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ICLG
The International Comparative Legal Guide to:
Corporate Governance 2019
12th Edition
A practical cross-border insight into corporate governance
Published by Global Legal Group, with contributions from:
Arthur Cox Herbert Smith Freehills LLP Stibbe
Ashurst Hong Kong Houthoff SZA Schilling, Zutt & Anschütz
BAHR Lenz & Staehelin Rechtsanwaltsgesellschaft mbH
Barun Law LLC Luther S.A. Tian Yuan Law Firm
Bowmans Macfarlanes LLP Travers Smith LLP
Cektir Law Firm Mannheimer Swartling Advokatbyrå Uría Menéndez
Cleary Gottlieb Steen & Hamilton LLP Miyetti Law Villey Girard Grolleaud
Cravath, Swaine & Moore LLP Nielsen Nørager Law Firm LLP Wachtell, Lipton, Rosen & Katz
Cyril Amarchand Mangaldas Nishimura & Asahi Walalangi & Partners (in association
with Nishimura & Asahi)
Davies Ward Phillips & Vineberg LLP Novotny Advogados
Davis Polk & Wardwell LLP NUNZIANTE MAGRONE
Elias Neocleous & Co. LLC Olivera Abogados / IEEM Business School
Ferraiuoli LLC Payet, Rey, Cauvi, Pérez Abogados
Glatzová & Co., s.r.o. Pinsent Masons LLP
Hannes Snellman Attorneys Ltd Schoenherr
The International Comparative Legal Guide to: Corporate Governance 2019
General Chapters:
1 Corporate Governance, Investor Stewardship and Engagement – Sabastian V. Niles,
Wachtell, Lipton, Rosen & Katz 1
2 Directors’ Duties in the UK – The Rise of the Stakeholder? – Gareth Sykes, Herbert Smith Freehills LLP 7
3 Human Capital Management: Issues, Developments and Principles – Sandra L. Flow &
Contributing Editors Mary E. Alcock, Cleary Gottlieb Steen & Hamilton LLP 11
Sabastian V. Niles &
4 Dual-Class Share Structures in the United States – George F. Schoen & Keith Hallam,
Adam O. Emmerich,
Cravath, Swaine & Moore LLP 16
Wachtell, Lipton, Rosen &
Katz 5 ESG in the US: Current State of Play and Key Considerations for Issuers – Joseph A. Hall &
Publisher Betty M. Huber, Davis Polk & Wardwell LLP 23
Rory Smith
6 Governance and Business Ethics: Balancing Best Practice Against Potential Legal Risk –
Sales Director Doug Bryden, Travers Smith LLP 32
Florjan Osmani
7 Corporate Governance for Subsidiaries and Within Groups – Martin Webster, Pinsent Masons LLP 36
Account Director
Oliver Smith
Country Question and Answer Chapters:
Senior Editors
Caroline Collingwood 8 Australia Herbert Smith Freehills: Quentin Digby & Philip Podzebenko 40
Rachel Williams
9 Austria Schoenherr: Christian Herbst & Florian Kusznier 47
Group Consulting Editor
10 Belgium Stibbe: Jan Peeters & Maarten Raes 53
Alan Falach
11 Brazil Novotny Advogados: Paulo Eduardo Penna 64
Published by 12 Canada Davies Ward Phillips & Vineberg LLP: Franziska Ruf & Olivier Désilets 73
Global Legal Group Ltd. 13 China Tian Yuan Law Firm: Raymond Shi (石磊) 79
59 Tanner Street
London SE1 3PL, UK 14 Cyprus Elias Neocleous & Co. LLC: Demetris Roti & Yiota Georgiou 87
Tel: +44 20 7367 0720
15 Czech Republic Glatzová & Co., s.r.o.: Jindřich Král & Andrea Vašková 94
Fax: +44 20 7407 5255
Email: info@glgroup.co.uk 16 Denmark Nielsen Nørager Law Firm LLP: Peter Lyck & Thomas Melchior Fischer 101
URL: www.glgroup.co.uk
17 Finland Hannes Snellman Attorneys Ltd: Klaus Ilmonen & Lauri Marjamäki 109
GLG Cover Design
18 France Villey Girard Grolleaud: Pascale Girard & Léopold Cahen 117
F&F Studio Design
19 Germany SZA Schilling, Zutt & Anschütz Rechtsanwaltsgesellschaft mbH:
GLG Cover Image Source
Dr. Christoph Nolden & Dr. Michaela Balke 124
iStockphoto
20 Hong Kong Ashurst Hong Kong: Joshua Cole 131
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Stephens & George 21 India Cyril Amarchand Mangaldas: Cyril Shroff & Amita Gupta Katragadda 136
Print Group
22 Indonesia Walalangi & Partners (in association with Nishimura & Asahi):
July 2019
Sinta Dwi Cestakarani & R. Wisnu Renansyah Jenie 144
Copyright © 2019
23 Ireland Arthur Cox: Brian O’Gorman & Michael Coyle 150
Global Legal Group Ltd.
All rights reserved 24 Italy NUNZIANTE MAGRONE: Fiorella F. Alvino & Fabio Liguori 157
No photocopying
25 Japan Nishimura & Asahi: Nobuya Matsunami & Kaoru Tatsumi 163
ISBN 978-1-912509-87-4
26 Korea Barun Law LLC: Thomas P. Pinansky & JooHyoung Jang 170
ISSN 1756-1035
27 Luxembourg Luther S.A.: Selim Souissi & Bob Scharfe 175
Strategic Partners
28 Netherlands Houthoff: Alexander J. Kaarls & Duco Poppema 182
29 Nigeria Miyetti Law: Dr. Jennifer Douglas-Abubakar & Omeiza Ibrahim 189
30 Norway BAHR: Svein Gerhard Simonnæs & Asle Aarbakke 197
31 Peru Payet, Rey, Cauvi, Pérez Abogados: José Antonio Payet Puccio &
Joe Navarrete Pérez 202
32 Puerto Rico Ferraiuoli LLC: Fernando J. Rovira-Rullán & Andrés Ferriol-Alonso 208
PEFC Certified 33 South Africa Bowmans: Ezra Davids & David Yuill 215
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from sustainably 34 Spain Uría Menéndez: Eduardo Geli & Ona Cañellas 222
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35 Sweden Mannheimer Swartling Advokatbyrå: Patrik Marcelius & Isabel Frick 231
PEFC/16-33-254 www.pefc.org
36 Switzerland Lenz & Staehelin: Patrick Schleiffer & Andreas von Planta 236
Continued Overleaf
Further copies of this book and others in the series can be ordered from the publisher. Please call +44 20 7367 0720
Disclaimer
This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice.
Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication.
This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified
professional when dealing with specific situations.
WWW.ICLG.COM
The International Comparative Legal Guide to: Corporate Governance 2019
Country Question and Answer Chapters:
37 Turkey Cektir Law Firm: Av. Berk Cektir & Av. Uğur Karacabey 244
38 United Kingdom Macfarlanes LLP: Robert Boyle & Tom Rose 251
39 Uruguay Olivera Abogados / IEEM Business School: Juan Martin Olivera 258
40 USA Wachtell, Lipton, Rosen & Katz: Sabastian V. Niles 264
EDITORIAL
Welcome to the twelfth edition of The International Comparative Legal
Guide to: Corporate Governance.
This guide provides corporate counsel and international practitioners with
a comprehensive worldwide legal analysis of the laws and regulations of
corporate governance.
It is divided into two main sections:
Seven general chapters. These are designed to provide an overview of key
issues affecting corporate governance law, particularly from a multi-
jurisdictional perspective.
The guide is divided into country question and answer chapters. These
provide a broad overview of common issues in corporate governance laws
and regulations in 33 jurisdictions.
All chapters are written by leading corporate governance lawyers and
industry specialists, and we are extremely grateful for their excellent
contributions.
Special thanks are reserved for the contributing editors Sabastian V. Niles
& Adam O. Emmerich of Wachtell, Lipton, Rosen & Katz for their
invaluable assistance.
The International Comparative Legal Guide series is also available online
at www.iclg.com.
Alan Falach LL.M.
Group Consulting Editor
Global Legal Group
Alan.Falach@glgroup.co.uk
chapter 22
indonesia
Sinta Dwi cestakarani
walalangi & partners
(in association with nishimura & asahi) r. wisnu renansyah Jenie
the requirement for a foreign direct investment to be conducted in the
1 Setting the Scene – Sources and
form of a limited liability company.
Overview
For the corporate governance rules of public companies, the Capital
Market Law is more detailed and requires the public companies to also
1.1 What are the main corporate entities to be discussed? comply with OJK and Indonesia Stock Exchange (“IDX”) rules.
These rules require public companies to have an independent
commissioner (constituting of at least 30% of the BOC members).
The discussion will focus on a limited liability company (perseroan
Aside from the foregoing organs of PT, the Capital Market Law
terbatas (“PT”)) set under Law No. 40 of 2007 concerning limited
requires other structures consisting of: (i) a Corporate Secretary; (ii) an
liability companies, and its implementing regulations (“Indonesian
Audit Committee; and (iii) an Internal Audit Unit. In addition, the
Company Law”). PT is the corporate entity form allowed within
public companies may also establish a Nomination and Remuneration
the context of foreign direct investment in Indonesia (with some
Committee. With issuance of the Decree of the Board of Directors of
exceptions in the banking and oil and gas sectors under production
PT Bursa Efek Indonesia No. Kep-00183/BEI/12-2018 concerning the
sharing contracts, or the construction sector in the scheme of joint
Amendment to Rule I-A on the Listing of Shares and Equity Securities
operation) and can take the form of a private company or a public
Other Than Shares Issued by Listed Companies on 26 December 2018
company (also known as PT Tbk) with a minimum of 300
(effectively applicable on 27 December 2018), public companies in
shareholders and issued and paid-up capital of a minimum of IDR 3
Indonesia are no longer required to have an independent director.
billion.
1.3 What are the current topical issues, developments,
1.2 What are the main legislative, regulatory and other
trends and challenges in corporate governance?
sources regulating corporate governance practices?
There have been no changes to general corporate matters set by the
Corporate Governance of Indonesian limited liability companies is
Indonesian Company Law, since 2007. However, some notable
mainly governed by: (i) the Indonesian Company Law; (ii) for
changes have been made by the Indonesian government for specific
foreign investment companies Law No. 25 of 2007 on Investment
sectors through the issuance of new regulations related to
and its implementing regulations (“Investment Law”); and (iii) for
business/investment licensing and multi-finance sectors as follows:
public companies, Law No. 8 of 1995 on Capital Market including
its implementing regulations (“Capital Market Law”). For public 1. Government Regulation No. 24 of 2018 concerning
Electronic Integrated Licensing Services on 21 June 2018,
companies, banks and non-bank financial companies (e.g. multi-
which allows for different kinds of business licences to be
finance and insurance companies), they are regulated under the
obtained electronically and integrated; and
regulations of the Financial Services Authority (“OJK”).
2. OJK Regulation No. 35/POJK.05/2018 (“POJK 35”) on
Articles of association provide more specific corporate governance
Multi-finance Activities which new provisions are, among
rules for each PT.
others: (i) allowing multi-finance companies to extend cash
The Indonesian Company Law sets the general rules on corporate loans directly to borrowers; and (ii) relaxation of the down
governance of PT – the duties, roles, rights, obligations and payment requirement for motor vehicle financing under
liabilities of PT and each organ of PT consisting of (i) General certain circumstances.
Meeting of Shareholders (“GMS”), (ii) Board of Directors
(“BOD”), and (iii) Board of Commissioners (“BOC”). The rules 1.4 What are the current perspectives in this jurisdiction
and provisions set by the Indonesian Company Law are generally regarding the risks of short-termism and the
applicable to all limited liability companies. importance of promoting sustainable value creation
over the long-term?
This Investment Law works in conjunction with the Indonesian
Company Law as one of the main sources of corporate governance
The government is starting to recognise the importance of promoting
practice for foreign investment companies. While most of the
sustainable value creation over the long-term and therefore
corporate governance rules are covered by the Indonesian Company
encouraging long-term investment. While, this is not implemented
Law, the Investment Law provides additional obligations/requirements
comprehensively in all business sectors, yet, we have seen a change
such as: restrictions on nominee-share ownership arrangements; and
144 www.iclg.com iclg to: corporate governance 2019
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