Corporate Governance in Indonesia: Appointment and Removal of Directors/Officers

As a general rule in Indonesia, the appointment of a member of the board of directors (BOD) is conducted through a general meeting of shareholders (GMS), in accordance with Article 94, paragraph 1 of the Company Law.

Directors may be appointed for a specific term and may be reappointed. Each appointment is effective on the date specified by the GMS or, in the absence of such specification, on the date the GMS is deemed closed.

Any individual may be appointed as a member of the BOD provided they have legal capacity and have not, within the previous five years:

• been declared bankrupt;
• served as a member of a BOD or BOC deemed responsible for a company’s bankruptcy; or
• been criminally convicted of an offence detrimental to state finances or related to the financial sector.

Further provisions regarding the appointment, replacement and dismissal of BOD members may be outlined in the company’s articles of association, subject to the minimum quorum requirements.

The procedures for the dismissal of BOD members are governed by Article 105 of the Company Law, which stipulates that BOD members may be dismissed at any time through a GMS, provided there is a valid reason for such dismissal and the director concerned is given an opportunity to defend themselves unless the director does not object to the dismissal. The dismissal becomes effective on the date the GMS is deemed closed or on a specific date determined by the GMS.

A member of the BOD may be suspended by the board of commissioners (BOC) for a specified reason as outlined in Article 106, paragraph 1 of the Company Law. During suspension, the BOD member is not authorized to perform their directorial duties. Within 30 days of the suspension, a GMS must be convened to decide whether the suspension will be lifted or if the director will be permanently dismissed.

Unless otherwise stipulated in the relevant articles of association, the GMS attendance and voting quorum for the appointment and dismissal of BOD members shall be a simple majority.

Excerpted from the Corporate Governance 2024 Chambers Global Practice Guide, published by Chambers and Partners.

Find Corporate Governance: Indonesia here.

Further reading:

Corporate Governance in Indonesia: Board Structure

Directors’ Duties: Climate Risk and Sustainability Disclosures – Indonesia

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