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Transfer the Ownership of an Indonesian Company

Jun 205 mins

Transferring ownership of an Indonesian company is a complicated process that must be carried out with extreme caution to avoid any potential difficulties. An Indonesian firm is owned in the form of shares. As a result, when shareholders sell their stock, they are actually selling a portion of their rights to the company’s ownership.

A Sales and Purchase Agreement must be executed before the share transfer may proceed. Many Indonesian business owners mistakenly believe that this phase marks the conclusion of the share transfer process; however, this is not the case. The Indonesian company’s share ownership has not yet been totally transferred to the new shareholder.

What are the Share Transfer Requirements in Indonesia

Before transferring any shares, all shareholders of limited liability companies in Indonesia must meet specific requirements outlined in Article 57, paragraph 1 of Law No. 40 of 2007 (commonly known as the Company Law).

  • One of them is that stockholders must first offer their shares to other shareholders in the same firm before selling them to anybody else.

  • An Indonesian company’s shareholders must first obtain the company’s consent before selling any of their shares.

  • Approval from the governing authorities, in accordance with current Indonesian rules and regulations, will also be necessary.

These requirements are the same no matter what business entity. The transfer of the shares will be made official once these procedures have been met.

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Procedure of Transferring the Shares of an Indonesian Company

The transferring of shares of an Indonesian company is governed by Article 56, paragraph 1 of the Company Law.

It states that all share transactions in Indonesia must:

  • Be completed with the execution of a share transfer document.

  • A written copy of the deed of share transfer must be provided to the corporation.

  • After all parties have signed the share transfer document, there are a few additional steps to take before the shares can be officially transferred.

  • The transfer of rights to the company’s shares must first be registered by the board of directors.

  • The date of the share rights transfers must be indicated when doing so.

  • Within 30 days of the signing of the deed, the board of directors must notify any appro

The shares are not automatically transferred even after the purchasers and sellers of the shares have signed the deed of share transfer. This is because, according to Article 612 of the Indonesian Civil Code, such transfers must be made through a single change of ownership, which must be completed by the owner or someone acting on their behalf.

As a result, ownership rights to the shares will not be transferred to the buyer of the shares until after they have been delivered. The distribution of a share certificate to the buyer of the shares makes such transactions official.

Owning shares of an Indonesian company is a way for one to own part of a company based in Indonesia. However, those who would rather have full control over the company should incorporate one.

Thinking of setting up a company in Indonesia or require corporate secretarial services? Reach out to us today for a free consultation!

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FAQs

How do you divide ownership of a business?2021-12-31T11:56:21+08:00

The founders should end up with about 50% of the company, total. Each of the next five layers should end up with about 10% of the company, split equally among everyone in the layer. 

What happens when a company changes ownership?2021-12-31T11:55:59+08:00

If a business has a major change in ownership, (the sale of a business, for example), part of the terms of the sale may be the assignment of the contract to the new owner. As part of the buy/sell process, a new contract may be substituted for a previous contract, with the agreement of both parties.

What is business transfer agreement?2021-12-31T11:55:22+08:00

A Business Transfer Agreement (“BTA”) is structured to give effect to a comprehensive sale of assets and liabilities of one entity to another entity. It is in a form of a purchase and transfer of ownership agreement wherein details regarding the sale of the business and its assets are captured.

Can ownership of a corporation be transferred?2021-12-31T11:54:18+08:00

Ownership in a corporation is transferred by the sale of stock. A change in ownership does not affect the existence of the corporate entity. Technically, shares of stock in a corporation are freely transferable. 

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