Yes, a shareholder can also serve as a director or commissioner, but must avoid conflicts of interest.
When investing in or founding a Perseroan Terbatas (PT)—Indonesia’s Limited Liability Company—understanding your shareholders’ rights and duties is not just advisable; it’s a necessity. Whether you are a majority investor or hold minority shares, your position grants you specific legal powers and responsibilities under Law No. 40 of 2007 concerning Limited Liability Company and as amended by the Job Creation Law (Omnibus Law).
In this guide, we explore what it truly means to be a shareholder in Indonesia, the extent of your shareholders’ rights and duties, how they function in practice, and how to protect your interests in both normal operations and disputes.
A shareholder is any party—individual or legal entity—that owns one or more shares in a PT. These shares represent ownership in the company and entitle the shareholder to a bundle of rights and impose specific legal duties. The company itself is a separate legal entity, and shareholders do not bear personal liability for corporate obligations except in certain limited circumstances.
Being a shareholder is not a passive role. Your rights allow you to participate in the company’s decision-making and economic benefits, while your duties ensure that corporate governance remains lawful, fair, and transparent.
Indonesian company law balances the power of shareholders with the operational independence of the board of directors. As a shareholder, your shareholders’ rights and duties stem from:
These legal frameworks give shareholders a voice in governance, a stake in profits, and a shield from undue liabilities—but also hold them accountable for good faith participation.
The right to vote is a cornerstone of shareholders’ rights and duties. It allows shareholders to influence decisions on matters like:
Voting power is proportional to the number and class of shares owned.
Shareholders are entitled to receive dividends from retained earnings, distributed upon GMS approval. While dividend issuance is not automatic, it is a fundamental economic right based on shareholding.
Note: The company must maintain financial solvency and a minimum reserve before paying dividends.
Under Article 50 of the Company Law, shareholders holding at least 10% of total shares may request access to:
This transparency measure ensures that shareholders can monitor company management effectively.
Shareholders must be consulted on fundamental decisions, such as:
These rights ensure that strategic decisions are made democratically.
In most cases, shareholders can freely transfer shares, though restrictions may apply through:
If directors or commissioners act against the interests of the company, shareholders can file:
This power protects against mismanagement and abuse of authority.
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Every shareholder is obligated to fully pay for shares they have subscribed. Unpaid shares not only violate the law but may be voided by the company and subject to damages.
The Articles of Association act as the “constitution” of the PT. Shareholders must:
Non-compliance can lead to exclusion or legal liability.
Shareholders must act in good faith and avoid conflict of interest—especially when also serving as directors or commissioners. They may not:
Even if a shareholder voted against a resolution in the GMS, once it is passed lawfully, it becomes binding. Shareholders must support corporate actions carried out in line with such resolutions.
Indonesian law includes safeguards to protect minority shareholders from being overpowered by majority owners. These include:
These protections ensure fair participation and reduce risks of corporate oppression.
The general rule is that shareholders are not personally liable for company debts. However, this “corporate veil” can be pierced when:
In such cases, courts may impose personal liability on shareholders.
The company’s daily operations are managed by the Board of Directors, not shareholders. While shareholders hold ultimate authority via the GMS, they do not directly interfere with management decisions unless specified in the law or AoA.
Understanding the difference between governance (shareholders) and management (directors) is crucial for corporate harmony.
Disputes may arise over dividends, share valuation, or corporate strategy. These can be resolved through:
To prevent disputes, it is essential to have a clear Shareholders’ Agreement and consistent adherence to corporate governance principles.
If your shareholders’ rights and duties are violated, you may pursue:
Timely legal advice is critical, especially in fast-moving corporate actions.
The Omnibus Law has streamlined company procedures, making it easier for shareholders to:
These reforms increase corporate efficiency while maintaining protection of shareholders’ rights and duties.
“Whether you’re a foreign investor or local founder, respecting and leveraging your shareholders’ rights and duties can define the success or failure of your business. We’ve seen how early-stage clarity and structured agreements prevent major legal and financial disasters down the road. Engage legal counsel before investing or transferring shares, and ensure every right is enforceable.”
Navigating the landscape of shareholders’ rights and duties in Indonesia requires more than a general understanding—it demands strategic foresight and proper legal safeguards. From voting rights and dividend claims to compliance obligations and liability risks, the stakes are high for every shareholder.
Need legal assistance asserting your shareholder rights or resolving a dispute?
Contact us today, our team of experienced Indonesian corporate lawyers will help you protect your investments and enforce your rights. Fill in the form below to get legal expert guidance from Kusuma & Partners Law Firm.
“DISCLAIMER: This content is intended for general informational purposes only and should not be treated as legal advice. For professional advice, please consult with us.”
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