Role and Status of Indonesian Company Secretary

Role and Status of Indonesian Company Secretary

Partly as a result of the modernizing influence of Indonesian Company Law, there is growing recognition of the need for company secretaries in Indonesia.  Currently, only publicly listed companies are legally required to appoint a designated company secretary.  Over the last few years, however, greater scrutiny of corporate affairs by governmental and international agencies, lenders, commercial partners, minority shareholders, employees and the general public has exerted pressure on companies to comply with basic organizational and procedural norms.  As the demand grows for good corporate governance, operational transparency and international standards of accountability, the need for a full-time company secretary in all but the smallest and most simple Indonesian companies will be felt.

The role of the company secretary is defined in Indonesian law only in the context of publicly listed companies, i.e., there is no mention of the office of company secretary in either the Company Law or the standard form Articles of Association ("Standard Form AoA") sanctioned by the Department of Law and Human Rights ("DoLH").

More recently, the Indonesia Stock Exchange ("ISE") has issued a decree defining in more detail the role and responsibilities of a company secretary, at least for companies listed on that exchange. ISE Regulation requires that company secretaries be given access to all material information of the company relevant to corporate transparency and disclosure obligations.

Given the limited legal recognition afforded company secretaries, it is not surprising that no licensing requirements or statutory qualifications for holding the position are stipulated.  As a functional matter, however, a company secretary is an important officer of the company. In many organizational structures, the company secretary either sits on or reports directly to the BoD. In larger corporations, the company secretary normally acts under the supervision of the general counsel of the company.

In defining the role and status of a company secretary, it may be helpful to distinguish the office of "general counsel". The mission of a general counsel is to act as legal advisor to the company and its management.  The general counsel almost always sits on the BoD, and plays an active role in corporate decision-making.  It is a position of greater responsibility than company secretary and, where both offices exist, the company secretary is subordinate to the general counsel. Indeed, the company secretary may be one of dozens of lawyers in a legal department over which the general counsel has managerial responsibility.

Historically, relatively few Indonesian corporations have had either a general counsel or company secretary, and even fewer have had both offices within the corporate structure.  Inevitably, to the extent the company secretary is the sole "legal person" in the company, the role, status and expectations are likely to be similar in many respects to those traditionally associated with a general counsel. Most Indonesian company secretaries handle a broader range of matters than their counterparts in other jurisdictions, and the description of a company secretary's tasks below reflects this wider scope of responsibility.