Running a company in Indonesia means understanding who holds power — and how that power is divided. Indonesian company law creates a clear split between those who run the business and those who watch over it. Directors manage day-to-day operations, while commissioners supervise and advise.
Getting this structure right is not optional. Under Law No. 40 of 2007 on Limited Liability Companies (as amended by the Job Creation Law), every Indonesian limited liability company (PT) is legally required to have both a Board of Directors and a Board of Commissioners. This two-tier board system is unique to Indonesia’s corporate governance model, and understanding it is essential for anyone running or planning to set up a business here.
Who Can Be Shareholders in Indonesia?
Any individual or legal entity — Indonesian or foreign — that contributes capital to the company becomes a shareholder. Shareholders are the legal owners of the company and hold ultimate authority over key decisions through the General Meeting of Shareholders (GMS/RUPS).
To become a shareholder in an Indonesian company, a person or entity must hold shares worth at least IDR 10 million. Shareholders can be individuals or corporate entities, and for a PT PMA (foreign-owned company), at least one shareholder must be a foreign individual or company.
If you’re new to the Indonesian business world, it helps to understand the broader company types available. Read this guide on What Is a Private Limited Company in Indonesia? for a complete breakdown of share structures and ownership options.
What Happens If 6 Months Have Passed and There Are Fewer Than 2 Shareholders?
Indonesian law requires a PT to have a minimum of 2 shareholders at all times. If the number of shareholders drops to just one and this situation continues for more than 6 months, the remaining shareholder may become personally liable for any company debts or losses incurred during that period. Additionally, the shareholder or other interested parties may petition the court to dissolve the company. This means failing to restore the required shareholder count quickly can have serious legal and financial consequences.
Shareholders for PT PMA Company
PT PMA (Perseroan Terbatas Penanaman Modal Asing) is a foreign-owned limited liability company in Indonesia. It must always have a minimum of two shareholders, who can be foreign individuals, foreign legal entities, Indonesian individuals, or Indonesian legal entities. Foreign shareholders can own up to 100% of shares in sectors fully open to foreign investment under Indonesia’s Positive Investment List.
For a deeper look at how foreign investment structures work in Indonesia, check out Understanding Foreign Investment Structures in Indonesia.
Role of Shareholders in an Indonesian Company
Shareholders do not manage daily operations — that role belongs to directors. Instead, shareholders make major decisions through the GMS. Their core powers include:
- Appointing and dismissing members of the Board of Directors and Board of Commissioners
- Approving the company’s annual financial statements and work plans
- Deciding on dividend distribution
- Approving amendments to the company’s Articles of Association (AoA)
- Deciding on mergers, acquisitions, or dissolution of the company
Shareholders may also hold different classes of shares. Some shares carry voting rights; others come with rights to propose directors or commissioners, or to receive higher dividends. The type and class of shares a shareholder holds directly affects how much influence they have over company decisions.
Board of Commissioners in an Indonesian Company
Every Indonesian PT is required to have at least one commissioner. The Board of Commissioners (BOC) is the supervisory body of the company. It does not manage day-to-day business operations — instead, it oversees and advises the Board of Directors.
If a company has more than one commissioner, one must be designated as the President Commissioner. The President Commissioner leads the board and coordinates the oversight function. Shareholders can also serve as commissioners, but shareholding is not a requirement for the role.
Responsibilities of Commissioners
The core job of a commissioner is to supervise — not to run. Specifically, the Board of Commissioners is responsible for:
- Supervising the Board of Directors — Overseeing how directors manage the company and ensuring they act within the AoA and applicable laws
- Providing recommendations — Giving sound advice to directors to help the company operate efficiently
- Reviewing major decisions — Certain significant actions by directors may require the approval or endorsement of the commissioners
- Protecting shareholder interests — Ensuring the company is being run in a way that benefits all shareholders
- Ensuring legal compliance — Monitoring that the company follows Indonesian regulations
Commissioners are not involved in operational management. Their role is structural and oversight-focused.
What Are the Requirements of Commissioners in Indonesia?
To be appointed as a commissioner in Indonesia, a person must meet the following basic requirements:
- Must be an individual (not a legal entity)
- Must not have been declared bankrupt or involved in a company bankruptcy in the past 5 years
- Must not have been convicted of a criminal offense causing financial losses to the state within the past 5 years
- Must be willing and capable of performing supervisory duties in good faith
- For public companies, additional requirements set by the Financial Services Authority (OJK) may apply
Foreigners can also serve as commissioners, subject to rules outlined in the section below.
Board of Commissioners’ Liability in Indonesia
Commissioners generally do not bear personal liability for the company’s obligations, as long as they fulfill their duties properly and in good faith. However, this protection can be lost. A commissioner may be held personally liable if:
- They neglect their supervisory duties and the company suffers losses as a result
- They act in bad faith or outside their authority
- They benefit personally from a decision that harms the company or shareholders
- In certain bankruptcy cases, if the court finds that the BOC’s oversight failure contributed to the company’s insolvency
This liability framework is meant to ensure commissioners take their oversight role seriously, rather than treating it as a passive or ceremonial position.
Commissioners and Suspension of Directors in Indonesia
One of the most significant powers the Board of Commissioners holds is the ability to temporarily suspend a director. This can happen when a director is suspected of acting against the company’s AoA, committing fraud, or taking actions that could harm the company.
However, this suspension power has clear boundaries:
- The suspension must be reported to the shareholders immediately
- A GMS must be convened within 30 days of the suspension to decide whether to officially terminate or reinstate the director
- If no GMS is held within 30 days, the suspension is automatically lifted
- The commissioner cannot replace or permanently remove a director — only the GMS can do that
This mechanism gives the BOC a meaningful check on director behavior while ensuring that shareholders remain the ultimate decision-making authority.
Directors in an Indonesian Company
The Board of Directors (BOD) is the executive body of the company. Directors are responsible for managing all aspects of the company’s day-to-day operations and represent the company in legal matters, both inside and outside of court. Every Indonesian PT must have at least one director.
For companies involved in public fundraising, those that issue public debt instruments, or publicly listed companies, the law requires a minimum of two directors. When there are two or more directors, one must be designated as the President Director (sometimes also called Director Utama), who leads and coordinates the board.
Directors are appointed, replaced, or terminated by shareholders through a GMS. The term of a director’s appointment is set out in the AoA. Directors must act according to the AoA and all applicable Indonesian laws at all times.
What Are the Requirements of Directors in Indonesia?
To be appointed as a director in an Indonesian PT, a person must meet the following conditions:
- Must be an individual (not a legal entity)
- Must not have been declared bankrupt in the past 5 years
- Must not have been convicted of any criminal offense that caused financial losses to the state in the past 5 years
- Must not have been a member of a BOD or BOC whose actions caused a company to go bankrupt, within the last 5 years
- For PT PMA companies, at least one director must be a resident of Indonesia
- For public companies, OJK may impose additional fit-and-proper requirements
Responsibilities of Directors
Directors are the legal representatives of the company and carry out a wide range of managerial tasks. Their key responsibilities include:
- Filing legal and regulatory compliances — Ensuring the company meets all its legal obligations
- Submission of financial statements — Presenting accurate financial records to shareholders and regulators
- Preparation of annual work plans — Creating and presenting a business plan before the start of each fiscal year
- Signing contracts — Executing agreements between the company and third parties
- Managing the company’s bank accounts — Overseeing financial transactions and banking relationships
- Maintaining the shareholders’ register — Keeping an accurate and updated list of all shareholders
- Recording GMS minutes — Documenting the proceedings and resolutions of all General Meetings of Shareholders
General Restrictions for Foreign Directors in Indonesia
Foreign nationals can serve as directors in Indonesian companies, but they must comply with Indonesia’s manpower regulations. The key general rules are:
- A foreign director must hold a valid Indonesian work permit (KITAS/IMTA), unless they qualify as a non-working commissioner
- At least one director in a PT PMA must be an Indonesian resident
- Foreign directors cannot hold positions that are closed to foreign workers under Indonesia’s Positive Investment List or manpower regulations
- The appointment of foreign directors must not contradict prevailing laws and regulations
Under Minister of Manpower Regulation No. 228 of 2019, positions of directors and commissioners who are not managing personnel are generally open to foreigners.
If you’re planning to live and work in Indonesia as a foreign investor, it’s also worth understanding your visa and residency options. See What is an Investor KITAS? for a full guide.
Specific Restrictions of Foreign Directors in Indonesia
While foreigners can generally hold director roles in PT PMA companies, certain sectors and situations carry specific restrictions.
1. Restrictions Based on Unfair Business Competition
Foreign directors must not use their position to gain unfair competitive advantages that violate Indonesia’s anti-monopoly and fair business competition laws (Law No. 5 of 1999). A foreign director who holds influence over competitors or engages in price-fixing, market division, or cartel behavior may face legal liability — both for the company and personally.
2. Restrictions in the Capital Market
In publicly listed companies, foreign directors are subject to additional screening by the OJK (Otoritas Jasa Keuangan — Financial Services Authority). Directors of public companies must pass a fit-and-proper test, and there may be nationality-based restrictions in specific financial and capital market positions as required by OJK regulations.
3. Restrictions in Personnel Positions
Under Manpower Regulation No. 228 of 2019, foreign nationals are prohibited from serving as directors in the following personnel-related positions:
- Human Resources Director (Direktur Personalia)
- Industrial Relations Manager
- HR Development Manager
- Any position responsible for personnel management and labor relations
These roles are specifically reserved for Indonesian nationals to protect local workers’ interests and ensure compliance with Indonesian labor law.
4. No Specific Restrictions for Foreign Directors in Indonesia
Outside of the specific restrictions listed above, there are no blanket prohibitions on foreign directors in Indonesia. As long as they hold the correct work permits, comply with manpower regulations, and do not occupy closed positions, foreign nationals can legally serve as directors across a wide range of industries and sectors. This makes Indonesia a relatively open environment for foreign business leadership compared to some neighboring countries.
Key Differences Between Directors and Commissioners in Indonesia: Powers, Limits, and Accountability
| Feature | Board of Directors (BOD) | Board of Commissioners (BOC) |
| Primary role | Manages and runs the company | Supervises and advises the BOD |
| Day-to-day operations | Directly involved | Not involved |
| Legal representation | Represents company in court and externally | Does not represent the company |
| Appointment | By shareholders via GMS | By shareholders via GMS |
| Minimum number (PT PMA) | 1 director | 1 commissioner |
| Can you suspend the other? | No | Yes (temporarily; subject to GMS) |
| Personal liability | Yes, if negligent or acting in bad faith | Yes, if oversight duties are neglected |
| Foreign nationals allowed? | Yes, with work permit; at least 1 resident required | Yes, with work permit (for PT PMA) |
| Personnel positions | Closed to foreigners | Not restricted in the same way |
Implications for Foreign Investors and Business Owners
For foreign investors, understanding the BOD and BOC structure is not just a compliance requirement — it’s a strategic tool. Here’s what this means in practice:
- Control: Foreign investors can serve on both the BOD and BOC in a PT PMA, giving them direct operational oversight and supervisory power.
- Liability protection: By properly separating management (directors) from oversight (commissioners), investors reduce the risk of personal liability for company actions.
- Governance quality: A well-structured BOC with independent commissioners improves decision-making quality and makes the company more attractive to future partners or investors.
- Compliance risk: Appointing foreign directors or commissioners without the correct permits or in closed positions can result in significant legal penalties and business disruption.
Many foreign investors opt for a mixed board — combining foreign directors or commissioners for strategic direction with local talent for regulatory knowledge and on-the-ground expertise.
For a full overview of what it takes to register and operate a foreign company in Indonesia, explore Foreign Company Registration Options in Indonesia 2026.
الأسئلة الشائعة
1. Who Can Terminate a Commissioner or a Director in the Company?
Only the General Meeting of Shareholders (GMS/RUPS) has the authority to terminate a commissioner or a director. The Board of Commissioners can temporarily suspend a director (for up to 30 days, pending a GMS), but they cannot permanently remove one. Shareholders vote on termination at the GMS, and this decision is binding.
2. The Process of Terminating a Commissioner or Director Is a Hassle. Is There Any Way to Avoid It?
Yes — prevention is the best strategy. When drafting the Articles of Association, companies can set clear term limits for both directors and commissioners, so their positions expire naturally without the need for a formal dismissal process. It is also advisable to include clear performance expectations and conduct guidelines in the AoA. A well-drafted AoA reduces conflicts and makes governance transitions smoother. Working with a professional company registration service can help you set this up correctly from the start.
3. Who Is Responsible for Reviewing and Approving the Annual Financial Statement — Board of Directors or Board of Commissioners?
Both play a role, but their functions are different. The Board of Directors is responsible for preparing and submitting the annual financial statements. The Board of Commissioners then reviews these statements as part of their supervisory function. Ultimately, the annual financial statements must be presented to and approved by shareholders at the Annual GMS. This three-layer review process — directors prepare, commissioners review, shareholders approve — is designed to ensure accountability and accuracy.
4. Can Foreigners Be Commissioners in Indonesia?
Yes — foreigners can serve as commissioners in a PT PMA (foreign-owned company). For a PT PMA, there are no restrictions on foreign commissioners in most non-personnel roles. Foreign commissioners must comply with Indonesian work permit requirements if they plan to physically work in Indonesia, though some arrangements allow for commissioner status without a work permit, especially for non-resident commissioners. Importantly, foreigners cannot be commissioners in a company that is 100% owned by Indonesian nationals (PT PMDN).
Ready to Set Up Your Indonesian Company the Right Way?
Understanding the roles of directors and commissioners is just one part of successfully establishing a business in Indonesia. From structuring your shareholders to filing with the right government bodies, every step matters.
If you’re exploring your options or need help with the registration process, also read our guide on Top 5 Challenges When Starting a PT PMA in Indonesia and learn How to Open a Corporate Bank Account in Indonesia for PT PMA to get fully prepared.
Let EZPZ Indonesia help you register your company quickly, legally, and with complete peace of mind.
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