A private limited company in Indonesia, also known as a Perseroan Terbatas (PT), is a type of business structure that offers limited liability protection for its shareholders. This means that the personal assets of the shareholders are protected from any debts or liabilities incurred by the company. In order to register it, a minimum of two shareholders and one director are required. The company must also have a registered office address in Indonesia and a minimum paid-up capital of IDR 50 million (Indonesian Rupiah). With our assistance, you can learn more about company registration and how to register your company in Indonesia. Once registered, it must comply with annual filing requirements, including the submission of financial statements and annual returns to the Ministry of Law and Human Rights of Indonesia. Let us guide you through the process of establishing a successful business in Indonesia.
How is a private limited company different from other business structures?
A private limited company, or Perseroan Terbatas (PT), in Indonesia is distinct from other business structures. It offers limited liability, meaning the owner’s personal assets are protected if the company faces financial issues. There are two types of PT: Local PT company and Foreign-owned PT PMA company. Local PT companies can only be 100% owned by an Indonesian citizen, but if a foreigner wants to set up this type of entity, they will need resident shareholders. The capital invested must be a minimum of IDR 10 billion for a foreign-owned PT PMA. Other business structures include State-Owned Companies (BUMN), which are wholly or partly owned by the government, Private-Owned Enterprises (BUMs), and Subsidiary Companies, which are set up as limited liability companies. Each of these business structures has its own characteristics, advantages, and disadvantages, and the choice depends on the specific needs and goals of the business.
What are the requirements for registering a limited company in Indonesia?
The requirements for registering a private limited company in Indonesia include:
➤ The submission of a Deed of Establishment, which includes the company’s Articles of Association
➤ A domicile letter that serves as a Notice of Situation of Registered Office
➤ A statement letter regarding the appointment of the Director, Commissioner, and Secretary
➤ A Capital Statement Letter that details the Particulars of Shares. These documents must be submitted to the Ministry of Law and Human Rights of Indonesia.
Additionally, at least two shareholders and one director must be appointed, and at least IDR 50 million must be paid as the authorised share capital. It is also mandatory to appoint a company secretary within 6 months from the date of incorporation, who must be a natural person and ordinarily resident in Indonesia. The proposed company name must also be approved by the Ministry of Law and Human Rights before registration can be completed.
How many shareholders are allowed in a private limited company?
In a private limited company, also known as a Perseroan Terbatas (PT), in Indonesia, there must be at least two shareholders. However, there is no specific maximum limit on the number of shareholders in a PT under Indonesian law. This flexibility allows for a broad range of investment and ownership structures, making it a popular choice for both local and foreign businesses. It’s important to note that the composition of shareholders may be subject to regulations depending on the business sector.
ℹ️ It’s also worth noting that there is no maximum limit on the number of shares that can be issued, but the minimum is one share per shareholder. Shareholders are also allowed to hold shares jointly.
What are the responsibilities and liabilities of directors in Indonesia?
The directors of a private limited company in Indonesia are responsible for the overall management and direction of the company. They are also responsible for ensuring that the company complies with all legal and regulatory requirements, as well as ensuring that the company’s financials are accurate and up-to-date. Additionally, they have a fiduciary duty to act in the best interests of the company and its shareholders. In terms of liabilities, directors are personally liable for any wrongful or fraudulent acts or omissions committed by them while in office. They can also be held liable for any failure to file annual returns or comply with any other legal requirement under the Indonesian Company Law. However, their liability is limited to the extent of the unpaid amount on the shares held by them.
ℹ️ Themis Partner offers a professional Shareholder Agreement drafted by lawyers to define all duties and responsibilities of shareholders of a limited liability company in Indonesia.
How is the management and administration of a limited company structured?
The management and administration is structured through the Board of Directors, who are elected by the shareholders and have overall responsibility for the management and direction of the company. They are responsible for making strategic decisions and ensuring that the company complies with all legal and regulatory requirements. The day-to-day operations are usually managed by the company’s management team, which is typically headed by a managing director or chief executive officer. The company must appoint a company secretary within six months from the date of incorporation, who is responsible for ensuring that the company complies with its statutory obligations and keeping proper records of the company’s meetings and resolutions. They also assist the board of Directors in the efficient administration of a company.
What are the annual compliance requirements for a private limited company?
A private limited company in Indonesia, also known as a Perseroan Terbatas (PT), must comply with several annual compliance requirements to maintain its good standing with the Ministry of Law and Human Rights. These include:
1. Filing annual returns, which must be submitted within a specified period after the annual general meeting and should include financial statements, auditor’s report, and details of shareholders and directors.
2. Holding an annual general meeting (AGM) within 18 months from the date of incorporation, and then once a year after that. The AGM should be held within the first 15 months of the financial year.
3. Filing a statement of particulars of the company’s directors, managers, company secretary, and substantial shareholders if there are any changes from the previous year.
4. Filing a statement of particulars of shares if there is any change of shares.
5. Keeping proper records of the company’s meetings and resolutions, and filing the necessary returns with the Ministry of Law and Human Rights. It’s important to note that all accounting records and financial statements must be written in the Indonesian language (Bahasa Indonesia). However, permission to use a different language may be obtained from the Ministry of Finance.
What are the tax implications of operating a private limited company?
Operating a private limited company in Indonesia, also known as a Perseroan Terbatas (PT), has various tax implications that the company and its shareholders should be aware of. Firstly, the company is subject to corporate income tax on its profits. Companies with gross turnover of no more than IDR 4.8 billion are subject to a 0.5 percent tax on total turnover. Small enterprises with an annual turnover of not more than IDR 50 billion are entitled to a 50% tax discount of the standard rate, imposed proportionally on taxable income on the part of gross turnover up to IDR 4.8 billion. The company may also be subject to withholding tax on certain types of income, such as dividends, rent, and royalties. Additionally, the company may be subject to Value Added Tax (VAT), as well as other taxes such as land and building tax, stamp duty, and import or export duties. The shareholders of the company are also subject to personal income tax on any dividends received from the company, and may also be subject to capital gains tax on the sale of their shares. It’s worth noting that Indonesia has Double Taxation Agreements (DTAs) with many countries, ensuring that the same income is not taxed twice.
How can a Indonesian private limited company be dissolved or wound up?
A private limited company in Indonesia, also known as a Perseroan Terbatas (PT), can be dissolved or wound up in several ways:
1. Voluntary Winding-up: The shareholders of the company may pass a special resolution to voluntarily wind up the company. This process is initiated by the directors or shareholders and requires the approval of at least 75% of the shareholders.
2. Compulsory Winding-up: The company may be wound up by the court if it fails to comply with any legal or regulatory requirements, or if it is unable to pay its debts.
3. Creditor’s Winding-up: A creditor of the company may apply to the court to wind up the company if the company is unable to pay its debts.
4. Strike-off: The company may be struck off from the register of companies by the Ministry of Law and Human Rights if it fails to file its annual returns for 2 consecutive years.
In all these cases, the winding-up process involves appointing a liquidator, who is responsible for collecting and selling the company’s assets, paying off its debts, and distributing any remaining assets to the shareholders. The final report of the liquidator is then reported to the General Meeting of Shareholders or the court for approval. The process of winding up a company in Indonesia is governed by the Indonesian Company Law. It’s important to note that all accounting records and financial statements must be written in the Indonesian language (Bahasa Indonesia). However, permission to use a different language may be obtained from the Ministry of Finance.
