If you want conduct business in Indonesia under a Local Company (Perseroan Terbatas or PT Local) or you already act as a shareholder in Indonesia, you must know that Annual General Meeting or AGM is a crucial thing and an AGM is mandatory to be held every year by a local company. What is AGM, what is its purpose and how to conduct an AGM? Here are a few things shareholders and business owners must know.
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What is an Annual General Meeting (AGM)?
Who has the ultimate authority in a company in Indonesia? According to the Indonesian Company Law (UU Nomor 40 Tahun 2007 about the Local Indonesian Company), shareholder general meeting is the highest authority in a local company. The shareholders’ general meeting consists of Annual General Meeting (AGM) and Extraordinary general meeting or EGM (Rapat Umum Luar Biasa) of shareholders. RUPS Luar Biasa can be held whenever the shareholders in Indonesia wish or whenever necessary for the company’s interest. Whenver EGM is to be held, all of the shareholders must be informed about this meeting in writing. However, we are not going to discuss more about EGM in this article. Instead we will focus on annual general meetings (AGM). Annual General Meeting (AGM) for shareholders is a mandatory meeting that must be held at least once a year. In an annual general meeting, shareholders have voting rights in making decisions about the company strategy, performance, auditors and other important matters. Annual General Meeting AGM discusses and approves or rejects the annual report submitted by the Board of Directors (BOD) concerning matters affecting the company.
What is discussed in an AGM?
AGM are conducted to discuss all important matters related to the business. Some of the matters discussed in AGM are as follows:
- Financial statements (profit or loss, assets and liabilities, cash flow of the business etc)
- Corporate social responsibility (CSR) report
- Business’s performance
- Appointment of auditors
- Discussion about remuneration packages of directors
Auditors are also given the opportunity to bring any critical issues to the attention of shareholders.
Conducting an Annual General Meeting (AGM)
Notice of the AGM must be given to shareholders at least 14 days prior to AGM. This notice must be sent by registered mail or made public through newspaper. The notice must provide the information about date, time, location and agenda of the AGM. It is also worth noting that any shareholder/s individually or collectively representing at least 10% of voting rights can propose BOD about the agenda of AGM. This proposal must be sent at least 7 days before the invitation of AGM is issued.
AGM will only be valid if shareholders with at least 50% voting rights attend the AGM. If this quorum for AGM is not met, a notice for the second AGM can be sent to shareholders to tell them that quorum was not met.
It is also worth noting that the agenda of AGM should be submitted to Financial Services Authority known as Otoritas Jasa Keungan (OJK) five days before AGM announcement is made.
An important thing to note is that Indonesian law allows AGM to be electronically held using video conference, teleconference or other suitable electronics means.
How MAM Corporate Solutions can help?
It can be very time consuming and complex to maintain company records, prepare board resolutions, file annual and periodic returns, deal with corporate governance matters and ensure that company meets all the compliance regulations.
MAM Corporate Solutions provides complete corporate secretarial services to companies to ensure smooth functioning of the board and compliance with laws and regulations. Some of corporate secretarial services include:
- Notification of Annual General Meetings (AGM) well before deadlines
- Establishing and maintenance of statutory registers
- Important communication with shareholders
- Preparation of director’s report
- Keeping the minutes of the meetings
Contact MAM Corporate Solutions
By hiring MAM Corporate Solutions, you will not only abide by Indonesian Laws and regulations but also have peace of mind. If your business needs corporate secretarial services you can contact our experts anytime by clicking here or provide below as much detail about your inquiry as possible to receive the most relevant response.