Newly passed law on limited liability companies hailed
Newly passed law on limited liability companies hailed
JAKARTA (JP): A noted corporate lawyer praised the new law on
limited liability firms, which was approved by the House of
Representatives (DPR) on Thursday.
"This is a good move. Not only is the new law more
comprehensive than previous regulations, it also provides more of
a legal framework and more certainty," lawyer Todung Mulya Lubis
told The Jakarta Post yesterday.
The long-awaited Law on Limited Liability Companies, passed by
the DPR Thursday in a plenary session with Minister of Justice
Oetojo Oesman, will replace the Commercial Law of 1847 and the
Company Law of 1939. Both previous laws were enacted by the Dutch
colonial government and are the foundation of the Code of
Commerce, the current legal reference for business practices.
The bill for the new law was originally drafted in 1974 but
final deliberations did not begin until last September. In the
end, the bill had to be revised several times to take the rapid
changes of today's business world into account.
The law contains several provisions specifically designed to
protect the interests of minority shareholders, employees and
creditors. It has also been designed to prevent monopolies from
being created in the case of business takeovers and mergers.
The justice ministry, however, has yet to release the
regulations required for its implementation.
"I think the fact that the new law addresses the rights of the
minority shareholders is important, especially since this had
never been done previously," Lubis said.
Professionalism
He also said that the new law will encourage boards of
directors and commissioners to be more professional and more
accountable to the minority shareholders.
"Since minority shareholders can now demand more transparency
and disclosures from the management and commissioners, we can
expect to see fewer 'sleeping partners'," Lubis said.
The lawyer was referring to the phenomenon where a business
person, especially one with political connections, can sit on
different boards of commissioners in hundreds of different
companies.
Lubis, however, warned that minority shareholders could
possibly abuse their new legal rights by obstructing business
progress.
"When any form of obstruction occurs, both management and the
public shareholders must settle their differences in court. From
there on, everything depends on the judiciary," he said.
Lubis also praised the new law's requirement forcing the
Minister of Justice to ratify or reject an incorporation deed
within 60 days of when the application was lodged.
"I just hope the justice ministry has the required
administrative means to meet this requirement," he said. (hdj)