In Law Number 40 of 2007 on Limited Liability Company (“Company Law“), it does not mention the exact meaning of control of Limited Liability Company. However, the term control of a limited liability company can be found in Article 1 number 11 of Company Law, as follows:
“Acquisition” means a legal act which is conducted by a legal entity or individual person for taking transfer of shares of a company which has effect of transferring control over aforementioned company”.
In addition, the word “control” is also contained in Article 125 paragraph (3) Company Law, as follows:“The acquisition referred to in paragraph (1) is the acquisition of shares which is resulting the shift of control of the Company.”
The term of control has been found in other literature as the party that is based on ownership of shares that is capable to take the decision in a General Meeting of Shareholders of the company, including it has the ability, either directly or indirectly to control a company by:
- determining to appoint or to dismis Board of Directors or Board of Commissioners, or
- making changes to the Articles of Associations.
Generally, the controllers are shareholders that have a majority vote. Related to this, the controllers often have the following powers:
- a simple majority vote which represent the majority in general;
- absolute majority vote which represents the ownership of more than 50% of the shares which has been validly issued by the company;
- special majority vote which represents the ownership of a particular stock.
The acquisition of the company can be performed with 2 (two) methods; firstly (1), through the company’s BOD or secondly (2), directly from the shareholders of the company. In an acquisition of shares, change of control may not always happen, particularly if the acquisition does not exceed 50% shares in the company. If the acquisition of shares exceeds 50% of shares in the target company, the party who acquires the target company will be the controller. The controllers may consist of an individual person or legal entity. An individual person is a personal being or a natural person, while the legal entity, according to the laws and regulations, may take form of limited liability company (including liability company), foundations, and cooperatives.
Alsha Alexandra Kartika