A&C - BUSINESS ADVISORY & LEGAL SERVICES

Before establishing a company, it is important to first understand the key organs within a Limited Liability Company (“Company”). However, before that, let us begin by understanding the definition of a Company as stipulated in Law Number 40 of 2007 concerning Limited Liability Companies ("Company Law 40/2007"). According to this law, a Company is a legal entity established based on an agreement involving an equity partnership, intended to conduct business activities with an authorized capital entirely divided into shares and meeting the requirements set forth by law.

In carrying out its business activities, a Company has several key organs, each with its own authority or function as stipulated by law, namely:

1. General Meeting of Shareholders (GMS):
   Many people assume that the highest organ within a company is the Board of Commissioners. However, as stipulated in Article 1 paragraph 4 of Law Number 40 of 2007 ("Company Law 40/2007"): "The Company’s organ that holds authority not granted to the Board of Directors or the Board of Commissioners, within the limits set forth in this law and/or the articles of association." This means that the General Meeting of Shareholders (GMS) is, in fact, the highest organ in a company. It serves as the primary forum where shareholders make key decisions regarding the future of the company.

    

2. Board of Commissioners:
   The second key organ of a company is the Board of Commissioners, which is responsible for carrying out overall supervision in accordance with the articles of association, as defined in Article 1 paragraph 6 of Law Number 40 of 2007 ("Company Law 40/2007"). The primary duties of the Board of Commissioners include overseeing the company's operations, temporarily suspending members of the Board of Directors, and being informed of all actions taken by the Board of Directors.

    

3. Board of Directors:
   The most authoritative organ, the Board of Directors is fully responsible for managing the Company and ensuring that its interests align with the Company’s aims and objectives as stated in its Articles of Association. The Board of Directors is also required to represent the Company, both in and out of court. Provisions regarding the Board of Directors are regulated under Article 1 paragraph 5 of Law Number 40 of 2007 ("Company Law 40/2007").

With the above explanation of the key organs within a Limited Liability Company, are you ready to establish the organizational structure that will drive your company’s operations? Contact A&C to help make your dream company legally recognized.

*Disclaimer: This article is for general information only and does not constitute legal advice. We accept no liability for any consequences arising from its use. Unauthorized use or reproduction is prohibited and may result in legal action.