Company (PT) Establishment in Indonesia

Company (PT) Establishment in Indonesia

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The establishment of limited liability company (“PT”) in Indonesia is governed under the law number 40 Year 2007 (40/7) regarding Company Law. This law supersedes the law number 1 year 1995 regarding company law.

A. Requirement

It is required minimum 2 (two) persons to establish a PT with notarial deed made in Indonesian language. The requirement of two people in establishing a company in Indonesia has its roots on the basic of contractual law principle. A company is established based on contractual relation. A contractual relation involves at least two people. it is for sure that contractual relation cannot be made unless involving at least two party/persons.
The law mentions that the minimum shareholder for PT establishment is two person. This is somewhat intriguing. Arguably, In my opinion the requirement should be minimum two party not people or person. A word party will be much acceptable since the founder of PT can also be a legal entity like PT it self, foundation or other legal entity. The next question arise if the founder of PT is a legal entity, is it still need at least two shareholder. Again arguably, in my opinion one shareholder of legal entity supposedly sufficient to establish a PT, because undoubtedly a legal entity in the form of PT is established by minimum two people. So that if a PT becoming a founder of another PT, then one party is considerably sufficient for the establishment.
A couple which has a relation as husband and wife can not jointly establish a PT since they are considered to represent one legal subject. However, for those who made a prenuptial agreement can jointly establish a PT since they are considered as separate legal subject.
Requirement of at least two person as founder or shareholder is excluded for the State Limited Liability Companies all of whose shares are owned by the State or Companies managing stock exchanges, clearing and guarantee houses, central securities depositories, and other institutions which further regulated in the Capital Markets Act.

B. Legalization

The next step for the PT establishment is submitting an application to the Minister of Law and Human Rights (MOLHR). The application process for the establishment of PT is through electronic system called “Sisminbakum”. Unfortunately, this system can only be accessed by Public Notary. The applicant will fill a standard format which include minimum information as follow :

  • Company’s name and legal domicile
  • Company’s period of incorporation
  • The purpose and objective and business activities of the Company
  • The amount of authorized capital, subscribed capital, and paid up capital;
  • The Company’s full address.

The application to obtain a decision from MOLHR shall be submitted not later than 60 (sixty) days after the date of the Deed of establishment is signed. Should all the requirement for the application is fulfilled, than within maximum 14 (fourteen) days the MOLHR will issue a decision regarding legalization for the establishment of PT. PT will automatically obtain its legal entity when the decision for the legalization of the PT is issued.

C. Registration

Any company under the laws and regulations of the Republic of Indonesia is obliged to be registered to Company Registry in line with the law no. 3 year 1982 regarding company registry. The Data of the company is submitted to company registry simultaneously with :

  • The Decree of the Minister regarding the ratification of the Company as a legal entity, or the approval of the amendments to the articles of association for which approval is necessary;
  • The receipt of notification of amendments to the articles of association which do not need approval; or
  • The receipt of notification of changes in the Company’s data which do not constitute
  • Amendments of the articles of association.

D. Announcement

A company which has been registered will be announced in the State Gazette. The announcement will be held by the MOLHR not later than 14 (fourteen) days after the issuance of the MOLHR decision on the legalization of PT establishment.

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