At Paul Hype Page and Co, this is the hardest process for us to see. From company incorporation to maintaining their accounts, we want ALL our clients to do well. However, if there comes a need to this process in any unforeseen circumstances, a company dissolution also known as a company strike off must be done.
Starting a business is never easy. Along your journey, you will be going through a lot of obstacles. Some of them are predicted but the others are not. There are so many companies which succeeded with their expansion but there are also many of them who failed. And some of them even cannot avoid the worse scenario a business could possibly face, a dissolution.
To fully understand the procedure to be followed, a distinction must be made between the representative office (RO) and the PMA.
Indeed, to end the existence of a RO, a simple dissolution will be needed, while to close down a PMA or PT Local, it will be needed not only to dissolute the company, but also, previously to that, to go through what is called liquidation. Put simply, liquidation refers to the cessation of a company’s operations and the sale of its assets to pay outstanding debts to creditors. The company will be dissolute and cease to exist following the completion of the liquidation process.
The dissolution of a company breakdown is stipulated under Indonesia’s Law No. 40 of 2007, Art 143 paragraph 1, which states that the dissolution does not automatically erase the company at the end of the liquidation process, but after the accountability has been approved by the General Meeting of Shareholders (GMS) or District Court will the company be dissolute completely. On the other hand, on the article 142 stipulates that companies may only be dissolute by the following reasons:
- Bankrupts assets of the company declared in condition of insolvency
- Due to revoked bankruptcy statement based on mandatory order of the commercial art
- Bankrupt assets of company are not sufficient to pay bankruptcy cost
- Termination of company duration as agreed in the article of association
- Resolution of GMS
- Compulsory closure pursuant to a court order. Note that this can happen due to bankruptcy, but not always
- Revocation of company’s licenses and permits, forcing the company to conduct liquidation