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Commissioner Services for Indonesian Companies – The Overview
Companies in Indonesia are required to have at least one commissioner. The commissioner’s role is important for a company as they are tasked with supervising the management of a company and monitoring the board of directors. A company may choose to have a board of commissioners (BoC) and appoint a president commissioner to lead it.
Commissioners for Local or Foreign-owned Companies
Appointing a commissioner or commissioners is an important decision as they act in the interests of the company and its shareholders and supervise the board of directors. Commissioners have a more passive role and are not involved in a company’s daily operations or the administrative level.
The two main duties of a commissioner or a board of commissioners are as follows:
1. Making sure that the board of directors make decisions in the company’s interests
Commissioners are tasked with ensuring that directors manage the company in coherence with the company goals and not for personal gain. This includes reviewing any major financial decisions and providing advice that the board of directors will have to implement.
In specific circumstances, commissioners also have the power to impose a temporary suspension or even remove a member of the board of directors. This is regulated by Indonesia’s company laws and commissioners must provide reasons for a director’s suspension or removal in writing.
A general meeting of shareholders (GMS) must also be held for a director to offer a personal defence in response to the proposed suspension or removal. A decision on whether to uphold or withdraw the suspension or removal will then be made at the end of the GMS. Temporary suspensions are regulated by Indonesia’s Law Number 40 of 2007.
2. Approving annual financial statements and reviewing financial budgets
Commissioners are also tasked with approving the annual financial statements of a company. They also review financial budgets proposed by the management and ensure that they are appropriate.
If there are any errors in financial calculations or the budget is deemed inappropriate, commissioners may reject it and provide advice on how it should be redone.
On the establishment process, commissioner need to sign the statement letter in regards to the authorised capital of the company.
Based on the Company Law No. 40 Year 2007:
- Boards of Commissioners shall supervise management policies, the running of management in general, with regard to both the Company and the Company’s business, and give advice to the Board of Directors.
- The supervision and giving of advice contemplated in paragraph (1) shall be done in the Company’s interests and in accordance with the Company’s purpose and objectives.
Appointment of Commissioners
Members of Boards of Commissioners shall be appointed by GMS, and can be terminated only by GMS as well. For foreign-owned companies, a commissioner can be either a local Indonesia citizen or a foreigner. Foreigners are allow to be the commissioners without getting a work permit.
He may choose to obtain a work permit if interested to work in Indonesia. Foreign commissioners should also be able to become a permanent resident after 3 years of living in Indonesia and can enjoy entering the country visa-free.
Additionally, commissioners may be able to have a part of company shares although they are not obliged to.
At 3E Accounting, we provide local resident director services but do not provide local commissioner services. There is no requirement that commissioners need to be a local citizen and it is more cost-effective to appoint your own foreign commissioner candidate instead of engaging with a service provider. You can engage our company secretarial services to assist you to perform all the job role of the commissioner. Contact us for more information.