Company Constitution

Company ConstitutionThe Company Constitution is a pivotal legal document that firmly establishes the rules and expectations for companies and their shareholders. This certifies the company name, business type, total capital, and overall liability along with delineating the business’s primary purpose, the directors’ responsibilities, and operational practices.

The adoption of the Company Constitution as a solitary document significantly transformed the corporate landscape in Indonesia. Prior to the amendment of the Indonesian Company Law, companies adhered primarily to the Company Law and operated under two distinct documents: the Memorandum of Association and the Articles of Association. A pivotal shift occurred with the law’s amendment, mandating the Company Constitution for all new incorporations, which combined the contents of the two previous documents into one.

A Company Constitution submission is integral to a company’s incorporation in Indonesia, and the business must adhere to the document’s terms. Key considerations while drafting include devising achievable objectives; structuring decision-making to prevent future discord; establishing compliance-friendly rules and regulations; and addressing mandatory sections such as the Name Clause, Subscriber Clause, and Liability Clause.

This document should also encompass several fundamental sections like the company’s name and liability, member details, subscription terms, and the number of founding members. It may also feature allocation of profits, distribution of surplus assets during dissolution, appointment and removal of directors, and powers of directors, among others. Company-specific rules like transfer restrictions or member limitation in private companies can also be outlined. This unifying document thus serves as a significant beacon, offering direction and discipline to companies in their collective endeavors in Indonesia.