Companies in Indonesia, especially Limited Liability Company, prioritize the important role of monitoring in form of the General Meeting of Shareholders (GMS) as the highest body in a Limited Liability Company, which shall be held at least once a year. GMS provides main opportunity for shareholders to raise issues and important matters that need to be discussed and necessary decisions to be taken by the Board of Directors. Along with the technological advances and the high mobility of the shareholders, decisions making through GMS can be conducted in several ways such as through Physical GMS, Electronic GMS, and Circular Resolution. What are the differences from the above decision-making methods? And how does the company respond to GMS decision-making during a pandemic? Let’s find out.
Physical GMS held at the domicile of the Company or if otherwise specified in the Articles of Association. This GMS begins with a meeting invitation to the shareholders through a circular letter issued by the Board of Director within 14 days before the meeting takes place. The GMS is carried out by direct interactions among the shareholders who are present with a voting right, whereas the quorum provisions is priorly determined under the Articles of Association or Law of the Republic of Indonesia No. 40 of 2007 regarding Limited Liability Companies (Company Law). In this Covid-19 pandemic situation nowadays, the implementation of Physical GMS method is not recommended since it will need a strict health protocols, such as physical distancing and mandatory prior Covid-test (swab antigen/PCR).
The use of electronic media in conducting the GMS or what is currently called e-GMS is also recognized in Article 77 paragraph (1) of Company Law. The use of e-GMS that is currently regulated, is an electronic facility system used to support the provision of information, implementation and reporting of meetings specifically in public companies. The e-GMS can also be conducted through teleconferencing media, video conferences, or other electronic media facilities that allows all GMS participants to see and hear each other directly and also participate in the meeting. The provision that need to be considered in the implementation of e-GMS is it shall be implemented within the territory of the Republic of Indonesia. Information and standards for the implementation of the e-GMS for public companies has currently regulated under Article 35 of Financial Services Authority (Otoritas Jasa Keuangan – OJK) Regulation No. 15/2020 such as, the obligation to provide an audit track record of all data processing activities during the e-GMS and the participants of the GMS that shall meet the quorum as stipulated under its Articles of Association or Company Law. However, these provisions are only apply, so far, to Public Company. Although it is conducted electronically, e-GMS also requires the preparation of a written minutes of meeting which are approved and signed by all GMS participants as stated “approved and signed” either physically or electronically, and needs to be made further in the form of a notarial deed.
The execution of Circular Resolution is a company decision-making method as a replacement of GMS that is quite popular since it is considered to be more efficient than the conventional GMS. One of the advantages in conducting a Circular Resolution is there is no need of a prior meeting invitation, notifications or announcements from the Board of Directors. Step that needs to be prepared to hold a Circular Resolution is communicating the proposal to be circulated among the shareholders. Such decisions shall be valid if all of the shareholders agreed and signed the written proposal. The weakness of this Circular Resolution is the lack of supervision that can lead to the possibility of misuse of shareholders signatures, so it is important for the companies to directly supervise the implementation of the Circular Resolution. Circular Resolution have the same binding legal force as decisions made through the GMS right after the signed Circular Resolution stated in a notarial deed no later than 30 days and registered in the Ministry of Law and Human Rights.
Decision-making through Physical GMS, e-GMS or Circular Resolution have their own advantages and disadvantages. It is important for every company to make sure which option suits the company’s needs, especially in pandemic situation nowadays, so that the chosen decision-making mechanism is able to increase the company’s efficiency and participate in breaking the chain of the spread of Covid-19 in Indonesia.
And this is it, our article about the GMS during pandemic. We hope this article will give you insights. However, should you need any questions, please do not hesitate to contact us!
