Following the provisions of the articles of association, the board of directors is the organ authorized and fully responsible for the management of the company in accordance with its aims and objectives. The board of directors also represents the company in and out of court.

A company’s board of directors consists of one or more persons. However, a company that issues debt acknowledgment letters to the public or a public company must have at least two (two) members if its business activities include collecting and managing public funds.

If the Board of Directors consists of more than two members, a resolution of the General Meeting of Shareholders (GMS) determines how the division of management duties and authority is carried out among the Board of Directors members. If the GMS does not stipulate this, a resolution of the board of directors is used to determine the division of such duties and authority.

The Board of Directors has two kinds of obligations, namely obligations related to the company, and obligations related to the GMS. In the PT Law, the duties of the board of directors are regulated including:

1. Carrying out the management of the company for the benefit of the company and following the aims and objectives of the company.
2. Responsible for the management of the company;
3. Submitting an annual report to the GMS after being reviewed by the Board of Commissioners no later than 6 (six) months after the company’s financial year ends.

The management of the company entrusted to the board of directors can be divided into two: The act of beheren is an act of management in the narrow sense, such as day-to-day management, while the act of beschikking or van eigendom is an act of ownership in the broad sense, including special and privileged actions that are no longer owned by the board of directors.

Concerning their duties and obligations, the board of directors has the following authorities:

1. Represent and on behalf of the company in and out of court;
2. Giving written authorization to one or more employees or other persons for and on behalf of the company in carrying out certain legal actions as written in the power of attorney;
3. Propose to the District Court that the company be declared bankrupt after being approved by the GMS;
4. Defend themselves in the GMS forum if the directors are temporarily dismissed by the GMS or commissioners.

In the interests of the company, the board of directors acts as an independent and risk-aware organ. No pressure factors influence the decisions and actions of directors; this is known as independence. In carrying out their duties and authorities, directors must have good faith and prudence. If not, directors may be held fully liable if the company loses money.

Bearing in mind the statement in the company’s Articles of Association (AOA) that “2 members of the board of directors are jointly entitled and authorized to act for and on behalf of the board of directors and represent the Company,” it can be inferred that both members of the board of directors must participate in every action of the board of directors, both in and out of court.

Article 97 paragraph (4) of the PT Law states that if the members of the board of directors are more than one person, each member shall be jointly and severally liable for the management of the PT.

Article 98(2) of the PT Law states that if the members of the board of directors are more than one person, each member of the board of directors has the authority to represent the company unless otherwise specified in the articles of association.

Legal Basis:

1. Law Number 40 of 2007 concerning Limited Liability Companies;
2. Government Regulation instead of Law Number 2 of 2022 concerning Job Creation;
3. Law Number 6 of 2023 on the Stipulation of Government Regulation instead of Law Number 2 of 2022 on Job Creation into Law.

Reference:

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