In Indonesia, a Limited Liability Company (Perseroan Terbatas / PT) operates through clearly defined corporate organs. Understanding the roles of Directors, Commissioners, and annual compliance obligations is essential to ensure lawful operations, protect corporate stakeholders, and maintain long-term business sustainability.
This article provides an overview of these responsibilities from a corporate governance and legal compliance perspective, as commonly applied in Indonesian corporate practice.
1. Duties and Responsibilities of the Board of Directors
The Board of Directors is the executive organ of the company, fully responsible for the management and daily operations of the PT.
Key Duties of Directors:
Managing the company in accordance with its articles of association and applicable laws
Representing the company, both inside and outside court proceedings
Formulating and executing business strategies
Managing company assets and finances in good faith and with full responsibility
Ensuring regulatory compliance across business operations
Directors must perform their duties with :
Good faith
Prudence
Loyalty to the company’s interests
Failure to do so may expose directors to personal liability, especially if losses arise due to negligence, abuse of authority, or actions taken beyond their legal mandate.
2. Duties and Responsibilities of the Board of Commissioners
The Board of Commissioners functions as a supervisory and advisory organ, overseeing the actions and policies of the Board of Directors.
Key Duties of Commissioners:
Supervising management policies and performance of directors
Providing advice and recommendations to directors for the company’s benefit
Ensuring compliance with laws, articles of association, and corporate governance principles
Reviewing financial and operational reports
Approving certain corporate actions, if required by the articles of association
Commissioners are not involved in daily management, but they may also incur liability if they fail to exercise proper supervision or knowingly allow unlawful acts.
3. Fiduciary Duties and Corporate Governance Principles
Both Directors and Commissioners are bound by fiduciary duties, including:
Duty of care
Duty of loyalty
Duty to act in the best interest of the company
Sound corporate governance requires:
Clear separation of authority
Proper documentation of decisions
Transparency and accountability
Avoidance of conflicts of interest
Strong governance reduces internal disputes, regulatory risk, and exposure to shareholder claims.
4. Annual Corporate Compliance Obligations of a PT
Every Indonesian PT is subject to annual compliance requirements, regardless of its size or level of activity.
Key Annual Compliance Obligations:
a. Annual General Meeting of Shareholders (AGMS)
The company must hold an AGMS to:
Approve the annual report
Ratify financial statements
Grant discharge and release (acquit et de charge) to Directors and Commissioners
b. Annual Report
Prepared by the Board of Directors and approved by Commissioners, the annual report typically includes:
Management report
Financial statements
Corporate activities summary
Supervisory report from Commissioners
c. Corporate Data Reporting
Companies must ensure updated and accurate reporting of:
Directors and Commissioners
Shareholders
Capital structure
Articles of association changes
This reporting is generally conducted through Indonesia’s corporate administration system.
d. Tax Compliance
Annual obligations include:
Filing Annual Corporate Income Tax Return
Reconciling financial and tax reports
Ensuring withholding and VAT obligations (if applicable) are fulfilled
e. Other Sectoral or Investment Reporting
Depending on business activities, companies may also be required to submit:
Investment activity reports
Sector-specific compliance filings
Licensing renewals
5. Why Proper Compliance Matters
Failure to comply with annual obligations may result in:
Administrative sanctions
Restrictions on corporate actions
Increased legal exposure for directors and commissioners
Loss of credibility with investors, banks, and business partners
Conversely, companies with strong compliance frameworks enjoy:
Greater investor confidence
Lower legal and operational risk
Smoother corporate transactions and expansions
The effectiveness of a PT depends not only on commercial success, but also on clear governance, responsible leadership, and consistent compliance. Directors and Commissioners must understand their legal boundaries, while companies must treat annual compliance as a strategic necessity rather than a formality.
As part of its corporate advisory services, Adroit Law Group assists companies in structuring governance frameworks, advising Directors and Commissioners, and managing ongoing corporate compliance to support sustainable and legally sound business growth.
