The establishment of a foreign investment company in Indonesia is partially regulated by law number 40 of 2007 (Company Law) regarding limited liability companies. The Company Law provides the general corporate requirements for the establishment of both a foreign investment limited liability company (PT PMA) and a local investment limited liability company (PT). In this column we will discuss the establishment requirements for a foreign investment limited liability company (foreign investment company) in Indonesia as regulated in the Company Law.
Shareholders of the Foreign Investment Company
Pursuant to article 7 Company Law, a foreign investment company must be established by at least two persons. A person under the Company Law can be either an Indonesian or foreign individual, or an Indonesian or foreign legal entity. Therefore for the establishment of a foreign investment company in Indonesia there must be at least one foreign shareholder as individual or in the form as legal entity.
Deed of Establishment of the Foreign Investment Company
In order to set up a foreign investment company in Indonesia, the shareholders must draw up a deed of establishment which must be legalized by a notary, in accordance with article 7(1) jo. 8 (1) Company Law. The deed of establishment contains, besides the Articles of Association, also the following additional information:
1. Regarding the founders:
a. In case the shareholder is an individual, the name, date of birth, place of birth, current residence information and citizenship.
b. In case the shareholder is a legal entity, the domicile of the legal entity, including the full address, the date and number of legalization of the ministry.
2. Regarding Board of Directors and Board of Commissioners:
a. The name, date of birth, place of birth, current residence information and citizenship information of the members of Board of Directors and Board of Commissioners who are first appointed through the deed of establishment
3. Regarding the shareholders (other than the founders):
a. The names, the number of shares and their issued and paid up nominal value.
Capital of the foreign investment company
Based on article 32 (2) Company Law the authorized capital of a company amounts at least 50 million Rupiahs. The authorized capital of a foreign investment company is regulated in article 22 of BKPM regulation 5 of 2013, and must amount at least 10 billion Rupiahs or its equivalent value in US Dollars. The issued capital must amount at least 25% of the authorized capital and must be paid up by the shareholders in full.
Obtaining legal entity status of the foreign investment company
The founders must submit the specific company data to the Ministry of Law and Human Rights (Ministry) as detailed in article 9 (2) Company Law in order to obtain a decree from the Ministry. Based on article 7 (4) Company Law a foreign investment company will obtain a legal entity status as of the date of issuance of a decree from the Ministry. After the foreign investment company obtained the legal entity status, the establishment process based on the Company Law is completed.