Indonesia: Everything You Need to Know About Director Transitions

To initiate a director change in Indonesia, companies must comply with Law No. 40 of 2007 on Limited Liability Companies, ensuring all legal and procedural requirements are met.

What Are the Key Considerations for Director Representation and Authority in Indonesia?

The Board of Directors (BOD) structure and authority must be reviewed since directors represent the PT individually or collectively, unless otherwise specified in the Articles of Association (AoA) or decided by shareholders. If multiple directors exist, their authority must be clearly allocated. Additionally, companies in regulated sectors or publicly listed PTs must ensure compliance with industry-specific rules on representation.

What Are the Legal Compliance Requirements for Director Eligibility?

Under Article 93, a proposed director must:

1. Have the legal capacity to perform corporate acts.
2. Not have been declared bankrupt in the last five years.
3. Not have been convicted of a financial crime or responsible for a company’s bankruptcy.

How Is a Director Change Approved in Indonesia?

The General Meeting of Shareholders (GMS) must approve a director change. The shareholders’ resolution must include:

• • Appointment, replacement, or dismissal details.
  • Effective date of the change. If unspecified, the change takes effect at the GMS closing.

What Documents Are Required for a Director Change?

Key documents include:

• • Formal acceptance letter from the new director (must not be backdated to avoid legal risks).
  • Shareholders’ resolution, notarized for legal validity.
  • Identity documentation (KTP for Indonesian directors, passport for foreigners).
  • Taxpayer Registration Number (NPWP) for compliance.

Are There Special Requirements for Foreign Directors in Indonesia?

Foreign nationals can be appointed as directors but must meet specific legal conditions:

1. Cannot hold positions restricted to Indonesians (e.g., Human Resources Director).
2. No residency obligation, unless required by the company.
3. Visa and work permit (KITAS, IMTA) needed if working from Indonesia.
4. Tax compliance depends on residency and income sources.

How Is a Director Change Reported to Authorities?

The Ministry of Law and Human Rights (MOLHR) must be notified within 30 days via the AHU-Online System. The notarial deed of the shareholders’ resolution serves as the official reporting document. Late filings may lead to penalties or rejection of subsequent corporate updates.

Does a Director Change Need to Be Published in Indonesia?

Yes, Article 30(1) mandates that MOLHR announces director changes in the Supplement to the State Gazette within 14 days of notification.

What Are the Responsibilities of a New Director?

A new director must:

• • Manage the company in good faith and in compliance with laws.
  • Maintain corporate documents, including financial statements and meeting minutes.
  • Ensure regulatory compliance and obtain GMS approval for significant actions.

What Should an Outgoing Director Do in Indonesia?

An outgoing director must:

• • Prepare a handover report, detailing ongoing corporate matters and responsibilities.
  • Transfer all corporate property, including legal documents, assets, and system access.
  • Remain liable for negligence or financial losses during their tenure, subject to legal claims from shareholders.

What Are the Additional Requirements for Public or Regulated Companies?

Public companies and firms in regulated sectors such as banking, insurance, and financial services must:

• • Pass fit-and-proper tests before appointment.
  • Obtain Bank Indonesia (BI) or Financial Services Authority (OJK) approval.
  • Comply with higher governance and reporting standards.

How Can Companies Ensure AGM Compliance in Indonesia?

The Annual General Meeting (AGM) must be conducted per Law No. 40 of 2007, ensuring proper documentation, approvals, and regulatory filings. Key steps include:

• • Scheduling the AGM within the legal timeframe.
  • Ensuring shareholder resolutions are properly documented.
  • Submitting necessary filings to MOLHR and other relevant authorities.

How Can Klea Help?

Klea simplifies corporate governance and compliance in Indonesia by:

• • Streamlining director change processes with automated documentation.
  • Ensuring regulatory filings are completed on time.
  • Providing expert guidance on AGM compliance and shareholder resolutions.

For more insights into processes in other jurisdictions, explore our article, How to Manage Director Changes and Triumph in South Korea: What You Need to Know for the Best Results.