The legal system in Indonesia is based on civil law and in civil law systems, codes and statutes are designed to cover all cases. There are various types of business entities in Indonesia, with a limited liability company, as known as a Perseroan Terbatas (PT).
Under a PT, the shareholder liability is limited to the extent of capital agreed to be contributed by the shareholders. The Indonesian Business Law divides the PT into 2 classes which are:
Local Company and PMDN Company
Perseroan Terbatas Penanaman Moda Asing (PT PMA)
What is a PT PMA in Indonesia?
A foreign investment in Indonesia is defined under Indonesian Law No. 25/2007 as an action carried out by a foreign investor with the goal of operating a business inside the country’s jurisdiction.
The PT PMA is a legal entity through which a foreign national, a foreign firm, or a foreign government agency can conduct business. The formation of PT PMA is governed by the Company Law’s Law No. 40/2007 on Limited Liability Companies.
This type of business might be held entirely or partially by foreigners. Due to the fact that certain industries in Indonesia are totally or partially closed to foreign investment, ownership restrictions may apply depending on the business.