Indonesian companies can make shareholder decisions through a circular resolution without holding a General Meeting of Shareholders (RUPS). This can be useful for foreign-owned companies whose shareholders are based in different countries.
How Does a Circular Resolution Work in Indonesia?
A circular resolution allows shareholders to make a decision without holding a RUPS. The proposed decision is sent to all shareholders with voting rights, and each shareholder must approve and sign it.
Once these requirements are met, the resolution has the same legal force as a decision made at RUPS. This mechanism is recognized under Article 91 of Indonesia’s Company Law.
For support with notarial and Ministry of Law filings, contact info@mapresourcesindonesia.com
Unlike RUPS, the company cannot rely on majority voting. A shareholder that owns 70%, 90%, or even 99% of the voting shares cannot pass a circular resolution if another voting shareholder does not agree.
A circular resolution is also different from an electronic RUPS. An electronic RUPS is still a shareholders’ meeting, while a circular resolution is a decision made without holding a meeting.
Using a circular resolution for a shareholder decision does not remove the company’s annual GMS obligations. Indonesian companies must still comply with the requirement to hold an annual GMS within six months after the end of the financial year.
What Can Shareholders Approve Through a Circular Resolution?
A circular resolution can generally be used for decisions that shareholders would otherwise make through a RUPS, subject to the company’s articles of association and any rules that apply to the specific decision.
This can include appointing or replacing directors and commissioners, changing shareholdings, approving certain capital changes, and amending the articles of association.
Signing the resolution does not always complete the change. A notarial deed or Ministry of Law procedure may still be required.
Does a Circular Resolution Need a Notary or Government Filing?
The shareholders do not automatically have to sign the circular resolution before a notary for it to be valid under Article 91. Written approval and signatures from all shareholders with voting rights are required.
Planning a shareholder change? Contact MAP Resources Indonesia at info@mapresourcesindonesia.com
However, if the decision changes the company’s articles of association or certain registered company information, the change must be put into an Indonesian-language notarial deed.
The company must then complete the applicable Ministry of Law procedure. Depending on the change, this may require approval or notification through Indonesia’s Legal Entity Administration System.
The process may therefore be:
Circular resolution → Notarial deed where required → Ministry of Law filing
Changes to directors or commissioners must be reported to the Ministry of Law within 30 days of the change. For other covered changes to the articles of association or company data, the application generally must be submitted within 30 days from the date of the relevant notarial deed.
Can Foreign Shareholders Approve a Circular Resolution from Overseas?
A circular resolution can be useful for a PT PMA with shareholders outside Indonesia because they do not need to travel to Indonesia or meet in one place to make the shareholder decision.
Coordinating shareholder approvals from overseas? Speak with MAP Resources Indonesia at info@mapresourcesindonesia.com
If the decision also requires a notarial deed or Ministry of Law filing, the company should confirm with the Indonesian notary how overseas documents must be signed and what supporting documents are required. Additional requirements may apply to documents signed outside Indonesia.
When Does the Company Still Need a RUPS?
If one voting shareholder does not approve the circular resolution, the company may need to hold a RUPS instead. Unlike Article 91 circular resolution, a RUPS can make certain decisions based on the applicable quorum and voting requirements.
Contact MAP Resources Indonesia for Corporate Changes
MAP Resources Indonesia can assist foreign investors with preparing circular resolutions, coordinating with Indonesian notaries, and completing the required Ministry of Law procedures. Contact us at info@mapresourcesindonesia.com for support.
