In 2020, Indonesia's Financial Services Authority (“OJK”) issued two regulations, OJK Regulation No. 15/POJK.04/2020 (“POJK 15”)1 and OJK Regulation No. 16/POJK.04/2020 (“POJK 16”),2 to establish a concrete legal framework to allow public companies / issuers to hold their shareholders' meetings online (“e-Meeting”). The OJK then appointed the Indonesia Central Securities Depository (“KSEI”) to act as the country's e-Meeting provider, which subsequently launched a new platform known as the “Electronic General Meeting System” (abbreviated to “eASY.KSEI”).
Unfortunately, however, POJK 15 and 16 did not make comprehensive provision for full online participation and voting by shareholders and their proxies. In particular, although a shareholder or their proxy could vote remotely in situations where the meeting's agenda was made available online in advance, for that vote to be effective it had to subsequently be submitted in person to the company by the shareholder themselves or their proxy (subject to exemptions in exceptional circumstances, as determined by the OJK or Government, such as the imposition of a quarantine or lockdown).
To overcome this and other obstacles that hampered the effective use of eASY.KSEI and the move to online shareholders' meetings, the KSEI's Board of Directors recently issued a new rule (“Rule XI-B”, effective 31 October 2022).3 Besides allowing shareholders or their proxies to cast binding votes remotely, the new rule also amends the existing rules on: (i) e-Meeting announcements and invitations to attend; (ii) registration of shareholders and proxies; (iii) general e-Meeting procedures; and (iv) general e-voting procedures.
However, despite the changes brought about by Rule XI-B, doubts persist as to the validity of at least some electronic meetings. This is because article 77(4) of the Companies Law 20074 requires the minutes of a shareholders' general meeting to be approved and signed by all the participants (whether attending in person or online). This provision creates difficulty for a public company / issuer wishing to hold an e-Meeting, as it may sometimes be difficult to secure the signing of the minutes by all the participating shareholders. We will discuss this issue in greater detail in sections C and D below.
B. Key Features of Rule XI-B
The key features of Rule XI-B may be summarized as follows:
1. Online Attendance
A public company / issuer that uses eASY.KSEI must accept or recognize the online attendance of shareholders or their proxies, and votes at an e-Meeting that are cast by shareholders or their proxies via eASY.KSEI. Audio, visual, audio-visual, or other appropriate facilities must be made available by the eASY.KSEI provider (read: the KSEI) so that the participants can see, hear, and participate directly in the e-Meetings.
Shareholders may only attend an online meeting if they fulfil the requirements set by the eASY.KSEI provider, including the requirements that they:
- submit a declaration confirming their attendance via eASY.KSEI, plus their vote on a minimum of one item of the GMS agenda, at least 1 business day before the scheduled date of the e-Meeting; or
- register online in real time via eASY.KESI during the online shareholder registration period on the date of the GMS, and submit their votes on the items of the GMS agenda within the permitted voting period.
Shareholders who wish to attend a shareholders' meeting remotely or grant power of attorney (“PoA”) to a proxy electronically are responsible for ensuring that eASY.KSEI access rights are not abused, including as regards voting and the appointment of proxies via eASY.KSEI.
A proxy may only represent a shareholder at an e-Meeting if they have been granted PoA by the shareholder and have registered with eASY.KSEI.
According to Rule XI-B, shareholders or proxies who attend an e-Meeting may submit questions and express their opinions using a “dedicated platform” provided by KSEI. We presume that this “dedicated platform” refers to eASY.KSEI (although this is not specifically stated in the rule).
2. Online Voting
In general, votes may be cast online by shareholders or their proxies via eASY.KSEI at any time during the period counting from the e-Meeting invitation up until the end of the permitted voting period for each item on the agenda.
In the case of a shareholder that has submitted a declaration confirming their attendance at an e-Meeting (see Section A.i above), any online votes that they cast at least one day before the date of the e-Meeting will be deemed valid. Further, any vote that they cast prior to the holding of the e-Meeting may be changed or revoked until such time as the chair of the meeting closes the voting. Similarly, if the shareholder has yet to vote, they may do so until the voting is closed by the chair.
A vote cast by a proxy may be changed or revoked by the proxy up to 1 business day before the e-Meeting, provided that they have received an instruction to do so from their principal. If a shareholder has not voted on a particular agenda item, their proxy may vote on that item during the permitted voting period, provided that they are authorized by the shareholder to do so.
Should there be a discrepancy between the voting tallies produced by eASY.KSEI and the public company / issuer, the latter “must adhere to the mechanisms and procedures stipulated by the KSEI.” (While Rule XI-B does not specifically explain what this means, it would appear that any voting tallies produced by eASY.KSAI will prevail.)
As explained in the Introduction above, Rule XI-B (building on POJK 15 and 16) endeavours to facilitate full online participation and voting at general meetings by shareholders or their proxies, two major features that were not previously available. The introduction of these new features, which are obviously of significant benefit to shareholders who are unable to participate or vote in person, represents the logical culmination of a general trend towards maximizing the use of IT so as to allow legally important meetings to be held remotely.
However, as also mentioned in the Introduction, an important caveat is in order. The basic issue is that Rule XI-B and POJK 16 are not entirely consistent with the Companies Law of 2007, which is the key legislation governing shareholders' rights and meetings.
While the Companies Law permits shareholders' meetings to be held remotely, Article 77(4) of that legislation provides that the minutes of an e-Meeting must be approved and signed by all of the participants (whether attending in person or online). By contrast, POJK 16 (which is lower in the legal hierarchy than the Companies Law and thus should not diverge from it), specifically states that the signatures of shareholders are not required for e-Meeting minutes to be valid. The OJK argues that it is entitled to diverge from the higher legislation through POJK 16 based on the authority provided by an emergency law that was issued in 20205 to cope with the difficulties caused by the Covid-19 pandemic. However, the big question is whether that authority still persists now that the pandemic has subsided? If not, then Article 77(4)of the Companies Law will apply and the minutes e-Meetings of public companies/issuers will once again need to be approved and signed by all the shareholders.
D. ABNR Commentary
Ultimately, it will be a matter for the courts to decide whether Article 77(4) Companies Law should once again be applied to e-Meetings of public companies. If they decide that it should, on the basis that the Companies Law is the overarching legislation governing shareholders' rights and meetings, then this would mean that that the minutes of e-Meetings would once again need to be signed by all attending shareholders/proxies. If not signed, a disgruntled shareholder would subsequently be able to challenge the validity of the meeting and its resolutions, and could potentially have grounds for bringing an unfair prejudice claim against the company. This is an important point, bearing in mind that a public company will generally have many shareholders, which makes it difficult for the company to ensure that all of them sign the minutes of an e-Meeting.
It is here that the role of the notary is of paramount importance as the minutes of an e-Meeting of a public company must, by law, be incorporated in a notarial deed. Consequently, we asked a number of senior notaries with extensive experience in the corporate law field about current practice as regards the signing of e-Meeting minutes. All of the notaries we spoke to informed us that they either sign the minutes themselves or sign them together with the chairperson, without requiring them to be signed by all of the participating shareholders/proxies. One notary said that he also requires one of the attending shareholders to sign. However, it is important to note that practice varies from one notary to another. Nevertheless, in all cases, once a notarial deed is executed, it constitutes conclusive evidence of the matters stated within it. Consequently, this should be enough to ensure the validity of minutes and preclude any challenges should Article 77(4) subsequently be reapplied, barring some egregious breach of notarial duties that is detrimental to a shareholder.
1. OJK Regulation No. 15/POJK.04/2020 on the Planning and Implementation of GMS of Publicly Listed Companies / Peraturan Otoritas Jasa Keuangan Republik Indonesia Nomor 15 /Pojk.04/2020 Tentang Rencana dan Penyelenggaraan Rapat Umum Pemegang Saham Perusahaan Terbuka
2. OJK Regulation No. 16/POJK.04/2020 on the Implementation of GMS of Publicly Listed Companies by Electronic Means / Peraturan Otoritas Jasa Keuangan Republik Indonesia Nomor 16 /Pojk.04/2020 Tentang Pelaksanaan Rapat Umum Pemegang Saham Perusahaan Terbuka Secara Elektronik
3. KSEI Directive No. KEP-0030/DIR/KSEI/1022 of 2022 (“Directive 30/2022”) on KSEI Rule No. XI-B regarding Procedures for the Conducting of Electronic General Meetings of Shareholders that Involve Voting via eASY KSEI / Keputusan Direksi PT Kustodian Sentral Efek Indonesia Nomor: KEP-0030/DIR/KSEI/1022 Tentang Peraturan PT Kustodian Sentral Efek Indonesia Nomor XI-B Tentang Tata Cara Pelaksanaan Rapat Umum Pemegang Saham Secara Elektronik Yang Disertai Dengan Pemberian Suara Melalui Electronic General Meeting System KSEI (eASY.KSEI)
4. UU No. 40 Tahun 2007 tentang Perseroan Terbatas
5. Emergency Law No. 1 of 2022 (Peraturan Pemerintah Pengganti Undang-Undang Nomor 1 Tahun 2020), as subsequently ratified by the National Legislature as Law No. 2 of 2020 (Undang-undang Nomor 2 Tahun 2020)
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