What to Know about the Roles of a Director in an Indonesian Company

There has never been a better time for setting up a company in Indonesia. It is a statement that has held true over the years and will still remain legit now and in the future.

Indonesia is one of the important business hubs in Southeast Asia and it has now transformed itself into one of the most rapidly-growing economies in the world.

However, setting up a company in Indonesia can sometimes be challenging for foreign entrepreneurs due to the country’s complex law and its required organisational structure for foreign-owned companies or PT PMA.

In accordance with Company Law in Indonesia, a PT PMA must have a minimum of one director, one commissioner, and two shareholders. Among these, a director plays a critical role as they directly influence the operation and performance of a business.

Let’s take a look at what you must know about the duties and responsibilities of a director to start your next big venture in Indonesia.

Criteria of a Director for a Company in Indonesia

Every Indonesian company, including PT PMA, must have at least one director.

Of course, a company can have as many directors as they need in Indonesia and they must be appointed via a General Meeting of the Shareholders.

All appointed directors must be in accordance with policies set out under the Company Law in Indonesia or the Articles of Association of the company. Once the director is appointed, the duration of appointment will be stated in the Articles of Association.

When more than one director exists in a company, one of the directors will be the President Director. Furthermore, all appointed directors will share the responsibilities and obligations based on the company structure.

To become a director when setting up a company in Indonesia, the candidate shall get a domicile letter to verify that he or she is an Indonesian resident.

If a director candidate is not a resident in Indonesia, a professional director also known as a professional non-executive director can be arranged with Cekindo.

One more thing to note, candidates who are bankrupt, sentenced for offense, a member of the BOC or BOD responsible for the bankruptcy of a company, are not allowed to be directors.

Obligations of a Director in Indonesia

A director in a Indonesian company can represent the company legally.

Here are some of the director’s obligations:

• Fill compliance. For example, social programs and taxes.
• Sign contracts with third parties.
• Manage the minutes of GMS, list of shareholders.
• Submit financial statements and yearly reports.

Consequences if Directors don’t Fulfill Their Obligations

The Board of Directors, Board of Commissioners and founders of the company will propose on the legal action to be taken on irresponsible and neglectful directors.

This is done through a voting system and if the final result shows that a director is neglectful, he/she will be removed from his/her director position.

How Cekindo Can Help You

Cekindo assists firms and entrepreneurs with business incorporation in Indonesia with clear and precise guidance and advice.

Our experts take care of providing business licensing and other legal formalities in accordance with Indonesia law.

As a trusted partner and through our wide network and wealth of experience, Cekindo is able to offer a complete service package once your business is incorporated, including step-by-step guidance through other business processes.

We are ready to help business owners and entrepreneurs to steer through government regulations and specific processes involved in Indonesian business incorporation and professional non-executive director provision.

If you are thinking of doing business in Indonesia, contact us now and our advisors will be glad to understand and fulfill your requirements. Fill in the form below.