Responsibility Regarding the Implementation of General Meeting of Shareholders

Responsibility Regarding the Implementation of General Meeting of Shareholders (GMS / RUPS)

Rapat Umum Pemegang Saham or the General Meeting of Shareholders (“GMS”) is one of the organs of a limited liability company in Indonesia, in which the GMS has the authority that the Board of Directors and the Board of Commissioners do not have. However, in practice, there are still plenty of questions about the implementation of the GMS. Such as, who can be chosen to lead the GMS as the chairman, as well as GMS results that arise due to differences in the GMS being held online (through video conference) or offline.

The purpose of the GMS (General Meeting of Shareholder) is to make concrete decisions regarding important company’s agendas and events that occur in their activities. The authority of GMS is determined in Law Number 40 Year 2007 Limited Liability Company (“Company Law”) and the Articles of Association (“AoA”). It is important for the GMS to be carried out in accordance with applicable regulations, given the importance of the Company agenda that must be decided. However, there are still many people who have many questions regarding how the procedures for implementing the GMS are good and correct. The following are the 5 Frequently Asked Questions related to the implementation of the GMS.

1. Who can be the Chairman of the Meeting to lead the company’s GMS?

Based on Article 79 paragraph (1) of the UU PT, the organiser of the GMS is the Board of Directors. Thus, in the practice of implementing the GMS, the chairman of the meeting and chairing the GMS is generally one of the members of the Board of Directors, or a Director, in the case that the Board of Directors of a PT only consists of 1 (one) Director.

However, prior to holding the GMS, the Company AoA must be examined, to ensure whether there are provisions regarding who can be the chairman of the meeting and chair the GMS. 

The resignation of a member of the Board of Directors or a member of the Board of Commissioners as chairman of the meeting to chair the GMS has important consequences, in the event that the chairman of the meeting is also a shareholder in the Company. In order for the shareholder to continue to exercise his/her voting rights, the shareholder must grant power of attorney to other people who are not members of the Board of Directors, members of the Board of Commissioners, and employees of the relevant Company. Because, this can prevent voting rights from being issued at the GMS.

2. Is it permissible if the chairman of the meeting is not the Board of Directors or the Board of Commissioners?

It can be done, if it’s approved by all shareholders of the Company (100%).

3. What are the mechanisms for making decisions by the GMS that the shareholders can use under the Company Law?
   There are 2 mechanisms for making GMS decisions:

• 1. Shareholders’ Resolution in lieu of the GMS
     This method can only be done if all shareholders of the Company agree on the decisions taken 100% without exception. In the event that even 1 (one) shareholder does not agree, even though the shareholder only has 0.01% of the voting rights, this decision cannot be made outside the GMS and executed. This is in accordance with the provisions of Article 91 of the Company Law.

     Shareholders’ Resolution in Lieu of GMS is a written document prepared by the Board of Directors or the shareholders whose contents are the agenda to be approved and decided by all shareholders of the Company.

     In practice, the shareholders can gather or come together to sign the Shareholders’ Resolution document. However, in the event that the shareholders are located in different places, the Shareholders’ Resolution document can be:

1. 1. 1. Circulated to the location of each shareholder to get the signatures of all shareholders, hence such resolution is usually referred to as a circular; or
      2. Made in several copies for each shareholder and signed separately, where only when all copies of the Shareholders’ Resolution in lieu of the GMS are collected, can it be referred to as one complete Shareholders’ Resolution document. 
   2. Implementation of the GMS in accordance with the Company Law and Company AoA
      In the event that there is a shareholder in the Company who does not agree with the decision taken, a GMS must be held in accordance with the provisions of the Company Law and the Company AoA to vote on the agenda that needs to be decided.

4. What is the difference between Online and Offline RUPS procedures?
   What distinguishes Online and Offline GMS are:

• 1. Offline GMS
     The GMS participants physically gather together.
  2. Online GMS
     The participants gathered via teleconference. Especially for a Public Company (Tbk), when conducting an Online GMS, a notary and chairman of the meeting must be physically present at the company’s domicile, in accordance with the Financial Services Authority (OJK) Regulations.

     For a private Company, the implementation of the Online GMS is not specifically regulated. In practice, it should be noted that not all notaries can execute the deed of shareholder decisions decided through the Online GMS, so it must be asked and discussed first.

5. Are the results of the GMS required to be notarized?

The notarization of the results of the GMS depends on the agenda decided. In practice, some GMS are not notarized because there is no obligation under the Company Law to be stated in an authentic deed.

However, for the GMS that decides on the agenda related to changes in the Company AoA and Company Data, it must be stated in an authentic deed, because there is an obligation to report to the Ministry of Law and Human Rights (Kemenkumham) of the Republic of Indonesia, both to seek approval and/or to provide reports.

The GMS  agenda that must be stated in an authentic deed made in front of Notary:

1. Agenda related to amendments to the AD, such as changes to the contents of articles of the AD or changes in the amount of authorized capital, issued and paid up by the Company; and
2. Agenda related to changes to company data registered in the Ministry of Law and Human Rights system, such as changes to shareholders’ data (not changes to shareholders) and changes to company address details.