General Corporate
In Indonesia, there are three forms of corporation which has the status of “Legal Entity”. One of them is the Limited Liability Company, as stipulated by Law No. 40 of 2007 regarding Limited Liability Company (“Company Law”).
1.
Limited
Liability Company
Ø
Key
Legislations:
·
Company
Law
·
Government
Regulation No. 43 of 2011 regarding Usage of the Name of Limited Liabilty
Company (“GR No. 43/2011”).
Ø
Minimum
Authorized Capital: IDR 50 million, which minimum of 25% must be issued and
paid-up (may vary depending on the business of the company) – Article 32 and 33
of Company Law.
Ø
The
value of shares shall be stated in Rupiah, as mentioned in Article 49 (1) of Company Law.
Ø
Prohibited
to use the name of existing listed company, unless you can provide a statement
letter from such company – Article 5 of GR No. 43 of 2011.
Ø
Founded
by two or more persons (or legal entity) by notarial deed based on a notarial deed drawn up in Bahasa
Indonesia (Deed of Establishment) – Article 7 (1) of Company Law.
Ø
Obtain
legal entity status on the date of the issuance of Ministerial Decree regarding
the ratification of the Company’s legal entity – Article 7 (4) of Company Law.
Ø
Required
to have the following licenses: Domicile Letter which issued by related
District Office, Tax Registered Number (NPWP and SKT) which issued by related
Tax Office, Business License and Company’s Registration Certificate which
issued by related Official Trade Office.
2.
Investment
Company
Ø
Key
Legislations:
·
Company
Law
·
Law
No. 25 of 2007 regarding Investment (“Investment
Law”).
Ø Domestic
investment may be in form of corporation, non-corporation, or individual
business, in accordance with the rules of law (Article 5 (1) of Investment Law).
Ø
Foreign
Investment must be set up in a form of limited liability company (Article 5 (2)
of Investment Law).
Ø
The
establishment of Domestic and Foreign Investment shall be in accordance to
Company Law.
Ø
Any
investors shall have the right to make transfer or repatriation in foreign
currency to capital, profit, dividend and any other revenue (Article 8 (3) of
Investment Law).
Ø
Any
investment companies shall be entitled to use experts of foreign citizen on
certain position and expertise (Article 10 (2) of Investment Law).
Ø
According
to Article 15 of Investment Law, every investor is required to make report on
investment activity and submit it to the Investment Coordinating Board (Badan
Koordinasi Penanaman Modal/BKPM).
Ø
Business
fields closed to foreign investment are (Article 12 (2) of Investment Law):
a.
production
of weapons, ammunition, explosive equipment, and warfare equipment; and
b.
any
business sectors explicitly declared closed based on the law.
3.
Board
of Directors (“BOD”)
Ø
According
to Article 93 (1) of Company Law, the candidate of the BOD
shall be individual who has
the capability in performing legal action, except within the period of 5 (five)
years prior to his appointment he/she:
a.
had
been declared bankrupt;
b.
being
the member of the Board of Directors or the member of Board of Commissioners
who have been adjudicated to have caused the bankruptcy of a Company; or
c.
had
been sentenced for a criminal offense which caused financial loss to the state
and/or relating to financial sector.
Ø
The
BOD shall undertake its duty to manage the Company for
the interest of the Company in the pursuit of its purposes and objectives, as stipulated in its Articles of Association.
Ø
Members
of the BOD are appointed by the General Meeting of Shareholders (“GMS”).
Ø
The
BOD shall represent the Company, in or outside the courts (Article 98 (1) of Company Law).
Ø
The
obligations of BOD are among others to establish and maintain a register of shareholders,
special register, minutes of GMS and minutes of the BOD’s
meeting.
4.
Board
of Commissioners (“BOC”)
Ø
The
BOC shall conduct supervision over the management policy, the implementation of
the management in general, either regarding the Company or its business, and
provides advice to the BOD
(Article 108 (1) of Company Law).
Ø
The
requirement for BOC’s appointment is similar to BOD.
Ø
Based
on the articles of association or the resolution of GMS, the Board of
Commissioners may perform the management over the Company in a certain
condition for a certain period
(Article 118 (1) of Company Law).
5.
General
Meeting of Shareholders (“GMS”)
Ø
GMS
has the authority which is not conferred to the Board of Directors and the
Board of Commissioners.
Ø
During
the GMS, the shareholders shall have the right to receive explanation relating
to the Company from the BOD and/or the BOC, as long as it
is related to the agenda of such GMS, and shall not in contrary with the
interest of the Company (Article 75
(2) of Company Law).
Ø
The
GMS may be convened by ways of teleconference, video conference, or other means
of electronic which enables all of the GMS participant to see, hear, and
participate directly in the meeting
(Article 77 (1) of Company Law).
Ø
According
to Article 86 of Company Law, GMS
shall be lawful if more than ½ (one-half) from the total shares with voting
right are present or represented, except the Law and/or articles of association
stipulates a bigger number of quorum.