RESPONSIBILITIES OF BOARD OF DIRECTORS FOR MANAGEMENT OF COMPANY IN CASE OF EXPOSURE TO COVID-19

#company, #management, #pandemic, #covid-19

Early in 2020 the world was shocked by the outbreak known as Coronavirus Disease 2019 ("Covid-19"). The impact of the outbreak which was declared a pandemic by the World Health Organization (WHO) hit almost all sectors of human activities worldwide, including the economic sector. Various steps were taken, including taking steps to stop activities totally (lockdown), restrictions, to increasing contact tracing.

In Indonesia itself, the government has decided to implement Large-Scale Social Restrictions (PSBB), which means that there is a restriction of activities for some sectors that are considered not essential. This restrictions has implications that there are certain sectors that are still running their business activities as usual, and the responsibility for the management of the Company as a legal entity continues as usual.

Basically, Article 1 Number 5 of Law No. 40 of 2007 concerning Limited Liability Companies ("Law 40/2007") states that the management of the Company is carried out by an organ called the Board of Directors. Not only the responsibility for the management, the Board of Directors is also authorized to represent the Company, both within and outside the Court in accordance with the provisions of the Company's articles of association. 

However, there is a question about what happens if the Board of Directors, which only consists of 1 (one) Director, is exposed to Covid-19, where according to the protocol set out by the government, a person who is positive for Covid-19 must undergo isolation or hospitalization. 

Governor Regulation No. 88 of 2020 concerning Amendments to Governor Regulation No. 33 of 2020 concerning the Implementation of Large-Scale Social Restrictions in Handling Corona Virus Disease 2019 (Covid 19) in the Special Capital Region of Jakarta (“DKI Governor Regulation 88/2020”) requires controlled isolation, namely at the Kemayoran Independent Isolation Facility, hotels, and inns or guesthouses. Meanwhile, someone who is positive for Covid-19 with severe symptoms is required to get treatment at the hospital according to the recommendations of health workers. 

If in the Company there is only one Director who serves as the only representative of the Company and is forced to undergo controlled isolation or hospitalization due to exposure to Covid-19, then automatically the Director cannot carry out his responsibilities directly to manage the Company. 

Can the Company continue to carry out its legal actions or are there other steps that can be taken so that the Company can continue to carry out its legal actions without having the Board of Directors as the party representing the Company? What steps can be taken so that the management of the Company can still be carried out?

Granting of Power by Board of Directors

In practice, if a member of the Board of Directors is unable to represent the Company to take legal actions, this can be done by someone who is authorized by the Board of Directors concerned to represent him in the management of the Company. The granting of power is carried out by observing the provisions contained in the Articles of Association of the Company. The granting of power can be carriedout in writing through a power of attorney signed by the Parties, namely the Authorizer and the Authorized. 

The granting of power by the Board of Directors is in line with Article 103 of Law 40/2007, which states that the Board of Directors may give a written power of attorney to 1 (one) or more employees of the Company or to some other persons for and on behalf of the Company to perform specific legal actions as described in the power of attorney. Apart from Law 40/2007 as lex specialis, the granting of power in general is also regulated in Article 1792 of the Civil Code, which states that a mandate is an agreement by which an individual assigns authority to another. who accepts it, to perform an act on behalf of such mandator. 

Therefore, before the Director udergoes controlled isolation or hospitalization, if the conditions allow, the Director may sign a Power of Attorney for 1 (one) or more employees related to the management of the Company in performing specific legal actions. According to the elucidation of Article 103 of Law 40/2007 "power of attorney" means a special power for specific actions mentiond in the power of attorney. Therefore, the power of attorney made to represent the Board of Directors is a special power of attorney. Furthermore, based on the provisions of Article 1795 of the Civil Code, a mandate can be either specific, being related to one or more matters, or general, being related to all matters of the mandator. 

Based on the provisions described above, in the special power of attorney made by the Director, it must be clearly stated that the legal interest is to represent the Director to represent the Company to take legal actions to be carried out, such as signing an Agreement. Therefore, if in controlled isolation or hospital care, the health facility allows the signing of a document for Covid 19 patients, then the granting of power by the Board of Directors can be carried out.

Furthermore, a question arises: what if in controlled isolation the health facility prohibits the Director from issuing a Power of Attorney because there is a risk of new infections plus the condition of the Director who is no longer able to sign the Power of Attorney?

Filling the Position of Sick Director

If the granting of power cannot be carried out because the procedures of the  health facility prohibit the signing of documents, and if the Director has severe symptoms due to Covid-19 so that he is no longer able to grant power for the company's management to other parties, then based on this, If the Director is ill and is unable to act on behalf of the Company, the step that can be taken is to refer to the provisions of the Articles of Association of the Company regarding who is the authorized party to carry out the management of the Company. This is in accordance with the provisions of Article 107 of Law 40/2007 which stipulates that the articles of association stipulate provisions with regard to:

a.     the procedure for the resignation of members of the Board of Directors;

b.     procedures for filling vacant positions on the Board of Directors; and

c.     the parties who have the authority to undertake the management of and represent the Company in the event that all of the members of the Board of Directors are prevented from doing so or have been suspended. 

In the book of M. Yahya Harahap, S.H., entitled “Hukum Perseroan Terbatas” (p. 435) It is stated that what is meant by being prevented is being prevented temporarily (for example all of them have mental disorders) or being prevented permanently (for example, all of them pass away). If illness due to Covid-19 suffered by the Director causes him to be unable to carry out the management of the Company, then the Director can be said to be prevented temporarily. 

Furthermore, according to M. Yahya Harahap, SH in the same book (p. 435), to overcome the vacuum or vacancy arising from these events, Article 107 letter c requires the Company to anticipate it in the Articles of Association by regulating provisions on who or which party or which organ is authorized to act in the management of the Company in accordance with Article 92 paragraph (1) of Law 40/2007 and who is authorized to represent the Company in and out of the courts in accordance with the provisions of Article 98 paragraph (1) of Law 40/2007. 

Therefore, if the condition of the Director makes it impossible to act on behalf of the Company due to being exposed to Covid-19 and the policies of the health facility do not allow the signing of the Power of Attorney, then the next step that can be taken is to appoint a party authorized to manage and represent Company in the event that a member of the Board of Directors is prevented from doing so in accordance with the provisions stipulated in the Articles of Association of the Company

Written by: Ronald Honarto - Febri Indriyani Fasry

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