The shareholders remove the director and appoint the new one. Can one hold both as a shareholder and a director? Find out the information.
The shareholders appoint the director. Therefore, the shareholders remove the director. The shareholders remove the director if the performance of the director in managing the company is unsatisfied.
Here is the information about the possibility of having the dual positions both as a shareholder and a director in Indonesian limited liability company.
The Obligation of Shareholders
Apart from the shareholders remove the director, the shareholders have certain obligations:
1. Changing the activities of the business in the company
2. Increasing and decreasing the authorized capital of the company
3. Transferring the shares of the company
4. Changing the location of the business of the company
5. Having the period of incorporation for the company
6. Performing the change of the company status from the private to the public liability company or vice versa
The Obligations of the Board of Directors
Here are the obligations that the board of the directors of the company.
1. Having the establishment and the maintenance of the minutes general meeting of shareholders and the minutes meeting with the board of directors
2. Having the responsibility to manage the interests of the company to achieve the goals and objectives.
3. Having the preparation and the submission of the annual report to the general meeting of shareholders such as profit and loss statement current balance sheet, equity changes, cash flows.
4. Having the duty of the supervisory of the previous accounting year that is conducted by the board of commissioners.
5. Having an obligation to ask for the approval from the general meeting of shareholders to transfer or secure the assets of the company.
6. Having the written request for the attorney on behalf of the company.
Can a Shareholder Become a Director?
Based on the Law no. 40 of 2007 on Limited Liability Companies (Company Law), article 93 section 1, explains that those who can be appointed as the members of the board of directors shall be individual who has the capability in performing a legal action, except within the period of 5 (five) years prior to his appointment.
The board of shareholders remove the director and appoint the new one. In line to the previous law, the Law of the Republic of Indonesia No.5 of 1999 Concerning the Ban on Monopolistic Practices and Unfair Business Competition of article 26 related to the double position states that a person who serves as the director or commissioner of a company is prohibited from concurrently being the director or commissioner at other enterprises, if the said enterprises:
a. are in the same relevant market; or
b. are closely related to the field and/or type of business; or
c. can jointly control the market share of certain goods and/or services, which could cause monopolistic practices and/or unfair business competition.
As the violation to the provisions conducted in article 26 to this law will be the subject to a criminal fine in the amount of at least Rp5,000,000,000 (five billion rupiah) and in the amount of Rp25,000,000,000 (twenty-five billion) rupiah at the most, or imprisonment at a
maximum period of 5 (five) months.
Based on the explanation above, it can be concluded that the shareholder cannot hold the position as the director or vice versa. Also, the shareholders remove the director when the director performs a damaging action related to the company so that it will be vague if the shareholder also works as a director.
BP Lawyers can help you: We can asisst you in providing the best solution to the legal problem of your business or your company’s you can contact us via, e-mail ask@bplawyers.co.id or phone +62 821 1000 4741
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