Khairunnisa Rahinaningtyas Corporate Governance

16/397035/EK/20991

Indonesia Corporate Governance Manual

IFC Advisory Services in Indonesia

Board of Commissioners
As stated in Indonesia’s Corporate Governance Code, public companies are adopting a two board
system, namely the Board of Commissioners and the ​Board of Directors,​ each of which has a
clear authority and responsibility. The Board of Commissioners shall function to oversee and
providing advices at strategic level to the Board of Directors. This organ is essential to influence
the performance of the company through its strategic oversight and control over management. To
have optimal performance, the following principle shall be observed:
1. the composition of the Board of Commissioners shall enable it to make effective, right
and timely decision and to act independently;
2. the members of the Board of Commissioners must be professional that possess the
integrity and capability to enable them to carry out their function properly including to
ensure that the Board of Directors shall observe the interest of all stakeholders;
3. the oversight and advisory function of the Board of Commissioners includes the acts of
prevention, improvement, and suspension
An AoA of a imited liability company stipulate the general duties of the Board of Commissioners
as follows:
- conduct supervision over the management (that is, the Board of Directors) of the
company;
- perform any duty specifically provided for by the AoA, prevailing laws and regulations
and/or the resolutions of the GMS;
- perform their duties, authorities and responsibilities in accordance with the AoA of the
company and the resolutions of the GMS;
- act in the interest of the company and be accountable to the GMS;
- examine and review the annual report prepared by the Board of Directors and sign it.
The numbers of commissioners shall be limited to the numbers set out in AoA. A Board of
Commissioners must have a minimum of one Commissioner or more.16 Boards of
Commissioners consisting of more than 1 (one) member shall constitute a council. There are
different types of committees, namely: (1) nomination and remuneration committee, (2) audit
committee, (3) risk policy committee, and (4) corporate governance committee.
Khairunnisa Rahinaningtyas Corporate Governance
16/397035/EK/20991

Commissioners on the Board of Commissioners are responsible for exercising their rights and
discharging their duties in good faith, with care and in a professional manner. Other duty is called
the duty of loyalty. In international corporate governance practice, the duty of loyalty is of central
importance to the governance framework, underpinning the effective implementation of key
corporate governance issues. The duty of loyalty requires commissioners to exercise their powers
in the interests
of the company as a whole.

Board of Directors
The ICL provides definition of the Board of Directors as the companies organ with full authority
and responsibility for the management of the company in the interests of the company in
accordance with the company’s purposes and objectives and to represent the company in and out
of court in accordance with the provisions of the AoA. In Indonesia, the establishment of a Board
of Directors is mandatory for limited liability companies.
ICL specifies several of the Board of Director’s duties and obligations, which include:
- undertake the management of Companies in the interest of the Companies and in
accordance with the Companies’ purpose and objectives
- represent Companies in and out of the courts
- make a register of shareholders, special register, GMS minutes, and minutes of meetings
of the Board of Directors; make annual reports and the Company’s financial documents as
contemplated in the Company Documents Act; and maintain all registers, minutes and the
Company’s financial documents and others of the Company’s documents.
The Indonesia’s CG Code provides general guidelines which stipulate that the duties of the Board
of Directors shall cover 5 (five) main tasks, namely in the areas of management, risk
management, internal control, public relation, and social responsibility. The position between
President Director and the members are equal. The ICL Article 92 regulates that the Board of
Directors of a company shall consist of 1 (one) or more members.
ICL does not set the maximum term, neither limit the re-election of the board of Directors’
member for a certain number of terms. However, the common practice in Indonesia is that the
terms usually 5 years and can be re-elected for maximum 2 times.