New corporate law needs conformity

JAKARTA (JP): An official warned yesterday that the draft on corporate law related to limited companies should be in conformity with the draft on the capital market law, which will be submitted to the House of Representatives (DPR) later this year.

Bacelius Ruru, the chairman of the Capital Market Supervisory Agency (Bapepam), told the House's special committee for the deliberation of corporate law that the two laws should accommodate one another.

The draft on limited companies was proposed to the House two months ago.

Conformity between the laws are essential, he said, because most of the companies listing shares or bonds on the capital market -- as well as those operating as securities firms and stock traders -- are all limited companies.

The House's special committee is now deliberating the draft of corporate law proposed by the government. The operation of a limited company is now regulated by the commercial law adopted from the business act introduced by the Dutch government during the colonial era.

According to the Bapepam chairman, the draft on limited companies contains a number of breakthroughs covering important aspects of business activities which are not stipulated in the present commercial law. The improvements include the clarification of the fiduciary duties of a board of directors and the derivative actions of shareholders.

Ruru, the former head of the Finance Ministry's public relations and law affairs department, said that the proposed law has also covered many aspects of the operations of a company, ranging from the procedures for starting a business to the process of liquidation.

He said the draft on the corporate law also includes terms and conditions of shareholder meetings and regulations regarding boards of directors and commissioners.

Ruru reminded the committee that the draft on limited companies should not restrict Bapepam's activities as a regulatory and supervisory agency. He said that regulations on activities related to capital markets, would be set by the capital market law which is now being prepared. (hen)