INDONESIA LAW AND PRACTICE Contributed by: Agus Ahadi Deradjat (Agung), Gustaaf Reerink, Adri Dharma, Karina Widyaputri and Ilma Sulistyani, ABNR Counsellors at Law
not be achieved, the parties may seek resolu - tion through international arbitration as mutually agreed by both parties. This process applies to investments that have been realised and are based on specific agreements between the investors and the government. 3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity The most common corporate vehicle for invest - ment in Indonesia – particularly for profit-ori - ented ventures – is the limited liability company ( Perseroan Terbatas or PT). The Investment Law explicitly requires that foreign direct investment be carried out through a PT. General Overview of Limited Liability Company Law No 40 of 2007 on Limited Liability Compa - nies as amended (“Company Law”) defines a PT as a legal entity that constitutes a capital part - nership, established based on an agreement, and conducts business activities with authorised capital that is entirely divided into shares. The definition also extends to individual legal entities that meet the criteria for Micro and Small Enterprises under applicable laws and regula - tions. However, this category is not further dis - cussed herein, as the focus is on PMA. A PT that is partly or wholly owned by foreign investors is classified as a PMA. Minimum Number of Shareholders Company Law requires that a PT have at least two shareholders, who may be individuals, legal entities, or a combination of both. If a PT becomes owned by a single shareholder, the law mandates that within six months either: (i)
the sole shareholder must transfer part of their shares to another party, or (ii) the company must issue new shares to one or more additional par - ties. Minimum Share Capital A PT’s capital structure consists of: authorised capital, issued capital, and paid-up capital. The authorised capital refers to the total capital (or portfolio capital) of a company. The Company Law requires that at least 25% of the authorised capital be issued and fully paid-up, meaning the authorised capital may be up to four times the issued capital. For PMA companies, the minimum issued and paid-up capital requirement is IDR10 billion. 3.2 Incorporation Process The incorporation of a PT in Indonesia involves the following key steps. 1. Preparation and execution of the Deed of Establishment (DOE). The founders must pre - pare a draft DOE, which includes the company’s Articles of Association (AOA). The DOE must be executed physically by the founders or their authorised proxies before an Indonesian Notary. 2. Preparation and execution of ancillary doc - uments. In addition to the DOE, the notary typically requires all founders, directors, and commissioners to execute various support - ing documents. These may include statements regarding capital payment, company domicile, tax registration, and identification of the com - pany’s beneficial owner. The timeline for this step depends on the availability of the relevant parties.
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