Practical Guide for Circular Shareholders Resolutions for Businesses in Indonesia

Corporate Secretary Service Indonesia – Circular shareholders resolutions for business in Indonesia are becoming increasingly relevant. In the fast-paced world of business in which we live today, it would not make sense for shareholders to have to wait for a physical GMS that can also delay decisions. Circular resolutions offer companies, which are looking for a faster or more flexible channel, this solution a lot faster. It is a way for shareholders to consensually agree about important company actions informally, but with all the same legal effect as a formal meeting.

What is a Circular Resolution?

A circular resolution is a written decision by all shareholders with voting rights, made outside of a physical GMS. Instead of gathering in person, the company distributes a written proposal. However, any term of the document can be made binding when it is approved and signed by every shareholder.

The legal basis is Article 91 of Law Number 40 Year 2007 concerning Limited Liability Companies. The law provides that shareholders may make valid and binding decisions outside of GMS, if all of the voting shareholders agree in writing.

Key Differences with a Conventional GMS

Circular Resolutions

• No physical meeting is required
• No invitations or meeting agendas
• Proposal is circulated, approvals are collected in writing
• Requires unanimous written consent
• Highly efficient, especially for shareholders in different cities or countries
• Has the same legal weight as a GMS

Conventional GMS

• Shareholders meet in person
• Requires formal invitations and agenda
• Decisions are made in a meeting forum
• Needs a quorum, not always unanimous
• Formal process, often used for complex or high-stakes matters

Procedures for Circular Resolutions

The process generally includes:

1. Drafting the Proposal: Initiated by the board of directors or shareholders.
2. Distributing to Shareholders: Sent in writing, either physically or electronically.
3. Collecting Written Approvals: Every shareholder must approve. A single objection invalidates the resolution.
4. Signing the Document: Shareholders sign either one copy circulated sequentially or separate copies compiled together.
5. Documenting the Decision: All signed approvals must be collected, recorded, and where necessary, legalized through a notarial deed.

Read Also: Investment Activity Report Submission to BKPM in Indonesia: Step-by-Step Guide for PT PMA

Forms of Circular Documents

• One physical document circulated and signed by each shareholder.
• Multiple copies signed separately and then submitted to the company.

Validity Requirements

For circular shareholders resolutions for business in Indonesia to be valid, companies must meet the following conditions:

• Unanimous Consent: Requires all voting shareholders to approve in writing.
• Consent in Writing: All shareholders must sign.
• Legally Binding Contracting Requirements: Requirements of Art. 1320 of the Civil Code must be met: mutual consent, legal capacity, definite object, and lawful cause.
• Notarial Deed for Certain Acts: Necessary where the decision includes the amendment of articles of association or other things for which registration with a government authority (e.g. the company register) is required.
• Equal Legal Force: Once valid, circular resolutions carry the same legal standing as a physical GMS.

Benefits for Businesses

Circular shareholders resolutions for businesses in Indonesia provide practical advantages:

• Quick and Flexible: No Official Notice and Physical Appearance Required
• Functional Why Shareholders as a Domestic: Friendly for firms with foreign investors or shareholders that live in multiple cities.
• Genuinely Strong on the Law: Provided requirements are met, resolutions cannot be thrown out merely because they were not written about at a GMS.
• Good for Time-Sensitive Issues: Allows for quicker decision making when situations require immediate attention.

We find circular shareholders resolutions for business in Indonesia a smart part of corporate governance in the millennial era. They enable firms to swiftly respond to their opportunities or challenges, all without sacrificing legal adherence. With the unanimous consent, the proper resolution, and the legal formality your company has the ability to make binding decisions as easily and quickly as possible.

So, don’t worry about developing your business by setting up a company in Indonesia, because Portcorp is here as a solution for your business, also when you need circular shareholders resolutions for business in Indonesia. Portcorp is your comprehensive corporate secretary service in Indonesia. With our presence, you can get a dedicated company secretary to support you to what you need. Our company secretaries will track deadlines and file paperwork so your business keeps running smoothly. Contact us now on +6221-5020-8090 for your business succeed in the future!