Authorized Capital and Paid-up Capital

The authorized capital is the total amount of share capital which can be owned by shareholders of a company. The minimum amount of authorized capital for local limited liability companies (PT) is 50 million rupiah and for foreign investment limited liability companies (PT PMA) 1 billion rupiah. Upon establishment of the company, the founders have to determine the amount of authorized capital. The authorized capital can be raised by amending the articles of association of the company, and certain government licenses, such as the principle permit for PT PMAs.

In general, limited liability companies do not issue all of the authorized capital. Only a certain part of the share capital is issued and paid-up. The Company Law requires that minimum 25 percent of the authorized share capital is issued and paid-up in full. The non-issued part of the authorized capital can be utilized to raise extra capital for the company. Such further increase of capital must be paid-up in full based on article 33(3) Company Law.

Purchase and Payment of Shares

In general, the payment of the issued and paid-up shares is made in the form of money. Even though the value of the shares must be stated in rupiah, the actual payment of the shares may be made in other currencies.

Under certain conditions payment of shares may be performed in other forms. These other forms can be either tangible or intangible goods. The goods must have a monetary value, which must be evidenced by accompanying documents. It must be noted that based on article 22 of BKPM regulation number 5 of 2013 Guidelines and Procedures on Licensing and Non-licensing of Capital Investment, land and buildings cannot be included in the share capital of foreign investment companies and therefore cannot be used as method of payment of shares.

Shares can only be issued on the owner’s name. Specific requirements regarding the shareholders are in Indonesia regulated in the Articles of Association of the limited liability company.

This column is provided by PNB Law Firm Jakarta

Bahas

ryuo |

"The minimum amount of authorized capital for ...foreign investment limited liability companies (PT PMA) 1 billion rupiah"
This is Incorrect.
The minimum investment is Ten billion rupiahs; the minimum amount of Paid Up capital is 2.5 billion rupiahs.
"...based on article 22 of BKPM regulation number 5 of 2013 Guidelines and Procedures on Licensing and Non-licensing of Capital Investment, land and buildings cannot be included in the share capital of foreign investment companies and therefore cannot be used as method of payment of shares."
Article 22 states that the minimum investment is ten billion rupiahs Excluding land and building.