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Company Law and Corporate Governance
On July 22, 2007 (after the in-country portion of this assessment was completed), Indonesia replaced its 1995 Company Law with a revised version. The revision process offered an opportunity or eliminates obsolete provisions in the old law and to add new provisions for investor protection following international corporate governance best practices. The revision process also presented the chance for Indonesia to streamline its company registration and licensing processes.
The new law accomplished this to only a very limited extent. However, it established a new body of “Company Law Monitoring Experts” with authority to review the law on a continuing basis. Specific suggestions for revision of the new law, for consideration by that body and others in Indonesia, are made below.
Corporate governance, critical to attracting domestic and foreign investment, has become a high priority worldwide and in Indonesia. Actions taken to date include new company-rating and director-training programs for public companies and the issuance of a new national Code of Good Corporate Governance (which has yet to implemented and enforced).
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