Lawlines Volume 9 Issue 4 - eOASIS

LawLinesVol 9 . Issue 4 • December 2007Around Rajah & TannRound Up – 2007 InPerspectiveCorporate Social Responsibility UnderThe New Indonesian Company LawFeature ArticlesTo Withhold Or Not ToWithhold – That Is TheQuestionAll Abuzz About GamesCorporate SocialResponsibility UnderThe New IndonesianCompany LawCase BitesLegislation BitesOn 16 August 2007, the Government of the Republicof Indonesia passed the new Company Law Number40 Year 2007 (‘New Company Law’) which revokedthe earlier version, Law Number 1 Year 1995. Thecriticisms and controversies surrounding the NewCompany Law which have emerged from the legalprofessionals and business entities appear to bedirected at one of the new concepts introduced,that is, the concept of corporate social responsibility/ tanggung jawab sosial dan lingkungan (‘CSR’).This article discusses the scope of the provisionson CSR in the New Company Law and suggestsways in which they might be improved.How Does The New CompanyLaw Cater To CSR?Section 1(3) of the New Company Law states thatCSR is a company’s commitment to participate ina sustainable economic development in order toimprove the quality of life and environment for thecompany, the surrounding community as well asfor society at large.Section 74 of the New Company Law containsthe provision on CSR. This section obliges everycompany involved in industries based on naturalresources to perform CSR. The costs of conductingCSR are to be treated as part of the company’sexpenses, the implementation of which should bewithin reason. The law also sanctions those whodo not perform CSR. Other details concerning CSRand the type of sanctions that will be imposed fornon compliance will be dealt with in a separateregulation that has yet to come into force.An important aspect of CSR to note is that it not onlypromotes the interests of the surrounding communityper se, but also that of stakeholders of the company,which broadly consist of, inter alia, the shareholders,creditors, directors and commissioners, employees,suppliers, distributors and customers.page 23 of 44 pages | print | comments | close