When a limited liability company (PT) in Indonesia decides to close its business it needs to follow the liquidation procedure set out in the Indonesian Law number 40 of 2007 on Limited Liability Company (Company Law). Besides the procedures in the company law it must also terminate employment agreements of employees, terminate tax licenses and investment licenses. Liquidation of a PT may take up to one year or more, depending on the outcome of e.g. tax audits and whether or not employees are willing to cooperate in their termination. In this column we discuss the reasons for liquidation and the appointment of liquidator based on the Company Law.
Reasons of Liquidation of a PT
Based on article 142(1) of the Company Law, a PT shall be liquidated based on the following reasons:
1. resolution of the General Meeting of Shareholders (GMS) in which it resolves to liquidate the PT;
2. expiry of the establishment period as mentioned in the Articles of Association (in case such period is not set as indefinite);
3. court decision to liquidate the PT;
4. a court decision to liquidate the PT, in case the PT's bankruptcy assets being insufficient to settle the bankruptcy costs;
5. the bankruptcy assets of a PT declared bankrupt, are in a state of insolvency as provided; or
6. revocation of the business license of the PT.
We will focus in this column on the liquidation of a PT based on resolution of the GMS to liquidate the PT. Based on article 89 of the Company Law, a GMS resolution is passed in case 75% of the shareholder attending the GMS vote in favor of the liquidation of the PT, unless the Articles of Association regulate differently.
Appointment of Liquidator
In case the shareholders of the PT decide to liquidate the PT, the shareholders shall, besides determining the date of liquidation, also appoint a liquidator. In case no liquidator is appointed in the GMS, the Board of Directors of the PT shall act as liquidator. As of the date of liquidation only the liquidator is allowed to perform legal actions on behalf of the PT. The Board of Directors is not allowed to perform any legal action anymore.
This column is provided by PNB Law Firm Jakarta