What Legal requirements are sometimes overlooked by Indonesian Company Owners?

The company laws of Indonesia mention the legal requirements which exist in the country as they pertain to businesses in Indonesia and their owners. Any violation of any of these requirements will cause a business owner to be unable to have their business registered and incorporated. Although the Indonesian government and other authorities are generally vigilant with regard to those who either intentionally or unintentionally attempt to bypass these requirements, the fact remains that such breaches of these regulations happen from time to time. 

Requirements Related to Appointments of Directors, Shareholders, and Commissioners 

Anyone who starts a limited liability company in Indonesia, regardless of whether it is owned by locals (PT) or by foreigners (PT PMA), must adhere to the laws which govern the appointment of directors, shareholders, and commissioners in such a company. Every PT and PT PMA which has been established in Indonesia is required to have a minimum of one director, two shareholders, and one commissioner. In the case of a PT, all of the shareholders of the company must be locals; such is not required of a PT PMA. Should a PT or a PT PMA have multiple directors or multiple commissioners, one of the directors or commissioners is required to serve as the president director or the president commissioner. As these are legal requirements, every company in Indonesia must comply with the information which has been stated. The consequence of not adhering to these important  requirements  is  that  the  company’s  incorporation  will  not  be  officially  completed;  only  companies  with  the  appropriate  number  of  directors,  shareholders,  and  commissioners  may  be  incorporated  in  Indonesia.

It may sometimes be difficult to select people who are deemed suitable to be shareholders, directors, or commissioners of a company based in Indonesia. Fortunately for anyone who faces difficulties related to this matter, we at Paul Hype Page & Co can be of assistance. Among the services we provide are the appointment of a company commissioner, the appointment of a nominee director, and the selection of nominee shareholders. In this way, you will not have to spend time searching for people who are to fill these crucial positions. 

Requirements Related to Articles of Association

There are also legal requirements related to Indonesian companies and their Articles of Association. Indonesia’s company laws specify the information which is to be contained within a company’s Articles of Association. The Articles of Association of an Indonesian company ought to include the company’s name, domicile, business goals, business activities, period of incorporation, and objectives behind the establishment of the company. The amounts of authorized, paid-up, and issued capita are also to be stated. Certain details related to the company’s shares must also be mentioned; these include the number and classification of shares, the number of shares within each classification, each share’s nominal value, and the rights which accompany ownership of each share. Each member of the company’s board of directors and board of commissioners must have the exact names of their position specified, as must the number of members in each board. The location in which each of the company’s General Meetings of Shareholders (GMS) is to be held must be mentioned. Information on certain procedures is also to be included in an Indonesian company’s Articles of Association. Such procedures include those related to the holding of a GMS, those which involve the hiring, replacement, and firing of any members of the company’s board of directors and board of commissioners, and those related to the distribution of dividends as well as how the profits of the company are to be used. 

An Indonesian company’s Articles of Association may also contain any other provisions which do not violate any other company laws in Indonesia except for provisions related to receipts of fixed interest on shares as well as those related to the granting of personal benefits to the company’s founders or anyone connected to the company’s founders. 

Any company owner which has Articles of Association that violate any of the preceding stipulations will not receive proper validation of that version of the company’s Articles of Association. 

Paul Hype Page & Co – OSS service provider and Asean Chartered Accountant.

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