Company Director Employment Contract Template for Indonesia

When appointing directors to your Indonesian company, you need a comprehensive employment contract that complies with both corporate and employment law requirements. A Company Director Employment Contract serves as the legal foundation for the director's appointment, defining their role, responsibilities, compensation, and the terms under which their employment can be terminated. This document is essential for establishing proper corporate governance and protecting your company from potential legal disputes.

When do you need this document?

You'll need this contract when appointing new directors to your Indonesian limited liability company (PT), whether they're founding directors, replacement directors, or additional board members. It's also required when renewing existing director appointments at the end of their terms, which typically range from two to five years under Indonesian law. If you're restructuring your board, promoting internal candidates to director positions, or bringing in external directors with specific expertise, this contract ensures all parties understand their legal obligations. For publicly listed companies, you'll need this document to comply with OJK regulations that require formal documentation of director appointments and responsibilities.

Key legal considerations

Your contract must clearly define the director's fiduciary duties, including their obligation to act in the company's best interests and maintain confidentiality of sensitive information. Include specific provisions about conflicts of interest, as Indonesian law requires directors to disclose any personal interests that might conflict with company decisions. The contract should address the director's authority limits, specifying what decisions they can make independently and which require board or shareholder approval. Compensation structures must comply with Indonesian tax law, and you'll need to include provisions for mandatory social security contributions under Law No. 24 of 2011. Termination clauses should align with both employment law protections and corporate law requirements for director removal, including notice periods and severance entitlements.

Legal requirements in Indonesia

Under Law No. 40 of 2007 on Limited Liability Companies, director appointments must be formally documented and registered with the Ministry of Law and Human Rights. Your contract must specify the director's term of office, which cannot exceed five years but can be renewed. Indonesian law requires at least one director to be an Indonesian citizen for most company types, so citizenship requirements should be clearly stated. The contract must include provisions for social security registration under BPJS Ketenagakerjaan and BPJS Kesehatan, as directors are considered employees under Indonesian social security law. For companies in certain sectors or with foreign investment, additional regulatory approvals may be required, and your contract should reference compliance with sector-specific regulations. If your company is publicly listed, ensure the contract addresses OJK requirements for director independence, reporting obligations, and disclosure requirements.