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  • Corporate Governance Framework: Indonesia

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    Frandy Karundeng
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    This document summarizes some key aspects of corporate governance in Indonesia. It notes that ownership is often concentrated among small groups or families, with little separation between owners and managers. This can lead to weak oversight and abusive related-party transactions. It also describes how some large state-owned enterprises set up complex holding structures that lack transparency. Corporate boards in Indonesia also often lack experience with governance best practices. While Indonesia has strengthened its legal framework for corporate governance in recent years, implementing proper governance remains a challenge.

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    This document summarizes some key aspects of corporate governance in Indonesia. It notes that ownership is often concentrated among small groups or families, with little separation between owners and managers. This can lead to weak oversight and abusive related-party transactions. It also describes how some large state-owned enterprises set up complex holding structures that lack transparency. Corporate boards in Indonesia also often lack experience with governance best practices. While Indonesia has strengthened its legal framework for corporate governance in recent years, implementing proper governance remains a challenge.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    22 views9 pages

    Corporate Governance Framework: Indonesia

    Uploaded by

    Frandy Karundeng
    This document summarizes some key aspects of corporate governance in Indonesia. It notes that ownership is often concentrated among small groups or families, with little separation between owners and managers. This can lead to weak oversight and abusive related-party transactions. It also describes how some large state-owned enterprises set up complex holding structures that lack transparency. Corporate boards in Indonesia also often lack experience with governance best practices. While Indonesia has strengthened its legal framework for corporate governance in recent years, implementing proper governance remains a challenge.

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    of 9

    BY: FRANDY KARUNDENG, SE.

    , MSA

    CORPORATE

    GOVERNANCE

    FRAMEWORK
    INDONESIA
    SPECIFICS OF CORPORATE

    GOVERNANCE IN INDONESIA

    LITTLE SEPARATION OF OWNERSHIP


    THE ROLE OF SOE CONCENTRATED OWNERSHIP
    AND CONTROL
    Since the early 1990s and Many private companies in
    Most controlling shareholders also
    especially in the last 20 Indonesia start out as small private
    act as the
    years, several SOEs have companies owned either by a single
    company’s President Director and sit
    been equitized and controlling shareholder, members
    on the Board of Directors.
    converted into partly of a family, or a small group of Failure to separate ownership and
    privatized companies shareholders. control typically results in weak
    through public stock This concentrated ownership accountability and control structures,
    offerings and/or strategic structure often entails a lack of abusive related party transactions,
    alliances proper documents (such as the and poor information disclosure
    company charter or financial (insiders have access to all
    regulations) and a lack of information and are unmotivated to
    supervisory activities and proper disclose to outsiders or minority
    book-keeping. shareholders).
    SPECIFICS OF CORPORATE

    GOVERNANCE IN INDONESIA

    UNWIDELY HOLDING STRUCTURES INEXPERIENCED AND INADEQUATE

    Some major business groups, CORPORATE BODIES

    especially large SOEs, are set The members of all these bodies are
    up in the form of parent supposed to be experienced and capable,
    companies controlling subsidiary but in reality they lack awareness of their
    companies. responsibilities,
    While holding structures can serve due to a historical lack of general good
    legitimate purposes, cross- practice in their areas. A lack of
    shareholdings and lack of experience in the field of corporate
    transparency have the tendency to governance is a big obstacle for further
    create opaque ownership economic development.
    structures. Unfortunately, strong, vigilant and
    Poor consolidated independent corporate bodies remain a
    accounting rarity.
    LEGAL AND REGULATORY FRAMEWORK

    Limited Liability Company on 1848 in Chapter 3 of Impact of WTO Agreement


    Indonesia Commercial Code

    The foreign investment in Indonesia first introduced Apllication of Industry-


    through the 1967 Foreign Investment Law. specific law and regulation
    Over the past 5 years, Indonesia’s legal and
    OJK Regulations
    regulatory framework for corporate governance has
    improved dramatically
    CG

    REGULATIONS

    LEGAL REQUIREMENTS COMPLY/EXPLAIN SUGGESTIONS

    RULES
    The rules that refer to
    These rules are to be These rules are
    mandatory legal
    followed. recommendations in
    requirements.
    marked in the text by their nature.
    by using words ”must”,
    the use of the word use terms such as
    “is obliged to”, “cannot”,
    “shall”. “should” or “can”.
    etc.
    Tiap kelompok download satu pengungkapan
    GCG di Indonesia.

    ASSIGN

    MENTS
    WWW.AUGUSTA&CO.COM
    THANK

    YOU!

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