For many foreign entrepreneurs, once they have incorporated their companies, they would think that their jobs are done. However, this is not the case. Not only do you need to have a good understanding of the regulations of setting up a company in Indonesia, but you also need to have a good grasp of its mandatory organisational structure.
An organisational structure in Indonesia may be confusing to foreign entrepreneurs. But, if you take the time to do it right, a strong organisational structure can boost your company’s efficiency tremendously, whether the company has only two employees or 300.
You need to ask yourself the following questions while establishing an organisational structure early in the growth stage of your company in Indonesia.
If you do not know the answer to those questions, the best thing to do would be reading this article until the end.
The hierarchy of the company structure in Indonesia goes like this:
On top of the hierarchy in a company structure is the shareholders. Shareholders, also known as stockholders, are the company’s owners and they inject capital or provide financial support in exchange for potential profits or dividends.
The daily business operations and activities of the company are not the responsibility of the shareholders. The main function of shareholders is to approve the decisions pertaining to the company’s performance and future goals in the general meeting of shareholders (GMS).
The hierarchy is then followed by the Board of Commissioners, or BOC. BOC supervises the company’s management regarding the company’s policies and gives advice to the Board of Directors. The effectiveness of those policies will also be monitored by the BOC on a continuous basis.
Board of Directors, with the acronym BOD, are the company’s shareholders. They take the advice from the BOC and are responsible for the company’s overall operations and management in compliance with the Company Law in Indonesia. Compliance is achieved through the operational and strategic decisions by BOD.
Shareholders appoint the BOD to handle the everyday’s affairs of the company. Oftentimes, BOD acts collectively but they can also give certain power or authority to members of the BOD.
The main responsibilities of commissioners and directors of a company in Indonesia are:
The termination of a director or a commissioner is performed through the shareholders’ general meeting. Below is the summarised process:
If you need further information regarding business setup in Indonesia, do not hesitate to contact us by filling in the form below. You can also visit our offices in Jakarta, Bali and Semarang.