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3.1 Articles of Association
An AoA must include the following minimum provisions:
• The company’s name and domicile/headquarters
• Business activities and objectives
• Terms of establishment
• Capital structure: the amount of the authorized capital, subscribed capital, and paid-up capital
• The number of shares and their classifications, including the number of shares allotted to each share class
• Names and titles of members of the BoC and BoD
• Determination of the place and procedure to conduct the GMS
• Procedures for the appointment, replacement, and dismissal of members of the BoC and BoD
• Procedures for the use of profits and allocation of dividends
In addition to these mandatory provisions, the company’s AoA may set forth other matters as agreed by the shareholders, so long as these are consistent with Indonesian law. An Indonesian company must execute its deed of establishment and AoA through a notarial deed in Bahasa Indonesia.
Amendment of AoA
Companies must amend their AoA every time significant changes occur, in particular changes to:19
• Company name and/or domicile/headquarters
• Business objectives or activities
• Period of incorporation
• Authorized capital
• Amounts of subscribed and paid-up capital (share capital reductions)
19 ICL, Article 21.
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• Company status from public to private and vice versa
• Decisions to expand the company’s scope of business
• Any other important events
Companies require approval from the MOLHR to perform any of these
amendments. Pursuant to Article 19 of the ICL, only the GMS has the authority to make amendments to the AoA. The following table sets out the ICL’s
minimum requirements and thresholds for the GMS to legitimately authorize AoA amendments (see Table 5 below for further details).
Companies must notify shareholders of proposed amendments by clearly listing these changes as agenda items in the notice of GMS. For companies declared bankrupt, amendments will be subject to approval by the company’s receiver.
Amendment of AoA (1st meeting)
Amendment of AoA (2nd meeting)
Amendment of AoA (3rd meeting)
Fourteen days prior notice
Seven days prior notice; the GMS may be convened within 10-21 days after the preceding GMS, or where a GMS is held following a court order, no later than 21 days as of the court order Seven days prior notice; the GMS may be convened within 10-21 days after the preceding GMS or, where a GMS is held following a court order, at the latest 21 days as of the court order
At least 2/3 of the total number of shares with legal voting rights At least 3/5 of the total number of shares with legal voting rights
Based on the decision of the Chairman of the District Court
At least 2/3 of the total number of votes legally cast at the meeting At least 2/3 of the total number of votes legally cast at the meeting
Not expressly prescribed under the ICL, however, the current interpretation governed by Article 87(2) of the ICL suggests more than half of the total number of votes legally cast at the meeting
Matters Notice Quorum Voting
Table 5 ICL Requirements for AoA Amendment
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Best Practice
It is accepted practice that the company, through its legal counsel/
department, prepares AoA amendments in cooperation with external legal consultants and with the participation of the corporate secretary.
The president commissioner and the president director should closely follow the process to ensure that provisions of the AoA are formulated in accordance with the company’s internal guidelines.
The final text of the draft proposal must be reviewed and accepted by the BoC and BoD. The accepted text will be submitted to the GMS as a proposal.
Since only the GMS can approve amendments to the AoA, the GMS is also the body responsible for resolving any objections from shareholders concerning amendments. Further, companies are prohibited from making amendments to the AoA if the amendment is contrary to the provisions governing the procedures for AoA amendment; the amendment violates existing laws and regulations or otherwise impairs public order and/or morality; or, with respect to decisions to decrease the companies’ share capital, if there is any objection from creditors.
All amendments to a company’s AoA require either acknowledgement from or approval of the MOLHR. The MOLHR must approve specific changes, namely those that affect:
• Company name and/or domicile
• Official business activities and/or purpose of the company
• The company’s period of incorporation
• Amount of the authorized capital
• Decrease in paid-up and issued capital
• Transfer of status from a private company to a public company or vice versa
For any amendments other than those listed above, companies need to obtain
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only an acknowledgment from the MOLHR.
Amendments to the AoA that require MOLHR approval will generally be effective from the date that approval is issued. All other amendments, which require only notification to the MOLHR, are effective from the date the MOLHR issues its letter of acknowledgement. However, specific provisions apply to amendments that involve a change from private to public company status (or vice versa), and in the context of mergers and acquisitions.
The ICL sets out the following timeframes:
1. Amendments to the AoA regarding a change in the company’s status from a private company to a public company come into effect on:20
• The date the Registration Statement the company submits to OJK becomes effective; or
• The date a company makes a public offering by submitting a declaration of registration to OJK. This declaration confirms the company’s intention to make a public offering in accordance with Indonesia’s capital markets regulations.
2. Amendments to the AoA regarding a merger or acquisition come into effect on:21
• The date the Minister issues approval or acknowledgement; or
• A later date if specified in the Minister’s approval as issued; or
• A later date if specified in the deed of merger or deed of acquisition.
Disclosure of AoA
The AoA is an important source of information for shareholders and potential investors. Companies should keep the original AoA document, as well as all its amendments, at the company’s registered office. A company’s register should be open to the public.22 Shareholders have the right to inspect and copy the AoA and any amendments.
20 ICL, Article 25(1).
21 ICL, Article 26.
22 ICL, Article 29(5).
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The MOLHR will announce the following corporate documents in the Supplement to the State Gazette of the Republic of Indonesia:
1. The deed of establishment together with the MOLHR’s Decree;
2. The deeds of amendment to company’s AoA together with the MOLHR’s Decree; and
3. The deeds of notification of amendment to company’s AoA.
The MOLHR is required to make these announcements no later than fourteen days from the date the MOLHR issues its decree, or from the receipt of the notification. Public companies must report any amendments to the AoA to the IDX.
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