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Corporation Law

While setting up a business in Indonesia, there are certain things one needs to take care of. Abiding by the Corporation Law in Indonesiais one of the most vital things for establishing a business in Indonesia.
 
Corporation Law in Indonesia
 
The law number 40 of 2007 (Company Law) regulates the establishment of a foreign investment company in Indonesia. The company law provides the requirements for establishing a foreign investment limited liability company (PT PMA) and a local investment limited liability company (PT).
 
Establishment requirements for a foreign investment limited liability company
 
Shareholders of the Foreign Investment Company
 
Under the article 7 of the Company Law, a foreign investment company must be established by at least two persons. The person can be a foreign individual or an Indonesian, or an Indonesian or foreign legal entity. Therefore, there must be at least one foreign shareholder as individual or in the form as legal entity for a foreign investment company establishment in Indonesia.
 
Deed of Establishment
 
To set up a foreign investment company, it is a must for the shareholders to draw up a deed of establishment legalized by a notary as per the article 7(1) jo. 8 (1) Company Law. Besides the Articles of Association, the deed of establishment must include the following information:
 
1. Founders:
 
a. If the shareholder is an individual, the name, date of birth, place of birth, current residence information and citizenship
b. If the shareholder is a legal entity, the domicile of the legal entity, including the full address, the date and number of legalization of the ministry.
 
2. Board of Directors and Board of Commissioners:
 
a. The name, date of birth, place of birth, current residence information and citizenship information of the members of Board of Directors and Board of Commissioners who are first appointed through the deed of establishment
 
3. Shareholders (other than the founders):
 
a. The names, the number of shares and their issued and paid up nominal value.
Capital of the foreign investment company
As per the article 32 (2) Company Law, the authorized capital for a company amounts at least 50 million Rupiahs. The article 22 of BKPM regulation 5 of 2013 regulates the authorized capital of a foreign investment company and it must amount atleast 10 billion Rupiahs or its equivalent value in USD. The issued capital must be 25% of the authorized capital and has to be paid in full by the shareholders.
 
Obtaining legal entity status of the foreign investment company
 
In order to obtain a decree from the Ministry of Law and Human Rights (Ministry), the founders of the foreign investment company have to submit the specific data as detailed in the article 9 (2) Company Law. As per the article 7 (4) Company Law, a foreign investment company will obtain a legal entity status as of the date of issuance of a decree from the Ministry. After obtaining the legal entity status, the establishment process as per the company Law is completed.