Liabilities
6.9 Meeting and Working Procedures
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The AoA or other internal guidelines can specify the procedures for convening and conducting BoC meetings. For publicly listed companies, BoC meetings should be held at least once every two months,158 and banks are required to hold BoC meetings no less than four times per year.159 It is also obligatory for all BoC members to physically attend the meeting at least twice a year.160
The president commissioner normally convenes regular BoC meetings. However, a company’s AoA may state that a BoC meeting may also be convened by any members of the BoC, upon a written request of the BoD, or upon a written request by one or more shareholders that jointly make up at least one-tenth of the total number of shares with valid voting rights issued by the company.
Relevant information and materials should be sent to commissioners together with the notice of BoC meeting, and sufficiently in advance to enable
commissioners to review the material thoroughly. The company’s AoA or an internal company manual will usually state the regulations concerning notice of BoC meetings. For example, a public company’s AoA may provide that:
• Notice for a BoC meeting shall be made by a member of the BoC who is authorized to represent the BoC.
• Notice for a BoC meeting must be made in writing and delivered directly to each BoC member with his/her acknowledgement of receipt through registered mail/courier services, telex, facsimile, or e-mail no later than three days prior to the meeting, not including the date of the notice and the date of the meeting, or within a shorter time period for an urgent matter.
• The notice for a BoC meeting must contain the agenda, date, time, and venue of the meeting. The BoC meeting shall be held within the domicile of the company or the place where the company conducts its activities.
Internal regulations or other internal documents should determine the form of the notice and method of delivering the materials that is most convenient and acceptable to all commissioners (for example by mail, fax, or e-mail). The delivery method must be sufficiently secure to ensure the notice reaches the commissioner at his/her registered address.
Commissioners can participate and vote in meetings in a number of ways, however specific restrictions apply to banks. For companies other than banks,
158 OJK Regulation No. 33/POJK.04/2014, Article 31.
159 OJK Regulation No. 55/POJK.03/2016, Article 37(1); OJK Circular Letter
No. 13/SEOJK.03/2017 on Implementation of Corporate Governance of Commercial Banks.
160 OJK Regulation No. 55/POJK.03/2016, Article 37(2).
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BoC members may participate if they are either:
• Physically present at the meeting, or
• Represented by a power of attorney
For banks, the BoC may make provision for its members to participate in meetings through teleconference technology by passing a resolution to that effect. The resolution must be passed at a meeting and signed by all BoC members.161
Best Practice
In addition to a meeting schedule, the BoC should have a working plan that includes the topics to be addressed. A standard AoA of a limited liability company may include provisions on BoC meetings. Ideally, the BoC should meet at least four times a year, although it may wish to hold meetings as often as it deems necessary.
Guidance on conducting productive and efficient BoC meetings:
• Develop an annual calendar of meetings. This will allow commissioners to schedule the meetings in their agendas. Note that this calendar should serve as a guide, i.e., the BoC should hold additional meetings when warranted and, vice versa, cancel meetings when there are no issues to be resolved.
• Set an agenda for each meeting well in advance.
This will allow commissioners to properly prepare for and focus on the task at hand. The president commissioner may wish to send a draft agenda in advance, allowing for comments and suggestions.
• Reserve important agenda items for the beginning of the meeting. Commissioners often have other commitments and may not be able to attend the
161 OJK Regulation No. 55/POJK.03/2016, Article 37(2); Circular Letter of OJK No. 13/SEOJK.03/2017, Article 8(a)(c).
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entire length of the meeting. It will be useful to address the most pressing agenda items early.
In addition to regular meetings, the BoC needs to organize a meeting to review and approve the annual report. This board meeting needs to take place two months prior to the AGM.
When participating in BoC meetings, each commissioner should:
• Actively listen and ask questions. This is particularly important for presentations or reports given by management, especially when these materials are presented in a complex or ambiguous manner.
• Request supporting materials. When presented with an issue that does not correspond to the commissioner’s area of expertise, additional information in the form of studies, independent appraisals or opinions, and other documentation on the subject should be requested prior to the meeting.
Although Indonesian law does not impose specific requirements on whether commissioners must attend all meetings, certain agenda items at BoC meetings will be so important that the company should consider making it compulsory for commissioners to be physically present in order to pass resolutions concerning these specific items, rather than allowing voting by way of teleconference or for resolutions to be passed in writing.
Particularly important matters include:
• Approval of the company’s strategic plan, including financial and business plans
• Calling the AGM and making decisions on related items
• Preliminary approval of the company’s annual report
• Convening or refusing a request by third parties to convene an EGMS
• Election of the president commissioner
• Creation and early termination of the authority of executive bodies
• Suspension of the president director and appointment of an interim president director
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• Recommendation on the reorganization or liquidation of the company The company’s AoA will typically determine the procedure to pass a valid BoC resolution. The company may provide that if the BoC is unable to reach consensus, a resolution may be adopted when more than one-half of the total votes cast during that meeting are affirmative. In case of a tie, the president commissioner (or other meeting chairperson) will pass the deciding vote. For banks, if any members of the BoC pass a dissenting opinion, these differences and their reasons must be included in the minutes of the meeting.162
Good corporate governance suggests the AoA or internal regulations should allow absentee ballots to count towards the quorum, and therefore contribute to voting (other than for important agenda items requiring physical votes). If the AoA requires BoC members to be present to pass some but not all types of company resolutions, absentee votes may be counted for those resolutions.
Companies should develop procedures for absentee voting, including deadlines for the delivery of voting ballots and the return of completed ballots. The procedures should give commissioners enough time to receive the ballots and make decisions on agenda items.
The ICL requires the BoC to keep copies of minutes from all meetings, which provide details of all proceedings and resolutions, and store copies of the details in company records.163 However, the AoA may allow the BoC to pass resolutions without physically convening a meeting. A standard AoA for a limited liability company may provide that:
• Any matters that are discussed and decided in a BoC meeting should be recorded in the minutes. The president commissioner should assign a BoC member—who will be present at the
meeting—to take minutes. These should be signed by the president and countersigned by another member of the BoC.
• The BoC may pass a resolution without convening a BoC meeting, provided that all members are notified in writing of the proposed resolution, grant their approval, and sign the resolution. A
resolution made in such manner will have the same legal effect as a valid resolution made at a BoC meeting.
Ideally, the president commissioner or meeting chairperson (if other than the president) should designate a BoC secretary to take notes and help prepare the minutes. Typically, the corporate secretary also serves as the BoC secretary.
162 OJK Regulation No. 55/POJK.03/2016, Article 38(5).
163 ICL, Article 116.
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These minutes must be signed by the president/meeting chair and countersigned by another BoC member who is present at the meeting, unless made before a notary in which case the minutes do not have to be signed. BoC minutes serve as valid evidence with respect to any resolutions made at the meeting.
As the legal and regulatory demands on commissioners become more onerous, minutes are important records to show that the BoC has discharged its duty of care. It is highly recommended for companies to include a record of the votes that individual commissioners pass in the minutes of each meeting.
It is important to note that minutes typically provide only a summary of the meeting. Companies should supplement this with a transcript of meeting proceedings. This transcript will form an integral component of the meeting record that should be incorporated into and stored with the minutes.
The following documents should be preserved together with BoC meeting minutes and/or transcripts:
• The voting ballots
• Dissenting opinions
• Written opinions of commissioners who were not able to attend Each commissioner should also be provided with a summary of the meeting’s discussions, along with:
• Copies of the minutes and/or meeting transcripts
• Reports detailing the voting outcome of all resolutions
OJK Regulation No. 35/POJK.04/2014 provides that the corporate secretary is responsible for preparing, organizing, and documenting both BoC and BoD meetings. While the president commissioner will decide when to convene a BoC meeting, the corporate secretary should be responsible for handling such matters as:
• Notifying all BoC members of BoC meetings
• Sending voting ballots
• Collecting completed ballots and absentee ballots
• Ensuring compliance with procedures for BoC meetings
• Keeping minutes and meeting transcripts