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Latest Columns Company Law

  • Reserve Fund Allocation & Dividend Distribution to Shareholders

    Reserve Fund Allocation and Dividend Distribution to Shareholders

    Based on article 70 of Law number 40 of 2007 on Limited Liability Companies (Company Law), PT companies are required to allocate money to a reserve fund. The Company Law keeps the requirement to allocate money to the reserve fund in place, until the it reaches 20 percent of the issued and paid up capital. In this column we look in more detail to the requirement to allocate money to the reserve fund.

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  • Shareholder Liability against Consumer Claims in Indonesia

    Shareholder Liability against Consumer Claims in Indonesia

    The customer protection in Indonesia is regulated in law number 8 of 1999 on Consumers' Protection (Consumer Law). The Consumer Law gives consumers the right to sue PT Companies for any damage incurred due to the use of certain goods or services. In this column we discuss the shareholder liability in case of such consumer claim. We compare the Consumer Law with the Law number 40 of 2007 on Limited Liability Company (Company Law), to gain understanding about the risk and liability of shareholders in such claims.

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  • Share Capital Requirements Amendment for Small Companies Indonesia

    Share Capital Requirements Amendment for Small Companies Indonesia

    The share capital requirement is regulated in article 32 of Indonesian law number 40 of 2007 regarding Limited Liability Company (Company Law). Paragraph 3 of the same article regulates that changes in the minimum amount of authorized capital as set out in paragraph (1) shall be stipulated by Government Regulations. As implementation of the paragraph 3, recently Government Regulation 7 of 2016 regarding Amendments in Authorized Capital of a Limited Liability Company (Government Regulation) was issued. In this column we discuss the implications of the new Government Regulation.

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  • Liquidator Tasks during Liquidation of Companies in Indonesia

    Liquidator Tasks during Liquidation of Companies in Indonesia

    When a PT company decides to liquidate its company, it needs to appoint a liquidator in the General Meeting of Shareholders. Once appointed, the liquidator shall take over all legal actions of the company as of the date of liquidation of the PT company. In this column we provide a general overview of the tasks which must be performed by the liquidator during the liquidation of the company, in line with the procedures set out in Indonesian Law number 40 of 2007 on Limited Liability Company (Company Law) and its implementing regulations.

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  • Liquidation of Limited Liability Company (PT) in Indonesia

    Liquidation of Limited Liability Company (PT) in Indonesia

    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.

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  • Shares and Capital in a Limited Liability Company in Indonesia

    Shares and Capital in a Limited Liability Company in Indonesia

    The general provisions regarding shares in an Indonesian limited liability company (PT for local companies and PT PMA for foreign companies in Indonesia) are regulated in Indonesian Law number 40 of 2007 concerning Limited Liability Companies (Company Law). The Company Law regulates the minimum authorized capital and paid-up capital, and stipulates procedural rules related to the purchase, ownership and sales of shares.  In this column we discuss the general rules governing shares of a limited liability company in Indonesia.

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  • Director Cannot be Considered as Employee in Indonesia

    Director Cannot be Considered as Employee in Indonesia

    Directors in Indonesia cannot be considered employees in Indonesia, because Indonesian Law number 13 of 2013 regarding Manpower (Labor Law) defines them as entrepreneurs. This has several implications of directors in Indonesia. The biggest implication is that directors do not enjoy the strong employee protection based on the Labor Law. Directors are therefore advised to carefully draft their service agreements to ensure sufficient protection. In this column we will explain the exact status of a director in Indonesia.

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  • Foreign Investment Company: Company Law Indonesia

    Foreign Investment Company: Company Law Indonesia

    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.

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