“According to Article 78 of UUPT, there are two kinds of GMS, which are annual GMS and other GMS. Each, have their own functions and criteria. Annual GMS needs to be held every year, at least 6 (six) months after the end of each financial year. The Board of Directors is obliged to hold an annual GMS.”
According the Law Number 40 of 2007 on Limited Liability Company (“UU PT”), The General Meeting of Shareholders, hereinafter referred to as GMS, is the organ of a Company that has authority not given to the Board of Directors or the Board of Commissioners, within limits as stipulated in this Law, and/or the articles of association. Despite being called an organ of a company, it is not a position but rather a meeting of the shareholders of the company in order to appoint a resolution for the company. According to Article 78 of UUPT, there are two kinds of GMS, which are annual GMS and other GMS. Each, have their own functions and criteria.
Annual GMS and other GMS
GMS is necessary to pass a resolution that is outside the authority of the Board of Directors and Board of Commissioners. Some of these resolutions might need to be passed in regular schedule while some others might be based on needs, hence there are two types of GMS to accommodate this. Annual GMS needs to be convened annually, at the very least 6 (six) months after the end of each accounting year. Other GMS, or also known as extraordinary GMS does not need to be convened regularly but rather only when there’s a need to convene one.
Annual GMS is required to be convened annually to pass the annual report made by the Board of Directors. According to Article 66 of UUPT, the Board of Directors is required to submit an annual report to the GMS after it has been reviewed by the Board of Commissioners. The annual report itself must consists of:
- financial statement which at least consists of the current balance sheet of the latest accounting year in comparison with the previous accounting year, profit and loss statement from the relevant accounting year, cash flows, report on the equity changes, and the record on such financial statement;
- report on the Company’s activities;
- report on the implementation of Social and Environmental Responsibility;
- details on issues which occurs during the accounting year which is affecting the Company’s activities;
- report on supervisory duty that has been performed by the Board of Commissioners during the previous accounting year;
- name of the members of the Board of Directors and Board of Commissioners;
- 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.
Annual GMS is allowed to have meeting agendas other than the ones listed above, however annual report is mandatory to be included as the Annual GMS itself is meant to be an accountability report of the Board of Directors to the shareholders.
Procedure of Annual GMS
The Board of Directors is obliged to convene annual GMS; however, the following parties also have the right to request to convene an annual GMS:
- The Board of Commissioners; or
- One or more shareholders jointly represent 1/10 (one tenth) or more of the total shares with legal voting right, except if the articles of association stipulate a less number.
The Board of Directors is required to send out the summon notification for the GMS in a maximum of 15 days after the Board of Directors received the written request from the Board of Commissioners or the shareholders. In the event the Board of Directors didn’t send out the notifications, the obligation falls to the Board of Commissioners. Such summon must be sent out in writing or via newspaper at least 14 days before the date of the GMS itself.
Annual GMS can be convened if more than ½ of the total shareholders with voting right are present or represented, except if the articles of association stipulate otherwise. If such quorum is not met, then the notice for a second meeting shall be made. In the second meeting, if the number of participants didn’t reach 1/3 from the total shares with voting right, the company may request the head of the District Court to stipulate a quorum for the third GMS. The summon notice for both the 2nd and 3rd GMS must be sent out at least 7 days before the date of the GMS. If the meeting quorum is reached, the GMS can be convened; however, in order to pass a resolution, the resolution must be approved by more than ½ of the total votes of the participants, unless stipulated differently by the articles of association. In general, this procedure and criteria apply to both annual GMS and other GMS; however, for other GMS with certain agendas such as amendment of the articles of association or merger of the company, the criteria for the quorum of the GMS might be different.
While annual GMS has to be convened annually, it doesn’t need to be held physically. According to Article 77 of UUPT, it is possible to convene annual GMS via electronic media, such as via teleconference or video conference. Alternatively, it is also possible to adopt binding resolution without convening GMS but instead via circular resolution, provided that all shareholders with voting right give their approval by signing the circulated proposal.
GMS meeting results
The annual GMS is one type of GMS that must be held every year, and all the provisions have been regulated in the Company Law. Regarding the results of the GMS meeting, it can be seen in Article 90 UUPT which explains that in every implementation of the GMS, the results of the GMS meeting must be made and signed by the chairman of the meeting and at least 1 shareholder appointed by and from the GMS participants, but the signature described earlier not required if the minutes of the GMS are drawn up with a notarial deed.
Based on the previous explanation, it can be observed that the minutes of the GMS must be drawn up and signed by the chairman and 1 shareholder appointed by the GMS participants as described above. The results of the GMS meeting are not required to be drawn up in the form of a notarial deed, but if the minutes are drawn up in a notarial deed, it is not required to be signed by the chairman and 1 shareholder as before.
Possibility of joint holding of the Annual GMS and Extraordinary GMS
The purpose of the Annual GMS is to present an annual report that must be submitted by the directors to shareholders within a period of no later than 6 months after the end of the company’s financial year. The agenda in this Annual GMS does not need approval or receipt of notification by the minister.
However, based on UUPT, the GMS will be required to obtain ministerial approval if there is a change in the articles of association in the form of:
- the name of the Company and/or the domicile of the Company
- the aims and objectives as well as the business activities of the Company
- the period of establishment of the Company
- the amount of authorized capital
- reduction of issued and paid up capital
- the status of a closed company becomes a public company or vice versa
In addition to changes to the articles of association above, it is sufficient to notify the minister. Basically there are no rules governing companies to hold Annual GMS and Extraordinary GMS. However, based on the explanation above, the agenda in the Annual General Meeting of Shareholders is usually an agenda that does not need to be notified to the minister. While the agenda at the Extraordinary General Meeting of Shareholders is generally an agenda that is required to obtain approval or receipt of notification by the minister.
Sanctions in Postponing or Not Holding the Annual GMS
Sanctions for a private limited liability company that postpones and does not hold an Annual GMS have not been regulated in the articles listed in the Company Law, nor are the consequences or sanctions for PTs if they do not hold an annual GMS. However, the UUPT explains that internal parties, namely the Board of Directors and the Board of Commissioners, can be personally held accountable if they do not hold a GMS.
Furthermore, public limited companies have additional arrangements in holding GMS, namely through the Financial Services Authority Regulation Number 15/POJK.04/2020 of 2020 concerning Plans and Implementation of General Meeting of Shareholders of Public Companies (POJK 15/2020). If a public limited liability company postpones or does not carry out the Annual GMS, there will be administrative sanctions imposed by OJK based on POJK 15/2020 in the form of:
- written warning
- a fine, namely the obligation to pay a certain amount of money
- restrictions on business activities
- freezing of business activities
- revocation of business license
- cancellation of consent
- cancellation of registration
Author: Adam Kausar
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