Financial statements are a vital component of the annual report that must be submitted by the board of directors to the General Meeting of Shareholders (“GMS”), as stipulated under Article 66 of Law No. 40 of 2007 concerning Limited Liability Companies (“Company Law”). This report must be signed by all serving directors and commissioners during the relevant fiscal year, reflecting their accountability for that period.

In accordance with Article 67(1) of the Company Law, annual reports must be made available at the company’s office from the date of the GMS notice, enabling shareholders to examine them in advance. This regulation affirms the shareholders’ right to transparency and financial accountability.

Accurate and reliable financial reporting is crucial, as the Company Law requires that financial statements fairly reflect the company’s financial position. If the financial statements are proven to be misleading or false, directors and/or commissioners may be held jointly and severally liable for damages caused to third parties, including shareholders.

Legal Remedies Available to Shareholders

Filing a Derivative Lawsuit

A derivative lawsuit allows shareholders to take legal action on behalf of the company against its internal management for acts that caused harm to the corporation. Unlike a regular lawsuit filed by the directors, a derivative action is initiated by shareholders themselves to protect the company’s interests.

Such actions may include demands for cessation of harmful conduct, recovery of financial losses, or preventive measures against future harm. Shareholders who own at least one-tenth (1/10) of total voting shares are entitled to file a derivative lawsuit against directors and/or commissioners who have allegedly caused damage to the company.

Filing a Petition for Judicial Inquiry at the District Court

In cases where shareholders are denied access to authentic and truthful financial statements, they may file a formal request for an inquiry to the District Court. This request must be based on strong suspicion of unlawful conduct by directors or commissioners, resulting in harm to the company or its shareholders.

Before submitting the request, shareholders must first seek clarification or relevant documents through the GMS. If the request is not honored, one or more shareholders representing at least one-tenth (1/10) of voting shares may proceed to file the court petition.

Strengthening Governance and Transparency

These legal mechanisms, as expressly provided under Indonesian law, empower shareholders with adequate instruments to safeguard their rights to transparency and corporate accountability. They also underscore the critical role of shareholders in monitoring company management, ensuring adherence to principles of sound and responsible corporate governance.