Shareholder Activism in Indonesia

While there is no specific definition of shareholder activism in Indonesia, and Indonesia does not recognize shareholder activism, the Indonesian Company Law (Law No. 40 of 2007 regarding Limited Liability Companies) gives certain rights to each shareholder and minority shareholder that allow them to influence the company's actions.

Each share grants its owner the right to attend and cast one vote in the general meeting of shareholders (GMS) and perform other rights under the Company Law. Actions that require shareholder approval include:

• amendments to the articles of association (AOA) must be approved by a resolution at a GMS at which at least two-thirds of the company's voting shares are represented and at least two-thirds of the shares in attendance approve the resolution;
• merger, consolidation, acquisition, bankruptcy and/or dissolution of the company, as well as the transfer or pledge of the company's assets as security for a loan, which comprise more than 50% of the company's net assets in one or more related or unrelated transactions, must be approved by a resolution at a GMS at which at least three-quarters of the company's voting shares are represented and at least three-quarters of the shares in attendance approve the resolution.

In all cases, the Company Law permits the AOA to require a greater percentage of votes to approve resolutions for these and any other matters.

• Each shareholder is entitled to file a lawsuit against the company if the shareholder suffers losses caused by the company's actions which are considered unfair and unreasonable as a consequence of a resolution of the GMS, or the Board of Directors (BOD) or the Board of Commissioners (BOC).
• Each shareholder has the right to request the company to repurchase his or her shares at a reasonable price in the event of the following corporate transactions where they cause a shareholder or the company to incur losses:

• • amendment of the company's AOA;
  • transfer or pledge of the company's assets valued at more than 50% of the company's net assets; or
  • merger, consolidation, acquisition or demerger of the company.
• At the request of one or more shareholders who jointly represent one-tenth of the total number of shares having valid voting rights, or a lesser number as may be stipulated in the company's AOA, the BOD must hold an annual general meeting of shareholders or an extraordinary general meeting of shareholders.
• One or more shareholders who jointly represent one-tenth of the total number of shares having valid voting rights can file a lawsuit at the relevant court against members of the BOD and/or the BOC who have caused losses to the company due to their faulty actions or negligence.
• One or more shareholders who jointly represent one-tenth of the total number of shares having valid voting rights can submit a written request to the relevant court to investigate the company for the purpose of obtaining data or information if there is any reason to believe that:

• • the company has committed an unlawful act which has caused damage to the shareholders or a third party; or
  • a member of the BOD or BOC has committed an unlawful act that has caused losses to the company, the shareholders or a third party.

In addition, for public companies the applicable capital market laws and regulations provide certain provisions to protect the interests of minority shareholders. In the acquisition of a public company, Indonesian Financial Services Authority (Otoritas Jasa Keuangan or OJK) rules require the new controller to conduct a mandatory tender offer to the public shareholders. Further, conflict of interest transactions are subject to the approval of independent shareholders.

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