Corporate Governance and Compliance in Indonesia
Indonesia’s corporate governance landscape is governed by the Company Law No. 40 of 2007, which outlines the roles and responsibilities of shareholders, boards of directors, and boards of commissioners in limited liability companies.
General Principle of Corporate Governance
The management and its supervisors, namely the board of directors and the board of commissioners, represent the company and not the shareholders. The board of directors is responsible for managing the company in the interests of the company, while the board of commissioners conducts general and special supervision of the board of directors.
Public Companies
Public companies with at least 300 shareholders or listed on the Indonesia Stock Exchange (IDX) are subject to capital market regulations, including Law No. 8 of 1995 on Capital Markets. These companies must comply with regulations issued by the Financial Services Authority (OJK) and the IDX, which provide more detailed guidelines on good corporate governance practices.
Private Companies
Private foreign investment companies and private local companies that obtain domestic investment company (PMDN) status from the Capital Investment Coordinating Board (BKPM) are subject to regulations regarding the field of capital investment. Other sectors may have specific laws and regulations governing corporate governance practices.
Licensing and Registration
The government has implemented the Online Single Submission (OSS) system, which consolidates all licensing systems into one platform. Companies must register with the OSS system to obtain a business identity number (NIB), business licence, and commercial licence. Sectoral ministries or government authorities determine the required licences and commitments or conditions for lines of business under their authority.
Good Corporate Governance Manual
In practice, companies also prepare their own good corporate governance manual as a reference for ethics and business practices.
Regulatory Framework
The regulatory framework for corporate governance in Indonesia includes:
- Company Law No. 40 of 2007: Outlines the roles and responsibilities of shareholders, boards of directors, and boards of commissioners in limited liability companies.
- Law No. 8 of 1995 on Capital Markets: Regulates public companies with at least 300 shareholders or listed on the IDX.
- Government Regulation No. 24 of 2018 on Electronic Integrated Business Licensing Services: Implements the OSS system for licensing and registration.
Key Players
- Indonesia Stock Exchange (IDX): Oversees capital market regulations and good corporate governance practices for public companies.
- Financial Services Authority (OJK): Issues regulations and guidelines for financial services, including capital markets.
- Capital Investment Coordinating Board (BKPM): Regulates foreign investment and domestic investment company status.
Contact Information
- Indonesia Stock Exchange: Building, 1st Tower, Jl. Jend. Sudirman Kav 52-53, Jakarta Selatan 12190, Indonesia.
- Call Center: 0800-100-9000 (Free)
- E-mail: callcenter@idx.co.id