This article discusses the authority and rights of foreign directors in Indonesian Foreign Investment Companies (PT PMA), focusing on their involvement in government affairs and asset credit applications within the Republic of Indonesia. It’s crucial for foreign parties to understand the scope and limitations of their rights and responsibilities, especially in the context of Indonesian laws governing foreign investments and corporate operations.
Legal Framework for PT PMA in Indonesia
According to Article 5 paragraph (2) of the Capital Investment Law, foreign investment activities must be conducted in the form of a Limited Liability Company (PT) based on Indonesian law and located within the territory of the Republic of Indonesia. This is further defined in the Limited Liability Company Law (UU PT) and the Job Creation Law (UU Cipta Kerja). A PT is a legal entity established by agreement to conduct business activities with a defined capital divided into shares.
Corporate Structure of a PT
A PT operates through corporate organs, namely the General Meeting of Shareholders (RUPS), the Board of Directors, and the Board of Commissioners. The Board of Directors has full authority and responsibility for managing the company in the best interests of the company, representing it both in and out of court as per the company’s articles of association.
Authority of Directors
The authority of the directors is outlined in Article 92 paragraph (2) of the UU PT, which states that the directors are authorized to manage the company within the limits set by law and/or the articles of association. This includes day-to-day management and decision-making based on expertise, available opportunities, and standard business practices.
Representation Rights and Limitations
Directors represent the company in various capacities, but there are specific limitations. As per Article 99 paragraph (1) of the UU PT, a director cannot represent the company in legal disputes involving the director personally or in cases of a conflict of interest. In such scenarios, other directors, the Board of Commissioners, or a party appointed by the RUPS will represent the company.
Foreign Directorship in PT PMA
The UU PT and UU Cipta Kerja do not differentiate between foreign and Indonesian directors in terms of authority in both domestic and foreign investment companies. This implies that foreign directors have the same authority and responsibilities as their Indonesian counterparts.
Restrictions on Foreign Workforce in Indonesia
However, there are restrictions on foreign workers in Indonesia. The Job Creation Law prohibits foreign workers from holding positions related to personnel management. Decree 349/2019 lists various personnel-related positions that foreign workers are prohibited from holding, such as Personnel Director, Industrial Relations Manager, Human Resources Manager, etc. Thus, foreign directors cannot be placed in roles that involve personnel management.
Credit Application by Foreign Directors in PT PMA
Regarding credit applications, as per Article 17 paragraph (1) of PBI 24/7/2022, banks are prohibited from conducting certain transactions with non-residents, including credit applications. However, foreign directors of a PT PMA, who are considered residents, are allowed to apply for credit in Indonesian banks, provided they fulfill the legal requirements and apply in their capacity as directors of the PT PMA.
Conclusion
In summary, foreign directors in PT PMA have the same legal authority and responsibilities as their Indonesian counterparts, except in personnel management roles. They are also permitted to apply for credit in Indonesian banks as long as they comply with the relevant banking regulations and legal requirements. Understanding these nuances is essential for foreign directors operating in Indonesia.