Governance and Management Governance and Board of Director - Coggle Diagram
Governance and Management Governance and Board of Director
Advantages and Disadvantages of Listed Companies
Access to investors
Freedom of share transfers
Limitation on the risks to shareholders
Diversification of risk
Compliance with securities regulations
Complex organizational structure
Compliance with disclosure obligations and other regulations
Willingness of shareholders to invest
Higher minimum charter capital requirements
Limited Liability Company
Definition of Limited Liability Company
Shareholders cannot be held personally liable for the company’s debts/liabilities. The company holds legal identity, can enter into contracts in its own name, and may sue and be sued.
The company adopts a two-tiered governance system comprising a BoC that supervises the BoD. The company organs consist of the GMS, BoC, and BoD. The company may issue shares and bonds.
Listed and Non-Listed Companies
Listed companies require higher paid-up capital and are subject to stricter and more complex rules with respect to corporate governance and information disclosure. Listed companies are generally better suited for larger and growing companies that might wish to raise finance in the equity markets.
Governance Structure of Limited Liability Company
General meeting of shareholders
Board of commissioners
The BoC plays a central role in Indonesia’s corporate governance framework. The BoC is responsible for overseeing and advising the BoD, in the context of pursuing the company’s interests and objectives.
Board of directors
The BoD is the legal representative of the company, except when that would give rise to a conflict of interest or the BoD has not been appointed, in which case the BoC may temporarily fill this role.
An audit committee
Audit committees play a critical role in assisting the BoC to discharge its oversight responsibility for adequate and effective risk management, financial reporting, control, and governance.
Issuers, public companies, and listed companies in Indonesia must establish an audit committee and develop and disclose an audit committee charter.
A nomination and remuneration committee
The company pays for the auditor/auditing firm’s services. The audit committee (if there is any) must review the external auditor fees and submit its recommendations to the BoC. Importantly, compensation procedures and the amount of compensation must be determined independently of the audit results.
A corporate secretary
The task is to ensure the company makes relevant corporate information available to the public, advise the BoD with respect to compliance with the Capital Markets Law and its implementing regulations, and to act as a point of contact between issuers or listed companies and OJK as well as the public.
An internal auditor
The internal auditor plays an increasingly important role in many Indonesian listed companies towards strengthening their governance standards.