Bill on companies passed<\/p>\n
The bill on limited-liability companies was first drafted in
\n1974. In the meantime it was revised several times to accommodate
\nrapid changes in the business world before being submitted to the
\nHouse of Representatives last September and finally being
\napproved last week. The new law will replace the Company Law of
\n1939 which was enacted by the then Dutch colonial rulers.<\/p>\n
The new legislation is one of several new laws in the
\ncommercial sector which are expected to be enacted this year.
\nBills on the capital market, on small business development, fair
\nbusiness competition and consumer protection are in the pipeline.
\nThey reflect the government's concerted efforts to implement the
\n1993 State Policy Guidelines, which include the development of
\nthe legal system in priority programs.<\/p>\n
Among the most important provisions of the new law is the
\nstipulation which will lay down legal requirements for more open
\naccountability of limited liability companies -- known under the
\nlocal acronym PT, which stands for Perseroan Terbatas. Most
\ncompanies are required to have their books audited by public
\naccountants according to the generally accepted principles of
\naccounting. The law now goes as far as stipulating the broad
\noutlines of what should be stipulated in the annual report or
\nfinancial statement. Even the salaries and other compensation for
\nthe management and supervisors (commissioners) are required to be
\ndisclosed in the report.<\/p>\n
The legislation also pays a great deal of attention to
\nminority shareholders. For example, a shareholder or shareholders
\nwith at least 10 percent of the total shares are entitled to call
\nfor a shareholders meeting. A shareholder also is allowed to sue
\nthe management or board of supervisors for wrongdoing detrimental
\nto the company. The protection of minority shareholders is quite
\nessential, especially because almost all companies already listed
\non the local stock exchanges remain controlled by the founding
\nshareholders.<\/p>\n
The law also stipulates clear-cut procedures for mergers and
\nacquisition. Such deals, for example, can be made only with prior
\napproval from the shareholders meeting which must be attended by
\nshareholders who represent at least 75 percent of the total
\nnumber of shares.<\/p>\n
It also stipulates provisions that allows companies to
\nrepurchase their issued shares. That will in turn open up
\nopportunities for the development of mutual funds, which are much
\nneeded to diversify the securities traded on the capital market.<\/p>\n
Many of the technical details of the new law have yet to be
\nelaborated in government regulations and ministerial decrees,
\nwhich will be issued to implement the legislation.<\/p>\n
Enacting a commercial law is one thing and enforcing the law
\nis quite another thing. The law will have to be supported by a
\nreliable court system manned by judges with adequate technical
\ncompetence to handle complex commercial cases. That, we think, is
\nnow the heaviest challenge to the government as it will require a
\nseries of training programs and a strong political will on the
\npart of the government to enhance an independent judicial system.<\/p>\n
The government can legitimately claim that the independence of
\nthe country's judicial system is guaranteed by Law No.14\/1970 on
\nthe judiciary. But common sense based on practices tells us quite
\na different fact. The basic question is how the court system
\nwhich is administered by the Ministry of Justice -- an executive
\nbranch institution -- could ever be truly independent. Again
\ncommon sense guides the judges as to where they should place
\ntheir loyalty because they fully realize that their budget,
\nassignments, transfers and promotions are all controlled by the
\ngovernment through the Ministry of Justice.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bill-on-companies-passed-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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