Corporate Governance In Indonesia: Board Structure

Indonesia adopts a two-tier board system comprising the board of directors (BOD) and the board of commissioners (BOC). The implementation of the two-tier board system in Indonesia is mandatory under the Company Law (Law No. 40 of 2007 regarding Limited Liability Companies, as last amended by the provisions of the Job Creation Law), meaning that every Indonesian company is required to have an active BOD and BOC functioning in the operation of the company.

Furthermore, based on Article 92, paragraph 3 of the Company Law, the BOD may consist of at least one or more members. However, Article 92, paragraph 4 of the Company Law mandates that companies engaged in activities related to the collection and/or management of public funds, companies issuing debt instruments to the public, and publicly listed companies must have at least two members on the BOD. This indicates that the Company Law only stipulates the minimum number of BOD members and does not impose a maximum