As an entrepreneur or investor, you must be familiar with the term General Meeting of Shareholders (GMS). The GMS activity itself is indeed a routine agenda that needs to be attended, both for stock investors and entrepreneurs.

However, not all companies are required to hold a GMS, only Limited Liability Companies (PT) that have gone public or already have shares listed on the Indonesia Stock Exchange are required to hold a GMS.

Then, why does the GMS need to be held? What is the purpose and what is done in the GMS? Check out the full explanation here.

What is GMS?
Based on Law Number 40 of 2007 concerning Limited Liability Companies, the General Meeting of Shareholders or GMS is one of the parts in the company besides the board of directors and the board of commissioners.

The existence of the GMS can be held by the directors using the summoning of the GMS, 1/10 of the shareholders or more than the total number of shares and the board of commissioners.

The GMS has authority that will not be given to the directors or the board of commissioners within the limits set by the law and the articles of association, thus making the GMS have the highest position in a company.

In the GMS activities, shareholders will get information related to the company which will later be explained by the directors and the board of commissioners.

In addition, shareholders in the GMS are also given the freedom to express opinions regarding the company based on the reports they get, then, these opinions must be heard by other shareholders, the board of directors, and the board of commissioners.

The form of authority of the GMS is the right to make decisions if all shareholders are present or represented at the GMS and approve the decision. For example, amending the articles of association, appointing or terminating members of the board of directors and commissioners to dissolve the company.

If the decision is approved, the company can immediately carry out the decision that has been made. This is what makes the authority of the GMS has the highest position and is important for the company.

What is the Purpose of GMS?
The purpose of the GMS varies based on its type, but the main purpose of the GMS procurement is to confirm the annual report of the company. Where based on the PT Law, the annual report consists of:

• Financial statements consisting of a year-end balance sheet compared to the previous financial year, income statement, cash flow statement, statement of changes in equity, and notes to the financial statements.
• Report on activities that have been carried out by the company.
• Report on the implementation of social and environmental responsibility. Any problems that affect business activities.
• Report on supervisory duties by the board of commissioners.
• Names of members of the board of directors and members of the board of commissioners.
• Salary and benefits for members of the board of directors and salary or honorarium and benefits for members of the board of commissioners.

Then, What are the Types of GMS?
According to Article 78 of Law Number 40 Year 2007, GMS is divided into two types, namely Annual GMS and Other GMS. What are the differences between these two types of GMS?

1. Annual GMS

Annual GMS is held once a year, or a maximum of six months after the previous annual meeting was held. Usually, the AGM is held at the end of the year when the company is in the process of closing the books, as well as being a routine agenda that the company will carry out.

In the AGM, the board of directors and the board of commissioners will provide financial reports and explain the condition of the company to shareholders.

The report submitted at the Annual GMS includes several things ranging from the company's annual report (starting from financial statements, profits, changes in the company's capital activities), details of the problem, to the names of the current members of the board of directors and board of commissioners.

Until the end of the meeting, the shareholders will provide conclusions and suggestions regarding what the company should do in the next year, as a form of material that will be discussed at the next Annual GMS.

2. Other GMS

Other GMS is usually held at any time if there are things that need to be conveyed and have not been discussed at the annual GMS. This means that Other GMS can be held at any time depending on the needs of the company concerned.

For example, Other GMS is held if the company needs to take an emergency business step. Other GMS can also be held immediately when the company has a problem. Below are some possibilities that can be the reason for holding Other GMS.

• There is a decision to dissolve the company. Whatever the reason behind the action, if all parties agree, the company will still be dissolved.
• There is a plan to carry out the process of merging, consolidating, acquiring or separating the company with several other companies.
• The appointment and dismissal of the board of directors and board of commissioners.
• Approval of the company's request to file for bankruptcy to the commercial court.
• It is not uncommon for other types of GMS to be held when the local District Court finds out about it.

What is the procedure for holding a GMS?
GMS cannot be done just like that, there are rules that need to be considered before holding a GMS. In the GMS there are also several things that must be fulfilled by the board of commissioners, including:

1. Reporting to the District Court
The company's board of commissioners needs to provide a report to the District Court or local District Court to propose the GMS agenda. Then, the District Court must provide a court decision which will later become the basis that the board of commissioners will use in the process of implementing the GMS.

2. Invitation of Shareholders
After the board of commissioners reports to the court, the next process is to summon all shareholders at least within 15 days after the request made by the local district court has been authorized.

If none of the shareholders are able to attend the GMS or only half of the shareholders are present, then the decree granted by the court will also be declared void.

If this happens, the board of commissioners will have to go through the same process from the initial stage, until it obtains a decree from the District Court. This action will be repeated up to three times.

However, the third time the GMS is submitted can only be requested by the High Court, and can no longer be granted by the local District Court.

Source: kontrakhumuk.com