BRANCH MANAGER REPRESENTING THE COMPANY IN COURT?
When there is a dispute in court, the person who represents the company (limited liability company) is the branch manager. Meanwhile, the Branch Manager is not included in the Board of Directors. In fact, the Branch Manager is not regulated in Law Number 40 of 2007 concerning Limited Liability Companies (“PT Law”).
Authority of the Board of Directors
Article 1(5) of the LLC Law defines the Board of Directors as the company’s governing body that has the authority and is fully responsible for managing the company in the company’s best interests, in accordance with the company’s objectives and purposes, and for representing the company both in and out of court in accordance with the provisions of the articles of association.
The authority of the Board of Directors is regulated in Article 98(1) and (2) of the LLC Law, which states:
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- The Board of Directors manages the Company for the benefit of the Company and in accordance with the Company’s objectives and purposes.
- The Board of Directors is authorized to conduct management as referred to in paragraph (1) in accordance with policies deemed appropriate, within the limits set forth in this Law and/or the articles of association.
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More technically, the authority of the Board of Directors is regulated in the Articles of Association and Bylaws (AD/ART) of a Limited Liability Company. The provisions regarding the authority of the Board of Directors in the AD/ART must not conflict with the Limited Liability Company Law. However, the authority of the Board of Directors may be regulated in more detail. For example, in a company with more than one director, the AD/ART may require the Chief Executive Officer/President Director or at least two directors to represent the company in and out of court.
Existence of Branch Managers
Legally, the PT Law does not regulate the position of Branch Managers. The existence of Branch Managers is based on the needs of the company’s activities. Given the relatively vast geographical area and intense business activities, it is not feasible for the company to be managed solely by the Board of Directors. As a result, some companies establish branches in certain regions. The establishment of a company branch requires the presence of a branch manager. The Branch Manager is responsible for overseeing the company’s operations within the scope of the branch’s operational area.
Authority of Branch Managers Based on Board of Directors’ Authority
Based on the existence of the Branch Manager as the leader in his/her work area, the duties and authority of the Branch Manager are regulated in the AD ART and/or company regulations. However, the Branch Manager may also be assigned to represent the company both in and out of court. The authority of the Branch Manager to represent the company in and out of court must be based on a Power of Attorney from the Board of Directors.
Power of Attorney Letter from the Board of Directors
In principle, a Power of Attorney Letter from the Board of Directors is the same as a Power of Attorney Letter in general. Article 1792 of the Civil Code defines a Power of Attorney Letter as an agreement that is regulated in, namely the granting of authority from one person to another to act on their behalf. Thus, a Power of Attorney from the Board of Directors can be interpreted as a form of agreement that grants special authority to the attorney-in-fact to represent and act on behalf of the principal (the Board of Directors of the corporation). The special authority that may be granted by the Board of Directors to the Branch Manager includes the authority to represent the corporation both in and out of court.
Although a power of attorney may be made in the form of an authentic deed, a private deed, or even orally, and the acceptance of the power of attorney does not always have to be stated in writing (vide Article 1793 of the Civil Code), a Power of Attorney should be made in the form of an Authentic Deed. The Board of Directors’ Power of Attorney should be drawn up before a Notary. This is intended to provide perfect evidentiary strength, thereby ensuring legal certainty and avoiding disputes in the future. In addition, a Board of Directors’ Power of Attorney drawn up before a notary fulfills certain formal requirements, providing protection for the recipient and other interested parties.
Conclusion
The Branch Manager may represent the company in court as long as he/she is authorized by the Board of Directors as evidenced by a Power of Attorney from the Board of Directors.
Legal Basis
– Law Number 40 of 2007 concerning Limited Liability Companies.
– Civil Code
Auditor :
Yuliana Munthe
Editor:
Muhammad Arief Ramadhan, S.H.