Background
A Limited Liability Companies (“Company”) may gain their capital by increasing its capital, the process is performed based on General Meeting Shareholder’s (“GMS”) Resolution. According to Article 41 paragraph (2) of Law Number 40 of 2007 on Limited Liability Companies (“Company Law”), GMS may transfer authority to Board of Commissioners (“BOC”) for purposes of approving implementation of the GMS’ resolution to increase the Company’s capital for maximum of 1 (one) year, with notes that anytime the granting of authority may be revoked by the GMS.
1. Increase of Authorized Capital
The GMS’ resolution to increase authorized capital is valid if taken with consideration of condition for quorum and number of approving votes to amend the articles of association (“AOA”) in accordance with provisions in Company Law and/or its AOA.
2. Increase of Subscribed Capital and Paid-up Capital
GMS’ resolution to increase subscribed and paid-up capital within limits of authorized capital are valid, if taken with a quorum of more than ½ (one half) of total number of shares with right to vote and approved by more than ½ (one half) of total number of votes, except a larger amount is stipulated in AOA.
All shares that are issued in relation to an increase of capital must first be offered to every shareholder in proportion to share ownership for the same classification of shares. If shares that will be issued for an increase of capital constitute classification of shares which has never been issued, those entitled to the first right to purchase are all shareholders in accordance with their ownership proportion of total shares. Article 43 paragraph (3) of Company law stated, the prior offer of shares shall not apply if shares issuance that are addressed to:
a. Employees of Company;
b. Bonds holder or other securities which can be converted into shares, which have already been issued with approval of the GMS; or
c. Undertaken in framework of reorganization and/or restructuring (merger, consolidation, acquisition, compensation account, or spin-off) which has already been approved by the GMS.
However, if shareholders who have been offered first do not use their right to purchase and pay in full for shares which are to be purchased within period of time of 14 (fourteen) days from the offering date, the Company may offer remaining shares which are not bought to third parties.
Sofie Widyana P.
