“Corporate governance” sounds like something for lawyers and annual reports. But at its heart, it’s a pretty practical question: who runs the company, who supervises them, and how can people tell whether decisions are being made responsibly?
In Indonesia, governance starts with company law, then becomes more detailed for public companies and regulated sectors. New rules on beneficial ownership add another layer of transparency. Internationally, the OECD principles offer a useful benchmark.
I’d think of these not as separate checklists, but as pieces of one system: clear authority, real accountability, and honest disclosure.
The Company Law sets the basic structure
The foundation 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 2023 law is part of the current framework, but it did not replace the Company Law’s central governance model.
That model has three corporate organs: the General Meeting of Shareholders (GMS), the Board of Directors, and the Board of Commissioners. The GMS handles matters reserved to shareholders by law or the company’s articles of association. The Directors manage the company and represent it. The Commissioners supervise management and advise the Directors.
This is Indonesia’s two-tier board structure. It works best when each body understands its lane. If the Commissioners start making everyday management decisions, responsibility gets blurry. If the Directors make major decisions without meaningful oversight, the checks and balances are mostly decorative.
Directors and Commissioners are accountable
The Company Law gives the Directors authority to manage the company, but that authority comes with responsibility. Article 92 sets out their management role, while Article 97 addresses their duties and potential liability for company losses resulting from fault or negligence, subject to the law’s conditions and protections.
The Commissioners’ role is different: supervise management and provide advice. Articles 108 and 114 address those responsibilities and potential liability connected to failures in supervision. This doesn’t mean every business loss makes a board member personally liable. It does mean that directors and commissioners should be able to show they acted within their authority, carefully considered important issues, and made decisions in the company’s interests.
In practice, good records matter. Meeting minutes, conflict-of-interest disclosures, risk assessments, and clear decision papers help show how a decision was reached. They also help a company learn from its choices rather than reconstructing them years later.
Public companies have more to disclose
The Company Law applies broadly, but public companies face additional OJK requirements. For example, OJK Regulation No. 21/POJK.04/2015 requires public companies to apply OJK’s governance guidelines and disclose how they have applied the recommendations in their annual reports. If a recommendation is not followed, the company must explain why.
That “apply and explain” approach gives companies room to choose practices that fit their circumstances, but it also makes silence a poor strategy. A useful explanation tells investors what the company decided, why, and whether it has another safeguard in place.
Other OJK rules address board composition and responsibilities, shareholder meetings, disclosure, and committees. The details depend on whether the company is an issuer, a public company, or operates in a regulated financial sector. OJK Regulation No. 33/POJK.04/2014, for instance, governs directors and commissioners of issuers and public companies.
Recent capital-market changes matter too. OJK Regulation No. 45 of 2024 updated parts of the framework for issuers and public companies, including matters around disclosure and identifying controllers. That’s important because control isn’t always obvious from a share register. Someone may exercise influence through voting rights, board appointments, or control over key decisions.
Beneficial ownership is part of the governance picture
Minister of Law Regulation No. 2 of 2025 is sometimes described as a corporate-governance regulation, but more precisely, it focuses on verifying and supervising the beneficial owners of corporations. It is not a general governance code.
The regulation requires covered corporations to identify their beneficial owners, verify and submit the information, keep supporting documents, complete a questionnaire, and update ownership information at least annually. Verification is risk-based, including consideration of money-laundering and terrorism-financing risks. Failure to report, or submitting inaccurate information, can lead to administrative sanctions.
Why should you care? Because knowing who ultimately owns, controls, or benefits from a company is a basic accountability issue. If a company cannot explain who is really behind it, regulators, investors, and business partners may reasonably question whether its governance is working.
The OECD principles provide a broader compass
Indonesia’s laws and OJK regulations set legal requirements. The G20/OECD Principles of Corporate Governance 2023 offer an international benchmark for thinking about the quality of those arrangements.
The Principles cover six areas: an effective governance framework; shareholder rights and equitable treatment; institutional investors and markets; disclosure and transparency; board responsibilities; and sustainability and resilience. They are not a replacement for Indonesian law. Think of them as a way to test whether your company’s governance is more than technically compliant.
The sustainability and resilience chapter is especially useful. Companies face risks from climate change, technology, supply chains, workforce issues, and market shifts. A board that looks only at last quarter’s numbers may miss what could threaten the company over the next five years.
Make governance real, not just a binder
For you, a workable governance system starts with a few habits:
- Make sure the GMS, Directors, and Commissioners have clear roles.
- Document major decisions and disclose conflicts of interest.
- Keep financial, ownership, and material information accurate and timely.
- Give the Commissioners enough independence and information to challenge management.
- If you’re a public company, meet OJK requirements and explain any recommendations you have not adopted.
- Treat beneficial-owner reporting as an ongoing duty, not a one-off filing.
The simplest test is this: can your company explain who controls it, who made a decision, what information they considered, and who checked the result? If the answer is unclear, the governance needs work.
Indonesia’s framework is layered: the Company Law provides the core structure, the 2023 Job Creation Law forms part of its amended context, OJK adds requirements for public and regulated companies, the 2025 Minister of Law regulation strengthens beneficial-owner transparency, and the OECD principles help you benchmark good practice. You don’t need to make governance complicated. You do need to make it clear, documented, and accountable.
My name is Asep Wijaya, writing for Wijaya & Co. We orchestrate to assist you navigate. Thank you for reading my posts.