Pursuant to Article 91 Law Number 40 of 2007 on Limited Liability Company (“Company Law“), the shareholders may make a resolution without convening General Meeting of Shareholders (GMS), provided that ALL of the shareholders give a written approval by signing the circular resolution.
Therefore, it is more effective and efficient to decide/approve an event or transaction or corporate action through a circular resolution than by convening a GMS. Such event or transaction are among others:
1. Change of Board of Directors/Commissioners (BOD/BOC);
3. Increase of Authorized Capital.
In practice, draft of Circular Resolution shall consist of the following variables:
1. Title: “Circular Resolution of Shareholders of PT X in Lieu of an Extraordinary GMS No. ____
2. The undersigned:
a. Shareholder I, as a holder of 50% shares in the Company
b. Shareholder II, as a holder of 50% shares in the Company
3. Stating that pursuant to Article 91 Company Law and/or Article ____ Article of Association of the Company, all of the Shareholders may adopt valid resolution without convening a GMS
4. Stating that all of the shareholders hereby confirm that they have been notified of the proposed resolution
5. Accepting the proposed event or transaction or corporate action
6. Accepting the act of Director in relation with the transaction or corporate action
7. In the event of change of BOD/BOC, there usually a clause in Article of Association of the Company on the 30 days notification prior to resignation of BOD/BOC. BOD/BOC may usually waivr this clause in his Resignation Letter and the Circular Resolution may usually approve such waiver
8. Authorizing the Director to submit notice or approval application to Minister of Laws and Human Rights (MOLHR) on such resolutions
If the client is a foreigner then the draft shall usually drawn in billingual.
Do not forget to liaise with the Notary on Statement of Meeting Resolution preparation within 30 days as of the date of Circular Resolution. The Notary shall then submit to MOLHR on approval and/or notice on such resolution.
The resolution shall be effective as of the issuance of MOLHR decision/approval or receipt.