Minority shareholders in Indonesia can request a General Meeting of Shareholders (GMS) if they hold at least 10% of the company’s voting shares, unless its articles of association allow a lower threshold.
If the board of directors and board of commissioners fail to convene the meeting, eligible shareholders can apply to the district court for authorization to organize it themselves.
What Shareholding Is Required to Request a General Meeting?
Under Indonesia’s Company Law, the minimum shareholding threshold can be met by one shareholder or several shareholders acting together.
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For instance, two foreign investors holding 6% and 4% of the voting shares can jointly request a GMS.
The threshold is based on voting shares rather than the number of shareholders. Foreign investors should review the company’s articles of association to determine whether a lower threshold applies.
How Can Minority Shareholders Force a General Meeting?
1. Submit a Request to the Board of Directors
Shareholders must submit a request by registered letter to the board of directors, explaining why the meeting is necessary. A copy must also be sent to the board of commissioners.
The directors must issue the meeting notice within 15 days of receiving the request. This deadline concerns issuing the notice, not holding the meeting itself.
2. Escalate the Request to the Board of Commissioners
If the directors fail to issue the meeting notice, shareholders may submit their request to the board of commissioners.
The commissioners then have 15 days from receiving the request to issue the meeting notice.
A GMS convened by the commissioners following a shareholder request is limited to matters connected to the reasons stated in that request.
3. Apply to the District Court
If neither board issues the meeting notice, shareholders may apply to the chairman of the district court with jurisdiction over the company’s domicile.
The court examines whether the shareholders have a reasonable interest in convening the meeting. Before deciding, it hears the applicants and the relevant directors or commissioners.
If approved, the court may authorize shareholders to convene the GMS and establish conditions governing its agenda and meeting arrangements.
If the application is rejected, shareholders may pursue cassation before the Supreme Court, as permitted under Article 80 of the Company Law. The meeting cannot be convened under this court-authorized procedure unless the necessary authorization is obtained.
Can Minority Shareholders Pass Resolutions Without Majority Support?
An ordinary GMS generally requires shareholders representing more than half of the company’s voting shares to attend or be represented. If this quorum is not met, a second meeting may be convened with at least one-third of voting shares represented, unless higher requirements apply.
Decisions should first be reached through deliberation and consensus. If consensus cannot be achieved, ordinary resolutions generally require approval by more than half of the votes cast.
Certain decisions, including amendments to the articles of association, require higher quorum and voting thresholds.
Under Article 80, the district court may authorize eligible minority shareholders to convene a GMS and specify the meeting arrangements. The quorum and voting requirements for the authorized meeting must follow the applicable provisions of the Company Law and the court’s order.
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Separately, Article 86 allows a company to seek a court-determined quorum for a third GMS if the first two meetings fail to meet their quorum requirements. This is a different procedure from obtaining authorization under Article 80.
Majority shareholders may therefore retain control over the outcome of a meeting, even if minority shareholders successfully convene it.
Protect Your Shareholder Rights with MAP Resources Indonesia
MAP Resources Indonesia assists foreign investors with shareholder matters, corporate governance, and GMS compliance. For assistance with convening a GMS in Indonesia, contact info@mapresourcesindonesia.com.
