Dissolution of a company is an extremely undesirable outcome for any business owner. However, it is one which sometimes has to happen. There are several reasons why a company in Indonesia might be dissolved. These reasons for dissolution will be detailed in the following article.

Dissolve Company



Companies in Indonesia

Indonesia is located in the Asia–Pacific region, one of the world’s best regions in which to start a new business. Starting and operating a business in Indonesia is becoming simpler and more accessible to the general public all the time. According to a report published by the World Bank, Indonesia is above average in ease of starting and doing business (Doing Business Report, World Bank report 2019). Indonesia ranked 73rd with regard to ease of doing business among 190 economies. There were 567 listed companies in the Indonesian stock market (Jakarta Stock Exchange – JSX) and their cumulative market capital was 7,400 trillion rupiah (US$479.42 billion). The market is divided into companies owned by two types of investors: local and international. The JSX has 48.67% of its investments made by local investors, whereas the foreign investments in the stock exchange are 51.33% of the total investments. The figures show that investing in Indonesia is easy due to the country’s low interest rate, low inflation rate, low tax rate, effective human resources, high technology, cheap labor, and many investment opportunities.

If you intend to invest in any Indonesian company, we at Paul Hype Page & Co are willing to assist you. Our financial experts understand all the complexities of business and finance in Indonesia. Thus, you can be assured that the investment advice you will receive from them will be accurate and unable to be questioned.

Starting a new business is not difficult, but running the business operation can be a major challenge. Every year countless businesses across Indonesia start, but 30% of new business shut their business operations within the first two years and only 50% of businesses are still in operation after five years After 10 years, only 37% are still conducting business operations. These figures can be improved through strategic planning, funding, and training. Business owners who do so will soon find that their business in Indonesia will be very successful and profitable.

Reasons for Dissolving a Company

An economy grows because of the businesses in it. Without healthy businesses, an economy cannot thrive. All successful economies are backed by various businesses of all types and sizes. Behind the successful economies there are small and medium enterprises (SMEs), corporations, and private companies which all utilize resources effectively and create jobs that lead to the generation of income that can be invested or spent locally. Developed countries have grown because they care about the SMEs, private companies, and corporations as they are the soul of the economy. Companies and their effects on a country’s economy have to be kept in mind while making any economic decisions that affect them, whether directly or indirectly. As Indonesia is one of the fastest-growing economies in the Asia–Pacific region, it ought to support foreign investors by promoting the welfare of its companies.

Many people plan to start companies in Indonesia. If you are one such person, we at Paul Hype Page & Co can assist you. We have a team of dedicated incorporation experts who have deep knowledge about the entire incorporation process in Indonesia. We will work with you and guide you through every step of the process which will ultimately result in the incorporation of your new Indonesian company.

Indonesia welcomes foreign investors and also appreciates local investors, but sometimes circumstances arise that force a business to shut off its business operations because of illegal activities or insolvency in the business operation. This means that the company has to strike off the business operations from the country and liquidate the business. The dissolving of a firm can either be voluntary or non-voluntary. The voluntary dissolution of a firm takes place when owners, partners, or investors choose to close the business operations. There can be various reasons for this: the firm has not been making profits, there has been mismanagement of business operations, there is low cash flow, there has been noncompliance with mandates, company liabilities have become excessive, or there is a partnership disagreement. The non-voluntary dissolution of company is defined by the law in Article 142. Article 142 of the Company Law of Indonesia defines the reasons and purposes that lead to the dissolving of an organization, company, or business (Company Law of Indonesia, 2007).

  1. Article 142(1) defines company dissolution as being based on the resolution of a general meeting of shareholders (GMS) in which members can resolve to liquidate the PT
  2. Termination of the establishment period as mentioned in the Articles of Association
  3. Court decision to liquidate the PT in case the PT’s bankruptcy assets are insufficient to settle bankruptcy costs
  4. Bankruptcy assets of a PT declared bankrupt are to be placed in a state of insolvency as provided
  5. Revocation of the business license of the PT