capital by agreement according to Law No. 1/1995, Law
No. 40/2007, Law No. 11/2020.

• Law No. 11/2020 provides a lengthy definition of a limited liability company (or • Several elements that make up one compound of understanding of a PT:
Perseroan Terbatas/PT) as: 1. A commercial agreement 
o Article 7(1) of the Company Law: “A company is company is established by two or more persons with a
“a legal entity which is an association of capital established based on an agreement notarial deed drawn up in Bahasa Indonesia.”
o Article 15 of KUHD: “All companies in this chapter is subject to the agreements of the concerned parties,
carries out business activities with authorized capital which is entirely divided into this commercial code, and the civil law.”
shares or Individual Legal Entities that meet the criteria for Micro and Small o Under KUHD, a PT is not explicitly defined as a legal entity. It was by referring to Supreme Court’s
Decision No. 268K/SIP/1980 dated 16 January 1982, any claim must be made to the company, not to
Entreprises as stipulated in the statutory regulation concerning Micro and Small the director.
Enterprises.”
2. As association of capital;
o Under Law No. 11/2020, it is no longer an absolute requirement.
• As a comparison, the previous definition of PT, as stipulated in Law No. 40/2007, is as o Article 7(5) of the Company Law, a single shareholder is permitted for a period of no longer than 6
follows: months, otherwise, the shareholder will be personally responsible for all PT’s obligations and losses.
o So, is it an association of capital or persons?
“a legal entity, which is an association of capital, established based on an agreement, 3. Business activities;
carries out business activities with authorized capital wholly divided into shares and o Specific scope of business activities according to the description of the Indonesia Standard Industrial
Classification/KBLI;
fulfills the requirements stipulated in this Law and its implementing regulations.”
4. Issuance of shares
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• But how about a single shareholder? It leads to two categories of PT: o Failure to comply with all mandatory and regulatory requirements due to a direct
or indirect involvement of shareholders, they can be charged to be liable
1. Ordinary PT exceeding the value of shares they own in the company.
2. Individual legal entity • For example: the unfaithful intentions of shareholders to use the PT for personal gain,
engage in illegal actions, illegally use PT assets that result in the PT having insufficient
o SME having a net worth of at most Rp. 50 million, excluding land and building, or having an
annual sales results of a t most Rp. 300 million. assets to pay off its debts, etc.
o How about the corporate actions before being a legal entity?
• The legal consequence as a legal entity and the principle of “Piercing the • Opening a bank account, engaging a notary/lawyers, signing a lease agreement
Corporate Veil (Lifting the Corporate Veil)” • Articles 13-14 of the Company Law:
o When obtaining the status as a legal entity? 1. By all members of the Board of Directors, the Board of Commissioners, and the founders;
2. All founders has consented such actions;
o Article 5 of the Company Law, a PT needs a name, a place of domicile, an
address within its domicile, and incorporating its name and address in all 3. A GMS is held to ratify such actions no later than 60 calendar days after obtaining a legal entity
status.
correspondences.
4. Such GMS must be unanimously approved by all shareholders.
o Elucidation of Article 4 of the Company Law, as a legal entity, it must comply
with the principle of good faith, appropriateness, propriety, and good corporate
governance (Asas itikad baik, asas kepantasan, asas kepatutan, dan prinsip tata
Kelola perusahaan yang baik) .

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• To be a public company, a private company must meet the following criteria:

Classification of PTs 1. The company has registered at least 300 shareholders and the total value of its issued
and paid-up capital is not less than Rp. 3 billion;
2. As otherwise determined by the authority.
1. Ordinary PT and Individual PT
• What are the significant different? Not due to the different provisions of the Company Law, but • Being a public company, it must:
they are simply becoming irrelevant. The sole shareholder = the only Director. 1. insert “Tbk’ behind the company’s name;
• GMS mechanism and the quorum for decision making; a single member of the Board of
Directors; the Board of Commissioners is not mandatory; the Director’s fiduciary duties toward 2. submit a “Statement of Registration” to the capital market supervisory agency, i.e.,
the company’s interest. OJK;
• Companies with the sole shareholder under Article 7(7) of the Company Law: 3. comply with all prevailing laws and regulations in capital markets issued by OJK and
o State-owned companies (BUMN); regional-owned companies (BUMD); village-owned enterprises (Bumdes); the Indonesian Stock Exchange.
companies managing stock exchanges, clearing and guarantee institutions, depository and settlement
institutions, and other institutions in accordance with the capital market law; small and medium • To be publicly traded company, it has conducted a public offering of shares
enterprises.
through the stock exchange.
o Business activities of the Company, Ultra Vires Doctrine, Alter Ego Doctrine(?)
• The governance structure must also include:
2. One type of PT only, i.e. Limited Liability Company by Shares o A corporate secretary; an internal auditor, various committees under the Board of
• Other types of companies, e.g., companies with shareholders obligations being unlimited or Commissioners (i.e., an audit committee, a nomination and remuneration committee, a
limited not by shares, but with guarantees under the English Law(the Companies Act 2006) risk policy committee (optional), a corporate governance committee (optional), an
investment committee (optional).
3. Private companies, public companies, and publicly listed/traded companies.

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 o The Extraordinary GMS is for other matters as required by the company’s articles
of association.
Organs of a PT o Where is the venue of GMS?

• A PT consists of three organs: the General Meeting of Shareholders (GMS), the
Board of Directors (BOD), and the Board of Commissioners (BOC).
• Two-tiered structure of Board Governance
GMS
o Much of constitutional work of companies is done through the GMS.
o It has all authorities that those of the BOD and the BOC.
o Entitled to acquire information relating to the company from the BOD and the BOC.
o It is subject to the provision of the Company Law and the Company’s articles of
association, the company’s interest, no in the situation of a conflict of interest with the
company’s interest, agenda of the meeting, and mandatory minimum quorum to pass the
resolutions.
o Two types of GMS: an annual GMS and an extraordinary GMS.
o Annual GMS is schedule within 6 month after the end of the company’s financial year, to
discuss and resolve on the financial statement, business report by the BOD, CSR report,
issues during the last financial year, supervisory report by the BOC, dismissal and
appointment of members of the BOD and the BOC, remuneration for the BOD and the BOC.
o Who can summon the GMS?
o Who can chair the GMS?
o Who can chair the GMS
o Mandatory minimum quorum of GMS:
 In general, 50% < shareholders holding voting rights to attend & 50% < Shareholders
who were present approve
 To amend the AOA  first meeting, 2/3 and 2/3, and second meeting, 3/5 and 2/3
 To approve corporate actions  first meeting, 3/4 and 3/4, and the second meeting,
2/3 and 3/4.
 Those corporate actions are merger, consolidation, acquisition, or spin off; liquidation
and dissolution; application for declaration of bankruptcy; extension of duration of
establishment; transfer or dispose of more than 50% of the company’s net assets in one
or more transaction, whether related or not related within a period of one fiscal year.

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BOD o a collegial representative system, where each can represent the organ,
o BOD’s authorities, duties, and roles  unless provided otherwise, applies to the BOD.
To run the company’s management for the benefit of PT and in accordance with the aims and
1.
objectives of the PT; o Other BOD’s duties include to prepare the shareholder registry, special
2. To represent the company both inside and outside the court; registry, minutes of GMS; to prepare annual report and corporate
3. to serve the manifold interest of the company and mot acting as agents of any individual financial documents; maintaining all register, minutes, and financial
shareholders; and documents of the company for safekeeping in the company domicile.
The management actions consist of (a) acting beheren, carrying out the day-to-day operations of
4.
the company; and (b) the act of beschikking or eigendom, acts related to the ownership of assets in o How to limit the BOD’s power in practice?
the company in a broad sense; it is no considered as company’s day-to-day operations or activities.
o When a Director should be held personally liable? How to avoid this legal
o FIDUCIARY DUTIES OF THE BOD risks?
1. Duty to act within powers
• Loss due to unauthorized acts; failures to register ownership of shares in
• Art. 92(1) of the Company Law, to carry out management in accordance with the purposes and objectives of the
PT special registry; carrying out certain actions outside the interest of liquidation
2. Duty to exercise reasonable care, skill, and diligence process; loss suffered by shareholders in good faith arising from the buying
• Art. 92(2) of the Company Law, the management actions are taken based on policies considered appropriate back of shares, which is null and void due to the law.
within limits stipulated in the Company Law and the company’s article of association.
• No personal error, no conflict of interest, performed in good faith and being
• Art. 97(2) of the Company Law, each member of the BOD must carry out his duties in good faith and full of
responsible. prudence; and undertaken actions to prevent losses.
3. Duty to avoid conflicts of interest
• Art. 99(1) of the Company Law, a member of BOD may not represent the company if there is an ongoing court
case between the company and the director in question or the director in question has a conflict of interest with o BUSINESS JUDGMENT RULES
the company.
• When there is a conflict of interest, how the representative functions of the BOD should be regulated?

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 o The appointment and dismissal is by the GMS, including the self-defense o The appointment and dismissal is by the GMS, including the self-defense
mechanism. mechanism.
o Membership of the BOD/BOC is subject to the Company’s Articles of
Association and the prevailing laws and regulations. o Membership of the BOD/BOC is subject to the Company’s Articles of
Association and the prevailing laws and regulations, including the
BOC existence of an independent commissioner.
o BOC’s authorities, duties, and roles 
1. To oversee management policies, company business, and general operation of the
company;
2. To provide advice to the BOD;
3. To temporarily manage the company under certain conditions (due to conflict of
interest of the BOD, or the BOD are unable or temporarily dismissed.);
4. To approve certain actions by the BOD if required by the company’s articles of
association;
5. To temporarily dismiss a member of the BOD effective of one months pending the
GMS resolution.
o Similar to the BOD, the BOC is required to carry out its duties in good faith,
prudence, and be responsible for the interest of the company and in
accordance with the aims and objective of the company; and to avoid any
potential conflict of interest with the company.
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Capitalization of PT and Shares Shares

• Authorized capital, issued capital, and paid-up capital. • Shares as moveable goods.
• Art. 32 of the Company Law, min. authorized capital is Rp. 50 million and 25%
of authorized capital must be issued and paid-up. • One share one vote principle
• GR No. 29/2016 does not require any minimum authorized capital, as further • Classification of shares  one classification must be ordinary share
confirmed by Law No. 11/2020 and GR No. 8/2021. But, it remains be subject
to particular regulations related to the company’s business activities. • The holders of ordinary shares have the rights to:
• How to determine the nominal/par value of share? Can we have a share with a (a) attend and cast a vote at the GMS;
fraction of the par value? What will be the consequence? When to pay the par
value? (b) receive dividend payments and remaining assets after the liquidation; and
• Increase of capital, capital reduction, share buy-back  What are crucial (c) exercise other rights based on the Company Law.
matters to consider on these corporate actions?
• Preemptive rights? Right of first refusal? Piggy-back right? Carry-along
obligation?

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Classification of shares Legal Protection for Minority Shareholders
• Under Article 53 of the Company Law, the said share classifications include the following: • How does the Company Law protect the minority shareholders’ interest?
a) Shares with voting rights or without voting rights; Can you please explain?
b) Shares with special rights to nominate members of the Board of Directors and members of the Board
of Commissioners;

c) Shares that, after a certain period, are withdrawn or exchanged for another classification of shares;

d) Shares that confer upon the holders that right to receive dividends in advance from holders of other
classifications of shares, concerning the distribution of dividends on a cumulative or non-cumulative
basis;

e) Shares that confer upon the holders the right to receive the distribution of the PT's remaining assets
after the liquidation in advance from holders of other classifications of shares.

• It is also possible to issue shares that combine two or more of these stock classifications. Article 53 (4) of
the Company Law

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Financial Aspect of PT Dissolution and Liquidation

• Financial Report of the Company • Approval by the GMS
o The balance sheet
o The income statement
o The cash flow statement • Appointment of the liquidator
o Explanatory notes to the financial statements
o The external auditor’s report  required only when: • Announcement in the newspapers
1. the company's business activities are collecting or managing public funds;
2. the company issues acknowledgment of indebtedness to the public;
3. the company is a publicly traded company;
4. the company is a state-owned company (Persero);
5. the company has assets or the amount of business circulation with a total value of at least Rp.50
billion; or
6. required by laws and regulations.

• Appropriation of profit
o Distribution of dividend
o Mandatory reserve
o Interim dividend
o Uncollected dividend

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