Process and Requirements for Establishing a Limited Liability Company for Foreign Investment

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By:

Team of Hukumindo

Previously, the Hukumindo.com platform has discussed the subject of  "Understanding 5 Steps Foreign Direct Investment In Indonesia" and also "Latest Negative List of Investments In Indonesia", and on this occasion will be discussed about Process and Requirements for Establishing a Limited Liability Company for Foreign Investment in Indonesia.

In the previous article entitled "Latest Negative List of Investments In Indonesia", the investor must first determine what investment sector he will establish in Indonesia, and after knowing that the investment sector does not conflict with the Negative Investment List, the next step that investors must take is to establish a limited liability company. And if we go back to the article entitled "Understanding 5 Steps Foreign Direct Investment In Indonesia", then this Process and Requirements for Establishing a Limited Liability Company for Foreign Investment is a core part of the first stage in the form of Establishing a Business and Registering. 

In simple terms, what is meant by Foreign Investment is investment activity to conduct business in the territory of the Republic of Indonesia which is carried out by foreign investors, either using fully foreign capital or in joint ventures with domestic investors.[1] In line with the foregoing, the legal entity of a limited liability company that is required for foreign investment is in the form of a "Foreign Investment Limited Company" or PMA. This means that there are additional conditions that are different from a limited liability company in general.

Limited Liability Company Establishment Requirements[2]

1. Based on the Regulation of the Head of the Investment Coordinating Board (BKPM), the minimum capital requirement for PMA for issued/paid up capital is currently at least IDR 10,000,000,000 (ten billion rupiah), with a minimum paid-up capital of Rp. 2.5 Billion Rupiah. This value excludes land and buildings;

2. Photocopy of Passport for foreigners;

3. Photocopy of personal ID card and NPWP for Indonesian citizens;

4. Photocopy of the latest PBB of place of business/office, if own;

5. Photocopy of Contract Letter, if the status of the contract office; 

6. Certificate of Domicile from the building manager, if in the building; 

7. The office is located in the Office/Plaza area, or Shophouse, or is not located in a residential area.

8. Photo of the person in charge of size 3x4 = 2 colored sheets.

Limited Liability Company Establishment Process[3]

1. Submit a letter of application to the Investment Coordinating Board, this process is carried out at the Investment Coordinating Board (BKPM).

2. Limited company name order, at this stage, you have to prepare several choices of company names that will later be used, once prepared, then the Notary will check it on the General Legal Administration system online to find out whether the name submitted can be used or not.

3. Drafting of Limited Liability Company Deed by Public Notary, This includes the name of the limited liability company, the place and domicile of the limited liability company, the management structure of the limited liability company, the authorized and paid-up capital of the limited liability company (including later the composition of share ownership), as well as the purposes and objectives of the limited liability company.

4. The signing of the Deed of Limited Liability Company in front of a Notary and Application for AHU Decree, at this stage the founders of the company signed the draft deed of the company in front of a Public Notary directly, this resulted in the draft deed of the company becoming a deed, and after that registration was carried out with the Ministry of Law and Human Rights through the Directorate General of General Legal Administration by the Notary concerned. Therefore, a limited liability company that has been established becomes legal as a legal entity after being registered and issuing a Decree.

5. Submission of Limited Liability Company Taxpayer Identification Number (NPWP), Companies can register with the relevant Primary Tax Office (KPP) to obtain a Taxpayer Identification Number (NPWP). 

6. License registration through Online Single Submission (OSS), this includes Business Identification Number (NIB) and Business License (SIUP). Business Identification Number means that the company you founded has been registered with the local government that covers the place where the company carries out its business activities. While the Business License serves as a sign that the company you have established has been allowed to carry out business activities by the local government.

When an investor has met the requirements and has gone through the stages as described above, then he is ready to carry out legal business activities in Indonesia.

*) For further information please contact:

Mahmud Kusuma Advocate

Law Office

Jakarta - Indonesia.

E-mail: mahmudkusuma22@gmail.com

___________________

References:

1. "Panduan Lengkap Pendirian PT 2021", legal2us.com, diakses pada tanggal 3 September 2021, https://legal2us.com/panduan-lengkap-pendirian-pt-2021/

2. "Biaya Syarat PMA Tahun 2021", tamasolusi.com., diakses pada tanggal 3 September 2021, https://tamasolusi.com/biaya-syarat-pendirian-pma/

3. Ibid.