There are two types of General Meeting of Shareholders: Annual General Meeting of Shareholders and Extraordinary General Meeting of Shareholders. Companies are required to hold annual meetings to discuss matters concerning the company and in extraordinary general meeting to resolve any urgent problems. We have put together a guide on the types of shareholder meetings in Indonesia.
Let’s learn more about the shareholder meetings.
Annual General Meeting of Shareholders
When is the annual general meeting of shareholders held?
Limited liability companies in Indonesia are required to hold an annual general meeting of shareholders (AGMS) within six months after the financial year-end.
According to article 13 of the Company Law, the first AGMS of the company should be held within 60 days after the company is a legal entity.
A limited liability company can forgo the AGMS through a Unanimous Written Resolution of Shareholders (UWRS), which must be approved by the company’s articles of association.
The UWRS will only be allowed if:
- All shareholders are informed in writing regarding the issues to be resolved
- All shareholders have an agreement and sign the UWRS
What issues are discussed at the annual general meeting of shareholders?
Matters that should be discussed and approved by the board of directors in the AGMS include the following issues:
- Board of directors and board of commissioners’ salary and allowances during the previous financial year
- Financial report
- Names of the members of the board of directors and board of commissioners
- Possible problems that occurred during the financial year
- Report on the board of director’s authorities and duties in the previous financial year
- Report on the company’s corporate, environmental and social responsibility activities
- The company’s activities
Who can call an annual general meeting of shareholders?
Members of the board of directors have the right to call an AGMS.
However, when it is due, the shareholders who jointly hold one-tenth or more of the total shares with voting rights or board of commissioners also have the right to request an AGMS.
How many days’ notice are required?
The notice of an AGMS must be given to shareholders within 14 days before holding the AGMS. It can be delivered by registered mail or announced in a daily newspaper.
The notice must include:
- The date, time, location and agenda of the AGMS
- Inform shareholders that materials for the AGMS are available at the company’s office from the date of the notice to the date of the AGMS
Quorum requirements for the annual general meeting of shareholders
The AGMS can be held if shareholders holding more than one-half of the total shares with voting rights attend or as determined in the articles of association of the company.
In the case that this quorum is not reached, a notice for a second AGMS can be sent to inform shareholders that the AGMS did not reach the required quorum and a new AGMS will be held.
The second AGMS will be valid if shareholders holding not less than one-third of shares with voting rights attend.
If the second AGMS fails to reach the required quorum, the company can request the District Court’s chairman to identify the quorum for the third GMS.
Extraordinary General Meeting of Shareholders
An extraordinary general meeting of shareholders (EGMS) is held only when an urgent matter needs to be settled as soon as possible.
What issues are discussed at the extraordinary general meeting of shareholders?
Issues that are discussed at an EGMS are:
- Removal of a director(s)
- Change of address of the company
- Transfer of shares
- Sensitive issue that needs to be solved before the AGMS; and
- All legal matters that require action from shareholders
When and who can call an extraordinary general meeting of shareholders?
An EGMS can be called any time as required, provided that there is a notice given in advance.
The board of commissioners or one or more shareholders who jointly represent one-tenth of the shares with voting rights can request an EGMS.
Shareholder meeting procedure
Before conducting the AGMS, a notice should be sent to participants about the date, time, location and agenda of the meeting 14 days in advance.
If a shareholder is unable to attend the AGMS, a proxy may be appointed to attend on their behalf with an executed Power of Attorney Letter.
The AGMS can be held if shareholders who hold more than one-half of the total share with voting rights are present. If the quorum is not reached, directors can call for a new AGMS.
Decisions in the AGMS will be passed by a majority of votes from the shareholders.
Indonesian companies have two main types of shareholder meetings, the AGMS and the EGMS, and these meetings are an important factor for the management of the company. To ensure your company complies with the rules and regulations, we recommend engaging with Acclime’s services.
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