Expert warns on minority shareholders protection law

JAKARTA (JP): The protection of minority shareholders as guaranteed by the law on limited liability companies should not create a new tyrant, a corporate lawyer said here yesterday.

"Under the old law, majority shareholders held so much power that they often seemed to act as tyrants. I hope now minority shareholders will not abuse their rights guaranteed by the new law and act themselves as tyrants," Rudhi Prasetya of the Surabaya-based Airlangga University cautioned.

Rudhi was one of the speakers at a seminar on the consequences of the enforcement of the new law on limited liability companies organized by the Association of Indonesian Public Companies and the Center for Law Studies Foundation.

Rudhi said that the protection of minority shareholders is provided in the articles 66, 85 and 117 of the law.

The stipulations give minority shareholders, who account for up to 10 percent of the total shares of a company, the right to ask for court orders to hold annual meetings of shareholders. The new rules also allow minority shareholders to sue directors or commissioners for wrongdoings which cause losses to the company and they allow minority shareholders to ask for a court order to liquidate a company.

Rudhi added that minority shareholders also have a right now to an inquiry which allows them, through a court order, to have access to documents and assets of any company under suspicion of unlawful practices.

However, Rudhi seems confident that minority shareholders will be prevented from excessive control over companies as long as court judges are careful in resolving conflicts between minority and majority shareholders.

Kartini Muljadi, the chair of a law firm, said that the minority protections as provided by the law are a positive development in Indonesian law.

She expects that the government will soon issue regulations to implement the new law. (04)