The annual report is regulated under chapter IV in Law No.40 of 2007 on Limited Liability Company (“Company Law”). The following will describe the delivery mechanism of an Annual Report to the GMS.
The directors will prepare an annual report of the company and then report it to the board of commissioners to be reviewed. Afterwards, the report will be submitted to the GMS. The maximum period of the delivery of an annual report to the GMS is no later than 6 (six) months after the company’s accounting year ends. It is stipulated under Article 66 paragraph (1) of the Company Law.
Under Article 66 paragraph (2), the annual report shall at least contain the following :
- financial statement which at least consists of the current balance sheet of the latest accounting year in comparison with the previous accounting year, profit and loss statement from the relevant accounting year, cash flows, report on the equity changes, and the record on such financial statement;
- report on the company’s activities;
- report on the implementation of social and environmental responsibility;
- details on issues which occur during the accounting year which is affecting the Company’s activities;
- report on supervisory duty that has been performed by the board of commissioners during the previous accounting year;
- name of the members of the board of directors and board of commissioners;
- salary and compensation for the members of board of directors, and salary or honorarium and compensation for the members of the board of commissioners of the company for the previous year.
The financial report shall be prepared based on the financial accounting standard. The financial accounting standard is a standard set by the Indonesian Accountant Profession Organization and recognized by the government of the Republic of Indonesia.
Under Article 66 paragraph (4) of the Company Law, for the company that is obliged to be audited, then the balance sheet and relevant profit and loss statement that have been audited shall be submitted to the Minister in accordance with the prevailing laws and regulations.
The annual report shall be signed by all members of the board of directors and board of commissioners during their service period at the relevant accounting year, and it shall be provided in the Company’s office as of the date of notice for GMS in order to be examined by the shareholders. It is stipulated under Article 67 of the Company Law.
Based on the explanation of this article, the signing of an annual report is the form of responsibility of the member of the board of directors and the board of commissioners in performing their duties.
If the member of board directors or member of the board of commissioners does not sign the annual report, then the objected person has to state his reason in writing, or on a separate letter attached to the annual report.
Nevertheless, if there is a member of the board of directors or member of board of commissioners who does not sign the annual report and does not state the reason in writing, the objected person will be considered has approved the annual report.
Under Article 68 paragraph (1) of the Company Law, the member of board of directors is obliged to submit the annual report of the Company to be audited by a public accountant if:
a. the activities of the company is to collect and/or to manage the community’s fund, such as bank, insurance, mutual fund;
b. the company issues a debt acknowledgement letter to the public;
c. the company is a public company;
d. the company is a stated-owned company;
e. the company owns assets and/or sales with the minimum value of Rp 50,000,000,000.00 (fifty billion Rupiah)
f. required by the prevailing laws and regulations.
If that obligation cannot be fulfilled, the financial report will not be ratified by the GMS. The report on the audit result by the public accountant has to be submitted in writing to the GMS through the board of directors.
The approval of an annual report, validation of financial report, and report on supervisory duty of the board of commissioners shall be granted by the GMS, as set out in Article 69 of the Company Law.
With regards to the provision, the member of board of directors and board of commissioners shall be jointly and severally liable if the submitted financial report is not true or misleading. Nonetheless, if it is proven that such condition is not because of their fault, member of the board of directors and board of commissioners may be exempted from that liability.
Deby Selina Panjaitan
