“While the process of establishment of company may have been concluded, the obligations of a new company do not stop there. What is next?”
After the establishment of a Company, there are multiple legal compliances that must be conducted in accordance with the Law No. 40 of 2007 concerning Limited Liability Company (“Company Law”). Some of the legal compliances as mentioned are listed below:
1. First General Meeting Shareholders
In accordance with Article 13 of the Company Law, it is regulated that any legal action carried out by the founders begins to bind the Company after the commencement of the first General Meeting Shareholders of the Company. As such, the General Meeting of Shareholders must expressly declare that the Company accepts or takes over all rights and obligations arising from legal actions taken by the founders.
The first General Meeting of Shareholders must be held within the period of no later than 60 (sixty) days after the Company obtains the status of an entity. The resolutions stated in the General Meeting of Shareholders are valid if the General Meeting of Shareholders is attended by shareholders representing all shares with voting rights and if the resolutions are approved by unanimous vote.
If the first General Meeting of Shareholders is not held within the stipulated time period or the General Meeting of Shareholders fails to make a decision, each founder who carries out a legal action is responsible personally for all the consequences that arise.
2. Capital Requirements and Deposit of Paid-up Capital to the Company’s Account
Article 32 of the Company Law explains that the authorized capital of a company is at least IDR 50,000,000.00 (fifty million rupiah). However, laws regulating certain business activities may determine the minimum amount of the Company’s capital which is greater than the provisions for authorized capital.
In relation to the authorized capital, Article 33 of the Company Law states that paid-up capital must be at least 25% (twenty-five percent) of the authorized capital and must be placed and fully deposited to the Company’s account. Therefore, immediately after the establishment of the Company, the founders must deposit the paid-up capital in full to the Company’s account.
Subsequently, any further issuance of shares to increase the issued capital must be fully paid-up. The validity of the issued and paid-up capital of the Company is evidenced by proof of deposit to the Company’s account.
3. Company Administrative Requirements (Shareholders Register Book and Share Certificates)
Pursuant to Article 50 of the Company Law, it is stated that the Board of Directors of the Company is obliged to keep a Shareholders Register Book and a special register containing information regarding the shares owned by members of the Board of Directors and the Board of Commissioners and their families.
The Register of Shareholders contains at least:
a. name and address of shareholder;
b. the number of the shares and date of acquisition of shares owned by shareholders, and their classification if there are multiple classification of shares;
c. the amount paid up for each share;
d. the name and address of the individual or legal entity that has the right to pledge the shares or as the recipient of the fiduciary guarantee of shares and the date of acquisition of the lien or the date of registration of the fiduciary guarantee;
e. information on the payment of shares in other forms.
In addition, in the Shareholders Register Book and the special register, every change of share ownership must be recorded and made available at the domicile of the Company so that it can be perused by the shareholders.
4. Annual General Meeting of Shareholders for the Annual Report of the Company
As mentioned in Article 66 of the Company Law, Annual General Meeting of Shareholders is held to discuss the Company’s annual financesand the Annual Report after being reviewed by the Board of Commissioners. This Annual General Meeting of Shareholders must commence within a period of no later than 6 (six) months after the end of the Company’s financial year.
The annual report must contain at least:
a. financial statements consisting of at least the balance sheet at the end of the most recent financial year in comparison with the previous financial year, profit and loss statements for the relevant financial year, cash flow statements, and statements of changes in equity, as well as notes to these financial statements;
b. reports on the Company’s activities;
c. report on the implementation of Social and Environmental Responsibility;
d. details of problems that arise during the financial year that affect the Company’s business activities;
e. report on supervisory duties carried out by the Board of Commissioners during the past financial year;
f. names of members of the Board of Directors and members of the Board of Commissioners; and
g. salaries and allowances for members of the Board of Directors and salaries or honorarium and allowances for members of the Board of Commissioners for the past year.
Based on the Company Law, there is not stipulated any sanction for the Company for not commencing Annual General Meeting of Shareholders within the time period as mentioned above. However, for the compliance of the Company, it is still mandatory for the Company to commence the Annual General Meeting of Shareholders in accordance with the prevailing laws and regulations.
Author: Atsyilla Salsabilla
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