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How to Strike Off a Company in Indonesia

5 min read|Last Updated: September 5, 2022|
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It is never easy to start a business in Indonesia and you will face numerous challenges throughout your entrepreneurial journey. There are many companies that have expanded successfully, but there are also many that have failed and had to dissolve the company.

A distinction must be made between the representative office (RO) and the PMA in order to properly comprehend the method to be followed.

Indeed, a simple dissolution will suffice to stop the existence of a RO, however, to close down a PMA or PT Local, it will be necessary not only to dissolve the company, but also to go through what is known as liquidation.

What Governs the Striking Off of a Company in Indonesia?

The dissolution of a company is governed by Indonesian Law No. 40 of 2007, Art. 143 paragraph 1. The law states that the dissolution does not automatically erase the company at the conclusion of the liquidation process, but only after the accountability has been approved by the General Meeting of Shareholders (GMS) or the District Court. Article 142, on the other hand, states that businesses can only be declared bankrupt for the following reasons:

  • Bankrupt assets are those of a corporation that has been declared insolvent.

  • Due to a revoked bankruptcy statement based on a commercial art commission’s obligatory order

  • The company’s bankrupt assets are insufficient to cover the costs of bankruptcy.

  • In accordance with the articles of association, the company will be terminated at the end of its term.

  • Compulsory closure of GMS has been resolved as a result of a court order. This can occur as a result of bankruptcy, although it is not always the case.

  • The company’s licenses and permissions have been revoked, forcing it to go into liquidation.

Company Dissolution Process in Indonesia

As previously stated, the Company’s dissolution will be followed by a liquidation process overseen by a liquidator or receiver (as the case may be). In a nutshell, the following are the liquidation procedures:

1. Notification to Creditor and Minister of Law and Human Rights (MoLHR)

At the latest 30 days as of the date of the dissolution of the Company, the liquidators must notify:

  • All creditors of the dissolution of the Company by announcing the dissolution of the Company in the Newspapers and the State Gazette of the Republic of Indonesia; and

  • The MoLHR of the dissolution of the Company for it to be recorded in the Company register that the Company is in liquidation.

If these conditions are not met, the dissolution will not be binding on third parties, and the liquidator will be equally and severally accountable with the Company for any losses suffered by third parties.

2. Creditor’s claims

Creditors have 60 days from the date of the notification of the Company’s dissolution in the newspapers and the State Gazette of the Republic of Indonesia to register their claims.

3. Reporting of the liquidation results

The liquidator must submit the outcomes of the liquidation to the GMS or the court (as applicable). This responsibility also applies to the receiver if the receiver is in charge of the liquidation process; in such instance, the receiver must report the liquidation outcomes to the supervising judge (hakim pengawas).

4. Announcement and notification concerning liquidation results

After the GMS, court, or supervisory judge ratifies the liquidation results (discharge and acquitted the liquidator, or the court accepts the accountability report of the liquidator appointed by it), a notification of the liquidation results must be sent to the MoLHR and published in the newspaper within 30 (thirty) days of the ratification of the liquidation results.

5. Recording of the expiration of the legal entity status of the Company

After the announcement in the press and communication to MOLHR regarding liquidation outcomes have been met, the Minister shall record the expiration of the Company’s legal entity status and delete the Company’s name from the Companies Registry.

6. Announcement of the expiration of the legal entity status of the Company

The Minister shall announce the expiration of the Company’s legal entity status in the State Gazette of the Republic of Indonesia.

Closure of the Tax Card in Indonesia

When your company receives the initial clearance from the MoLHR, you must also complete the tax closure at the local tax authority.

Verification and tax audit are the only ways to close the tax card. It will cover the company’s tax liabilities, revisions, and any other things that are deemed relevant.

The auditing procedure can take up to a year to complete. It could take as little as 6 months, depending on how thoroughly you’ve followed your accounting and tax reporting procedures.

No.  Description  No. Working Days 
1  Article of dissolution issued by the notary   2 
2  Newspaper publicity  2 
3  Liquidation process  60 
4  Decree of dissolution by MoLHR  40 
5  Revocation the Principle/Business License by BKPM  10 
6  Revocation Tax ID number by tax office  180 
7  Revocation Company Registration Certificate by PTSP  7 

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Is a dissolved company the same as liquidation?2022-01-04T10:54:07+08:00

Liquidate means a formal closing down by a liquidator when there are still assets and liabilities to be dealt with. Dissolving a company is where the business is struck off the register at Companies House because it is now inactive. 

What happens to director of dissolved company?2022-01-04T10:53:22+08:00

Once a company goes into liquidation, creditors holding personal guarantees will pursue the directors to pay the outstanding company debt. The creditors that will almost always have a personal guarantee include, a financing bank, a landlord, and any major suppliers. 

When should a company dissolve?2022-01-04T10:52:54+08:00

If you have been doing business as a corporation or limited liability company, you need to officially dissolve your entity so that you are no longer liable for business taxes or filings in your state. Officially dissolving your business also puts creditors on notice that your entity can no longer incur business debts. 

What happens if my company is dissolved?2022-01-04T10:48:00+08:00

When you dissolve a limited company, whether through Members’ Voluntary Liquidation (MVL) or voluntary strike-off, any debts that are still owed must be repaid. Members’ Voluntary Liquidation is administered by a licensed insolvency practitioner (IP) who ensures that creditors are repaid in full. 

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