The Resolution for the Removal of Director in Indonesian Company

As the shareholders remove the director and appoint the new one in the limited company in Indonesia. Find out the procedures are.

The process of removing the director in Indonesia depends on the general meeting of the shareholders. As the shareholders appoint the director, the shareholders remove the director, too.  

The action to carry out the resolution for the removal of the director in the limited liability company should be in the general meeting of the shareholders before the decision is made. Here is the overview of the process of the resolution for the removal of the director in Indonesian company.

The Position of the Directors

According to Indonesian Law No.40 of 2007, article 94 subsection 1, explains that members of the board of directors are appointed by the GMS (The General Meeting of Shareholders). Before the shareholders remove the director, the director can resign when he or she still officiate as a director. 

Furthermore, the director can complete his or her term and can renew the contract if both the shareholders and the director are willingly to achieve the goals and objectives of the company in the future. Still, the shareholders remove the director and appoint the new one for the development of the company.

The Process of the Resolution for the Removal of the Director

The issue where the shareholders remove the director is always intense especially when the general meeting of the shareholders are held for this purpose. 

The resolution in which the agenda of the general meeting related to the removal of the director need to fulfill certain requirements:

1.      The voting and the quorum should follow the AOA (an amendment of the articles of association) of the company

2.      The decision of the removal of the director will be valid if the attended or represented majority of the shareholders (more than 50% of the total shares) in the general meeting of the shareholders use the rights of voting.

3.      The resolution for changing the members in the board of directors or the board of commissioners should follow the basis of the mutual consensus, where the failure in which the affirmative votes should cover more than 50% of the total votes during the general meeting of the shareholders. The general meeting of the shareholders in the limited liability company in Indonesia also must follow the resolutions of the resignation of the member of the board of directors or the board of commissioners not more than 90 days after the acceptance of the letter of resignation from the member of the board of directors or the board of commissioners. The election vote for the removal of the director will be valid or effective as the resolution in the general meeting is conducted.

4.      After the shareholders remove the director, the shareholders will stipulate the term of AOA to the directors and the commissioners.

5.      The shareholders reappoint the new board of directors’ members or commissioners members when the term of the position of both members expires.

6.      Through the notary, the company is required to announce or inform the Minister of Law and Human Rights about the changes in the structures of the board of directors.

7.      The Minister of Law and Human Rights will publish or issues of the approval or acknowledgment of the registration of the change of the board of directors in the form of receipt.

To sum up, the resolution of the issue of the stakeholder remove the director needs to be executed carefully so that the removal of the director in the general meeting will not turn into chaos.

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