Corporate Social Responsibility (“CSR”) in Bahasa is known as tanggung jawab sosial perusahaan. Chapter V of Article 74 of the Law Number 40 of 2007 on Limited Liability Companies (“Company Law”) regulates on Social and Environmental Responsibilities, where Companies which perform its business activities in sectors of and/or related to natural resources are required to undertake social and environmental responsibilities

Under Article 74 paragraph (1) of Company Law, there are 2 (two) criterias that require Companies to undertake CSR, namely;

1. Companies which perform its business in sectors of natural resources.

The definitions of “Companies which perform its business in sectors of natural resources” are companies which perform business activities in management and utilization of natural resources.

2. Companies which perform its business activities related to natural resources.

    “Companies which perform its business activities related to natural resources” are companies which do not manage and utilize natural resources, but their business activities have impact on natural resources capability functions. The provision of Article 74 of Company Law is intended to continue creating Company relations which are harmonious, balanced and in accordance with environment, values, norms and cultures of local society.

The social and environmental responsibilities take form of obligations of Companies which is budgeted and calculated as expenses of Companies, which its implementation must be undertaken by considering appropriateness and reasonableness.

The regulations concerning CSR, is regulated in Article 74 of Company Law, and is also regulated in Article 15 of Law Number 25 of 2007 on Capital Investment (“Investment law”). In Investment Law, the legal risks  for Companies that do not undertake CSR are regulated in Article 34 of Investment Law, that

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is Administrative sanction such as:

(i) written warning;

(ii) restrictions on business activities;

(iii)suspension of business activity and/or investment facilities; or

(iv) revocation of business activities and/ or  investment facilities.

Whereas, the provisions of sanction for the Companies which do not implement CSR are not specifically regulated in Company Law, but it is given and sanctioned in accordance with the related law and regulations, which is subjected to any form of sanctions that is regulated in the laws. The further provision on Social and Environmental Responsibility is regulated by Government Regulation Number 47 of 2012 on Social and Environmental Responsibility of Limited Liability Companies.

Sofie Widyana P.