Corporate governance is how a company is directed: supervised, and held accountable. Indonesia’s framework combines company law, capital-market rules, beneficial-owner reporting, and international guidance.
If you run a business or invest, first identify which rules apply. The key distinction is whether your company is private or public. Both follow the Company Law, while public companies face extra OJK obligations.
Good governance should build trust, not just paperwork.
Indonesia’s Two-Tier Company Structure
Law No. 40 of 2007 on Limited Liability Companies establishes three company organs: shareholders’ meetings, directors, and commissioners. The Job Creation legislation amended the Company Law, most recently through Law No. 6 of 2023. Each organ has a distinct role, so commissioners are not simply another executive board.
Directors manage and represent the company. They must act for its interests and within its purposes. Commissioners supervise management and advise directors. Shareholders’ meetings decide matters not assigned to the other organs by law or the company’s articles.
This division creates accountability, but does not guarantee it. Directors must act in good faith and with full responsibility. They can be personally liable for losses caused by fault or negligence. A director may defend a claim by showing good faith, prudent management, no conflict, and efforts to prevent loss. Commissioners can also face liability for faulty or negligent supervision, subject to statutory defenses.
Shareholder Rights and Transparency
Shareholders may attend and vote at meetings, receive dividends, and claim liquidation proceeds. They may challenge unfair company decisions and seek remedies for specified transactions. Eligible shareholders can also bring certain derivative claims for company losses. These rights matter especially when family or other controlling ownership is strong. Minority investors need clear information and fair procedures.
Companies must hold an annual shareholders’ meeting within six months after the financial year ends. Directors prepare an annual report, and commissioners review it. It covers financial statements, business activities, social and environmental responsibility, material issues, and board information. Certain companies must also have audited statements, including public companies and some larger or publicly funded companies. These requirements help shareholders make informed decisions.
The 2023 Job Creation Law introduced a simplified company form for qualifying micro and small enterprises. One individual may establish such a company, and its director must prepare financial statements. This can make formal business ownership more accessible. It does not remove the need for accurate records or responsible decisions.
Extra Rules for Public Companies
Issuers and public companies face additional Financial Services Authority rules. Otoritas Jasa Keuangan, or OJK, regulates capital-market governance and disclosures. POJK No. 33/POJK.04/2014 sets requirements for directors and commissioners. Public companies generally need at least two directors and two commissioners. At least one commissioner must be independent on a two-member board. Larger boards must meet the regulation’s independent-commissioner ratio.
Public-company boards also have independence, meeting, and disclosure duties. An independent commissioner should question management without compromising relationships or financial interests. Commissioners must establish an audit committee. POJK No. 55/POJK.04/2015 requires the committee to review financial information, internal audit, legal compliance, risk, and conflicts.
OJK’s governance guideline uses “comply or explain” for its recommendations. A public company should apply the guidance or explain why it did not, including any alternative approach. It must report implementation in its annual report. This flexibility recognizes that companies differ, but vague explanations can weaken investor confidence.
Public companies also face detailed annual-report requirements. Reports include audited financial statements and governance information. Companies must submit reports to OJK and make them available to shareholders and the public. If you invest, look beyond headline profits.
Beneficial Ownership and International Principles
Minister of Law Regulation No. 2 of 2025 adds a broad transparency layer. It applies to corporations, including limited liability companies, not only listed firms. Covered entities must identify and verify beneficial owners, submit information, keep records, and update it annually. They must also update information when relevant changes occur. The regulation authorizes verification, supervision, and administrative sanctions).
Beneficial-owner disclosure helps identify people who ultimately own or control a company. That matters when ownership chains cross borders or involve several legal entities. It complements board oversight and shareholder rights. It does not replace them.
The G20/OECD Principles of Corporate Governance provide an international benchmark. They emphasize shareholder rights, equitable treatment, disclosure, board responsibilities, institutional investors, and sustainability and resilience. They guide improvements to national frameworks, but do not replace Indonesian law. I find them practical: Are owners treated fairly? Does the board disclose and oversee what matters?
What Good Governance Looks Like in Practice
Match safeguards to the company’s ownership and risk profile. Widely held companies need independent oversight and reliable disclosures. Family-controlled companies need protections against conflicts and unfair treatment of minority investors. Multinationals need controls that work across subsidiaries, local laws, and reporting systems.
Start by mapping owners, board roles, approval limits, and reporting lines. Keep minutes, financial records, and conflict disclosures complete. Ensure the audit committee can investigate concerns and follow findings through. Compare disclosures across years, not just against formal checklists. Treat beneficial-owner information as a living record, not a one-time filing.
No governance system can eliminate every conflict. The goal is to make decisions visible, assign responsibility, and create credible ways to challenge misconduct. Indonesia combines statutory duties, OJK requirements, ownership transparency, and international principles. When you know which rules apply and test whether they work, you can make better decisions and build trust. For complex transactions, confirm current requirements with qualified Indonesian counsel at Wijaya & Co.
My name is Asep Wijaya, writing for Wijaya & Co. We orchestrate to assist you navigate. Thank you for reading my posts.