The New Indonesian Company Law: Does it Support Good Corporate Governance?

Abstract

This article explores and analyses concept of board of commissioners under Law No. 40 of 2007, which is to answer a question of whether it is a legal tool to support the hope of Indonesian Government in implementing good corporate governance. It finds that the law has contained differences and uniqueness of the two-tier board model compare to the European Two-tier systems such as the two-tier board structure is compulsory, regardless of size, listing or type of company; the board of commissioners (except the delegated commissioners) are representative of shareholders; the board of commissioners do not have right to both appoint and dismiss the board of directors. Additionally, the law also introduces the delegated and the independent commissioners. This concludes that the law does not regulate fundamental principles that encourage the board of commissioners to be professional. Thus, the hope of the government to implement corporate governance is a dream.