Annual Business Plan on Limited Liability Company (“Business Plan”) is regulated under Chapter 4 of Law No.40 of 2007 on Limited Liability Company (“Company Law”). Under Article 63 of the Company Law, the board of directors shall prepare the Business Plan prior to the commencement of the upcoming accounting year. This Business Plan contains annual budget of the company for the upcoming accounting year and things that will be done by the company for a period of 1 (one) accounting year.
Under Article 64 paragraph (1) of the Company Law, the Business Plan shall be delivered by the directors to the board of commissioner or the GMS as stipulated in the articles of association.
The articles of association may determine the Business Plan delivered by the board of directors whether it has to obtain an approval from the board of commissioner or the GMS, unless determined otherwise in the laws and regulations. The elucidation of Article 64 paragraph (2) of the Company Law further explains, if the legislation has determined that the approval on the Business Plan is granted by the GMS, then the articles of association cannot determine that the Business Plan is approved by the board of commissioners or otherwise.
Likewise, if the legislation determines that the Business Plan should obtain an approval from the board of commissioners or the GMS, the articles of association cannot determine that the Business Plan is submitted by the board of directors to the board of commissioners or the GMS.
In the case that articles of association stipulates that the Business Plan must be approved by the GMS, under Article 64 paragraph (3) of the Company Law, the mechanism is:
- the Business Plan must be submitted by the board of directors to the board of commissioners in order to be reviewed;
- afterwards, it is submitted to the GMS for an approval.
Under Article 65 of the Company Law, it is possible to apply the past Business Plan. The possibility shall be based on the following justified reasons :
- board of directors fails to deliver the Business Plan to the board of commissioner or the GMS in accordance with the articles of association.
This condition occurs if the board of directors fails to make or draft theBusiness Plan for the upcoming accounting year or the Business Plan has been made and drafted, but has not been submitted to the board of commissioners or the GMS to be approved. With regards to the provision of Article 65 of the Company Law, the past Business Plan may be applied, thus all the provisions and activities that conducted on the upcoming accounting year are based on the past Business Plan.
- the Business Plan submitted by the board of directors to the board of commissioners or the GMS, has not been approved.
This condition occurs if the board of directors has made, drafted and delivered the Business Plan to the board of commissioners or the GMS, but has not been approved. Accordingly condition,the the past Business Plan may be applied to the company.
Therefore, based on the above provision, vacancy of the Business Plan may not happen and directors will still be able to carry out their activities.
Deby Selina Panjaitan
