What to Know About Corporate Governance in Indonesia

Corporate governance can sound like boardroom jargon, but it answers a very practical question: who gets to make decisions for a company, who checks those decisions, and how do shareholders and other stakeholders know what’s going on? 

In Indonesia, good governance is not just a checklist for big public companies. It starts with the rules for every limited liability company, then gets more demanding for companies that raise money from the public or operate in regulated sectors.

I think of it as the company’s system of checks and balances. Strong governance helps the business make decisions responsibly, spot trouble sooner, and earn trust from investors, employees, customers, and regulators. 

Here are the legal building blocks worth knowing.

The Company Law sets the Foundation

The main framework is Law No. 40 of 2007 on Limited Liability Companies, as amended, including by Law No. 6 of 2023, which enacted the Job Creation regulation into law. The amendments sit within a larger business-law framework. They did not replace the Company Law’s central governance structure.

For a limited liability company, the law divides authority among three corporate organs: 

1. the General Meeting of Shareholders (GMS), 
2. the Board of Directors, and 
3. the Board of Commissioners. 

That two-tier structure is a defining feature of Indonesian company governance.

The GMS handles matters reserved to shareholders by law or the company’s articles of association. The Board of Directors manages and represents the company, while the Board of Commissioners supervises management and advises the Directors. These roles are related, but they are not interchangeable. A shareholder may have influence through ownership and voting rights, but that doesn’t mean they should casually step into the Directors’ management role or the Commissioners’ oversight role.

That separation is useful only if it works in practice. If the Directors make every decision without meaningful supervision, the checks are weak. If the Commissioners try to run daily operations, accountability gets muddy. You want clear authority, documented decisions, and people who understand what they’re responsible for.

Responsibility has Real Consequences

The Company Law expects Directors to manage the company in its interests and in line with its purposes. Article 97 makes directors responsible for management, and can make them personally liable for company losses caused by their fault or negligence, subject to the law’s conditions and defenses. Commissioners also have oversight duties, and Article 114 addresses their responsibility for losses connected to failures in supervision.

That doesn’t mean every bad business outcome creates personal liability. Business involves risk. The key questions are whether directors or commissioners acted within their authority, in good faith, with appropriate care, and in the company’s interests. For you as a founder, board member, or shareholder, careful records matter: meeting minutes, conflict disclosures, decision papers, and evidence that the board considered material risks.

Governance also depends on the company’s reporting. The Company Law requires an annual report for the GMS, including financial information and an account of the company’s activities and responsibilities. A report should help shareholders understand what happened, not just satisfy a filing requirement.

Public Companies Answer to Extra OJK Rules

If your company is an issuer or public company, the core Company Law still applies, but OJK adds another layer. OJK Regulation No. 21/POJK.04/2015 requires public companies to apply OJK’s corporate governance guidelines and disclose their implementation in the annual report. If a company does not follow a recommendation, it must explain why. That “apply and explain” approach gives companies some flexibility, but it also asks them to be transparent about the choices they make. 

OJK rules also address board composition and conduct. For example, POJK number 33/POJK.04/2014 sets requirements for Directors and Commissioners of issuers and public companies. Other rules apply to areas such as shareholder meetings, audit committees, disclosure, and specific financial sectors.

There have also been recent capital-market changes. OJK Regulation No. 45 of 2024, effective from the end of 2024, updates the framework for issuers and public companies, including rules relevant to disclosure and identifying controllers. That matters because control is not always obvious from a shareholding chart. A person may exercise significant influence through voting arrangements, the ability to appoint board members, or control over important decisions. For public companies, governance should reveal who is really steering the ship.

What Minister of Law Regulation No. 2 of 2025 Adds

One regulation that’s easy to mislabel is Minister of Law Regulation No. 2 of 2025. It is not a general corporate-governance code. Its focus is verification and supervision of corporate beneficial owners: the real individuals who ultimately own, control, or benefit from a corporation.

The regulation requires covered corporations to identify and report beneficial owners, verify the information using supporting documents, keep records, complete a questionnaire, and update the information at least annually. Verification is risk-based, including attention to money laundering and terrorism-financing risks. Failure to report or providing inaccurate information may lead to administrative sanctions, such as a written warning, blacklisting, or restrictions on access to the Ministry’s online legal-administration system.

Why does this belong in a governance discussion? Because transparency about the people behind a company is part of accountability. If your company’s ownership looks clear only on paper, but no one can identify who actually controls it, regulators and business partners may have good reason to ask harder questions.

The OECD Principles are a Useful Compass

Indonesia’s laws set binding duties, while international standards can help you assess whether your governance is working well. The G20/OECD Principles of Corporate Governance 2023 cover six (6) areas: 

1. an effective governance framework; 
2. shareholder rights and equitable treatment; 
3. institutional investors and markets; 
4. disclosure and transparency; 
5. board responsibilities; and 
6. sustainability and resilience.

The Principles are not a substitute for Indonesian law. Think of them as a benchmark. They encourage companies to treat shareholders fairly, disclose material information clearly, hold boards accountable, and take sustainability and resilience seriously. That last point matters even for companies that don’t think of themselves as “sustainability businesses.” Climate, supply-chain, workforce, and technology risks can all affect long-term performance.

What Good Governance Looks Like Day to Day

For you, strong governance is less about having a glossy policy binder and more about habits that hold up under pressure:

1. Give the GMS, Directors, and Commissioners clear roles, and follow the company’s articles of association.
2. Record decisions and the reasons behind them, especially when the company faces a conflict of interest or major risk.
3. Keep financial and ownership information accurate, current, and understandable.
4. Make sure the Commissioners can challenge management without being pulled into day-to-day operations.
5. If you’re a public company, meet OJK disclosure and reporting duties, and explain any governance recommendations you have not adopted.
6. Treat beneficial-owner reporting as an ongoing responsibility, not a one-time filing.

Closing Remarks

The practical test is simple: can your company explain who controls it, who made a decision, what information they considered, and who checked the result? If the answer is fuzzy, your governance probably needs work.

Indonesia’s corporate-governance framework is a layered system. The Company Law establishes the core structure, OJK adds rules for public and regulated companies, the 2025 Minister of Law regulation strengthens beneficial-owner transparency, and the OECD Principles offer a broader benchmark. You don’t need to make governance complicated. You do need to make it real, documented, and honest.

My name is  Asep Wijaya, writing for Wijaya & Co. We orchestrate to assist you navigate. Thank you for reading my posts.