Understanding the Extraordinary General Meeting of Shareholders under Indonesian Company Law

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Authors

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In Indonesia, the Extraordinary General Meeting of Shareholders (“EGMS”) plays a pivotal role in enabling shareholders to make critical decisions that go beyond the scope of the Annual General Meeting of Shareholders (“AGMS”). Governed by Law No. 40 of 2007 on Limited Liability Companies and its amendments (“Company Law” or “UUPT”), the EGMS secures that shareholders can exercise control over significant corporate matters whenever needed.

In this Corporate Series, we highlight the key rules on EGMS under the Company Law, including the circumstances under which they are required, the parties authorized to convene them as well as its procedures and requirements.

EGMS

An EGMS is a formal forum convened by a company’s shareholders outside the schedule of the AGMS, specifically to address urgent, non-routine, or extraordinary matters requiring shareholder approval. An EGMS may be held at any time as necessary in the interests of the company. ¹ In contrast, the AGMS is typically held once a year to address routine corporate matters, such as approving the annual report, ratifying the company’s financial statements, and handling other related matters.

Situations Requiring an EGMS

EGMS may be convened to address various significant corporate actions, including but not limited to: ²

1. Amendments to the Articles of Association (“AOA”);
2. Approval of mergers, consolidations, acquisitions, spin-offs, dissolution or liquidation of the company;
3. Changes to the company’s capital structure (e.g., capital increase or reduction); and/or
4. Appointment or dismissal of the Board of Directors (“BOD”) or the Board of Commissioners (“BOC”) outside the AGMS schedule.

Parties Authorized to Convene an EGMS

EGMS can be convened by: ³

1. BOD;
2. BOC if the BOD fails to call a meeting; or
3. One or more shareholders holding at least one-tenth (1/10) of the total shares with voting rights, unless a lower threshold is stipulated in the AOA.

Procedural Requirements for Calling an EGMS

An EGMS is subject to the following procedures to ensure all shareholders are fully informed and able to exercise their voting rights:

1. Notice of Meeting ⁴ – The notice must be delivered no later than 14 (fourteen) days prior to the scheduled date of the meeting (excluding both the date of the notice and the date of the meeting). The notice should include the date, time, place, and detailed agenda of the EGMS.

2. Attendance Quorum Requirements ⁵ – The quorum is typically determined based on the matters to be resolved and the provisions in the AOA. (e.g., amendments to the AOA generally require an attendance quorum of at least 2/3 of the total shares with voting rights).
   For a more detailed explanation of the attendance quorum requirements applicable to each type of GMS agenda, please refer to our previous Corporate Update Series here.

3. Approval Quorum Requirements – Resolutions are passed by the affirmative votes stipulated under the Company Law or the company’s AOA, depending on the type of decision. (e.g., resolutions on amendments to the AOA require approval by at least 2/3 of the votes present).
   For a more detailed explanation of the approval quorum requirements applicable to each type of GMS agenda, please refer to our previous Corporate Update Series here.

Circular Resolution of Shareholders

Shareholders may also adopt binding resolution without holding a GMS, by signing a written circular resolution, provided that all shareholders with affirmative vote give their written consent.

1. Article 78(4) of Company Law ↩
2. Article 21, Articles 87–92, and Article 102 of Company Law ↩
3. Articles 79–80 of Company Law ↩
4. Article 82(2) of Company Law ↩
5. Article 86(1)–(3) of Company Law ↩

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Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.

Go to

1. EGMS
2. Situations Requiring an EGMS
3. Parties Authorized to Convene an EGMS
4. Procedural Requirements for Calling an EGMS
5. Circular Resolution of Shareholders

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