Registering a Business in Indonesia

Feb 2021

Before starting the registration process, the investor should be aware that there are some limitations on share ownership for foreign companies that plan to establish a company or business in Indonesia. There is also a Negative Investment List (Daftar Negatif Investasi) that details which industries are restricted or prohibited for foreign companies in Indonesia.

To establish a limited liability company with foreign ownership (known in Indonesia as PT PMA or Perseroan Terbatas Penanam Modal Asing), a foreign investor must submit an application to the Indonesia Investment Coordinating Board (Badan Koordinasi Penanaman Modal or BKPM) through the One Stop Service (Pelayanan Terpadu Satu Pintu or PTSP, via www.nswi.bkpm.go.id) to obtain a principle license.

After the license is issued by BKPM, the founding shareholders or their proxies need to execute the deed of establishment containing the PT PMA’s articles of association, which must be signed before a notary public and filed with the Ministry of Law and Human Rights for its approval. The filing process is handled by the notary. Once the Ministry of Law and Human Rights approves the articles of association, the PT PMA must register with the Ministry of Trade. From start to finish, the establishment of a PT PMA may take 6-8 weeks.

The process to register is as follows:

  • Reserve the PT’s name with the Ministry of Law and Human Rights. This procedure is usually handled by a notary. The company name must be in the Indonesian language. Other statutory requirements for the name are found in Government Regulation No. 43 of 2011, which covers procedures for the submission and usage of a PT’s name.
  • Execute and obtain approval for the PT PMA’s articles of association. Filing is done electronically by the notary public, who completes the electronic form prescribed by the Ministry of Law and Human Rights with the required information and attaches supporting documents. All the documents must be submitted to the ministry within 60 days of the date that the deed of establishment containing the articles of association is executed. The articles of association are prepared in notarial deed form in the Indonesian language. No more than 14 days after the complete application letter and supporting documents are received by the Ministry of Law and Human Rights, it will electronically issue its signed decision to approve the company as a legal entity.
  • Obtain a certificate of domicile.
  • Obtain a taxpayer registration number and a taxable entrepreneur registration number.
  • Register the PT PMA with the Ministry of Law and Human Rights. The application is submitted by a notary acting as the proxy for the founding shareholders.
  • Register the articles of association with the Ministry of Trade. Once the Ministry of Law and Human Rights has approved the PT’s articles of association, the PT must be registered in the company registry at the relevant regional office of the Ministry of Trade within three months of starting business. A company registration certificate will be issued on filing and will be valid for five years. The first registration with the Ministry of Trade is handled by a notary.
  • Publish the articles of association in the state gazette. Following approval by the Ministry of Law and Human Rights and registration with the Ministry of Trade, the articles of association must be submitted to the state printing office for publication in the supplement to the state gazette. This step is traditionally handled by a notary. Article 30 of Law No. 40 of 2007 regarding limited liability companies (Company Law) requires the Ministry of Law and Human Rights to announce the deed of establishment of the PT along with the ministry’s approval in the supplement to the state gazette within 14 days of that approval.
Company Constitution

A limited liability company must have articles of association as required by Law No. 40 of 2007 regarding limited liability companies (Company Law). While the Company Law does not provide model articles of association, it does set out the minimum details that must be incorporated. These details include:

  • The name and domicile of the company.
  • The purposes, objectives and business activities of the company.
  • The period of incorporation of the company.
  • The amount of authorized capital, issued capital and paid-up capital.
  • The number of shares, share classification, if any, including the number of shares for each classification, the rights attached to each share and the nominal value of each share.
  • The name of the title or position and the number of members of the board of directors and board of commissioners.
  • The determination of the place and procedures for holding a general meeting of shareholders.
  • The procedures for the appointment, replacement and dismissal of members of the board of directors and board of commissioners.
  • The procedure for profit utilization and the distribution of dividends.

The articles of association of a limited liability company are available by request from the Ministry of Law and Human Rights. Shareholders’ agreements are commonly used in addition to the articles of association.

If you need assistance with incorporation in Indonesia, please contact us.