Are you thinking of establishing a local company PT (Perseroan Terbatas) to do business in Indonesia? In addition to the Board of Commissioners and Board of Directors, it is mandatory and critical for PT in Indonesia to hold a General Meeting of Shareholders (GMS). GMS must be held at least six months after each financial year.
Definition and Purpose of GMS
GMS is a meeting held annually for shareholders to convey their voting rights in making decisions related to the company.
The purpose of a GMS is to discuss and approve the annual report submitted by the Board of Directors (BOD) with regard to matters affecting the company.
Generally, a GMS includes the following:
- Business activities report
- Financial report
- Company’s corporate, social and environmental responsibility activities implementation report
- Report of issues affecting business activities and performance
- Report of BOD’s authorities and duties in the previous fiscal year
- BOD and BOC members’ names
- BOD and BOC members’ salaries and allowances in the last fiscal year
When necessary, an extraordinary general meeting of shareholders (EGMS) can also be held for the best interests of a PT. In accordance with law on Indonesian company, a PT can hold a GMS electronically via video conference and teleconference.
One thing worth noting is that a PT can forgo the GMS through the Unanimous Written Resolution of Shareholders (UWRS), permitted under the PT’s Articles of Association (AOA). The UWRS is allowed only with the following conditions:
- All shareholders have been informed in writing with regard to the issues to be resolved
- All shareholders are in consensus and sign the UWRS
Procedures of Conducting GMS
In order for a PT to organise a GMS, they must comply with the following procedures:
- BOC can request to hold the GMS
- A GMS can be held by shareholders when they represent more than a tenth of the total shares
- Reasons are compulsory to request to hold a GMS
- A GMS organised must be according to the requested reasons
- GMS requests shall be submitted to the BOD
- GMS requests from the shareholders must be submitted to the BOC
- A new GMS can be organised if the attendance by shareholders is more than 50%
- If the quorum is not reached, the directors can call for the second GMS
- Decisions are made in GMS with the majority votes from the shareholders
Notification of GMS Agenda
The notification of GMS agenda must be submitted to the Financial Services Authority OJK (Otoritas Jasa Keuangan) in five days prior to the GMS announcement. The GMS announcement must be made in 14 days before the issuance of the GMS invitation. The following criteria must be included in the GMS announcement:
- Shareholders eligibility to attend the GMS
- Agenda proposal requirements for GMS eligible shareholders
- Date of GMS invitation
- Date of GMS
Quorum and Voting Requirements for GMS
As mentioned earlier, a GMS can only be held when it is attended by members with valid voting rights and more than 50% of the total shares.
A second GMS is needed if this quorum for the GMS is not achieved. In this case, shareholders must be informed that the first GMS failed to reach the quorum. Then, the second GMS will only be valid when not less than one-third of all shares attend the GMS. If again the quorum of second GMS is not met, a PT can ask the relevant District Court’s chairman to decide a new quorum for the third GMS.
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