An Indonesian foreign-owned company (PT PMA) generally requires at least one director and one commissioner. Foreign investors can appoint additional directors and commissioners, but the structure determines who can act for the company, how major transactions are approved, and how management is supervised.
Does a PT PMA Need Both a Director and Commissioner?
The Board of Directors (Direksi) manages the company and represents it inside and outside court. The Board of Commissioners (Dewan Komisaris) supervises the directors and provides advice but does not ordinarily manage the company’s day-to-day business.
A standard PT PMA can generally operate with one director and one commissioner. The same individual cannot simultaneously serve as both a director and commissioner of the same company.
For a PT PMA with simple operations, one director and one commissioner may be enough.
Can Directors and Commissioners Be Foreign Nationals?
For an ordinary privately held PT PMA, Indonesian company law does not generally require the director or commissioner to be an Indonesian citizen solely because the company is foreign-owned, although sector-specific rules can impose additional requirements.
However, appointing a foreign national is different from allowing that person to work in Indonesia. A foreign director who performs work in Indonesia must have the appropriate immigration status and, where applicable, foreign-worker authorization for the position.
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Foreign ownership also does not override restrictions that apply to particular positions or industries. A regulated business may impose additional nationality, residency, experience, or approval requirements on directors or commissioners.
Should a PT PMA Have One Director or Several?
Where a PT PMA has several directors, the key question is who has authority to act for and bind the company.
Under Indonesian company law, each director can generally represent the company unless the law or the company’s articles of association provide otherwise. Where the company has several directors, the articles of association can regulate how directors represent the company, including requiring joint representation for specified actions, subject to Indonesian company law.
This allows shareholders to require two directors to act together for particular company actions rather than allowing every director to act independently.
Banks, counterparties, government systems, and internal group procedures may rely on the company’s documented representation and authorization arrangements when determining who can act for the PT PMA.
What Can the Commissioner Approve or Restrict?
The commissioner supervises the directors rather than acting as another executive manager.
However, the company’s articles of association can require the directors to obtain commissioner approval or assistance before carrying out specified legal acts. This can give shareholders additional control over transactions such as significant financing, asset disposals, or other commitments identified in the articles.
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These restrictions do not transfer general management responsibility from the directors to the commissioners. The directors remain responsible for managing the company, while the commissioners exercise their supervisory function within the powers provided by Indonesian company law and the articles of association.
When Are Additional or Independent Commissioners Required?
An ordinary privately held PT PMA does not generally need an independent commissioner merely because it has foreign shareholders.
Different requirements can apply to public companies and businesses regulated by authorities such as the Financial Services Authority (OJK). Certain financial-sector businesses can be subject to specific rules covering the number, composition, independence, competence, or regulatory approval of directors and commissioners.
A board structure that is sufficient for an ordinary consulting or trading PT PMA may not satisfy the additional requirements imposed on a regulated financial business.
Structure Your PT PMA with MAP Resources Indonesia
MAP Resources Indonesia helps foreign investors establish PT PMAs and structure director and commissioner appointments in line with Indonesian company law and the requirements of the company’s business activities. Contact us at info@mapresourcesindonesia.com.
