There are statutory restrictions in Indonesia on the quorum of general meetings of shareholders (GMS). A GMS can be held and is entitled to adopt resolutions if shareholders representing more than half of the company’s shares with voting rights attend or are represented at the meeting, unless the articles of association (AOA) require a higher quorum.
If the quorum is not reached, a second GMS can be called and adopt resolutions if shareholders representing not less than one-third of all shares with voting rights attend or are represented at the meeting, unless the AOA require a higher quorum. If a quorum is not reached at the second GMS, a request can be filed with the chairman of the competent district court to determine the quorum requirements for a third GMS. This request must be made by the company’s authorised representative as provided in the company’s articles of association.
Each share grants its owner the right to attend GMS and cast one vote at GMS. Non-voting shares can be issued, but all share classes must be entitled to dividends.
A GMS resolution must be adopted by consensus. If a consensus cannot be reached, a GMS resolution will be valid if it is approved by more than half of the total votes cast at the GMS, unless otherwise required by the law or the company’s articles of association.
Specific voting majorities are required for the following corporate actions:
- Increasing and decreasing the company’s authorised share capital, which must be approved by at least two-thirds of the votes legally cast at GMS where shareholders holding at least two-thirds of the company’s total issued voting shares are present or represented.
- Amending the company’s AOA (the quorum and voting requirements are the same as for an increase or decrease of capital).
- The merger, consolidation, acquisition, winding-up, or division of the company, which must be approved by three-quarters of the votes legally cast at a GMS where shareholders holding at least three-quarters of the company’s total issued voting shares are present or represented.
- Increasing the company’s issued and paid-up share capital within the limit of authorised capital, which must be approved by more than one-half of the total votes cast at a GMS where shareholders with more than one-half of the total voting shares are present or represented.
The company’s AOA can impose higher quorum and voting requirements to pass resolutions on these matters.
This first appeared in Establishing a Business in Indonesia, published by Thomson Reuters Practical Law. You can find the full chapter here.
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