Hot Topics In Corporate Governance In Indonesia

On 31 December 2024, Indonesia's Financial Services Authority (Otoritas Jasa Keuangan or "OJK") issued OJK Reg 45/2024. This regulation was enacted to implement the mandate under Law No 8 of 1995 regarding Capital Markets, last amended by Law No 4 of 2023 regarding the Development and Strengthening of the Financial Sector ("Law 4/2023") and is intended to further develop and strengthen Indonesia's capital markets sector.

OJK Reg 45/2024 also revokes, in whole or in part, a number of existing regulations governing key aspects of the capital markets, including the registration and delisting of public companies and issuers, rights issues by public companies and the disclosure of material information or facts.

One of the key changes introduced by OJK Reg 45/2024 relates to corporate governance, particularly in connection with the disclosure of material information or facts and the responsibilities of controllers of public companies. Under the previous regulatory framework, public companies were required to disclose any material information or facts within two business days.

Under OJK Reg 45/2024, public companies must now disclose and report material information as soon as possible, and no later than prior to the opening of the next business day's first trading session. This accelerated disclosure timeline aims to enhance transparency and market integrity.

OJK Reg 45/2024 also asserts an obligation for public companies to identify and report their controllers to the OJK, including any subsequent changes thereto. The term "controller" is defined as any party that directly or indirectly owns more than 50% of the paid-up voting shares or otherwise possesses the ability to determine – either directly or indirectly and by any means – the management and/or policies of the company. The party designated as the controller is also assigned specific responsibilities, including:

• organizing and attending general meetings of shareholders (GMS);
• ensuring the continuity of the public company's business; and
• appointing the members of the BOD and BOC of the public company.

Significantly, OJK Reg 45/2024 further provides that, pursuant to a resolution of the independent shareholders in a GMS or a decision by the OJK or a competent court, a controller may be held liable for losses suffered by the company if it is proven that the controller:

• in bad faith, utilized the company for their personal interests;
• was involved in unlawful acts involving the company; or
• directly or indirectly misused the company's assets in a manner that caused the company's assets to become insufficient to satisfy its obligations.

ESG Sector

Aside from the foregoing developments, similar to 2024, the authors have observed several developments in the environmental, social and governance (ESG) sector. One such development occurred in late 2024, when the Institute of Indonesia Chartered Accountants launched the Sustainability Disclosure Standards Roadmap, which marks a significant step in the strengthening of corporate governance in Indonesia through enhanced sustainability reporting.

The roadmap was developed through stakeholder consultations and is aligned with the standards issued by the International Sustainability Standards Board. It provides guidance to ensure the creation of high-quality sustainability reports to support business activities. According to the roadmap, the use of the standards set out within it as guidance for preparing sustainability reports will become effective starting 1 January 2027, with the possibility of earlier adoption. Among other objectives, the roadmap encourages broader voluntary disclosures and a robust sustainability reporting ecosystem.

Still within the ESG sphere, the Indonesian government has expanded the SIMBARA system, a digital platform to monitor non-tax state revenue and mineral and coal trade, with the aim of enhancing transparency, accountability and regulatory compliance. In mid-2024, SIMBARA's functionality was broadened to enable the monitoring of additional key commodities, including nickel and tin. The launch and socialization of the new features for nickel and tin monitoring were conducted in July 2024. This enhancement of the SIMBARA is expected to strengthen corporate governance practices by promoting greater oversight across the mineral and coal sector.

Excerpted from the Corporate Governance 2025 Chambers Global Practice Guide, published by Chambers and Partners.

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