“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.”
According to the Law Number 40 of 2007 on Limited Liability Company (“UU PT”), The General Meeting of Shareholders (“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. According to Article 78 of UUPT, there are two kinds of GMS: annual GMS and other GMS. Each, have their functions and criteria.
Annual GMS and other GMS
GMS is necessary to pass a resolution outside the authority of the Board of Directors and Board of Commissioners. Some of these resolutions might need to be given on a regular schedule, while 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 six months after the end of each accounting year. Other GMS, also known as extraordinary GMS, doesn’t need to be convened regularly but only when there’s a need to convene one.
Content of Annual GMS
Annual GMS must 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 a yearly report to the GMS after the Board of Commissioners has reviewed it. Therefore, the annual report itself must consist of:
- a 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;
- a report on supervisory duty that the Board of Commissioners has performed 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 the 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, the 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 rights, 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 the voting right is 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 did not reach 1/3 from the total shares with voting rights, 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 seven days before the date of the GMS.
If the meeting quorum is reached, the GMS can be convened; however, 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 does not 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 a 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.
Author: Benedictus Giovanni
Gaffar & Co., Indonesian Boutique Law Firm which specializing and focus on commercial law areas e.g. Capital Market & Financial Services.
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