Indonesian Company Act

1BA THE LIMITED LIABILITY COMPANY (Law No.1/1995 dated March 7, 1995) BY THE GRACE OF GOO ALMIGHTY THE PRESIDENT OF THE REPUBLIC OF INDONESIA Considering a. that regulations on the limited liability company as meant in the code of business law (Statute Book of 1847 No.23) are no ionger in keeping with the rapid economic and business developments either on a national or international scale; b. that in addition to the corporate body taking the form of the limited liability company as meant in the com. merce law there is another corporate body taking the form of Indonesian limited liability company (based on ‘Ordonnantie op de indonasische Maatschappij op Aandeeton, Staatsblad 1990 : 569 jo. 717) cc. that in order to create lege! unity, meet demand tor & new law capable of spurting the national. development, and ensure legal cenainties and law enforcement, the dual {unction of the regulations as meant in letter b needs to be nulified by improving regulations on the limited liabilty company: 4. that the improvement of requlations on the limited liability company as meant in fetter ¢ must constitute the manifestation of the principles of collective effort according to the principles of economic cemoracy based on the state ideology Pancasila and the 1944 Constitution; e. that based on the considerations as meant in letters a. b. cand d, itis deemed necessary to lay down a law on the limited liability company. In view of Anticle 5 paragraph (1), Article 20 paragraph (1), and Article 33 of the 1945 Constitution: With the approval of ‘THE HOUSE OF REPRESENTATIVES DECIDES: To stipulate : THE LAW ON THE LIMITED LIABILITY COMPANY. CHAPTER | GENERAL PROVISIONS Article 1 Referred to In this law as 1. The limited liability company, hereinafter referred to as the company, shall be the corporate body which is established on the basis of an agreement, carries on business activities with authorized capital entirely divided into shares, and meets requirements stipulated in this law and its enforcement reguiations. 2, Organs of the company shall be the general meeting of shareholders, the board of executives, and the board! of directors; 3. The general meeting of shareholders, hereinaiter abbreviated to RUPS, shall be the organ of the company, which holds supreme authority in the company and all authority, which is not transferred to the boards of executives and directors; 4, The board of executives shall be the organ of the company which is fully responsible for the management of the company for the interest and purpose of the company and represents the company either inside or outside the court according to the statutes; 5. The board of directors shall be the organ of the company which has the task of conducting general and/or special supervision over and giving advice to the board of executives in managing the company; 6. The open company shall be the company whose capital and shareholders meet certain req company which makes a public offer, according to the law on the capital market; 7. The Minister shall be the Minister of Justice of the Republic of Indonesia : yments or the BN. 5709/5704/3-5-1995 Article 2...198 Anticle 2 Activities of the company shall be in line with the purpose and aim of the company and shall not contradict the law, public order, and/or ethics. Article 3 (1) Shareholders of the company shall not personally be held responsible for an agreement made under the name of the company nor the loss suffered by the company in excess of shares they have withdrawn. (2) The provision in paragraph (1) shall not be applicable if: a. the company does not or does not yet meet requirements to become a corporate body; . relevant shareholders with bad intentions directly or indirectly use the company for their personal interests; ¢. relevant shareholders are involved in illegal acts committed by the company; or 4. relevant shareholders irectly or indirectly use property of the company in a breach of the law, making the ‘company unable to use its property to settle its debts. Article 4 The company shall be subject to this law, statutes, and other laws. Article 6 ‘The Company shall be domiciled in the territory of the Republic of Indonesia as detormined in its statutes. Article 6 ‘The company shall be established for a period of time as determined In its statutes. CHAPTER II ESTABLISHMENT, STATUTES, REGISTRATION, AND ANNOUNCEMENT Part One Establishment Article 7 (1) The company shall be established by 2 (two) persons or more by using a notarial document written in Indone- sian language. (2) Each founder of the company shall get part of shares at the moment the company is established. {@)Ifafter the company is validated the number of shareholders is less than 2 (two}, the relevant shareholder shall transfer part of shares to other persons no later than 6 (six) months starting the date of the event. (4) Ifafter the period of time as meant in paragraph (3) has passed the number of shareholders is stil less than 2 (two), the shareholder shall personally be held responsible for any agreements made and the losses suttered by the company, and upon the request of the interested party the district court can disolve the company. (6) The provisions in paragraphs (1), (2) and (4) shall not be applicable to the company constituting the state- owned company. (6) The company shall get the status as a corporate body after the Minister validates the deed of establishment as meant in paragraph (1). (7) In making a deed of establishment the founder can be represented by another person based on the power of attorney. Article 8 (1) The deed of establishment shall contain statutes and other information including at least a. full name, place and date of birth, job, domicile, and citizenship of the founder; ‘line-up, full name, place and date of birth, job, domicile, and citizenship of members of the boards of executives and directors that are for the first time appointed; and ‘c. name of shareholders that have already got part of shares, breakdown of shares, and nominal value or promised value of subscribed and paid-in shares at the moment of establishment. (@) The deed of establishment shall not contain : ‘a. provisions on the receipt of fixed interest on shares; and . provisions on the granting of personal profit to the founder or other parties. BN, 5703/5704/36-1996200, Article 9 (1) To get the validation as meant in Article 7 paragraph (6) all founders or their proxies shall fle applications in writing by enclosing the deed of establishment of the company. (2) The validation as meant in paragraph (1) shall be granted no later than 69 (sixty) days after the receipt of the applications. {@) Ifthe applications are rejected, the rejection shall be notified in writing to the applicants along with the reasons for the rejection within a period of time as meant in paragraph (2). Article 10 (1) Legal acts related to capital structure and participation as well as share structure of the company committed by founders before the establishment of the company shall be contained in the deed of establishment. {2} Original or official copies of the authentic deed on the legal acts as meant in paragraph (1) shall be put on the deed of establishment {@) If provisions in paragraph (1) and paragrah (2) are not met, the legal acts shall not inflict rights and obligations onthe company. Article 11 (1) Legal acts committed by founders in the interests of the company before the company is validated shall bind the company after the company becomes @ corporate body if: a, the company firmly states that it receives all contracts signed between founders or other persons assigned by the founders and third parties; . the company firmly states that it takes over all rights and obligations arising from the contracts signed between founders or other persons assigned by the founders and third parties, although the contracts are rot realized under the name of the company; or ‘c. the company confirms in writing all legal acts committed under the name of the company. {2} f the company neither accepts, takes over nor confirms the legal acts as meant in paragraph (1), each of the founders committing the legal acts shall personally be held responsible for al effects that arise. Part Two Statutes Article 12 Statutes shall at least contain the name and domicile of the company, the purpose and aim as well as business activity of the company in line with the law in force; the period of time the company will operate; the amount of authorized capital, subscribed capital, and paid-in capital the number of shares, the number of classified shares, it any, along with number of shares for each classification, matters inherent to each share, and nominal value of each share; t. the line-up, number, and name of members of the boards of executives and directors; «g. the place and peocedure for holding RUPS: fh. the procedures for electing, appointing, succeeding, and dismissing members of the boards of executives and directors; iL the procedur8s for utilizing profts and distributing dividends; and }._ other provisions according to ths law. eeaege Article 19 (1) The company shall not use the name that a, as legally been used by another company or resembles the name of another company; or b. contradicts public order and/or ethics. (2) The name of the company shall be preceded by “Limited liability Company" abbreviated to "PT. {@) The namo of the open company shall bear the abbreviation “Tbk" at the end of the name of the open company besides being subject to the provision in paragraph (2) (4) Further provisions on the use of name of the company shall be regulated by a government regulation BN, 5703/5704/35-19952A Anticle 14 (1) Changes in statutes shall be determined by RUPS. {@) Proposals of changes in statutes shall be contained in the letter of notification or announcement to hold RUPS. Anicte 15 (1) Genain changes in statutes shall be approved by the Minister, registered in the list of companies, and an. nounced according to this law. (@) Certain changes as meant in paragraph (1) shall include the name of the company; the purpose and aim of the company; the business activity of the company: the period of time the company will operate, ifthe statutes fix a certain period ol time; the amount of authorized capital, the reduction of subscribed and paid-In capital, or g. the change in status from the closed company to the open company o* the other way around, (8) Changes in statutes other than thase mentioned in paragraph (2) shall only be reported to the Minister no later than 14 (lourteen) days starting the date of RUPS decisions, and registered in the list of companies in accordance with provisions in Article 21. reange Anicle 16 Changes in stalutes as meant in Article 15 paragraphs (2) and (3) shall be made by using a notarial document written in Indonesian language. Asticle 17 (1) Changes in statutes as meant in Article 15 paragraph (2) shall come into force as from the date of approval. {2) Changes in statutes as meant in Article 45 paragraph (8) shall come into force as from the date of registration. Anicie 18 Changes in statutes shall not be made at the moment the company is declared to be a bankrupt, except if there is approval from a curator. Article 19 Applications tor approval of changes in statutes as meant in Anicte 1 paragraph (2} shall be rejected if 2. the applications contradict provisions on the procedure for making changes in statutes; b. the content of changes in statutes contradicts the law, public order and/or ethics, or . there is criticism from creditors over RUPS decisions on capital reduction. Article 20 Procedures far fling applications for, granting approval of, and rejecting proposals of changes in statutes shall be as meant in Article 9 Part Three Registration and Announcement ‘Anticte 21 (3) The board of executives of the company shall register the following documents in the list of companies : a. the deed of establishment together wi a {etter of validation from the Minister as meant in Anicle 7 paragraph (6), b. the deed of changes in statutes together with a letter of approval from the Minister as meant in Article 15 paragraph (2), or c. the deed of changes in statutes together with a report to the Minister as meant in Article 15 paragraph (2). (2) The registration as meant in paragraph (1) shail be done no later than 30 (thirty) days after the date of validation or approval or after the receipt date of the report BN. 5703/5704/3-5-1995 ATE ENS Bernese228, Article 22 (1) The company as meant in Article 21 that has beon registered shall be announced in the Supplement to State Gazette of the Republic of indonesia. (@) The board of executives shail fle an application for the announcement of the company as meant in paragraph (1) no later than 30 (thirty) days starting the date of registration. (@) The procedure for filing applications for the announcement of the company shall be according to the law in force. Article 23 ‘As long as the registration and announcement as meant in Articles 21 and 22 have not yet been made, the board of executives shall collectively be held responsible for all legal acts committed by the company. CHAPTER Ill SHARES AND CAPITAL ~ Part One Article 24 (1) The authorized capital of the company shall consist of the entire nominal value of shares. (2) The shares es meant in paragraph (1) can be issued in the form of named shares and/or bearer shares. Article 25 (1) The authorized capital of the company shall amount to at least Rp 20,000,000 (twenty million rupiahs). (2) The law or enforcement regulations regulating certain business fields, can determine the minimum amount of authorized capital of the company which is different from that as meant in paragraph (1). (9) The change in the amount of authorized capital as meant in paragraph (1), and the determination of the amount of authorized capital of the company together with its change shall be stipulated by a government regulation. Article 26 (1) At the moment the company is established, at least 25% (twenty five percent) of the authorized capital as. meant in Article 25 must have been subscribed, (2) For any subscription of capital as meant in paragraph (1) at least 50% (fity percent) of nominal value of each share Issued must have been pald in (9) All shares that have been issued must fully be paid in at the moment the company is validated, by using a legat evidence of payment. (4) Further iesuance of shares shall be fully paid in. Asticle 27 (1) The paying in of shares can be made in the form of money or other means, (2) Ifthe paying in of shares is made by using other means as meant in paragraph (1), the appraisal of prices shall be determined by an expert who has nothing to do with the company. (8) The paying in of shares in the form of immovables shall be announced in 2 (wo) dailies, (4) For the open company any issuance of shares must fully be paid in by cash Article 28 (1) Shareholders having claims on the company’ cannot use their rights of claim as compensations for the obligation to pay in the price of their shares. (2) Certain claims other than those referred to in paragraph (1) which can be compensated for pai be further regulated by a government regulation. in shares shall Article 28 (1) The company shall be banned from issuing shares for its own possession. (2) The ban on the possession of shares as meant in paragraph (1) shall also be applicable to subsidiaries to possess shares issued by their principal company. BN. 5703/5704/35-1995 Part Twos.234 Pan Two Protection of Capital and Property of the Company Article 20 (1) The company can repurchase the shares that have been already issued with the provision that a. the repurchase is financed by nat profit so long as this does not make the net property of the company smaller than the amount of subscribed capital plus compulsory reserves in accordance with this law; and . the nominal value of the entire shares owned by the company and its subsidiaries and pawned shares held by the company does not exceed 10% (ten percent) of the subscribed capital (2) The direct or indirect acquisition of shares contradicting paragraph (7) is cancelled for the sake of the law and payments that have been received by shareholders must be returned to the company. (8) The board of executives shall collectively be held responsible for all Sosses suffered by shareholders with good intentions due to the cancelation for the sake of the law as meant in paragraph (2). Anicie 31 (1) The cepurchase of shares as meant in Article 30 paragraph (1) of the further transfer of shares shall only be dione on the basis of RUPS decisions. (2) The RUPS decisions as meant in paragraph (1) shall be considered valid, if RUPS is attended by shareholders representing at least 2/3 (two-thirds) of the entire shares with valid votes, and if the RUPS decisions are approved by at least 2/3 (two-thirds) of the votes. Article 32 (1) RUPS can delegate authority to give approval as meant in Article 31 to other organs for a maximum period of 5 (five) years. (2) The delegation of authority as meant in paragraph (1) can any time be extended for a maximum period of § (five) years. (8) RUPS can any time withdraw the delegation of authority as meant in paragraph (1) Article 33 (1) Shares repurchased by the company as meant in Article 30 cannot be used to cast vote at UPS and to determine a quorum in accordance with this law and/or the statutes. (@) Shares of the principal company purchased by its subsidiaries cannot also be used to cast any vote at RUPS: and to determine a quorum in accordance with this law and the statutes, Part Three (ncrease in Capital ~ Article 34 (1) The capital of the company can only be raised on the basis of RUPS decisions. (2) RUPS can delegate authority to give approval as meant in paragraph (1) to the board of directors for a maximum period of 5 (five) years. (8) RUPS can any time withdraw the delegation of authority as meant in paragraph (2) Article 35, RUPS decisions as meant in Article 34 paragraph (1) shall be considered valid, f they are made on the tbasis of provisions on invitation to the mesting, quorum, the number of votes required for changes in the statutes in accordance with this lew and the statutes. Aicle 3 (i) Ifthe statutes do not stipulate otherwise, all shares issued to raise capital shall be first offered to each shareholder in proportion to the ownership of shares ol the same classitication, {2)if shareholders da not use their rights to purchase shares as meant in paragraph (1), after a period of 14 (fourteen) days starting the date of offer has passed the company shall offer shares 10 employees ahead of fiers to other persons to buy a certain number of shares. (8) Further provisions on shares offered to employees as meant in paragraph (2) shall be regulated in a govern- ‘ment regulation, Park Fou e=zoQom=eo~ To be continued BN, 5703/5708/35-1995,‘THE LIMITED LIABILITY COMPANY (Law No.1/1995 dated March 7, 1995) (Continued from Business News No. 5703/5704 pages 18A - 23A) Part Four Reduction of Capital Antcle 37 (1) The capital of the company can only be reduced on the basis of RUPS decisions made in accordance with the provision in Article 35. (2) The board of executives shall notify in writing the decisions as meant in paragraph (1) to all creditors and ‘announce them in the State Gazette of the Republic ct indonesia and 2 (two) dailies no later than 7 (seven) days starting the date of decisions. Business News 8705/5-5-1995 ticle 3B...7A Article 38 (1) Within a period of 60 (sixty) days starting the date of announcement as meant in Article 37 paragraph (2), creditors can file objections in writing to decisions on the reduction of capital along with reasons for the objections to the company with copies addressed to the Minister. (2 Within a period of 30 (thirty) days starting the receipt dete of objections as meant in paragraph (1), the ‘company shall give answers to the objections along with reasons. (8) If the company rejects the objections or falls to give solution agreed upon by creditors, within a period of 30 (thirty) days starting the receipt date of answers of the company, the creditors can file lawsuits to the district ‘court whose judicial area covers the domicile of the company. Article 38 (1) The reduction of capital shall be valid after changes in statutes obtain approval from the Minister. (2) The approval of changes in statutes from the Minister as meant in paragraph (1) shall be granted only it a. there is no objection in writing from creditors within a period of time as meant in Article 38 paragraph (1); b. solution to objections from creditors have been achieved; or cc. lawsuits from creditors with definite legal force have obtained. Article 40 ‘Changes in statutes along with approval from the Minister on the reduction of capital shell be registered land announced in accordance with Article 24 and 22. Article 41 (1) The reduction of capital shall be done for each share or all shares of the same classification proportionally (2) In the case of more than one share classifications, a decision on the reduction of capital can only be made as ong as it conforms to the decision made at the previous meeting of holders or shares of the same classifica. tion whose rights are harmed by the decision on the reduction of capital. Part Five Shares Article 42 (1) The nominal value of shares shall be stated in the Indonesian currency. (2) Shares without nominal value shall not be issued. {@) Bearer shares shall be issued only if the nominal or promised value of the shares is fully paid in. Article 43 (1) The company shall make and keep a list of shareholders containing at least a. the name and address of shareholders; . the quantity, number and acquisition date of shares owned by shareholders, and if more than one share classifications are issued, each of the share classification c. the amount of each share paid in; 4d. the name and address of individuals or corporate bodies holding rights to pawn shares and the acquisition date of the rights to pawn shares; and «. information on the paying in of shares in other forms as meant in Article 27 paragraph (2). (2) In addition to the list of shareholders as meant in paragraph (1). the company shall make and keep a special list of information on shares owned by members of the boards of executives and directors as well as their rela tives in the company and/or in other companies and the date the shares are acquired, {@) the company issues beaver shares, the date, quantity, and number of bearer shares issued shall be recorded in the list of shareholders and the special list as meant in paragraph (2). (4) Changes in share ownership shall also be recorded in the list of shareholders and the special list as meant in paragraphs (1) and (2). (6) The list of shareholders and the special list as meant in paragraphs (1) and (2) shall be made available in the domicile of the company to make them visible to shareholders.1BA Article 44 Shareholders shail be given share ownership evidence for the shares they hold. Atcle 45 (1) Each share shall give its holder an undividable right. (@2)IF4 (one) share is owned by more than 1 (one) persons, the right to the share can only be used by appointing a holder representing other holders. Article 46 (1) Statutes shail determine t (one) share classifications or more. (2) Each share of the same classification shall give its holder the same right. (8) In the case of more than 1 (one) classified shares, statutes shall determine 1 (one) classification of common shares. (4) Apart from the classified shares as meant in paragraph (9), statutes can determine 1 (one) classified share or more: a. with a special, conditional or fimited vote or without a vote; bb. which after a certain period of time can be withdrawn or exchanged for another classified share: c. which gives its holder a right to cumulative or non cumulative dividends; and/or d. which gives its holder a right to have priority over other holders of classified shares in the distribution of dividends and remaining property of the company in the event of liquidation. Anticle 47 (1) Statutes can determine the nominal value of split shares. (2) Holders of split shaces shall not be given a personal right to cast vote, except if the holders of split shares either individually or together with other holders of split shares of the same type hold a nominal value of t (one) classified shares. Article 48 Statutes of the company shall contain the procedure for irenstering rights to shares in accordance with the law in force. Anicle 48 (1) The transfer of rights to named shares shall be done by using a deed of right transfer. (2) The deed of right transfer as meant in paragraph (1) or its copy shall be sent in writing to the company. {8) The board of executives shall record the transfer oF rights to named shares, the date and day of the transfer of rights to named shares in the list of shareholders or the special list as meant in Article 43 paragraphs (1) and @), (4) Tho transfer of rights to bearer shares shall be accompanied by the delivery of share certificates. (6) Tho model and the procedure for transfering rights to camed and bearer shares traded in the capital market shail be regulated in the law on the capital market. Article 50 Statutes shall regulate provisions on restrictions on the transfer of rights to shares, namely: a. the obligation to make frst offers to certain groups of shareholders or other groups of shareholders, and/or ’. the obligation to obtain prior approval from the organs of the company. Article 51 (4) if statutes require shareholders to first offer their shares to certain groups of shareholders or other sharehoid- ers who are not their own preference, the company shall ensure that al shares offered are bought at reasona. bie prices and paid by cash within a period of 30 (thirty) days starting the date of offer. (2)|fthe company cannot ensure that the provision in paragraph (1) is implemented, shareholders shall offer and sell their shares to employees before the shares are offered to other persons. (3) Shareholders required to offer their shares as meant in paragraph (1) shail have the right to withdraw the offer after the period of time as meant in paragraph (1) has passed. Business News 5705/5-5-1995194 (4) The first offer of shares to certain groups of shareholders or other shareholders shall be macie on one ocas~ sion only. (6) The provision on the offer and sale of shares to employees as meant in paragraph (2) shall be further stipulated ina government regulation. Anicle 52 (1) The approval or the rejection of the transfer of rights to shares with approval from the organs of the compapny shall be granted in wting within a maximum period of 90 (ninty) days after the organs of the company receive the request for the transfer of rights to shares. {@) I the period of time as meant in paragraph (1) has passed and the organs of the company do not grant approval in writing, the organs of the company shall be regarded as having approved the transfer of rights to shares. {@) the organs of the company approve the transfer of rights to named shares, the approval of the transfer of fights to named shares shall be done in accordance with provisions in Article 49 within @ maximum period of {90 (ninty) days after the approval is granted. (4) Ifthe transfer of rights to shares is rejected, the organs of the compeny shall appoint other prospective buyers in accordance with the provision in Article 81 paragraph (1). {6) Ifthe transfer of rights to shares as meant in paragraph (4) is rejected without the appointment of prospective buyers, the provision in paragraph (2) shall be applied, Article $3 (1) Bearer shares shail not be pawned, (2) Named shares can be pawned, except otherwise stipulated in the statutes. (3) Pawned shares shall be recorded in the list of shareholders and the special list as meant in Article 43. (4) Votes on pawned shares shall remain in the hand of shareholders. Article 54 (1) Shares shall constitute movable articles and give ownership rights to their holders. (2) Each shareholder has the right to file a lawsuit against the company to the district cour, If interests of the shareholder are harmed due to unjust and unreasonable acts of the company as a result of the decision of UPS, the board of executives or the board of directors. {@) The lawsuit as meant in paragraph (2) shall be filed to the district court whose judicial territory covers the domicile of the company. Anticle 55 (1) Each shareholder has the right to ask the company to buy his shares at reasonable prices, If the relevant shareholder does not approve the acts of the company harmful to the interests of the shareholder or the ‘company, in the form of ‘a, changes in statutes; b. the sale, guaranteeing, exchange of property in a great part or in a whole, or c. the merger, fusion, or taking over of the company. Q)If the shares that each shateholder asks the company to buy as meant in paragraph (1) exceeds the limit to how many shares the company must repurchase as meant in Article 30 paragraph (1), the company shall make an effort to sell remaining shares to other parties. CHAPTER IV ANNUAL REPPORT AND USE OF PROFIT Part One annual Report Article 56 Within a period of § (five) months after the book year of the company is closed, the board of executives shall draw up an annual report to RUPS, containing at least: a. an annual financial statement consisting of a final balance sheet of the past book year and a profit and loss statement of the relevant book year as well as explanations of the documents; Business News §705/8-5-1995 be a_consoligesed.208 & @ consolidated balance sheet of companies merging into one group besides balance sheets of each of the ‘companies; @ report on the condition and operation of the company and the result that has been achieved; the main activity of the company and changes occurring in the book year; detailed account of problems arising during the book year having impacts on the activities of the company; the name of members of the boards of executives and directors; and salaries and other allowances of members of the boards of executives and directors. Article $7 (1) The annual report as meant in Article §6 shall be signed by all members of the boards of executives and directors. 2) Ifany of the members of the board of executives or the board of directors does not sign the report as meant in paragraph (1} the reasons for not doing so shall be stated in writing, Article 58 (1) The annual financial statement shai! be made in accordance with the Financial Accounting Standard. 2) the Financial Accounting Standard as meant in paragraph (1) cannot be applied as expected, the explanations and reasons for which the Financial Accounting Standard cannot be applied shall be provided for. Article 59 (1) The board of executives shall hand over the annual financial statement of the company to a public accountant for audit, if: ‘&. the business field of the company Is related to the mobil b. the company issues debentures; or . the company constitutes a limited liability company. (2) Ifthe obligation as meant in paragraph (1) are not fulflled, UPS shall not validate the annual financial statement. (8) A report on the result of an audit by the public accountant as meant in paragraph (1) shall be forwarded in writing to RUPS through the board of executives. (4) The annual financial statement as meant in paragraph (1) shall be announced in 2 (two) dalle after being Validated by RUPS. ation of private funds; Article 60 (1) RUPS shalt approve the annual report and validate the annual financial statement. (2) Decisions on the approval of the annual report and ihe validation of the annual financial statement as moant in paragraph (1) shall be made In accordance with this aw and/or the statutes. (9) If documents on the annual financial statement made available are not correct and/or misleading, members of the boards of executives and directors shall collectively be held responsible for acts detrimental to other parties. (4) Mombers of the boards of executives and directors shall be exempted from the obligation as meant in paragraph (2), if the acts prove not to be their faults. Part Two The Use of Profit Anicle 61 (1) Every book year the company shall set aside certain amount of net profit for reserves. (2) The setting aside of net profit as meant in paragraph (1) shall be done until reserves amount to at least 20% (twenty percent) of the subscribed capital (3) Reserves as meant in paragraph (1) which do not yet reach the amount as meant in paragraoh (2) can only be used to make up the loss which cannot be met by other reserves. (4) Provisions on the setting aside of net profit for reserves and the Use of reserves shall be further laid down in a government regulation Business News 6705/5:278 THE LIMITED LIABILITY COMPANY (Law No.1/1995 dated March 7, 1995) (Continued from Business News No. 5705 pages 16A - 20A) Anticle 62 (1) RUPS shall decide the use of net profit including the determination of the amount of net profit set aside for reserves as meant in Article 6 paragraph (1). 2) IF RUPS does not stipulate otherwise, the entire net prottt shall be distributed to shareholders as dividends atter being reduced by the amount set aside for reserves as meant in Article 61 paragraph (1). @) After 5 (five) years dividends which are not distributed shall be included in reserves earmarked for dividends. (4) The distribution of dividends as meant In paragraph (3) shall be regulated in the statutes. CHAPTER V RUPS Anticle 63 (1) RUPS shall have all authority which is not given to the board of executives or directors within limits determined in this taw and/or the statutes. (2) RUPS shall have access to all information from the board of executives and/or the board of directors related to the interests of the company. Article 64 (1) RUPS shall be held in'the place where the company Is domiciled or carries on its business activities, except otherwise stipulated by the statutes. (2) The place as meant in paragraph (1) shall be found in the territory of the Republic of Indonesia. Article 65 (1) RUPS shall consist of annual RUPS and other RUPS. (2) Annual RUPS shall be held within a maximum period of 6 (six) months atter the book year. (@) All documents of the company as meant in Article 56 shall be brought to annual RUPS. {4) Other RUPS shall be held any time according io the needs. Article 66 (3) The board of executives shall hold annual RUPS, and in the interests of the company shall hold other RUPS. (2) RUPS as meant in paragraph (1) can also be held upon the request of 1 (one) shareholder or more jointly representing 1/10 (one-tenth) of the total number of shares, or the smaller number as stipulated in the statutes of the relevant company. (8) The request as meant in paragraph (2) shail be filed to the board of executives or directors by using a regis. tered letter along with reasons for the request (4) RUPS as meant in paragraph (2) shall only discuss problems relating to the reasons as meant in paragraph @). Anticie 67 (1) The chief of the district court whose judicial territory covers the domicile of the company shall issue @ par an applicant to: a, extend invitations to annual RUPS by himself upon the request of shareholders, if neither the board of executives nor the board of directors holds annual RUPS at the given time; or . extend invitations to other RUPS by himself upon the request of shareholders as meant in Article 67 para graph (2), if neither the board of executives nor the board of directors extends invitations to other RUPS after a period of 30 (thirty) days starting the date of request hes passed. (2) The chief of the district court as meant in paragraph (1) shall determine the model, content and validity period of invitations to RUPS and appoint the chairman of the meeting, regardless of provisions in this lave or the stat~ utes. (9) RUPS as meant in paragraph (1) is held, the chief of the district court shall order the board of executives or directors to attend it. (4) The decision of the chief of the district court on the issuance of the permit as meant in paragraph (1) shall constitute the decision of the first and final agency, 0 Business News §706/8-5.1995, Article 68.28 Anicle. 68 (1) To hold RUPS the board of executives shall send invitations to shareholders. (2) In exceptional cases determined in the statutes, invitations to RUPS as meant in paragraph (1) can be made by the board of directors. Article 69 (1) Invitations to RUPS shall be made no later than 14 (fourteen) days ahead of RUPS. (2) Invitations to RUPS shall be made by using registered letters. {@) Invitations to RUPS of the open company shall be made in 2 (two) dailies. (4) Invitations to RUPS shall contain the date, hour, piace, and program of the meeting along with the announcement that materials to be discussed in the meeting are made available in tho office of the company starting the date invitations to RUPSP are made to the date RUPS is held. (6) The company shall make available copies of the materials as meant in paragraph (4) to shareholders free of charge. (6) If invitations to RUPS do net conform to provisions in paragraphs (1) and (2), the decision shail remain valid it UPS is attended by all shareholders representing Valid votes and the decision is approved by a consensus. Article 70 . (1) For the open company, invitations to RUPS shall be preceded by the announcement on the planned invitations to RUPPS in 2 (two) dati. - (2) The announcement as meant in paragraph (1) shall be made no later than 14 (fourteen) days before invitations to RUPS are made. Anicle 71 (1) Shacchotders with valid votes shall attend RUPS and use theit rights to vote by themselves or proxies. {2} In taking votes members of the boards of executives and directors as well as employees shall be banned from acting as proxies of the shareholders as meant in paragraph (1). Article 72 (1) Each share issued shall bear one vote, except otherwise stipulated by the statutes. (2) Shares owed by the company shall not bear a vote. (6) Shares of the principal company owned by its subsidiaries shall not also bear any vote, Article 73 (1) RUPS shall be continued if it s attended by shareholders representing more than 1/2 (a half) of the number of shares with valid votes, except otherwise stipulated by this law and/or the statutes. (2) Ifa quorum as meant in paragraph (1) is not reached, second invitations to RUPS shall be made. {@) Invitations as meant in paragraph (2) shall be made no later than 7 (seven) days ahead of the second RUPS. (4) The second RUPS shall be held 10 (ten) days at the earliest and 21 (twenty one) days at the latest after the first RUPS Is held. (6) The second RUPS as meant in paragraph (4) shall be considered valid and shall make a decision if tis attended by shareholders representing at least 1/3 (one-third) of the total number of shares with valid votes. (6) fa quorum of the second RUPS as meant in paragraph (6) is not reached, the chief of the district court shat! determine the quorum upon the request of the company, Article 74 (1) The decision of RUPS shail be made on the basis of conasuttations to achieve agreement. (@) ifthe decision based on the consultations to achieve agreement as meant in paragraph (1) is not reached, the decision shall be made on the basis of common majority votes from valid votes, except if this law and/or the statutes stipulate that the decision shall be made on the basis of votes larger than common majority votes. Article 75 {1) The decision of RUPS to amend the statutes shall be considered valid, if RUPS is attended by shareholders representing at least 2/3 (two-thirds) of the entire number of shares with valid votes and the decision is approved by at least 2/S (two-thirds) of the number of the shares,298 (a): the quorum as meant in paragraph (1) is not achiaved, the decision reached at the second RUES shall be aoneigered valid as long as RUPS Is attended by shareholders representing atleast 2/9 (two-thirds) of the tntire number of shares with valid votes and the decision is approved by the mejority votes. Anicle 76 In the case of the merger, fusion, taking over, bankruptcy and liquidation of the company the decisions reached at RUPS shall be considered valid f RUPS is attended by shareholders representing at least 2/4 (three. euah) ct the entre number of shares with valid votes and the decision ls approved by atleast 3/4 (Ihree-fourhs) of the number of votes. Asticle 77 [Any RUPS shall have minutes of the meeting signed by the chairman of the meeting and at least 1 (one) shareholder appointed among and by participants of RUPS. Article 78 (1) Statutes of the company may stipulate that RUPS decisions ean be made through mnethods other than meetings. {@) li statutes of the company contain provisions as meant In paragraph (1), decisions can be mace as long 26 a shareholders with valid voles have approved in writing the decisions as well as the method of making the decisions, CHAPTER VI THE BOARD OF EXECUTIVES AND THE BOARD OF DIRECTORS Anticle 79 (1) The management of the company shall be in the hand of the board of executives. {2) The company engaged in the mobiization of private funds, the company issuing debentures, and the epen company shall have at least 2 (two) members of the board of executives. {@) Individuals who can be appointed as members ofthe board of executives shall be those who are able to take legal acts and meet the eiteria of not Being once declared to be @ bankrupt, of not being once members of he board of oxecutives or the board of directors declared uity of causing the company to go bankrupt, or of not being once sentenced for committing a criminal act inflicting losses on the state § (five) year before thelr appointment as members of the board of executives. Article 80 (1) Members of the board of executives shall be appointed by RUPS. {@) The board of executives shall be forthe first time formed withthe line up and name of members ofthe board of executives contained in the deed of establishment as meant in Article 8 paragraph (1) letter b {@) Members of the board of executives shall be appointed for a certain period of time, and if possible, they can be re-appointed, (4) Statutes shall regilate the procedure for nominating, appointing and removing members of the board of executives irrespective of the rights of shareholders in the nomination. Adticle 81 (1) Regulations on the distribution of task and authority of each mernber of the board of executives ao wall as the ‘amount and type of income of each member of the board of executives shall be laid down by RUPS. {2) Statutos shall stipulate that the authority of RUPS as meant in paragraph (1) is in the hand of the board of directors under the name of RUPS. Article 82 ‘The board of executives shall fully be held responsible for the management of the company and repre~ sent the company either inside or outside the court. Article 83 (Q) I'he board of executives encompasses more than 1 (one) members, each member of the board of executlves shall be authorized to represent the company, except otherwise stipulated by this law and/or the statutes. {@) Statutes shall restrict the authority of members of the board of executives as meant in paragraph (1). Business News 5706/8-5-1995 Article Bu.304 Article 84 (1) Members of the board of executives shall not be authorized to represent the company, if 4. there is case before the court between the company and the relevant members of the board of executives, or ’. the interests of the relevant members of the board of executives and the company contradict each other. (2) Statutes shall stipulate parties authorized to represent the company in the case of matters as meant in para sn APH (1). (@)If statutes do not stipulate provisions as meant in paragraph (2), RUPS shall appoint t (one) shareholder or more to represent the company. (@) if statutes do not stipulate provisions as meant in paragraph (2), RUPS shall appoint 1 (one) shareholder or more to represent the company. Article 65 (1) Each member of the board of executives shall faithfully and responsibly carry out tasks for the interest and business of the company. (2) Each member of the board of executives shall personally be held responsible for his mistakes or negligence while carrying out tasks as meant in paragraph (1), (3) Under the name of the company, shareholders representing at least 1/10 (one-tenth) of the entire number of shares with valid votes shall fle a lawsuit to the district cour against members of the board of executives for theit mistakes or negligence inflicting losses on the company. Article 86 3) The board of executives shall ‘a, make and keep a list of shareholders, minutes of RUPS and the meeting of the board of executives; and b, organize the recording of business transactions. (2) The list of shareholders, the minutes of meetings and business transactions as meant in paragraph (1) shall be kept in the place where the company is domiciled, (8) Upon the request in writing from shareholders, the board of executives shall permit shareholders to conduct an inspection of and to have access to copies of the list of shareholders, the minutes of meetings and busi ness transactions as meant in paragraph (1). Article 87 Members of the board of executives shall notify the company of their and/or their relatives’ share ownership in the company and other companies. Anicle 88 (1) The board of executives shall obtain approval from RUPS to transfer or use property of the company in a whole or in a great part as collateral for loans. (2) The legal act as meant in paragraph (1) shall not harm third parties with good intentions. (3) The RUPS decision to transfer oF use property of the company in a whole or in a great part as collateral for loans shall be considered valid, if RUPS is attended by shareholders representing at least 3/4 (Vhree-fourths) Of the entire number of shares with legal votes and the decision is approved by at least 3/4 (three-fourths) of the number of votes. <4) The legal act as meant in paragraph (1) shall be announced in 2 (two) dailies no later than 30 (thirty) days atter the legal act is taken. Article 89 (To be continued) (Editor's note: the word *statutes* referred to in Article 12 of this law (BN.S703/5704/3-5-1995 page 208) and thereafter mean ‘articles of association’) =000= Business News 5706/8-5-19951A THE LIMITED LIABILITY COMPANY (Law No.1/1995 dated March 7, 1995) (Continued from Business News No. 5706 pages 27A - 30A) Article 89 The board of executives shall grant power of attorney in writing to 1 (one) employee or more of the company or another person for and under the name of the company to take a certain legal act. Article 90 (1) The board of executives shall oniy fle an application to the district court to have the company declared to be ¢ bankrupt on the basis of a decision of AUPS, (2) Ifthe company goes bankrupt due to mistakes or negligence of the board of executives while property of the company cannot adequately make up the loss due to the bankrupcy, each member of the board of executives shall collectively be held responsible for the loss. @) Members of the board of executives who can prove that the bankrupey is not because of their mistakes or negligence shall not collectively be held responsible for the loss. Article 91 (1) Members of the board of executives may be dismissed any timie on the basis of a decision of RUPS and reasons for dismissal of members of the board of executives. . (2) The decision to dismiss members of the board of executives as meant in paragraph (1) shall only be taken after the concerned members of the board of executives are given the chance to defend themselves In RUPS. ()The decision on the dismissal as meant in paragraph (2) shall lead to expiry of the term of office as members of the board of executives. Article 92 (1) RUPS or the board of directors may suspend members of the board of executives by mentioning reasons for the suspension. (@) The suspension as meant in paragraph (1) shall be notified in writing to relevant members of the board of executives, (8) The suspended members of the board of executives as meant in paragraph (1) shall not be authorized to'earry out their tasks, (4) Within a maximum period of 20 (thirty) days after the date of suspension RUPS shall be held. (5) The relevant members of the board of executives shall be given the chance to defend themselves in RUPS as ‘meant in paragraph (4). (6) RUPS may revoke the decision on the suspension or dismiss the relevant members of the board of executives. (7) If no RUPS as meant in paragraph (4) is held within a period of 20 (thirty) days, the suspension shall be declared null and void. Article 93 Statutes shall regulate the fing of temporarily vacant pest of members of the board of executives in the case of members of the board of executives being suspended or being unavoidably absent Pan Two The Board of Directors Anticle 94 (1) The company shall have the board of directors whose authority and obligation are stipulated in the statutes. (2) The company mobilizing private funds, the company issuing debentures, of the open company shall have at least 2 (two) members of the board of directors (3) In the case of more than 1 (one) members of the board of directors, they shall constitute a council Business News 5707/12-5-199518A Anticle 95 (1) Members of the board of directors shall be appointed by RUPS. (2) The board of directors shalt be for the first time formed with the line up and name of members of the board of ‘tors contained in the deed of establishment as meant in Article 8 paragraph (1) letter b. {9) Members of the board of directors shall be appointed for @ certain period of time, and if possible, they can be re-appointed, (4) Statutes shall regulate the procedures for nominating, appointing and dismissing members of the board of directors irrespective of the rights of shareholders in the nomination. Article 96 Individuals who can be appointed as. members of the board of directors shall be those who are able to {ake legal acts and have the criteria of not being once deciared to be a bankrupt, of not being once members of {he board of executives or the board of directors declared guilty of causing the company to go bankrupt, or of not being once sentenced for commiting a criminal act inflicting financial losses on the state & (five) years before thelr appointment as members of the board of directors. Article 97 The board of directors shall have the task of supervising policies of the board of executives in managing the company and giving advice to the board of executives. Antcle 98 (1) The board of directors shail faithfully and responsibly carry out tasks for the int company, (2) Under the name of the company, shareholders representing at least 1/10 (one-tenth) of the entice number of shares with valid votes may file a lawsuit to the district court against members of the board of directors for their mistakes or negligence inflicting losses on the company, rest and business of the Article 99 Members of the board of divectors shall notify the company of their and/or their relatives’ share awner- ship in the company and other companies. Article 100 (1) Statutes shall stipulate the granting of authority to the board of directors 10 give approval or assistance to tho board of executives in taking certain tegal acts, (2) Based on the statutes or decisions of RUPS, the board of directors shall take the act of managing the compa- fy under a certain condition for a certain period of time. {9) Members of the board of directors taking the act of managing the company under a certain condition for a certain period of time as meant in paragraph (2) shall be subject to provisions on the rights, authority and Obligations of the board of executives to the company and third parties Article 101 (1) Members of the board of directors may be dismissed or suspended by RUPS. (2) Provisions on the dismissal and suspension of members of the board of executives as meant in Articie 91 and Anicle 92 paragraphs (2), (3) (4). (6), (6) and (7) shal also be applicable to members of the board of directors. CHAPTER Vu MERGER, FUSION AND TAKE-OVER Atticle 102 ()On8 company or more may merge with the existing company or fuse with another company into a new company, (2) The plan for merger of fusion as meant in paragraph (1) shatl be contained in the pian for merger or fusion Srawn up jointly by the boards of directors of companies to be merged or fused, containing at least Business News $707/12.5-1995198 a. the name of companies to be merged or fused; ’b. the reasons and explanations of respective boards of executives of companies to be merged or fused and requirements for the merger of fusion; ©. the procedure for converting shares of respective companies to be merged or fused into shares of the new company formed by merger or fusion: 4. the planned change in the statutes of the new company formed by merger or fusion, if any, or the draft deed of establishment of the new company formed by fusion; . the balance sheets, the profit and loss statements in the last three book years of all the companies to be merged or fused; and {other matters that need to be made known to shareholders of respective companies. Aniicle 103 (1) Corporate bodies or individuals may take over the company. (@) The take-over of the company as meant in paragraph (1) may be done through the take-over of shares In a whole or in a great part which leads to the transfer of contral over the company. (@) The take-over by companies shall be subject 0 the following provisions: ‘a. The plan for take-over shall be contained in the plan for take-over drawn up by the boards of executives of the companies that will take over the company and the board of executives of the company that will be subject to the take-over, containing at least : 4) the name of the companies that wil take over the company and the company that will be subject to the take-over; and 2) the reasons and explanations from the boards of executives of respective companies regarding the requirements and procedures for taking over the shares of the company that will be subject to the take- over. b. The take-over of the company shall be done with approval from RUPS of respective companies regarding the planned take-over submitied by boards of executives of respective companies (4) The take-over by corporate bodies other than companies shall be subject to the following provisions : a. The plan for take-over shall be contained in the plan for take-over drawn up by the board of executives of the company that will be subject to the take-over and the management boards of the corporate bodies other than companies that will take over the company, containing at least 1) the name of the company that will be subject to the take-over and the name of the corporate bodies other than companies that will take over the company; and 2) the reasons and explanations from the board of executives of the company that will be subject to the take-over and the corporate bodies other than companies that will take over the company regarding the requirements and procedure for taking over the shares of the company that will be subject to the take- over. b. The take-over shall be done with approval from RUPS of the company that will be subject to the take-over land approval from members or the management boards of the corporate bodies other than companies that will take over the company. (5) The take-over by individuals shall be subject to the following provisions : fa, The plan for take-over shall be contained in the plan for take-over drawn up by the board of executives of the company that will be subject to the take-over and individuals that will take over the company, containing at least 4) The name of the company that will be subject to the take-over and individuals that will take over the company; and 2) The reasons and explanations from the board of executives of the company that will be subject to the take-over regarding the requirements and procedure for taking over shares; bb. The take-over shall be done with approval from RUPS of the company that will be subject to the take-over regarding the plan for the take-over forwarded by the board of executives of the company that will be subject to the take-over and the indiviuals that will take over the company. {6) The provision as meant in paragraph (1) shall not restrict corporate bodies or individuals to take over the company directly from shareholders. Business News 707/12-6-1985 Artigl20 Article 104 (1) Legal acts regarding the merger, fusion and take-over of the companies shall take into account a. the interests of tha companies, minority shareholders, and employees, and ’. the public interests and sound competition in doing business. {2) The merger, fusion and take-over of the companies shall not reduce the rights of minority shareholders to sell their shares at reasonable prices. Article 105 (1) RUPS decisions on the merger, fusion and take over of companias shall be considered valid i they are made In accordance with Article 74 paragraph (1) and Article 76. {@) The board of executives shall announce the planned merger. fusion and take-over of the companies in 2 (two) dalies no later than 14 (fourteen) days before invitations to RUPS are made. Article 106 (1) The plan for the merger of companies that has obtained approval from RUPS shal bo attached to the application for a change in the statutes of the companies to get approval from the Minister as meant in Article 15 paragraph (1). {e) The plan for the merger of companies that has obtained approval from RUES complete with the change in the statutes of not complete with the change in the statutes shall be reported to the Minister as meant in Article 15 paragraph (2). {@) The plan for the merger of companies that has obtained approval from RUPS shall be attached to the applics- tion for the validation of the deed of establishment of the company formed by merger to obtain validation from the Minister as meant in Article 7 paragrach (6) (@) The plan for the take-over of the company that has obtained approval from AUPS shall be reported to the Minister as meant in Artiole 15 paragraph (3). (6) The provisions in Articles 21 and 22 shall also be applicable to the merger, fusion and take-over of companies. Article 107 (1) In the case of merger or fusion, companias mergad or fused into one company shall be disolvec. {2) The dissolution of the companies as meant in paragraph (1) shell be preceded by liquidation or not {@) lf the dissolution of companies 2s meant in paragraph (1) is not preceded by liquidation fa. the assets and labilties of companies merged or fused shall legally go to the company formed by merger or fusion: and bb. the shareholders of the companies merged or fused shall become the shareholders of the new company formed by merger or fusion. Article 108 (1) The board of executives of the company formed by merger or fusion shall announce the merger or fusion in 2 (two) dailies no later than 20 (thity) days after the merger or fusion is completed {@) The provision in paragraph (1) shall also be applicable to the boards of executives of companies that take over other companies 2s meant in Article 103 paragraph (1). Anicie 109 Further provisions on the merger, fusion and take-over of companies shall be regulated in @ government regulation CHAPTER Vill INVESTIGATION OF THE COMPANY Article 110 (1) The investigation of the company may be conducted with the aim of collecting data or information in the case of suspicions that : Business News 5707/125-1985214 a. the company has committed an illegal act detrimental to shareholders or third parties; oF b. members of the board of executives or the board of directors have committed an illegal act detrimental to the company, shareholders or third parties. (2) The investigation as meant in paragraph (1) shall be conducted by fling an application in writing complete with reasons for the investigation to the district court whose judicial territory covers the domicile of the company. (@) The application as meant in paragraph (2) shall only be fled by a. a shareholder under his own name or under the name of the company if he/she represents at least 1/10 (one-tenth) of the entire number of shares with valid voites: b. another party, which in the statutes or agreement with the company is authorized to filo an application tor the investigation of the company; ot . the attorney general's office representing the pul jerests. Article 111 (1) The chief of the district court shall have the right to reject or approve the application as meant in Article 110. (2) The chief of the district court as meant in paragraph (1) shall reject any application if itis not based on reasonable reasons, (@) if an application is approved, the chief of the district court shall issue judgement on the investigation of the company and the appointment of 3 (three) experts at the maximum to conduct the Investigation of the ‘company. (4) Each member of the board of executives, the board of directors, employee, and public accountant who have been appointed by the company as meant in Aricle 59 paragraph (2), paragraph (1) cannot be appointed as ‘experts as meant in paragraph (3) (6) Investigators shall have the right to inspect all documnents and property of the company that they need to know. (6) Members of the board of executives, members of the board of directors and all employees of the company shall give any information needed to conduct the investigation of the company. (7) investigators shall be banned from making the result of an investigation known to other parties. Article 142 (1) Investigators shall submit 2 report on the result of an investigation to the chief of the district court. (2) The chief of the district court shall only give copies of the report on the result of the investigation to the rele vant applicant and company. Anticle 113 (1) If an application for the investigation of the company is approved, the chief of the district court shall determine the maximum amount of investigation cost. (2) The cost as meant in paragraph (1) shail be borne by the company. {@) Basad on the request from the company, the chief of the district court shall determine compensations for the investigation cost as meant in paragraph (2) to the applicant, member of the board of executives, and/or member of the board of directors. CHAPTERP IX THE DISSOLUTION OF THE COMPANY AND LIQUIDATION The company shall be disolved because of a. RUPS decision; b. the expiry of period of establishment as stipulated in the statutes; . court judgement. Article 115 (1) The board of executives shall fle a proposal for the dissolution of the company to RUPS. (2) The decision of RUPS on the dissolution of the company shall be considered valid if it is made according to Article 74 paragraph (1) and Article 76, Business News 5707/12-5-1995 (3)_The224, {@) The company shal! be disolved at the moment as stipulated in the decision of RUPS. (4) The dissolution of the company as meant in paragraph (3) shal be followed by liquidation conducted by liquidators. Asticle 116 (1}f the company is disolved due to the expiry of the period of establishment as stipulated in the statutes, the Minister shall extend the period of establishment upon the request of the board of executives. (2) The application for the extension of the period of establishment as meant in paragraph (1) shall only be made ‘on the basis of the decision of RUPS attended by shareholders representing 2/4 (three-fourths) of the entire number of shares with valid votes and approved by at least 3/4 (three-fourths) of the total votes. {6} The application for the extension of the period of establishment as meant in paragraph (1) and the application for approval of changes in the statutes, shall be filed to the Minister no later than $0 (ninty) days before the expiry of the period of establishment. {4} The decision of the Minister on the application as meant in paragraph (1) shall be granted no later than 30 (thirty) days after the receipt date of the application. (6) If the period of establishment of the company expires and RUPS decides not to extend It, the liquidation of the ‘company shall be conducted according to provisions in this chapter. Anticle 117 (1) The istrict court shall disolve the company upon the request of a. the attorney general's office on the basis of strong evidence that the company has violated public interests: b. 1 (one) shareholder or riore representing at least 1/10 (one-tenth) of the entire number of shares with valid votes; ©. creditors on the basis of strong reasons that 4) the company is unable to pay its debts after itis declared bankrupey; or 2) property of the company is not adequate to settle all ofits debts after the statement of bankrupcy is revoked: of d, interested parties because of the existence of legal defects in the statutes of the company: (2) The court judgement shall also stipulate the appointment of liquidators, Article 118 (1) Ifthe company is disolved, within a maximum period of 30 (thirty) days liquidators shail ‘a register the dissolution in the list as meant in Article 21; b. file an application for the announcement of the dissolution in the State Gazette of the Republic of Indonesi ¢. announce the dissolution in 2 (two) dailies; and d. notify the dissolution to the Minister. (2) As long as the registration and announcement as meant in paragraph (1) letters a, b, and c are not yet made, the dissolution of the company shall not be valid for third parties. @) if liquidators neglect to register the dissolution as meant in paragraph (1) letter a, liquidators shall collectively be held responsible for losses suffered by third parties, (4) The registration and announcement as meant in paragraph (1) shall be made by mentioning the name and adress of liquidators. Article 119 (1) If the company is disolved, the company cannot take any legal act, except to settle its property in the process of liquidation. (2) The act of settling property as meant in paragraph (1) shall include a. recording and callecting property of the company; b. determining the procedure for distributing property; Business News 5707/12-5-1995, Se mak ingens as238, . making payments to creditors; paying remaining property resulting from the liquidation to shareholders; and @. other acts needed to settle property of the company. Article 120 (1) Liquidators of the disoived company shall notty ll craditors of the dissolution of the company through registered letters. (2) The notification as meant in paragraph (1) shall contain a, the name and address of liquidators; bb. the procedure for fing claims; and cc. the period of time for filing claims not exceeding 120 (a hundred and twenty) days starting the receipt date of notification {@) Creditors fling claims according to provisions in paragreph (2) letters b and c but the claims are later rejected, shall fle lawsuits to the district court no later than £0 (ninty) days starting the date of rejection. Atticle 121 (1) Creditors who do not file claims according to the provision in Article 120 paragraph (2) letter ¢ shall file claims to the district cout within a period of 2 (two) years after the dissolution of the company is registered and announced as meant in Article 118. (2) Creditors shall only file claims as meant in paragraph (1) on remaining property of the company that has not been distributed to shareholders, Article 122 (1) If no tiquidator is appointed, members of the board of executives shall act as liquidators. (@) Provisions on the appointment, suspension, dismissal, authority, obligation and responsibilty of and the supervision over the board or executives shail also be applicable to liquidators, Article 123 Upon the request of 1 (one) interested person or more or the attorney general's office, the chief of the district court shall appoint new liquidators and dismiss old liquidators because they fail to carry out tasks as expected, or debts of the company exceed its property. Article 124 (1) Liquidators shail be responsible to RUPS for the liquidation of the company. {2) The remaining property resulting from the liquidation of the company shall be distributed to shareholders. {@) Liquidators shall register and announce the final result of liquidation according to Articles 21 and 22 and announce it in 2 (two) dailies. ‘CHAPTER X TRANSITIONAL PROVISIONS Article 125 (1) Deeds of establishment which have been validated or changes in statutes which have been approved before the enforcement of this law shall remain valid as long as they do not contradict this law, (2) Deeds of establishment which have not been validated or changes in statutes which have not been approved at the moment this law takes effect shall be adjusted to this law. (8) Within a period of 2 (two) years starting the enforcement date of this law, the company established and vall- dated on the basis of the code of business law (Wetboek van Koophandel, Staatsblad 1847 : 29) shall be adjusted to this law. Business News 5707/12-6-1995240, Article 126 (1) Within a period of 3 (three) starting the enforcement date ofthis law. corporate bodies established on the basis of Ordonnantie op de Indonesische Maatschappij op pAandeelen, Staatsbled 1999 ; 69 jo 717), shall apply {or the validation of deeds of establishment and statutes to the Minister. (2) Corporate bodies as meant In paragraph (1) that have had thelr statutes validated by the Minister shall be subject to this law. ‘CHAPTER XI OTHER PROVISIONS Article 127 The company engaged in certain business activities in the capital market sector shall be subject to this law, except otherwise stipulated by the laws on the capital market. CHAPTER Xil CLOSING PROVISIONS Article 128 . (1) With the enforcement of this law, the First Book Title Three Part Three Article 35 to Article 86 of the Code of Business Law (Wetboek van Koophandel, Staatsblad 1847 : 23) on the limited liability company and amefd- ments thereof, the latest by Law No.4/1971, shall be deciared null and void, {2) All enforcement regulations of the First Book Title Three Part Three Article 36 up to Article 86 of the Code of Business Law (Wetboek van Koophandel, Staatsbiad 1847 : 23) on the limited liability company and amend- ments thereof, the latest by law No.4/1971, shall remain valid as long as they do not contradict or are not yet replaced by now regulations on the basis of this law. {8) Ordonnentie op de Indonesische Mastschappij op Aandeelen, Staatsblad 1939 : 569 jo 717 shall be declared null and void’3 (three) years after the enforcement of this iaw. Anticle 129 ‘This law shall take effect 1 (one) after the promulgation of this few. For public cognizance, this law shall be promulgated by placing It in the Statute Book of the Republic of indonesia Stipulated in Jakarta Promulgated in Jakarta On March 7, 1995 On March 7, 1995 THE PRESIDENT OF THE REPUBLIC THE MINISTER/STATE SECRETARY OF INDONESIA sed. sed. MOERDIONO SOEHARTO STATUE BOOK OF THE REPUBLIC OF INDONESIA 1995 NO. 13 ELUCIDATION won (To be continued) 000 Butiness News 5707/12-5-1995194, PHE LIMITED LIABILITY COMPANY (Law No.1/1995 dated March 7, 1995) (Continued jrom Business News No. 5707 pages 17A - 244) ELUCIDATION ON THE LAW NO.1/1995 CONCERNING THE LIMITED LIABILITY COMPANY GENERAL ‘The Broad Outlines of State Policy (GBHN) states that “the target of the Second Long Term Development Plan is creating the advanced and self-reliant Indonesian people and community in materially and spiritually peaceful and prosperous circumstances, in the communityhood, nationhood and statehood order based on the state ideology Pancasila, in completely balanced and harmonious life of the Indonesian nation In terms of the relations between one individual and another, between human beings and communities, between the human beings and the nature and the environment, as well as between human beings and God Almighty.” In the economic sector, the general target of the development is among others directed towards the promotion of the paople's prosperity in a more equitable manner. To that end, a variety of supporting facilities are needed, including the legal structure that encourages, activates, and controls all development activities in the economic sector. ‘One of the legal materials needed to support the economic development is provisions on the limited liability company in lieu of old provisions. With the new provisions, the limited liability company wil hopefully serve as one of the pillars of national ‘economic development under the principles of collective effort according to the principles of economic democra~ cy as the manifestation of the state ideology Pancasila and the 1945 Constitution. Taking into account the rote given to the limited Fability company in the national economic order referred to above, the improvement of the law on the limited liability company is an urgent need. Provisions on the limited liability company as regulated in the Code of Business Law no longer keeps abreast with and meets the rapidly growing economic and business developments at the present time, Therefore, new policies such as on foreign exchange, foreign aid, foreign capital investment, international cooperation, banking system, capital market, are needed. The new developments have increasingly made the Indonesian economy more bound to the world economy, so that the indonesian economy can no longer clos@ itself to global impacts and demands. However, the new regulations on the limited liability company must continue to be based on and stick to the econo principles outlined in the 1945 Constitution, ie. the principles of collective effort Since the limited liability company constitutes the business unit taking the form of a corporate bo, with capital composing of shares forming the combination of capital, this law stipulates that all subscribed shares must be fully paid in with a view to enabling the limited liability company to carry on business activities more soundly, effectively and efficiently In addition, this law must continue to protect the interests of each shareholder, creditor, ard relevant party as well as the company itself. This is important in view of the fact that conflicts of interest between the shareholders and the company, or between the minority shareholders and the majority shareholders, may occur in the limited liability company. In the case of conflicts of interest the minority shareholders are given certain authority among others the right to make a request for a general meeting of shareholders and for an audit of the company under judgement by the chief of the district cour. To avoid unsound competition as a result of the concentration of economic power on a handful of ‘economic agents as well as to prevent monopoly and monopsony of any forms detrimental to the public interests, this law also stipulates requirements and procedures for merging, fusing and taking over companies. This law also stipulates requirements for reduction of capita, repurchase of shares and dissolution of companies in an effort to protect the interests of creditors, Busingss News 5708/17.5-1995 Arrespectives s+.200 Irrespective of the efforts to protect the interests of minority shareholders, this law also pays attention to the protection of the interests of the community and the company by, among others, specifying the task, authority and responsibilty of the company. ARTICLE BY ARTICLE : Aticle 1 and Antcle 2: Sutficiently clear Anicle 3 Paragraph (1) The provision in this article affirms the nature of the limited company that shareholders are only responsi ble for the value of shares they withdraw, excluding their personal property. Paragraph (2) In certain cases the limited responsiblity may be relinquished. Certain cases referred to in this article are among others if personal property of shareholders turns out to be mixed with property of the company so that establishment of the company merely serves as @ means of fuing the personel interests of shareholders. Acticle 4 ‘The enforcement of this law, statutes of the company and other laws also does not reduce the obligation of the company to comply with the pricinples of goods intentions, the principles of faimess, and the principles of appropriateness in managing the company. Referred to as “other laws" are all laws related to existence and operation of the company, including provisions in the Code of Civil Law (Statute Book of 1847 No.23} and the Code of Commercial Law (Statute Book Of 1847 No.23), so long as they are not revoked or otherwise stipulated In this lave. Asticle 5 This domicile of the company authomatically functions as the head office of the company. ‘The company must choose its domicile as its address by which all fetters are written and to which the company can be contacted, Adtcle 6 This provision affirms that the period of establishment of the company is basicaly unlimited, However, if the period of establishment of the company is specified, it must firmly be stated in the statutes. antcle 7 Paragraph (1) Referred to as "persons" are individuals or corporate bodies. This provision affirms prevailing principles according to this law that as a corporate body the company is established on the basis of a contract and that it has more than 1 (one) shareholders. Paragraph (2) up to paragraph (4) : Sufficiently clear Paragraph (5) Since the state-owned company has its own specific status and characteristics, provisions on the number ‘of founders of the state-owned company are laid down ina separate law. Paragraph (6) and paragraph (7) : Suficiently clear Anicle 8 Paragraph (1) Lettera To establish the company a detailed account of the citizenship of founders is needed. Basically, the Indonesian corporate body taking the form of the company is established by Indonesian citizens, but that foreign citizens are given the opportunity to establish such a corporate body so long as the law governing the business fields of the company makes it possible for the foreign citizens to do so, or the establishment of the company is lald down in a separate law. Letter b : Sulficiently clear Letter Referred to as "having already got part of shares" is the number of shares that shareholders get at the moment the company is established Paragraph (2): Sufficiently clear. Business News 5708/17-5- 199521A Article 9 Paragraph (1) Referred to as ‘proxies” are notary publics of other persons appointed on the basis of special power of attorney. Paragraph (2) ‘The period of 60 (sixty) days starts from the date the application is regarded as having met requirements and adequacy according to the prevailing provisions. Paragraph (3) : Sufficiently clear. Article 10 Paragraph (1) “The said legal acts are among others related to the paying in of shares in the form of or by means of cash. Paragraph (2) Referred to as “shall be put’ is that all documents containing legal acts related to establishment of the relevant company shali be attached to the dead of establishment as an integral part. The integration of the documents into the deed of establishment is done by attaching or sewing the documents into the deed of establishment as an integral part. Paragraph (3) if the legal acts as meant in paragraph (1). are not contained in the deed of establishment and/or are not enclosed according to paragraph (2), the legal acts will only bind the company that is confirmed according to provisions in Article 11. Article 11 Paragraph (1) “This provision governs the procedure for transfering to the company the rights and/or responsibilities as a result of legal acts taken by the founders after the company is established but is not yet validated as @ corporate body, through the firm receipt and take-over of rights and responsibilties as well as the confirmation of the said legal acts. Paragraph (2) “The authority of the company to confirm the legal acts as meant in paragraph (1) is in the hand of RUPS. Since RUPS still cannot be held shortly after the company is validated, all founders, shareholders and members of the board of executives can confirm the legal acts. As long as the legal acts are not yet confirmed due to the fact that the company is not established and validated or it does not confirm the legal acts, the company is not bound. Adicle 12: Letter a : Suffiently clear Lettor b: ' Referred to as ‘the business activity of the company" is the activity carried out by the compaiiy to realize the aim and purpose. Letter ¢ : See elucidation of Article 6 Letter d up to letter j : Sufficiently clear Article 13 Paragraph (1) and Paragraph (2) : Sufficiently clear. Paragraph (3) In the caso of no abbreviation "Tok" the company means the closed company. Paragraph (4) : Sutfciently clear Anicle 14 up to Article 16 : Sufficiently clear Anicle 17 . Paragraph (1) : Sufficiently clear Paragraph (2) ‘The registration can only be done after changes in the statutes are reported to the Minister Anicle 18 Changes in statutes of the company declared to go bankrupcy on the basis of approval from a curator is made possible with the aim of enabling the company to free itself from going bankrupey, for Instance, through Business News 5708/17-5-1995 Shanges....+220, changes aimed to increase capital, succession of members of the board of executives or the board of directors or management changes. ‘The changes must be made with prior approval from the curator. This is in line with the principles of bankrupcy, ie., all legal acts in the state of bankrupcy can only be taken by or with approval from a curator. Article 19 and Article 20 : Sulficiently clear Article 21 Paragraph (1) Referred to as “list of companies" shall be the list of companies as meant In Law No.3/1982 on the compulsory registration of companies. Paragraph (2) : Sufficiently clear Amticle 22 : Sutficiently clear Anticle 23, In addition to criminal sanctions as meant in Law No.3/1982 on the compulsory registration of compa- niles, this article also governs civil sanctions in the case of obligations as meant in Article 21 and Article 22 not being futflled Attcle 24 Paragraph (1) : Sufficiently clear Paragraph (2) Named shares shall be the shares that bear the name of thelr holders or owners. Bearer shares shall be the shares that do not bear the name of their holders or owners. Article 25 Paragraph (1) and Paragraph (2) : Sutficiently clear Paragraph (3) ‘The provision in this paragraph is i Article 26 Paragraph (1) up to paragraph (3) : Sutfciently clear Paragraph (4) This provision affirms that as from the date of validation the paying in of shares by instalments is not allowed. The paying in of shares by instalments is only made possible before the date of validation Article 27 Paragraph (1) In general the paying in of shares is made by using money, but that it may also be done by using tangible or Intangible articles that can be measured by money. The paying In of shares is done at the moment the company is established or after the company is validated as a corporate body. ‘The paying in of shares made in the form of matters other than money at the moment of establishment of the company must be contained in the deed of establishment, while the paying in of shares made in the form of matters other than money after the validation of the company as a corporate body must obtain approval from FUPS or other organs appointed by RUPS. The paying in of shares made in the form of matters other than money must be complete with a detailed account of value or price, type or kind, status, domicile, etc. considered necessary to explain the paying in of shares. Paragraph (2) Referred to as "an expert who has nothing to do with the company" is an individual or corporate body validated by the government, and having the capability to appraise the price of the matters based on his/its expertise or knowledge. Paragraph (3) The aim of announcing the paying in of shares made in the form of immovables in 2 (two) dailies is to make it known to the public and to give interested parties the apportunity to file objections to the transier of immovables as paid-in. shares. The announcement of the paying In of shares in the form of immovables fs made in an Indonesian daily published or circulating in the domicile of the company, and in another Indonesian daily with national circulation. tended to anticipate changes in economic conditions. Business News 5708/17-5-1995 Thee sree,234, The announcement contains the amount of paid-in shares in the form of immovables and breakdown, thereof as meant in the elucidation of Article 21 paragraph (1). The paying in of shares using other means is recorded in the list of shareholders. Paragraph (4) : Sufficiently clear Article 28 : Paragraph (1) : Sufficiently clear Paragraph (2) Referred to as “certain claims” ate among others convertible bonds, and claims of other forms according to developments in the business world are further regulated in a government regulation, Article 29 In principle, the issuance of shares is aimed to collect capital, and thet the obligation to pay in shares should be borne by other parties. To ensure certainties this article stipulates that the company Is banned from issuing shares for its own possession. The ban on the own possession of shares issued by the principal company Is also applicable to its subsidiaries, Subsidiaries are banned from possessing shares issued by their principal company on the grounds that the shares ownership of subsidiaries is inseparable from that of their principal company. Referred to as “subsidiaries” are companies having special relations with anather company due to the fact, that a. more than 50% (lity percent) of their shares are owned by their principal company: . more than 50% (fity percent) of votes in RUPS are contralled by thelr principal company, and/or . control over the management of companies, appoiniment and dismissal of members of the board of executives and the board of directors are very much influenced by their principal company, Articie 30 Paragraph (1) Repurchase of shares of the company does not lead to the withdrawal of the shares, except If there is the reduction of capital. Letter a Referred to as “net property” is net property according to the latest balance sheet validated in the last 6 (six) months. Letter b : Sufficiently clear Paragraph (2) Since shareholders are obliged to return the money they have received, thus the company is obliged to return the shares it has bought to the shareholders too, Paragraph (3) : Sufficiently clear. Article 31 : Sufficiently clear. Article 32 Paragraph (1) Basically, repurchase of shares can only be made with approval from RUPS, This article gives the possi bility that authority to give the approval can be delegated to other organs of the company, namely the board of executives or the board of directors Paragraph (2) and Paragraph (3) : Sufficiently clear, Antigle 33 ; Sufficiently clear. Article 34 Referred to as “capital of the company’ is authorized capital, subscribed capital and paid-in capital Paragrap (2) and Paragraph (3) : Sulficiently clear. Article 35 : Sulficiently clear. Article 36 Paragraph (1) : Sulficiently clear. Paragraph (2) The period of 14 (fourteen) days is valid for all companies. Therefore, statutes of the companies cannot determine 2 pariod of time other than the poriod of 14 (fourteen) days. Paragraph (3) : Sutficiently clear. Susiness News $708/17-5-1995248, Anicle 37 Paragraph (1) “Referred to as “reduction of capital” is recuction of authorized capital, subscribed capital and paid-in capital Paragraph (2): Suificiently clear. Asticle 28 Paragraph (1) : Sutficiontly clear. Paragraph (2) Referred to as “reasons” are among others in the form of assurance that the company will fulfil its obligations to creditors. Paragraph (3) : Sutficiontly clear. Article 39 and Article 40 : Sutfciently clear. Article 41 Paragraph (1) This provision is intended to achieve the balance among shareholders as a result of reduction of capital The withdrawal relinquishes shares that have already bought so that they cannot be Issued any more Paragraph (2) : Suticiently clear Anicle 42 : Suliciently clear. Article 43 Paragraph (1) : Sufficiently clear. Paragraph (2) The special list serves as one of sources of information about the quantity of shares and ihe interests of managers in the company or other companies so conllicts of interest that may arise can be reduced to the minimum, Referred to as “their relatives” are their wife/husband and children. Paragraph (3) up to paragraph (6) : Sutficiently clear. Article 44 Named share ownership evedences are in the form of share certificates. Named share ownership evi ences are handed over to parties and are stipulated in the statutes according to the needs. Paragraph (2) ‘The distribution of rights to shres can only be done with the help of the company as meant in Anticle 47. If the statutes make it possible, part of rights to shares is called split shares, Article 46 Paragraph (1) Relerred to as "share classification” is 2 group of shares in which shares have the same characteristics fone from the other, and the characteristics distinguish the shares from those belonging to a group of shares of different classification. Paragraph (2) : Suticiontly clear. Paragraph (3) Referred to as “common shares” are shares giving votes to make decisions in RUPS on all matters rolat- ing to the management of the company, rights to dividends and remaining property in the case of liquidation, The rights to vote owned by holders of common shareholders also may be owned by holders of shares of cther classifications. Paragraph (4) These various elements of share classifications do not always indicate that the share classitications stand separately one from the other. & share classification may constitute a combination of 2 (two) or more elements of the share clastfications. Article 47 Paragraph (1) Split shares may only be issued on the basis of provisions in the statutes. The provisions in the statutes on the possibilty of splitting shares do not give shareholders the right to split shares by themselves. Paragraph (2) : Sufficient clear. Anicle 48 : Sulficiently clear. Business News 5708/175-1995258 Acticle 48 Paragraph (1) Referred to as “deed! is either deed made before a notary public or undethand deed Paragraph (2) up to paragraph (5) : Sufficiently clear. ‘Aticle 50 : Sufficiently clear. Article 51 Paragraph (1) Referred to as “reasonable prices’ can be in the form of market prices or the prices set by appraisers of share prices who have nothing to do with the company. ‘The period of 30 (thiny) days is set to ensure that after the period of time shareholders will have freedom 10 offer their shares to other parties. Paragraph (2) ‘The ownership of shares by employees according to this paragraph does not change status of the shares into that of employee's shares. Paragraph (3) up to paragraph (6) : Suliciently clear. Article 82 : Sulfictently clear. Article 53 Paragraph (1) and paragraph (2) : Suffciently clear. Paragraph (3) ‘This provision is intended to enable the company or other interested parties to have knowledge of status of the shares. Paragraph (4) : Sufficiently clear. Article 54 Paragraph (1) The ownership of shares as movables gives material rights to their holders. The rights can be defended against the interests of each individual. Paragraph (2) ‘The lawsuit basically contains a request that the company will stop the adverse acts and take certain steps to overcome after-effects of the acts as well as to prevent the recurrence of the same acts Paragraph (3) : Sufticiently clear. Adticle $5 : Sufficently clear. ‘Aniicle 56 : Letter a : Sufficiently clear. Letter Referred to as “consolidated balance sheet’ is the consolidated balance sheet according to the prevailing Financial Accounting Standard. Letter ¢ Matters that must be reported include forecasts of the future development of the company. letter d up to letter g : Sufficiently clear. Antcle 57 Paragraph (1) : Sutficiently clear. Paragraph (2) ‘The annual report put forward to RUPS must be signed by all members of the board of executives and the board of directors because it serves 2s the report of accountability in the realization of tasks. if any of members of the board of executives or the board of directors does not sign the annual report, the reasons why he/she does not do so must be explained in writing to RUPS so that RUPS can use the reasons as one of considerations in appraising the annual report. Antcle 58 Paragraph (1) Relerred to as "Financial Accounting Standard’ is accounting principles that have been acknowledged and approved by Indonesian accountants and authorized state agencies. Paragraph (2) :Sufficiently clear. Article 59 ... (To be continued) Business News 6708/17-5-199510A THE LIMITED LIABILITY COMPANY. (Law No.1/1995 dated March 7, 1995) (Continued from Business News No. 5708 pages I9A - 254) Article 59 Paragraph (1) ‘The obligation to hand over the annual financial statement to a public accountant for audit is because of the nature of the relevant company. The obligation to hand over the annual financial statement to an internal auditor is justified with the assumption that the public trust in the company must not be harmed. This provision is also valid for public listed companies. Lotter a Referred to as “companies whose business field Is related to the mobilization of private funds" are among others banks, insurance companies and mutual funds. Letter b Referred to as “debentures” are among others bonds. Letter c : Suificiently clear. Paragraph (2) : Suficiently clear. Paragraph (3) This provision affirms that the public accountant is held responsible for the result of the audit he/she has conducted. Paragraph (4) : See elucidation of Article 27 paragraph (3) Article 60 Paragraph (1) and paragraph (2) : Sufficiently clear. Paragraph (3) The annual financiat statement must reflect the real condition of assets, liabilties, capital and business proceeds of the company. The board of executives and the board of directors are fully responsible for the truthfulness of the annual financial statement in particular and the annual report in general. Paragraph (4) : Suificiently clear. Anicla 61 : Sufficiently clear. Anicle 62 Paragraph (1) Based on this provision, RUPS may decide that net profit will partly or wholly be used as dividends for shareholders, or for other needs, such as bonuses for members of the board of executives and the board of directors, bonuses for employees, social fund reserves, ec., of for reserves of the company which are among others used for the expansion of the company. Paragraph (2) up to paragraph (4) : Sutficiently clear Article 63 : Suffciently clear. Article 64 Paragraph (1) ‘The statutes may determine a venue of RUPS outside the domicile of the company, Paragraph (2) : Suficiently clear. Adicle 65 and Article 66 : Sutficiently clear. Atticle 67 Paragraph (1) up to paragraph (3) : Suffciently clear. Paragraph (4) This provision is meant to ensure that there will be no delay in RUPS. Article 68 Paragraph (1) : Sufticiently clear. Business News 5709/19-5.1995 Feragraph (2) ..MA Paragraph (2) Invitations to RUPS are the obligation of the board of executives. However, in the case of unavoidable things happening to the board of executives, or in the event of conflicts of interest involving the board of executives and the company, invitations to RUPS may be made by the board of directors. Article 69 Paragraph (1) : Sufficiently clear. Paragraph (2) ~ This provision is meant to ensure that the invitations to RUPS have already been made and addressed to shareholders. Paragraph (3) up to paragraph (6) : Sufficientiy clear. Article 70 Paragraph (1) ‘The announcement is meant to give shareholders the chance to forward proposals to the board of executives about the inclusion of other matters in the agenda of RUPS. Paragraph (2) : Sufficiently clear. Article 71 : Sufficiently clear. Anticle 72 Paragraph (1) The provision in this paragraph is in line with the provision in Article 46, in which the company can issue ‘one share classification or more. The freedom to issue shares in different classifications gives the possiblity of whether oF not to give rights to vote on the shares issued, including a variety of the rights themselves. Ifthe statutes does not stipulate the above-mentioned matter, each share issued may be regarded as bearing one vote, Paragraph (2) ‘Based on this provision, the shares owned by the company, either directly or indirectly, do not bear any vote and are not included in determining a quorum. Paragraph (3) : Sufficiently clear. Article 73 Paragraph (1) Deviations from the provision in Article 73 paragraph (1) are only made possible, except if they are stipulated in this law. The statutes may not determine a quorum which is smaller than that stipulated in this law. Paragraph (2) Since invitations to this RUPS result from an inadequate quorum in the first RUPS, the second RUPS must. have the same agenda as the first RUPS. Paragraph (3) up to paragraph (5) : Sutfciently clear, Paragraph (6) IF the chief of the district cour is not present due to unavoidable things, the other official representing the Chief of the district court must determine the quorum. Aicle 74 Basically, all decisions of RUPS must be made through negotiations to achieve agreement. If no decision ‘of RUPS is made despite the negotiations to achieve agreement, the decision of RUPS may be made by a majority vote. In general the majority vote is ihe ordinary majority vote i.e., the number of votes which is larger than other groups of votes without having to exceed @ half of the entire votes in the voting. However, ithe decisions of RUPS are closoly related to the very fundamental matters for the existence, survival, or nature of the company, this law and the statutes may determine a majority vote, which is larger than an ordinary majority vote, namely an absolute majority vote or a qualified special majority vote. The absolute majority vote is the majority vote exceeding 1/2 (a half) of the entire votes in the voting. The special majority vote is the majority vote whose exact number is determined, for instance, at 2/8 (Wwo-thirds), 3/4 (Hhree-fourths), 3/5 (three.ths), etc. Anicle 75 and Article 76 : Suficiently clear Business News 5709/19-5-199512A Anticle 77 The signing of minutes of RUPS by 1 (one) shareholder appointed among and by participants of RUPS is aimed to ensure the certainty and truthfulness of the content of the minutes of RUPS, Ifthe minutes of RUPS are made by a notary public, the shareholder needs not to sign them. Aticle 78 The decisions of RUPS made through ‘other methods" are t jons made by sending written pro: posals to all shareholders to. decide, and the decisions will only be valid if all shareholders agree in writing the method of making the decisions and proposals. The other methods are not applicable to the company Issuing rnemed shares. Paragraph (2) : Sutficiently clear. Aticle 79 Paragraph (1) This provision assigns the board of executives to manage the company. including the daily activities of the company. Paragraph (2) : Paragraph (2) The pariod of § (five) years starts when the concerned individuals are declared guilty of causing the company to go bankrupcy, or complete jal terms, if convicted. Article 60 up to Article 62 Sutficiently clear Article 83 Paragraph (1) This law chooses a colleaguelike representation system, but thet each member of the board of executives is authorized to represent the company for practical purposes. - Paragraph (2) and paragraph (3) : Suffciently clear Atticle : Paragraph (1) and paragraph (2) : Suffciently clear Paragraph (3) lithe act of the board of executives has an adverse impact on the company, the sharaholderfuliling requirements as meant in this paragraph may represent the company to file a lawsult oF indictment to the court against the board of executives. Amicle 86 : Paragraph (1) Letter a : The list of shareholders is made according to provisions in Article 43. Leter b : Sutictently clear Paragraph (2) and paragraph (3) : Suficiently clear Article 87 Any change in share ownership must also be reported. The report of the board of executives on the change in shares ovmnership Is recorded in the special ist as meant in Article 43 paragraph (2). Referred to as “their relatives" are as meant In the elucidation of Article 43 paragraph (2) Aticle 88 up to Article 90 : Sufficfertly clear. Article 91 Paragraph (1) : Sutficiently clear Peragrapi (2) if the concerned members of the board of executives are not present, RUPS may dismiss them without their attendance, Paragraph (9): Sufficiently clear. Acie 92 Since the dismissal may only be done at RUPS and take a certain period of time, for the interests of the company the dimissal may be done without having to await the holding of another RUPS. Therefore, itis reascna- ble to authorize the board of directors as the supervising organ of the company to suspend the members of the board of executives, uificiontly clear. Business News 5709/19.5-1995 sParagraph (2)134 Paragraph (2) and paragraph (9) : Sufficiently clear Paragraph (4) Invitations to RUPS must be done by the organ of the company suspending the members of the board of executives. Paragraph (6) up to paragraph (7) : Suficiently clear. Article 93 : Suticiently clear Article 94 = Paragraph (1) ‘The words" the board of directors" mean "organ" and “organ of the company’. As an organ, the board of directors is usually called “the board of directors", and as “an organ of the company’, Its called member of the board of directors. In this law, the definition of *the board of directors” as “an organ’ also includes other boards carrying out specitic supervisory tasks in certain fields. Paragraph (2) The company engaged in the mobilization of private funds needs supervision in a larger scale because the activity concerns public interests. Paragraph (3) : Unlike the board of executives, in the case of more than 1 (one) members of the board of directors, as a council the board of directors cannot act upon its own interests to represent the company. Article 95 : Suificiently clear. Article 96 : See elucidation of Article 79 paragraph (3). Aticle 87 and Article 98 : Sufficiently clear Anicle 89 ‘Any change in share ownership must also be reported. The repor of the board of directors on the change in share ovinership is recorded in the special list as meant in Article 43 paragraph (3). Referred to as “their rela tives" are as meant in Article 43 paragraph (2). Article 100 Paragraph (1) : Suffciently clear. Paragraph (2) This provision authorizes the board of directors to manage the company, which is really the task of the board of executives, if any of members of the board of executives is absent. If any of members of the boerd of executives is present, the board of dtectors can only take certain actions fiemly stipulated in this law. Paragraph (3) : Sutfciently clear. Anticle 101 : Sufficiently clear Article 102 Paragraph (1): Suffciently clear. Paragraph (2) Letter a and letter b ! Suficiently clear Lotter ¢ In addition to the ratio of the exchange of shares, the procedure for converting shares also includes the procedure for determining the amount of money paid to shareholders of the companies merging or fused into a new company. The payments of money to shareholders of the companies merging or fused into a new company constitutes compensatory payments for shareholders who do not wish the merger or fusion. If payments of money to the shareholders are made, prices oftheir shares must be based on reasonable value. Letter d up to letter: Sutficienty clear. Article 103, . The takeover of the company as meant in this article does not abridge provisions as meant in Article 47. Article 104 Paragraph (1) + This provision affirms that the merger, fusion and takeover of the company cannot be.done if they harm the interests of certain parties. Business News 5709/19-5-1995 Ihe14a ‘The merger, fusion and takeover of the company must avoid the possiblity of monopoly, or monopsony Whatever forms detrimental to the public interests. Paragraph (2) Minority shareholders have the right to sell their shares at reasonable prices. Ifthe minority shareholders cannot exercise their right, they may oppose the plan for the merger, fusion, and takeover of the company put forward by the board of executives, and exercise their right as meant in Article 55, Article 105 Paragraph (1) : Sutticiontly clear Paragraph (2): This announcement is meant to give the concerned parties the chance to have knowledge of the plan. If they fee! that thelr interests are harmed in connection with the realization of the plan, they may take certain steps to defend their interests Anticle 106 and Anicle 107 : Article 108 This announcement is meant to give the interested third parties the chance to know that the merger, fusion and takeover of the company have already been done. In this context the announcement must be made no later than 30 (thirty) days starting the date: a, the Minister approves changes in the statutes in the case of merger: b, the Minister receives the report, elther in the case of changes in the statutes as meant in Article 1 paragraph (8) or in the case of no changes in the statutes; ©. the Minister validates the deed of establishment of company in the case of fusion. Article 109 : Sufficiently clear. Article 110 Paragraph (1) Before taking this step, the applicant must first make a direct request to the company for data or informa tion to be needed. if the company rejects or does not heed the request, the laws offer solution to the problem, Paragraph (2) Sutficiently clear. Paragraph (3) Letter a up to letter ¢- Sufficiently clear. Article 111 Paragraph (1) and paragraph (2): Sutficiently clear Paragraph (3) Referred to as “experts” are individuals having expertise relevant to the field to be investigated. Paragraph (¢) : Sutfciently clear. Paragrephy (5) Referred to as “documents” are all books, records and letters relating to the activities of the company. Paragraph (6) and paragraph (7} : sufficiently clear. Anicle 112 : Sutficiently clear. Atticle 113 Paragraph (1) ‘The chiel of the district court must determine the amount of investigation costs for investigators on the basis of the expertise of investigators and the financial capability of the company. Paragraph (2) and paragraph (3) : Sufficientty clear. Article 114 up to Artie 116 : Sutficiently clear Article 117 Paragraph (1) Letter a and letter b : Suffcie Latter The applications trom creditors are needed because bankrupcy will not automatically lead to the dissolution of the company. iently clear. clear. Business News 5709/19.5-1995154 Letter d : Sulficiently clear. Paragraph (2) : Sutficlently clear Aniicle 118 Paragraph (1) ‘The period of 30 (thirty) days starts a. the date of dissolution by RUPS, ifthe company is disoived by RUPS; or b. the date of court judgement to obtain definite legal force, if the company is disolved on the basis of court judgement, Paragraph (2) up to paragraph (4) : Suffciently clear. Article 119 Paragraph (1) ‘As long as the liquidation is under process, statutes of the company and all changes thereof that take effect at the moment of the dissolution of the company remaian valid until the liquidators are exonerated by RUPS from their responsiblties. Paragraph (2) and paragraph (9) : Sutficiently clear. Article 120 : Sufticionty clear Article 121 Paragraph (1) : This provision is only valid for creditors whose identity and address are unknown at the time the lig tion is under process. Paragraph (2) : Sufficiently clear. Article 122 up to Article 126 : Suliciently clear. Article 127 Basically, the company engaged in certain activities relating to the capital market is subject to provisions in this law. However, since the activities of the company have specific nature different from that of activities of ‘other companies in general, specific regulations governing the company is made possible. ‘The specific regulations include matters relating to the system of paying in capi ‘company's shares, the right to vote, and the holding of RUPS. Article 128 and Article 129 : Sulficiently clear. I, the repurchase of the ‘SUPPLEMENT TO STATUTE BOOK OF THE REPUBLIC OF INDONESIA NO.3687

Indonesian Company Act

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