The Approval of the Annual Report Is Now Required to Be Submitted to the Minister of Law through SABH: What Should Directors Take into Account?
Directors of capital-based limited liability companies must now submit GMS approval of the annual report to the Minister of Law through SABH, including the applicable legal basis and sanctions.
Key Points
- The board of directors is required to submit the annual report to the GMS no later than 6 (six) months after the end of the company’s financial year.
- The approval of the annual report by the GMS must be notified to the Minister of Law through the SABH and must be set forth in a notarial deed.
- The notification of the approval of the annual report must be submitted by the board of directors through a notary no later than 30 (thirty) days from the signing date of the notarial deed.
- Failure to submit the approval of the annual report may result in the imposition of administrative sanctions, ranging from a written warning to the blocking of access to SABH.
Introduction
The annual report is a statutory accountability instrument under Indonesian company law, which must be submitted by the board of directors to the General Meeting of Shareholders (“GMS”) no later than 6 (six) months after the end of the company’s financial year. The annual report is presented at the annual GMS to be reviewed and to obtain the approval of the GMS.
Although the company law does not explicitly stipulate sanctions for directors who fail to submit the annual report to the GMS, such failure is not without legal consequences. In the context of corporate management, such omission may be qualified as a breach of the directors’ duties in carrying out their functions. Accordingly, if the company suffers losses, the directors may be exposed to personal and joint liability, particularly as, for the relevant financial year, the directors have not yet obtained a release and discharge of responsibility (acquit et de charge) from the GMS.
A recent development has emerged with the enactment of Minister of Law Number 49 of 2025 on the Requirements and Procedures for the Establishment, Amendment, and Dissolution of Limited Liability Companies (“MOL Regulation No. 49/2025”) on 17 December 2025, which simultaneously revoked the regulation that had been in force since 2021. One of the significant changes introduced by the MOL Regulation No. 49/2025 is the obligation for directors to submit the approval of the annual report by the GMS to the Minister of Law through the Legal Entity Administration System (“SABH”). Under this regulation, failure to comply with such obligation may result in the blocking of the Company’s access to SABH.
Thus, although MOL Regulation No. 49/2025 is normatively situated within the framework of legal services for limited liability companies through SABH (such as services relating to amendments to the articles of association, changes to company data, and company dissolution), the regulation of the obligation to submit the approval of the annual report introduces new normative consequences for directors, requiring them to ensure compliance in order to avoid the blocking of SABH access.
This article specifically discusses the obligation to notify the approval of the annual report for capital-based limited liability companies. Meanwhile, for individual companies, the applicable obligation is the submission of financial statements, which has been regulated by the Minister of Law since 2021 and does not fall within the scope of this article.
Notification of Approval of the Annual Report through SABH
MOL Regulation No. 49/2025 requires that the approval of the annual report by the GMS be set forth in a notarial deed. This requirement is indeed not explicitly regulated under the company law. Nevertheless, given that MOL Regulation No. 49/2025 mandates such formality, the annual GMS must be documented in a notarial deed.
The approval of the annual report must be submitted to the Minister of Law no later than 30 (thirty) days from the signing date of the notarial deed containing such approval. This provision must be read in conjunction with the obligation to convene the annual GMS, which under the Company Law must be held no later than 6 (six) months after the end of the Company’s financial year. The notification of the approval of the annual report is submitted by the board of directors through a notary, electronically via SABH, by uploading the required supporting documents. The supporting documents as stipulated under MOL Regulation No. 49/2025 include (i) the notarial deed containing the GMS approval of the annual report; and (ii) the Company’s annual report.
The annual report must, at a minimum, contain the following:
- financial statements, consisting at least of the end-of-year balance sheet for the most recent financial year with a comparison to the previous financial year, income statement, cash flow statement, statement of changes in equity, and notes to the financial statements;
- a report on the company’s activities;
- a report on the implementation of social and environmental responsibility;
- details of issues arising during the financial year that affected the company’s business activities;
- a report on the supervisory duties carried out by the board of commissioners;
- the composition of the members of the board of directors and the board of commissioners; and
- salaries and allowances for members of the board of directors, as well as salaries/honorarium and allowances for members of the board of commissioners.
After the submission of the approval of the annual report has been received in SABH, the Minister of Law, through the Directorate General of General Legal Administration, shall issue a letter acknowledging receipt to the company.
Sanctions for Failure to Notify the Approval of the Annual Report
A company that fails to comply with the obligation to submit the approval of the annual report as described above shall be subject to administrative sanctions in the form of a written warning and the blocking of SABH access. The initial sanction in the form of a written warning is delivered through a notification in SABH and/or via electronic mail.
If the Company continues to fail to fulfill its obligation, within a period of 30 (thirty) days calculated from the date of the notification in SABH, will be subject to a further sanction in the form of access blocking, namely the closure of the company’s access to SABH. Such SABH access blocking may be lifted by submitting an application for unblocking through SABH and uploading the required supporting documents, which include (i) the notarial deed containing the GMS approval of the annual report; and
(ii) the company’s annual report.
Closing
The introduction of the obligation to submit the approval of the annual report through SABH pursuant to MOL Regulation No. 49/2025 marks an important shift in the corporate compliance regime for limited liability companies. This obligation is no longer merely internal in nature between the board of directors and the GMS, but has now been integrated into the state administrative system with tangible administrative consequences.
Accordingly, company directors must proactively ensure that the annual GMS is convened in a timely manner in accordance with statutory requirements, and that the approval of the annual report is duly set forth in a notarial deed and submitted to the Minister of Law through SABH within the prescribed timeframe. This has become increasingly critical given that approval by the GMS of the annual report cannot always be assumed, while administrative delays or omissions may significantly hinder the company’s legal activities through the blocking of access to SABH.
