The term e-RUPS is frequently understood, incorrectly, as a shareholders meeting conducted entirely through electronic means without any physical attendance whatsoever. That understanding is not accurate. Financial Services Authority Regulation Number 16/POJK.04/2020 concerning the Electronic Implementation of General Meetings of Shareholders of Public Companies does open the possibility for a Public Company to make use of information technology in conducting a General Meeting of Shareholders, but it does not remove the physical component of the meeting.
eASY.KSEI serves as a facility that allows shareholders to grant electronic proxies, cast votes remotely, and follow the proceedings without having to travel to the meeting venue. The operational convenience the platform offers needs to be distinguished from the legal framework governing it. In practice, decisions on the physical GMS obligation, the use of e-Proxy and e-Voting, and restrictions on shareholder attendance do not fall within the authority of KSEI as system provider, but within the authority of the Financial Services Authority, as set out in POJK Number 15/POJK.04/2020 and POJK Number 16/POJK.04/2020.
This misunderstanding carries real compliance risk for Public Companies. An issuer that assumes implementing eASY.KSEI automatically discharges the obligation to hold a physical GMS risks breaching Article 8 of POJK Number 16/POJK.04/2020, which requires the physical presence of specific parties in every electronic GMS. A mistaken view of where the line sits between the system provider and the regulator can also affect the procedural validity of the meeting and the resolutions it produces.
Are e Proxy and e Voting Mandatory
The obligation to provide an electronic proxy mechanism did not originate with eASY.KSEI. Article 27 of POJK Number 15/POJK.04/2020 concerning the Planning and Conduct of General Meetings of Shareholders of Public Companies already required Public Companies to provide an electronic proxy alternative for shareholders to attend and vote at a GMS. That obligation rests with the issuer, not with whichever electronic system happens to be used.
When a Public Company chooses to use the eASY.KSEI application to conduct an electronic GMS, it automatically gains access to the e-Proxy and e-Voting modules built into that platform. In other words, e-Proxy and e-Voting are not optional add-on features that can be selectively adopted or ignored, but a direct consequence of discharging the Article 27 obligation through the platform made available for that purpose.
KSEI’s position as system provider rests on its own legal basis. Article 4 paragraph 2 of POJK Number 16/POJK.04/2020 provides that an e-RUPS provider is either a depository and settlement institution appointed by the Financial Services Authority, or another party approved by the Financial Services Authority. Under Decision of the Board of Commissioners of the Financial Services Authority Number Kep-29/D.04/2020 concerning the Appointment of PT Kustodian Sentral Efek Indonesia as Provider of the Electronic General Meeting of Shareholders System, issued on 24 April 2020, KSEI was formally appointed as e-RUPS provider.
That appointment is not conceptually exclusive. Should another e-RUPS provider be approved by the Financial Services Authority in the future, a Public Company would have the option of using that provider as an alternative to eASY.KSEI. What is mandatory is not the use of any particular platform, but compliance with the obligation to make an electronic proxy and voting mechanism available, as required under Article 27 of POJK Number 15/POJK.04/2020.
Why Physical GMS Remains Mandatory
One of the most common misconceptions in practice is the assumption that implementing the e-Proxy and e-Voting modules removes the need for a physical GMS. Article 8 paragraph 1 letter b of POJK Number 16/POJK.04/2020 expressly states that, in conducting an electronic GMS, a Public Company remains obligated to hold a physical GMS attended at minimum by
- the chairperson of the meeting,
- one member of the board of directors and or one member of the board of commissioners, and
- capital market supporting professionals assisting the conduct of the meeting.
This provision shows that e-RUPS is, at its core, a hybrid mechanism. The electronic component facilitates remote shareholder participation, while the physical component is retained to secure the procedural legality of the meeting, including the reading of the agenda, the ratification of minutes, and direct interaction between the chairperson and the parties authorized to witness the corporate decision-making process.
The presence of capital market supporting professionals at the physical GMS also serves a function that an electronic system cannot fully replace, particularly in ensuring that the notarial process and the legal documentation of the GMS proceed in accordance with applicable requirements. The absence of that physical element could raise questions about the validity of the meeting itself, including the risk of disputes over the resolutions later adopted.
This obligation also reflects broader good corporate governance considerations. The physical presence of the chairperson and the relevant corporate organs provides a more concrete form of accountability than an interaction conducted entirely online, and helps ensure that the use of technology does not diminish the oversight and accountability functions attached to the organs of a Public Company.
When May Issuers Restrict Shareholder Attendance
Whether an issuer has the authority to restrict shareholder attendance at a physical GMS is one of the issues most frequently misread in practice. Some issuers assume that, so long as the GMS is conducted electronically, they have discretion to refuse shareholders’ physical attendance for reasons of efficiency or other operational considerations.
Article 9 of POJK Number 16/POJK.04/2020 answers that question directly.
- Under certain conditions, a Public Company may forgo the physical GMS referred to in Article 8 paragraph 1 letter b by restricting shareholder attendance in person, either in part or in full, in conducting the GMS electronically.
- The certain conditions referred to in paragraph 1 are to be determined by the Government or with the approval of the Financial Services Authority.
Read that way, the authority to restrict shareholder attendance clearly does not rest with the Public Company itself, but with the Government or the Financial Services Authority through a formal determination or approval mechanism. An issuer has no authority to unilaterally impose such a restriction based purely on internal considerations, even where the underlying rationale relates to meeting efficiency or venue capacity.
A restriction imposed without a Government determination or Financial Services Authority approval risks conflicting with shareholders’ right to attend and participate directly in corporate decision-making. The implications extend beyond administrative risk. They can also affect the procedural validity of the GMS and expose the resolutions adopted at the meeting to challenge by shareholders who consider themselves prejudiced.
Any policy restricting the physical attendance of shareholders adopted by a Public Company should accordingly be grounded in a Government determination of certain conditions or written approval from the Financial Services Authority, rather than in the issuer’s own internal policy or an operational recommendation from the electronic system provider.
Compliance Risks in Electronic GMS
The three issues discussed above, namely the e-Proxy and e-Voting obligation, the requirement to hold a physical GMS, and the limits on the authority to restrict shareholder attendance, form an interconnected compliance framework for conducting an electronic GMS. A Public Company using eASY.KSEI needs to understand that the technical convenience the platform provides does not substitute for the substantive obligations set out in POJK Number 15/POJK.04/2020 and POJK Number 16/POJK.04/2020.
From a corporate governance perspective, compliance with these provisions helps preserve legal certainty over the strategic resolutions adopted at a GMS, from the approval of financial statements and amendments to the articles of association through to the appointment of members of the board of directors and board of commissioners. A failure to meet the physical GMS obligation, or an incorrect application of shareholder attendance restrictions, can create grounds for a later challenge seeking to annul GMS resolutions.
From the standpoint of shareholder rights, this regulatory framework ensures that the use of technology in conducting a GMS does not diminish shareholders’ fundamental right to attend, express their views, and oversee corporate decision-making. Corporate secretaries and legal counsel at Public Companies need to ensure that every policy relating to the conduct of an electronic GMS, including any decision to restrict physical attendance, is documented with reference to the correct legal basis, whether a Government determination or written approval from the Financial Services Authority.
An accurate understanding of where the authority of a system provider such as KSEI ends and the authority of the regulator, the Financial Services Authority, begins is an important element of compliance risk mitigation, and forms part of the ongoing good corporate governance practice expected of Public Companies in the Indonesian capital market.
Frequently Asked Questions (FAQ)
e-RUPS facilitates electronic participation by shareholders, but Article 8 of POJK Number 16/POJK.04/2020 still requires the physical presence of the meeting chairperson, at least one member of the board of directors and or board of commissioners, and capital market supporting professionals.
Yes, unless certain conditions determined by the Government or approved by the Financial Services Authority apply, as set out in Article 9 of POJK Number 16/POJK.04/2020.
Not unilaterally. The authority to restrict shareholder attendance rests with the Government or the Financial Services Authority, not with the issuer's internal policy.
