Understanding the Company's Article of association

Indoneisan Company Law is regulated under the law No. 40 Year 2007 regarding Limited Liability Company (Company Law)
A deed of establishment contains the article of association and other information related to the establisment of company.
In principle, other than subjecting to the Company Law, a company must also subject to the article of association that has been determined. In other words, article of association is a rule of game in a company.
Article of association contain at least:
  1. the Company’s name and domicile;
  2. the purposes and objectives and field of business of the Company;
  3. the Company’s period of incorporation;
  4. the amount of the authorised capital, subscribed capital, and paid up capital;
  5. the number of shares, classifications of shares if any including the number of shares for each classification, the rights attaching to each share and the nominal value of each share;
  6. the name, position and number of members of the Board of Directors and Board of Commissioners;
  7. the determination of the place and procedure for holding a GMS;
  8. the procedures for the appointment, replacement, and dismissal of members of the Board of Directors and Board of Commissioners;
  9. the procedure for the use of profits and allocation of dividends. 
Article of association may also contain other provisions as long as not in conflict with the Company Law. If there is contradiction between the article of association with the company law, then company law shall be prevailed.
Article of association may not contain:
  1. provisions concerning receipt of fixed interest on shares; or
  2. provisions concerning the grant of personal benefits to the founders or other parties.
Related to the Name of Company, there are several things must be concerned as follow:
  1. Article 16 Company Law states that the company may not use the name which: a) have been lawfully used by another Company or are in principle the same as the name of another Company; b) conflict with public order and/or morality; c) are the same as or similar to names of state institutions, government institutions, or international institutions, except with the permission of those concerned; d) are not in accordance with the purpose and objective and business activities or merely show the purpose and objective of the Company without its own name; e) have the meaning Company, legal entity, or civil association.
  2. The name of company must be preceded by the phrase “Perseroan Terbatas” (Limited Liability Company) or the abbreviation “PT”
  3. In the case of a Public Company, other than the provision as stated in the poin 2 above being applicable, the abbrevation “Tbk” must be added at the end of the company’s name. If there is no abbrevation “Tbk”, it means the company is a privat company.
  4. The furter provitions related to the name of Company will be regulated in the Governent Regulation.
The company has its domicile (also its office center) in the city or regency within the territory of the Republic of Indonesia specified in the articles of association.
This provision does not close the posibility that the company being domiciled in the village or subdistrict as long as the article of association state the name of  such city and subdistrict. For example: PT A is domiciled in Kesawan Village, Medan Barat Subdistrict, Medan Regency.
The company must have a purpose and objective and a field of business which are and stated in the Company’s articles of association and in accordance with the provisions of legislative regulations.
Understanding the Company’s Article of Association

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