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