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28 November 2021 (closed)
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The articles of association of an Indonesian limited liability company (a PT in case of local investment and PT PMA in case of foreign investment) are initially drafted at the establishment of the company. The articles of association form part of the deed of incorporation. In this week’s column we will discuss the provisions which regulate the content of the articles of association and other relevant requirements, which are set out in the Indonesian law number 40 of 2007 (Company Law).
Content Articles of Association Indonesia
Article 15 (1) Company Law sets out the minimum content requirements for the articles of association of a limited liability company in Indonesia. According to this article, the articles of association should at least contain:
- the name of the company;
- the domicile of the head office of the company, which is located in the territory of Indonesia;
- the objectives and purpose of the company, which constitute the company’s primary business;
- the term of the company, which can be both for limited and unlimited term;
- the main business activities;
- the amount of authorized, issued and paid-up capital;
- the amount of shares divided into the different types of shares classifications (if any) and the nominal value of each share;
- the procedure to convene a general meeting of shareholders;
- the place to convene a general meeting of shareholders;
- the titles and amount of members of the Board of Directors and the Board of Commissioners;
- the appointment, replacement and discharge procedure for members of the Board of Directors and the Board of Commissioners;
- the procedure for the use of company’s profit and the distribution of company’s dividends to the shareholders.
Besides the abovementioned minimum content requirements, the articles of association may contain other provisions as long such provisions are not violating any laws and regulations in Indonesia. The Company Law provides two clear restrictions to provisions which may not be contained in the articles of association:
- provisions regarding shareholders receiving a fixed interest based on their share ownership; or
- provisions which provide personal benefits to the founders of the company or to any other party.
Legalization and Amendments Articles of Association Indonesia
As part of the deed of establishment, the articles of association of an Indonesian company is initially legalized by virtue of a notarial deed, based on article 7(1) jo. 8(1) Company Law. Any amendments of the articles of association require at least approval of the general meeting of shareholders and in certain cases approval of the Minister of law and Human Rights. In our next column we will discuss in detail the relevant laws and regulations in Indonesia regarding the amendments of the articles of association.