Bill on limited liability firms to meet global standard
JAKARTA (JP): Minister of Justice Oetojo Oesman told the House of Representatives yesterday that the bill on limited liability companies was written not only to meet the global standard of business activities, but also to implement the economic principles of the 1945 Constitution.
"Indonesia's economy should not close itself to the influence and the demands of the economic globalization process," Oesman said when he presented the bill at a House plenary session.
He claimed that the bill adheres to Article 33 of the 1945 Constitution which stipulates that the economy be managed as a common endeavor based on the principle of the family system.
According to Oesman, the bill, which contains 12 chapters and 128 articles, will replace the old Commercial Code and Company Act which was enacted in 1847 and 1939, respectively, during the period of Dutch colonial rule.
"The old laws, besides already being obsolete, mainly reflected the principle of liberalism and individualism ... to defend the political system of the (Dutch) Kingdom," he said.
The bill on limited liability companies (Perseroan Terbatas or PT), was initially proposed to the State Secretariat by Oesman's predecessors 20 years ago, but rapid changes in the business world required it to be revised several times.
Oesman told the House yesterday that the bill stipulates several provisions specifically designed to protect the interests of minority shareholders and creditors, for example, in case of mergers, acquisitions and liquidations.
"The bill empowers minority shareholders to call for a general shareholders meeting and to ask, on the basis of a court order, for investigations of a limited liability company," Oesman added.
Transparency
He said that the proposed legislation also requires companies to be more transparent.
The bill, for example, requires companies to use the nationally accepted general principles of accounting, to have their financial reports audited by certified public accountants and to announce their annual reports through the mass media.
Legislator Aberson Marle Sihaloho of the Indonesian Democratic Party, however, said on Thursday that the bill does little to address the dangers of laissez faire capitalism in Indonesia, which has spurred the excessive growth of conglomerates and monopolies.
Sihaloho contends that the one-share-one-vote principle as stipulated in the bill will harm the interest of minority shareholders, adding that the government should find a mechanism to limit the power of the capitalists.
President of Sigma Batara securities Frank Taira Supit, who is also a noted lawyer, argued, however, that the one-share-one-vote principle is an internationally recognized standard.
Supit told The Jakarta Post yesterday that a bill that opposes such a principle will impede not only foreign investors in Indonesia but also local companies.
Oesman acknowledged that the bill does not fully address all aspects of business activities, saying that the idea is to make the legislation flexible enough to accommodate the rapid changes in the business world.
"It's more or less a flexible bill, even though we did our best to stipulate the rules of the game," he said.
According to the bill, two or more persons can establish a limited liability company with minimum authorized capital of Rp 10 million (US$4,640), of which 50 percent shall have been paid.
The bill stipulates that the capital can be issued in several classes of equity shares, but one of them shall have the characteristics of common shares.
A limited liability company shall be founded on the basis of a notary deed and the company becomes a legal entity only after its incorporation deed has been ratified by the Minister of Justice.
The bill requires the Minister of Justice to ratify an incorporation deed within 60 days after the application. (09)