Shareholders and

Ownership
Group 7:
Maghfira Iza H - 1706072405
Ruth Angeli C. Wullur - 1806134556
Hadila Franciska - 1706058607
 Outline

Minority Rights &

Ownership Structure
Responsibility
structure of Shareholders

Equitable Case
Treatment of Ownership
Structure - PT
Shareholders SMART Tbk
Ownership Structure
 Ownership Structure

● Ownership structures are of

● The ownership structure is
major importance in corporate
defined by the distribution of
governance because they
equity with regard to votes
affect the incentives of
and capital but also by the
managers and thereby the
identity of the equity owners.
efficiency of the firm.

● Ownership structure can be

distinguished by the level of
concentration of ownership
rights as well as by the
identity of the owner.
Ownership Structure Around The World

Based on La Porta et al (1999) analysis in 27 countries

to see if there were “chain” of ownership:

1. 24% large companies are widely held

2. 35% are family-controlled
3. 20% are stated controlled
 The most common ways to organize a business
Sole Proprietorship Partnership

A sole proprietorship is a one-person A partnership is simply a business owned

business that is not registered with the by two or more people that haven’t filed
state like a limited liability company papers to become a corporation or a
(LLC) or corporation. limited liability company (LLC).

Limited Partnership Limited Liability Company

Limited partnerships are costly and A limited liability company is a corporate

complicated to set up and run, and are structure whereby the members of the
not recommended for the average small company are not personally liable for the
business owner. Limited partnerships are company's debts or liabilities.
usually created by one person or company.
Non-profit Corporation Cooperative

A nonprofit corporation is a corporation Cooperative is an organization owned and

formed to carry out a charitable, operated democratically by its members.
educational, religious,literary, or scientific
purpose.A nonprofit can raise much-needed
funds by soliciting public and private grant
money and donations from individuals and
companies.
Minority Structure
Company Law No.40 of 2007 Article 79

● Personal Right The convention of GMS can be

● Appraisal Right performed upon the request.
● Pre-Emptive Right
● Derivative Right
● Enquete Recht

Minority shareholders

Own less than 50% of the company’s outstanding shares, so they does not exercise
control over a corporation.
If a dispute arises or another issue requiring shareholder votes, a minority
shareholders doesn’t have voting strength on his own.
Minority Right

The rights of shareholders

who own smaller stakes in a
company. They should have
the same rights as larger
shareholders but often this is
not the case.
Minority Shareholders

Shareholders who
have smaller holdings
of shares.
 Key Influence on the Type of Ownership and Control Structure

Legal System
● Common law legal system have a better minority protection than civil law legal
system
● If legal, environment doesn’t have good protection,a relative group can retain
ownership, power, and control
● In UK and USA, right of minority shareholders are well-protected,there are many
more companies with diversified shareholders bases and family-owned are much
less common
Rights and Responsibilities of
Shareholders
 Rights of Shareholders
UU nomor 40 tahun 2007
Pasal 52 ayat (1)
Shares give the owner the right to:
a. attend and cast a vote in the GMS;
b. receive dividend payments and the
remaining assets resulting from liquidation;
c. exercise other rights based on Law.
Pasal 79 ayat (2)
The annual GMS may be conducted upon
request of one or more shareholders who
together represent 1/10 or more than the
total shares with voting rights, unless the
articles of association determine a smaller
amount.
Pasal 75 ayat (2)
In the GMS forum, shareholders are
entitled to obtain information relating to
The Company from the BOD and/or the
BOC, as long as it relates to the agenda
of the meeting and does not conflict with
the interests of the Company.
Pasal 85 ayat (1) dan (2)
Shareholders with voting rights, either
individually or represented by a power of
attorney, have the right to attend the GMS
and to use his voting rights in accordance
with the number of shares he owns.
 Rights of Shareholders
UU nomor 40 tahun 2007

The Right to Ask First The Right of Minority Position

Pasal 43 ayat (1) dan (2) Pasal 62 ayat (1)

(1) All shares issued to increase capital must
first be offered to each shareholder in
proportion to the share ownership for the same
classification of shares.
(2) In the case of shares to be issued for
additional capital are shares whose
classification has never been issued, those who
have the right to purchase first are all the
shareholders in accordance with the number of
shares it owns.
Each shareholder has the right to request the
Company to purchase its shares at a fair price if the
person concerned does not agree to the Company's
actions that harm the shareholders or the Company,
in the form of:
a) amendments to the articles of association;
b) transfer or guarantee of the Company's assets
which have a value of more than 50% of the
Company's net assets; or
c) Merger, Consolidation, Acquisition, or Separation
 Rights of Shareholders
Pasal 61
Each shareholder has the
right to file a lawsuit against
the Company if harmed due
to the Company's actions
which are deemed unfair and
without reasonable reasons
as a result of the resolution
of the GMS, Directors and/or
the Board of Commissioners.
Rights to file a lawsuit
UU nomor 40 tahun 2007
Pasal 97 ayat (6)
On behalf of the Company,
shareholders who represent
at least 1/10 of the total
shares with voting rights
may file a lawsuit against a
member of the Board of
Directors who, due to their
mistake or negligence,
causes a loss to the
Company.
Pasal 114 ayat (6)
On behalf of the Company,
shareholders who represent
at least 1/10 of the total
shares with voting rights
may file a lawsuit against a
member of the Board of
Commissioners who, due to
their mistake or negligence,
causes a loss to the
Company.
 Responsibilities of Shareholders
UU nomor 40 tahun 2007
Pasal 3

The shareholders of the Company are not personally responsible for the engagement made on
behalf of the Company and is not responsible for the losses of the Company in excess of the
shares it owns, unless:

the shareholders
the shareholders concerned, either
the requirements the shareholder
concerned, either directly or indirectly,
of the Company concerned is
directly or indirectly, illegally use the
as a legal entity involved in an
in bad faith make Company's assets,
have not been or illegal act
use of the Company which results in the
are not fulfilled committed by
for personal gain Company's assets
the Company
being insufficient to
pay off the debts
Equitable Treatment of
Shareholders
 Equitable Treatment of Shareholders
According to OECD Principles
Principle III. A (1):
Within any series of a class, all shares should
carry the same rights. All investors should be
able to obtain information about the rights
attached to all series and classes of shares
before they purchase. Any changes in voting
rights should be subject to approval by those
classes of shares that are negatively affected.
Principle III. A (2):
Minority shareholders should be protected
from abusive actions by, or in the interest of,
controlling shareholders acting either directly
or indirectly, and should have effective means
of redress.
Principle III. A (3):
Votes should be cast by custodians or
nominees in a manner agreed upon with the
owner of the shares.
Principle III. A (4):
Impediments to cross-border voting should be
eliminated.
Principle III. A (5):
Processes and procedures for general
shareholder meetings should allow for
equitable treatment of all shareholders.
Company procedures should not make it
unduly difficult or expensive to cast votes.
 Equitable Treatment of Shareholders
According to OECD Principles

Principle III. B (1): Principle III. C:

Prohibition of insider trading Members of the board and key executives
should be required to disclose to the board if
Principle III. B (2): they have a material interest in any
Regulation of related-party transactions transaction or matter directly affecting the
● Shareholder voting avoidance system corporation, either directly, indirectly or on
● Prohibition of lending to related parties behalf of third parties.
● Decisions and disclosure of
remuneration to the directors,
supervisors and executives
● Director voting avoidance system
● General prohibition of related-party
transactions by directors and executives.
● Damage compensation liability
● Criminal liability.
 Equitable Treatment of Shareholders
According to
Pedoman Umum Good Corporate Governance KNKG (2006)

The company must...

Protect the rights of Maintain an orderly Provide information about

shareholders according to register of shareholders the company in a timely,
the laws and regulations in accordance with laws correct and orderly manner
and articles of association and regulations and the to shareholders, except for
of the company. articles of association. confidential matters.

Not take sides with certain shareholders Be able to provide a

by providing undisclosed information to complete explanation
other shareholders. Information must be and accurate information
provided to all shareholders regardless of regarding the holding of
the type of shares owned. the GMS.
 Case
Ownership Structure - PT
Sinar Mas Agro Resources and
Technology (SMART) Tbk
Ownership Structure
Corporate Structure
Ownership of Sinarmas
In the term of ownership structure, Family
business who has the most ownership is
SMART Tbk, one of business group of Eka Tjipta
Widjaja family. What happened in the family
ownership also reflected why family control has
no significant effect on financial performance.
Controlling shareholders do not concern to
profit maximization because of curency crisis
and decreasing opportunity to get it.
Controlling shareholders’ ability to control the
decision making of management is the
implication of agency problem II.
In the agency problem II concept, management
–which are mostly dominated by family- will
have minimal conflict to the controlling
shareholders because of family goal. This
concept can explain why management mostly
supported by controlling shareholders interest.
When controlling shareholders do not focus on
financial performance because the want to get
another private benefit, management will act
something to realize that goal. In the two tier
system, Both board and management were
separately do their work. Although that there
was combined leadership in two tier system,
both board and management family member
were not separate.
Thankyou