What’s in this article
Setting up a company in Indonesia is easy – what comes next may not be that simple. There are many regulations and legal obligations that an Indonesian company should abide by. Understanding these could be time-consuming and confusing, especially for new business owners or foreigners.
No matter the type of legal business entity you have incorporated in Indonesia, from Persoroan Terbatas (PT) or Limited Liability Company (LLC), there are legal obligations to take note of. Local PTs account for the vast majority of businesses in Indonesia as the benefits include:
- Carry out many business activities in various business fields
- Lower paid-up capital than a foreign-owned company (PT PMA)
- Clear Separation between Personal Assets and Company Asset
A PT PMA (Perseroan Terbatas Penanaman Modal Asing) is a legal entity which foreigners can use to conduct commercial activities in Indonesia established under Indonesian law. In a PT PMA, foreigners both individual and legal entities can register as shareholders.
- Shares of PMA can be owned up to 100% by foreign investors, but are subject to the Negative Investment List
- On-site tax or import duties are lower
- Has the same rights and responsibilities as local companies
Legal Obligations of an Indonesian Company
Under the Indonesian Company Law,
- All directors cannot be bankrupt in the past five years before the appointment
- Members of a board of directors (BOD) or board of commissioners (BOC) cannot be found to be at fault for causing a company to be declared bankrupt
- Board of directors (BOD) or board of commissioners (BOC) cannot be sentenced for a crime that caused losses to the state and/or a crime related to the finance sector
- Foreign nationals are prohibited from serving as human resources directors and there are several other directorships positions that foreign nationals are prohibited from holding under the employment laws and regulations.
- The Minister of Manpower Decree No. 40 of 2012 regarding Certain Positions that Should Not be Taken by Foreign Manpower (MOM Dec 40/2012) sets out various company positions related to personnel and industrial relations that cannot be taken by foreign nationals.
- The BOD and its members are not liable for the acts taken for and on behalf of the company, but the member(s) of the BOD and BOC can be personally liable for the losses of the company if it can be proven that the loss resulted from the fault or negligence of the BOD or BOC.
Parent company’s Liability According to Company Law
The parent company can be liable if one of the following applies:
- The subsidiary no longer fulfils the requirements to be a legal entity.
- Parent companies used the subsidiary for their interests in bad faith.
- The parent company is directly involved in an unlawful act committed by the subsidiary.
Indonesia Consumer Protection Law Requirement
- Companies and organizations must fulfil the required standards
- Conform to the information stated in their packaging
- Not to be falsely marketed or advertised
Several products, such as foods and drugs, are subject to additional regulatory requirements as regulated by, among other things:
- Law No. 36 of 2009 regarding Health.
- Law No. 18 of 2012 regarding Food.
- Various regulations enacted by relevant authorities, such as the Food and Drug Supervisory Agency (Badan Pengawas Obat dan Makanan) (BPOM)
What are the Requirements for Formation of an Indonesian Company?
The main registration requirements to establish a corporate business vehicle (PT PMA) are:
- Executing a deed of establishment in the Indonesian language before a public notary
- The PT PMA must comply with any shareholding limitation requirement set out in the Negative Investment List
- Obtaining approval from the Ministry of Law and Human Rights (MOLHR) for the establishment of the PT PMA
- Obtaining a certificate of domicile (Surat Keterangan Domisili Perusahaan) (SKDP) from the Sub-District Head (Lurah)
- Obtaining a taxpayer registration number (Nomor Pokok Wajiba Pajak) (NPWP) from the tax office.
- Opening a bank account in Indonesia
A PT PMA must normally submit the following reports:
- Capital Investment Activity Report (Laporan Kegiatan Penanaman Modal) (LKPM) quarterly before it obtains a business licence, and every semester once it has obtained a business license
- Audited Annual Financial Statement to the Ministry of Trade (MOT)
- Mandatory Manpower Report to the local manpower office
- Companies engaged in the financial services sector must submit a monthly report and audited annual financial statement
- They will also need to produce an annual business plan and implement of good corporate governance report, to the Indonesian Financial Services Authority (Otoritas Jasa Keuangan)
FAQs
“PT” secara sederhana berarti perseroan terbatas. Itu sebabnya Anda hampir selalu melihat nama perusahaan Indonesia dimulai dengan “PT.”. Ini hanya mengacu pada status tanggung jawab terbatas mereka.
Perseroan Terbatas (LLC) adalah struktur bisnis yang diizinkan oleh undang-undang negara bagian. Sebagian besar negara bagian tidak membatasi kepemilikan, sehingga anggota dapat mencakup individu, perusahaan, LLC lain, dan entitas asing. Tidak ada jumlah maksimum anggota.
Indonesia menerapkan sistem hukum campuran dengan sistem hukum sipil sebagai sistem hukum utama yang diadopsi dari hukum kolonial Belanda. Indonesia juga mengenal sistem hukum adat dan sistem hukum agama (hukum syariah Islam).
Undang-Undang Perseroan Terbatas (UU No. 40 Tahun 2007 tentang Perseroan Terbatas) mengatur bagaimana perusahaan menjalankan perusahaannya di Indonesia. Sejak UUPT diundangkan pada tahun 2007, belum ada perubahan dan tidak ada peraturan baru yang dikeluarkan pada tahun 2015 terkait UUPT.
