General Overview of GMS
The General Meeting of Shareholders (GMS) holds unparalleled authority within the corporate structure. As one of the corporate organs, the GMS possesses powers not granted to the board of directors or the supervisory board within the limits established in Law Number 40 of 2007 concerning Limited Liability Companies (Undang-Undang Perseroan Terbatas: UU PT) and/or the articles of association. In this regard, the GMS holds the highest control in a private limited company (PT), even though each corporate organ (GMS, Board of Directors, and Supervisory Board) has its own authority according to their respective functions and responsibilities.
The powers of the GMS that are not granted to the board of directors or the supervisory board include:
- Approving the submission of bankruptcy applications for the company;
- Amending the articles of association;
- Appointing and dismissing members of the board of directors and the supervisory board;
- Approving the extension of the company’s duration;
- Approving mergers, consolidations, acquisitions, or spin-offs; and
- Dissolving the company.
The GMS itself is categorized into two types: the Annual GMS and the Extraordinary GMS. The Annual GMS must be held once a year before the end of June, while the Extraordinary GMS can be convened at any time by the board of directors through a written request. The implementation of the GMS aims to review all activities within the company, such as business operations, financial reports, and detailed issues that have arisen during the fiscal year affecting the company’s business activities.
Conducting the GMS
The GMS is conducted at the company’s place of business as stated in the articles of association. However, according to Article 77 paragraph (1) of the UU PT, in addition to the GMS being held conventionally at the company’s business location, it may also be conducted via teleconference or video conference. This provision offers flexibility for participants to participate in the GMS without being physically present in the same place (face-to-face).
Furthermore, the outcomes of the GMS are recorded in minutes agreed upon and signed by all GMS participants as regulated in Article 77 paragraph (4) of the UU PT. Consequently, a GMS conducted via video conference can bring together participants as if in one place, even though they are physically located in different places but can still hear and see other participants live, as in a conventional GMS.
On the other hand, concerning the GMS conducted based on amending the articles of association, as stipulated in Article 21 paragraph (4) of the UU PT, the minutes of the GMS must be declared in a notarial deed in the Indonesian language. This means that if the GMS decision involves amendments to the articles of association, even if carried out via video conference, it must be formalized in a notarial deed.
In the execution of the GMS via video conference, it is essential to note the difference from the conventional GMS—where in the conventional GMS, participants are physically present at the same time and place of the GMS, whereas, in the video conference GMS, participants are not in the same place but follow the proceedings of the GMS from start to finish simultaneously.
Authenticity of the GMS Minutes
As explained above, if the subject of the GMS is concerning the amendment of the articles of association, the results must be formalized in the form of a deed. A deed can be considered authentic if it meets:
- The form of the deed must comply with the provisions of Article 38 of Law Number 2 of 2014 concerning Amendments to Law Number 30 of 2004 about Notary Position (Undang-Undang Jabatan Notaris: UU JN).
- The authentic deed is drawn up before a public official appointed by the Minister, namely a Notary.
- The authentic deed is made by a competent public official. A notary who is on leave or has been temporarily dismissed does not have the authority to create an authentic deed. Similarly, a Notary who has not been sworn in cannot create an authentic deed (their act becomes an underhand deed).
According to Article 1 number 1 and Article 15 paragraph (1) of the UU JN, it is declared that a Notary has the authority to create an authentic deed, making it clear that a Notary is a public official with the authority to draft authentic deeds concerning actions, agreements, and determinations. The General Meeting of Shareholders (GMS) can be considered an agreement or consensus among the GMS participants in relation to the company. Therefore, the deed containing the decisions of the GMS created by a Notary can be regarded as an authentic deed.
Further, based on Article 16 paragraph (1) letter m, it is stated that a Notary is obligated to be physically present to read the deed in front of the appealers, with the presence of two witnesses, and specifically for inheritance deeds, four witnesses must be in attendance. This means that the procedure for creating the minutes deed of the GMS must also be attended in person by the Notary, the appealers and two witnesses. If this procedure is not conducted by the Notary—in the sense that the Notary does not physically (directly) read to and face the appealers and witnesses—the consequence is that the status of the deed becomes an underhand deed.
The issue arises concerning the authenticity of a GMS minutes deed conducted via video conference, as such a GMS does not require the physical presence of the appealers in the same location. This situation does not comply with the rules of Article 16 paragraph (1) letter m of the UU JN. Therefore, if this article is used as the reference, the status of a GMS deed through video conference could be considered an underhand deed.
There is a contradiction between the UU PT and the UU JN, particularly in the mechanism of conducting the GMS. The UU PT permits the execution of the GMS through video conference, which allows meeting participants to follow the proceedings of the GMS from different locations while still being able to see and hear the proceedings, thus not physically facing the Notary. On the other hand, the UU JN requires the Notary to be directly and physically in the presence of the appearers and witnesses. This conflict can be resolved using the legal principle “lex specialis derogat legi generali.”
The lex specialis derogat legi generali principle refers to the preference in law between two statutes that are hierarchically equivalent, and the legal act is ordered by the law, with Article 16 paragraph (1) letter m of the UU JN being the lex generalis, while the lex specialis is Article 77 paragraph (1) in conjunction with the Explanation of Article 77 paragraph (4) of the UU PT.
In the execution of Article 77 paragraph (1) in conjunction with the Explanation of Article 77 paragraph (4) of the UU PT, attention must also be paid to the form of the deed related to Article 38 of the UU JN. In the creation of a conventional deed, the form, particularly the concluding part of the deed, typically shows that the appearers, witnesses, and Notary are present in the same place at the same time. However, with a GMS conducted through video conference, the different locations of the GMS participants compared to each other must be explicitly stated to prevent the deed from becoming an underhand deed.
Based on the discussion above, the legal status of the GMS minutes deed conducted through electronic media, specifically video conference, can be referred to as an authentic deed if the principle of lex specialis derogat legi generali is applied, where Article 16 paragraph (1) letter m serves as the lex generalis, and the lex specialis is Article 77 paragraph (1) in conjunction with the Explanation of Article 77 paragraph (4) of the UU PT. Under this legal construction, the sanction in Article 16 paragraph (9) of the UU JN, which would render the deed an underhand deed, does not apply. Furthermore, the provision in Article 16 paragraph (1) letter m, which requires that the appearers, witnesses, and Notary must all be physically facing each other at the same time and place, only applies to deeds other than the GMS deeds as mentioned in Article 77 paragraph (1) in conjunction with the Explanation of Article 77 paragraph (4) of the UU PT.
