Corporate Secretarial Services

Establishing a company in Indonesia, whether as a local business entity or Foreign Direct Investment (FDI) business entity, involves navigating regulatory requirements governed by the Law No. 40 of 2007 on Limited Liability Company. This process is crucial for businesses aiming to operate legally and effectively within the Indonesian market.

Key Considerations for Company Establishment:

Legal Entity Options:
● Establishing a local company (PT PMDN) or a foreign-owned company (PT PMA) if there are foreign investors based on business objectives and ownership structure.

Requirements and Procedures:
● Prepare necessary documents such as Articles of Association (Anggaran Dasar), shareholder agreements, and other supporting documents for the company establishment.
● Processing business licenses and tax administration documents.
● Submit applications to relevant authorities, such as the Indonesia Investment Coordinating Board (BKPM), and obtain necessary approvals.

Capital Requirements:
● Comply with minimum capital requirements as stipulated by law, which vary based on the type and scale of business activities.

Corporate Governance:
● Establish corporate governance frameworks, including board structure, appointment of directors/commissioners, and compliance with reporting obligations.

Taxation and Compliance:
● Understand tax obligations and ensure compliance with Indonesian tax laws, including registration for tax identification numbers (NPWP).

Benefits of Establishing a Company in Indonesia:
● Market Access: Gain access to Southeast Asia’s largest economy and emerging consumer market.
● Investment Incentives: Benefit from various government incentives and facilities aimed at promoting investment.
● Strategic Location: Leverage Indonesia’s strategic location for regional business expansion and trade.

The Investment Realization Activity Report, known as Laporan Kegiatan Penanaman Modal (LKPM) in Indonesia, is a mandatory report that must be submitted by all business entities in Indonesia except micro scale business entities and business entities that conduct upstream oil-and-gas, banking, non-bank financial institutions, and insurance activities. This report provides a detailed account of investment activities and compliance with regulations, ensuring transparency and accountability to the Indonesian Investment Coordinating Board (BKPM).

Key Components of LKPM:
Investment Realization:
● Detailed records of the actual investment made during the reporting period, including capital expenditures and other financial investments.

Project Progress:
● Updates on the progress of projects, including milestones achieved, construction progress, and operational developments.

Employment Data:
● Information on the number of employees, including local and expatriate staff, and details on their roles and employment terms.

Production and Sales:
● Data on production volumes and sales figures, highlighting the economic impact of the investment.

Challenges and Obstacles:
● Identification of any challenges or obstacles faced during the investment process and the measures taken to address them.

Future Plans:
● Outline of future investment plans and projections, including potential expansions or new projects.

Submission Process:
Preparation:
Collect and compile all necessary data and documentation related to the investment activities.

Online Submission:
Submit the LKPM through the Online Single Submission (OSS) system, ensuring all required fields are accurately filled out.

Compliance:
Ensure timely submission of the LKPM as per the reporting schedule set by BKPM to avoid any penalties or compliance issues.

Benefits of Compliance:
● Regulatory Compliance:
Ensures adherence to Indonesian investment regulations and avoids potential penalties.

● Transparency:
Enhances transparency and builds trust with government authorities and stakeholders.

● Operational Insight:
Provides valuable insights into the progress and impact of investment activities.

Updating the OSS RBA (Online Single Submission – Risk-Based Approach) is a mandatory process for businesses operating in Indonesia. It involves updating, reviewing, and revising the company’s licensing based on Risk-Based Approach assessment to ensure compliance with regulatory requirements. Failure to comply will result in imposition of administrative sanctions by BKPM, Provincial and District/City DPMPTSP, KEK administrators, and KPBPB concession agencies on their respective authority, at their discretion. *

Key Steps for Updating OSS RBA:

Review of Risk-Based Approach (RBA) Assessment:
● Evaluate the existing RBA assessment to identify any changes or updates needed based on new business activities or regulatory updates.

Documentation Preparation:
● Prepare all necessary documentation, including updated business plans, financial statements, and other relevant information required for the OSS RBA update.

Submission Process:
● Access the OSS system and navigate to the OSS RBA section.
● Enter updated information and upload required documents as per the system’s guidelines.

Review and Approval:
● Awaiting review and approval from the relevant authorities, ensuring all submitted information meets regulatory standards.

Implementation of Changes:
● Implement any necessary changes or adjustments as directed by the approved RBA update.

Compliance Monitoring:
● Regularly monitor compliance with the updated RBA to ensure ongoing adherence to regulatory requirements.

Benefits of Updating OSS RBA:
● Regulatory Compliance: Ensures alignment with Indonesian regulatory requirements.
● Operational Efficiency: Facilitates smoother business operations by reflecting current business activities.
● Risk Management: Enhances risk management practices through updated assessments.

The re-appointment of Directors and/or Commissioners in Indonesia is a formal process governed by the Company Law No. 40 of 2007. The company’s Article of Association usually determines the appointment of Directors and Commissioners for a specific period. When tenure almost expires, and there is no change in the Directors and Commissioners’ composition, the Director and/or Commissioner must be re-appointed by the General Meeting of Shareholders.. This procedure is essential for ensuring continuity in leadership and compliance with legal requirements.

Key Steps for Re-appointment:

Board Resolution:
● Obtain a board resolution approving the re-appointment of Directors and/or Commissioners. The resolution should outline the term of re-appointment and any associated terms and conditions.

General Meeting Approval:
● Present the board resolution for approval at a General Meeting of Shareholders (GMS) or General Meeting of Commissioners (GMC), depending on the corporate structure.

Documentation Preparation:
● Prepare the necessary documentation, including the minutes of the board meeting and GMS/GMC, as well as updated personal details of the re-appointed individuals.

Submission to Authorities:
● Submit the updated information to the Ministry of Law and Human Rights (MoHLR) or relevant authorities for official registration and approval.

Amendment of Company Records:
● Amend company records and update the Articles of Association (Anggaran Dasar) to reflect the re-appointment.

Notification to Stakeholders:
● Notify stakeholders, including employees, business partners, and regulatory bodies, about the re-appointment.

Benefits of Proper Re-appointment:
● Legal Compliance: Ensures compliance with corporate governance and regulatory requirements.
● Continuity: Maintains stability and continuity in corporate leadership.
● Transparency: Demonstrates transparency to shareholders and stakeholders.

The Annual General Meeting of Shareholders (Annual GMS) in Indonesia is an event that must be held no later than 6 (six) months after the financial year ends as regulated in Law No. 40 of 2007 on Limited Liability Company. Furthermore, the Annual GMS is organized by the Board of Directors, the process involves submitting an annual report to the General Meeting of Shareholders after being reviewed by the Board of Commissioners. This statutory meeting provides a forum for shareholders to gather annually to discuss and decide on key company matters.

Key Aspects of AGM:

Agenda Setting:
● The AGMS generally covers approval of annual financial statements, appointment of auditors, election of directors or commissioners, and distribution of dividends.
Legal Requirements:
● Held annually within six months of the end of the financial year, as stipulated by Indonesian law.
● Notice of meeting and agenda must be provided to shareholders within the timeframe specified by regulations.

Quorum and Voting:
● Decisions are made based on a majority vote unless otherwise specified by the Articles of Association.
● Quorum requirements ensure sufficient shareholder representation for valid decision-making.

Reporting and Compliance:
● Detailed minutes of the meeting are recorded and maintained as per legal requirements.
● Compliance with Company Law No. 40 of 2007 ensures adherence to governance standards and transparency.

Shareholder Rights:
● Shareholders exercise voting rights and have the opportunity to raise questions or concerns during the meeting.

Importance of AGM under :Law No. 40 of 2007 on Limited Liability Company:
● Corporate Governance: Promotes transparency, accountability, and shareholder engagement.
● Legal Compliance: Ensures adherence to Indonesian corporate regulations and governance principles.
● Strategic Decision-Making: Facilitates important decisions crucial for the company’s direction and operations.

Change of Article of Associations (Change of Address, Change of Shareholders, Change of Board of Director, Change of Purpose and Objective, Increase of the capital of company)

Changing the Articles of Association (AOA) in Indonesia involves various amendments, which includes changes in address, Shareholders, Board of Directors or Board of Commissioners composition, company’s purpose and objective, and capital increase. These changes are regulated under Law No. 40 of 2007 on Limited Liability Company.

Key Changes to Articles of Association:

Change of Address:
● Procedure: Amend the AOA to reflect the new address. Obtain approval from the General Meeting of Shareholders (GMS) and notify the Ministry of Law and Human Rights.
● Legal Basis: Article 21 of Law No. 40 of 2007 on Limited Liability Company.

Change of Shareholders:
● Procedure: Update the AOA to reflect changes in shareholders due to transfer or issuance of shares. This requires GMS approval and notification to relevant authorities.
● Legal Basis: Article 55-56 of Law No. 40 of 2007 on Limited Liability Company.

Change of Board of Directors:
● Procedure: Amend the AOA to include new appointments or dismissals of directors. Approval by the GMS and subsequent notification to the Ministry of Law and Human Rights are necessary.
● Legal Basis: Article 94 of Law No. 40 of 2007 on Limited Liability Company.

Change of Purpose and Objective:
● Procedure: Modify the AOA to outline new business objectives or activities. Approval from the GMS and notification to authorities are required.
● Legal Basis: Article 16 of Law No. 40 of 2007 on Limited Liability Company.

Increase of Capital:
● Procedure: Amend the AOA to reflect changes in the company’s capital structure, such as increases in authorized or paid-up capital. GMS approval and notification to the Ministry of Law and Human Rights are necessary.
● Legal Basis: Article 33 of Law No. 40 of 2007 on Limited Liability Company.

Process for Amending the AOA:
Draft Amendment: Prepare a draft of the proposed changes.
GMS Approval: Hold a General Meeting of Shareholders to approve the amendments.
Notary Deed: Execute a notary deed to formalize the amendments.
Submission to Authorities: Submit the notary deed and other required documents to the Ministry of Law and Human Rights.
Notification and Approval: Ensure changes apply legally based on obtaining a approval letter or notification letter from the Ministry of Law and Human Rights as required by law.

Importance of Complying with UU No. 40/2007:
● Legal Compliance: Ensures adherence to corporate governance standards and regulatory requirements.
● Corporate Governance: Promotes transparency and accountability within the company.
● Business Flexibility: Allows the company to adapt to changes in business strategy and market conditions.