Company Registration in Indonesia - Business Starting & Setup

Indonesia's legal system is based on the Romano-Germanic system of law, with a significant percentage of borrowing from the Dutch legal system. Corporate law is contained in the Company Law NUMBER 40 OF 2007, as amended from time to time.

Indonesian law provides for the possibility of establishing the following organisational and legal forms:

Local company with liability limited by shares (PT PMDN),Company with foreign investment and liability limited by shares (PT PMA),Representation of foreign company (KPPA).

The most popular and common form is a company with foreign investment and liability limited by shares (PT PMA).

The time period for registering a new Indonesian company in the registry is 10 working days, but may be longer due to the need to obtain additional authorisation documentation for the planned activity.

The word "PT" is a mandatory element of the name indicating the legal form of the limited liability company. Every Indonesian company name must first be approved by the registration authority. The Latin alphabet may be used in the spelling of names. The name must contain a minimum of 3 words with at least 3 letters in each word. The registrar may reject any name that it considers unacceptable, that is the same or similar to the names of already registered Indonesian companies, or that implies illegal activities, militaristic orientation or government patronage.

The first step in registering a company in Indonesia is to obtain approval of its name from the Registrar of Companies. The Memorandum of Association is then signed by the shareholders in the presence of a notary public.

The Memorandum of Association defines the basic structure of the company, specifies its name, the purpose of incorporation, the amount of share capital and its division into shares of a certain value, as well as other provisions related to the structural organisation of the company, procedures for convening shareholders' meetings, passing resolutions and transfer of shares, including all possible restrictions. By special resolution, the company may amend or supplement the Memorandum of Association.

At the next stage of company registration, the Memorandum of Association and the necessary registration forms are sent to the Ministry of Foreign Investment for approval. Upon receipt of the registration confirmation from the Ministry, a request for a tax number is sent to the local tax office. At the same time, registration in the online company register (OSS) is carried out in order to obtain a Commercial Certificate Number (NIB), which will be used for most of the procedures.

Upon completion of registration, a commercial licence, proof of compliance with zoning regulations, and a certificate of compliance with environmental regulations are issued.

Companies must have a registered office (registered office) in Indonesia. Copies of the company's corporate documents must be kept at this registered office address.

Indonesian law does not contain requirements for the existence, form and content of a seal. Each company can prepare a seal according to its own preferences. The most common reason for preparing a seal is to open a corporate account with foreign banks, most of which require a seal.

Redomiciliation of companies from and to Indonesia is not possible at this time.

The minimum number of directors is one. It can only be a natural person. Data on the directors are entered in the online register. The law does not impose residency requirements, however, in order to avoid difficulties during on-site inspections by the state authorities, it is recommended that the director resides permanently in Indonesia.

All companies must appoint a commissioner, who may be an individual, whether resident or non-resident. There are no specific qualification requirements for the position of Commissioner. According to the law, a person may not fulfil the functions of a sole director and a commissioner at the same time.

An Indonesian company is required to have two or more shareholders, which can be individuals and legal entities, Indonesian residents or non-residents. General meetings of shareholders must be held at the business address annually, with the first meeting to be held within 18 months of the company's incorporation.

The authorised share capital of a company may have to be denominated in Indonesian Rupiah. The minimum amount of authorised share capital is IDR 10 billion. There is no stipulated timeframe for payment of authorised capital. The issuance of bearer shares or shares without nominal value is not authorised.