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Board of Commissioners (BOC) Cannot be Completely OffHand in A Company Bankruptcy

The accountability of “BOC as the supervisor in a company, should be requested when a company is declared bankrupt.”

The role and the main task of the board of commissioners in a company (Limited Liability Company) is carrying out general supervision over the policy and management of the company as well as providing advice to the board of directors. When a responsibility is neglected, it will possibly be asked to be responsible for the loss. That applies also in the process of bankruptcy.

In principle, bankruptcy is a general confiscation of all assets of the company in which its management and settlement are conducted by a curator and are overseen by a supervisory judge as appointed in a bankruptcy decision. However, often times all confiscated assets are unable to pay off all debts of the company. In fact, there are times when a company has no assets at all, so that settlement to pay off the existing debts cannot be done.

When that happens, the board of commissioners as the party who has the authority to conduct surveillance and to give advice will usually be asked to take responsibility. This is because the commissioners should know each lunge of the board (especially the directors) of the company, including when there are actions that will bring loss to the company.

However, to determine the commissioners’ guilt, it needs to go through evidence in judicial proceedings in advance,particularly in the case of bankruptcy. There are other lawsuit mechanisms that may be filed by the interested parties both creditors and / or curator to the commissioners concerned. Mechanism of proposing other lawsuits is stipulated in Law No. 37 of 2004 on Bankruptcy and Suspension of Debt Payment.

When the commissioners are convicted or negligent in their duties, then the board of commissioners are personally responsible for the losses. In such a situation it is possible for the personal assets of the commissioners to be confiscated for settlement of the debt payment to a third party.

It is expressly set out in Article 115 of Law Number 40 of 2007 on Limited Liability Company (Company Law) that is:

In the case of bankruptcy due to errors or omissions of the Board of Commissioners in supervising the management performed by the Board of Directors and the Company’s assets are not sufficient to pay for all liabilities of the Company as a result of bankruptcy, each member of the Board of Commissioners along with members of the Board of Director shall be mutually take responsibility on liabilities that has not been paid.

However, as long as all the commissioners can prove the following things, they cannot be asked to be responsible for the company bankruptcy. Those proofs are:

  1. The bankruptcy is not caused by their fault or negligence;
  2. They have performed supervisory duties in good faith and prudence for the interests of the Company and in accordance with the purposes and objectives of the Company;
  3. They do not have a personal interest, either directly or indirectly, over the acts of management by the Board of Directors resulted in bankruptcy; and
  4. They have provided advice to the Board of Directors to prevent bankruptcy.

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