Understanding the Importance of Circular Decisions in Limited Liability Companies

Oct 13, 2025 by thesweetdesigns.com 132 views

Understanding the Importance of Circular Decisions in Limited Liability Companies

In the realm of limited liability companies, the decision-making process is a crucial aspect that requires careful consideration and adherence to the law. One of the mechanisms for implementing decisions outside the General Meeting of Shareholders (GMS) is through circular decisions, also known as circular resolutions. This article aims to provide an in-depth understanding of the mechanism, validity, and role of the notary in the decision-making process through circular decisions.

Mechanisms for Implementing Circular Decisions

The decision-making process through circular decisions involves a written approval from all shareholders. This means that decision proposals must be submitted in writing and signed by all shareholders in the form of a treatise. It is essential to note that no shareholder should reject the proposal, as this would render the circular decision invalid.

The process of implementing circular decisions is governed by the Limited Liability Company Law (UUPT) and the Civil Code (Kuhperdata). Article 91 of the UUPT and Article 1320 of the Kuhperdata provide the framework for the validity of circular decisions. According to these articles, all shareholders must approve the proposal and sign it in the form of a treatise.

Circular Decision Validity

The validity of circular decisions is divided into two aspects: internal and external.

Internal Validity

Internal validity refers to the compliance of circular decisions with the applicable laws and regulations. In this context, circular decisions must be in accordance with Article 91 of the UUPT and Article 1320 of the Kuhperdata. This means that all shareholders must approve the proposal and sign it in the form of a treatise.

External Validity

External validity refers to the recognition of circular decisions by external parties, such as the government and other stakeholders. To be externally valid, circular decisions must be legalized with authentic deeds made by the notary, as well as obtaining approval or notification from the Minister of Law and Human Rights (HAM) of the Republic of Indonesia. Furthermore, circular decisions must be published in the additional news of the State Gazette of the Republic of Indonesia.

The Role of the Notary in Circular Decisions

Notaries play a crucial role in providing legality and validity to circular decisions. They are responsible for making an authentic deed that includes the approval of all shareholders. Notaries are also expected to apply the principle of caution in the process of making a deed, and play an active role in helping shareholders to understand their duties and obligations in this process.

Recommendation

To provide legal certainty and avoid potential disputes, the government should issue a more detailed special regulation or implementing regulations regarding circular decisions. This would ensure that shareholders and notaries are aware of the applicable rules and procedures, and can make informed decisions.

Conclusion

Circular decisions can be an alternative to effective decision-making in certain situations. However, compliance with applicable rules and procedures is very important to ensure validity and prevent potential conflicts. The role of the notary in this process is very important to ensure the legality and validity of circular decisions.

Best Practices for Implementing Circular Decisions

To ensure the validity and effectiveness of circular decisions, the following best practices should be followed:

Clear Decision-Making Process: The decision-making process should be clear and transparent, with all shareholders aware of the proposal and the requirements for approval.
Written Approval: Written approval from all shareholders is essential to ensure the validity of the circular decision.
Notary Involvement: Notaries should be involved in the process of making an authentic deed, and should apply the principle of caution in making the deed.
Publication: Circular decisions should be published in the additional news of the State Gazette of the Republic of Indonesia to ensure external validity.
Government Approval: Approval or notification from the Minister of Law and Human Rights (HAM) of the Republic of Indonesia is required to ensure external validity.

By following these best practices, shareholders and notaries can ensure the validity and effectiveness of circular decisions, and avoid potential disputes.

Future Research Directions

Future research should focus on the following areas:

Development of Special Regulations: The government should issue a more detailed special regulation or implementing regulations regarding circular decisions to provide legal certainty and avoid potential disputes.
Notary Training: Notaries should receive training on the role of circular decisions and the requirements for making an authentic deed.
Shareholder Education: Shareholders should be educated on the importance of circular decisions and the requirements for approval.

By addressing these research directions, the validity and effectiveness of circular decisions can be improved, and the potential for disputes can be reduced.

Conclusion

In conclusion, circular decisions are an important mechanism for implementing decisions outside the General Meeting of Shareholders (GMS) in limited liability companies. The validity of circular decisions is governed by the Limited Liability Company Law (UUPT) and the Civil Code (Kuhperdata), and requires written approval from all shareholders and notary involvement. The role of the notary in this process is crucial to ensure the legality and validity of circular decisions. By following best practices and addressing future research directions, shareholders and notaries can ensure the validity and effectiveness of circular decisions, and avoid potential disputes.

Understanding Circular Decisions

Circular decisions are a mechanism for implementing decisions outside the General Meeting of Shareholders (GMS) in limited liability companies. This decision-making process involves written approval from all shareholders and is governed by the Limited Liability Company Law (UUPT) and the Civil Code (Kuhperdata).

Q&A on Circular Decisions

Q: What is the purpose of circular decisions?

A: The purpose of circular decisions is to provide an alternative to effective decision-making in certain situations, allowing shareholders to make decisions outside the General Meeting of Shareholders (GMS).

Q: Who is responsible for making a circular decision?

A: The shareholders are responsible for making a circular decision, as it requires written approval from all shareholders.

Q: What is the role of the notary in circular decisions?

A: The notary plays a crucial role in providing legality and validity to circular decisions by making an authentic deed that includes the approval of all shareholders.

Q: What are the requirements for the validity of circular decisions?

A: The validity of circular decisions is divided into two aspects: internal and external. Internal validity requires compliance with Article 91 of the UUPT and Article 1320 of the Kuhperdata, while external validity requires legalization with authentic deeds made by the notary and approval or notification from the Minister of Law and Human Rights (HAM) of the Republic of Indonesia.

Q: How are circular decisions published?

A: Circular decisions must be published in the additional news of the State Gazette of the Republic of Indonesia to ensure external validity.

Q: What is the importance of notary involvement in circular decisions?

A: Notary involvement is crucial in ensuring the legality and validity of circular decisions, as they are responsible for making an authentic deed that includes the approval of all shareholders.

Q: Can circular decisions be used in all situations?

A: No, circular decisions cannot be used in all situations. They are only applicable in certain situations where the decision-making process requires written approval from all shareholders.

Q: What are the consequences of non-compliance with circular decision requirements?

A: Non-compliance with circular decision requirements can lead to disputes and potential conflicts between shareholders.

Q: How can shareholders ensure the validity and effectiveness of circular decisions?

A: Shareholders can ensure the validity and effectiveness of circular decisions by following best practices, such as clear decision-making processes, written approval, notary involvement, publication, and government approval.

Q: What is the future of circular decisions in limited liability companies?

A: The future of circular decisions in limited liability companies depends on the development of special regulations and the education of shareholders and notaries on the role of circular decisions.

Conclusion

Circular decisions are an important mechanism for implementing decisions outside the General Meeting of Shareholders (GMS) in limited liability companies. By understanding the purpose, requirements, and role of the notary in circular decisions, shareholders can ensure the validity and effectiveness of these decisions.