Closing a business, particularly a PT (Limited Liability Company) in Indonesia, can be a complex and daunting task. While Indonesia is an attractive destination for investment and business, not all ventures succeed as planned. Whether due to financial struggles, management challenges, or other factors, some companies may face the difficult decision to dissolve. Understanding the legal requirements and procedures for dissolving a PT is crucial for entrepreneurs and business owners to navigate this process smoothly.
This article provides a comprehensive overview of the dissolution process, legal bases, and necessary documentation, ensuring you are well-informed before making any decisions.
What is the Dissolution of PT?
Dissolution of PT is a procedure that legally terminates business operations. This article provides information on the process of dissolving a company and outlines some of the reasons why entrepreneurs may decide to dissolve a PT. In Indonesia, the process of establishing and closing a company must go through legal procedures. These regulations are stipulated in the Indonesian Limited Liability Company Law No. 40 of 2007, Article 142, which covers the termination of activities, liquidation, and the end of the company’s legal status.
Six Legal Reason for the Dissolution of PT
The decision to dissolve a company does not always stem from business failure. Companies may be dissolved due to reasons such as insufficient resources, poor management, or unstable economic conditions. However, it is not uncommon for a company to be dissolved during business growth. According to Law No. 40 of 2007, several factors can justify the dissolution of a company:
- Dissolution is decided by the General Meeting of Shareholders (GMS) through a mutual agreement involving at least three-quarters of the shareholders.
- The expiration of the company’s establishment period, as stated in the articles of association.
- Based on court order
- By the revocation of its bankruptcy status through a commercial court order having permanent and binding legal force, the Company’s bankruptcy assets being insufficient to settle the bankruptcy costs;
- The bankruptcy assets of a Company declared bankrupt, are in a state of insolvency as set out under the Law on Bankruptcy and Suspension of Payment Obligations; or
- Due to the revocation of the Company’s business license, the Company is required to carry out its liquidation in accordance with the laws and regulations.
What Are the Requirements for Dissolution of PT?
Dissolution Process of PT in Indonesia:
All the dissolution process includes the involvement of the notary, ministry of law and human rights, creditors settlement, termination to the employee(s), and announcement to the national newspaperThere are 3 main steps to legally close a company in Indonesia, which are:
STEP 1: Liquidation plan
The liquidation can happen based on the reasons as stated above. Therefore, the initial liquidation process depends on the legal reasons.
The shareholders can resolve to liquidate a company through a GMS and it will be followed by:
- Appointment of a liquidator
- Announcement in the national newspaper
- Notification to the Ministry of Law and Human Rights (MOLHR)
- Submit the application to revoke the business license, as applicable
- Submit the application to close the Tax ID (NPWP)
STEP 2: Settlement of the Assets of the Company
One of the essential steps in the dissolution of PT is liquidation, which is the process of settling the company’s assets and obligations. This process is handled by a liquidator, who is responsible for paying debts from debtors to creditors. The liquidator can be a member of the board of directors, a professional, or a consultant with expertise in the field. The appointment of the liquidator must be approved by the court or the GMS. According to Law No. 40 of 2007, the steps in the liquidation process include:
- The liquidator records and collecting the assets and debts of the company
- Publishing the plan for the distribution of assets resulting from the liquidation in the newspaper and the state gazette
- Making payment to the creditors including to the employees, if any
- Making payments from the remaining liquidation assets to the shareholders
STEP 3: Finalizing the Liquidation
After the settlement of the assets of the company, it comes to the step to finalize the liquidation.
- The liquidator reports the final results of the liquidation to the GMS to be approved and released by the shareholders or after the court accepts the accountability report of the liquidator appointed by it
- Liquidator notify the Minister of MOLHR and announce the final result in the national newspaper
- The Minister of MOLHR will record the expiration of the company’s legal status and remove the company’s name from the company’s registry
- The liquidation report is ratified by the Ministry of Law and Human Rights, followed by an announcement through newspapers/media within 30 days from the ratification date.
- The Ministry of Law and Human Rights records the termination of the company’s legal status and removes the company’s name.
What Are the Costs for Dissolving a PT?
The process of dissolving a PT itself requires following lengthy procedures and preparing numerous documents. The required cost will depend on the following factors:
- Notary public
- Official fees paid to the MOLHR
- Newspaper agency fee. Please note that at least 3 newspaper announcement shall be made
- expert/consultant/in house of tax expert to close the NPWP and VAT of a company. An audit to the respective company will be conducted by the tax office to check whether all tax obligations (payment and reports) have been cleared. Only after it is cleared, the tax office can close the Tax ID and VAT
- Consultant or liquidator fee, if you want the liquidation process to be handled by a professional. Assistance from experts in this field, such as CPT Corporate, can certainly streamline the dissolution process.
Documents Required for PT Dissolution
Before starting the company closure process, several documents are required, including:
- Identity Cards (KTP) and Tax Identification Number (NPWP) of the Directors, Commissioners, and Shareholders. If the shareholder is an entity, articles of association and document that shows the director’s composition
- Deed of Establishment of the Company and its amendments
- Decree of the Ministry of Law and Human Rights and its amendments
- Tax ID (NPWP), Tax Registry (SKT) of the Company, and VAT
- Business identification number (NIB)
- Tax reports
Company Closure Procedure Summary
- First dissolution deed to approve the liquidation plan
- First newspaper announcement
- Approval from the Ministry of Law and Human Rights
- Revocation of NIBP in OSS
- Revocation of VAT
- Revocation of NPWP and SKT
- Second dissolution deed
- Second newspaper announcement about settling the company’s assets
- Approval from the Ministry of Law and Human Rights
- Third newspaper publication
PT dissolution is a serious process that must comply with legal regulations and may have tax implications. Consulting with a legal expert or an experienced corporate consultant is recommended for proper guidance.
Conclusion
Dissolving a PT in Indonesia is a detailed process that requires strict adherence to legal procedures and thorough documentation. From understanding the legal grounds for dissolution to managing the liquidation process, every step is crucial to ensure compliance and avoid potential liabilities. Partnering with experts who are well-versed in these processes can make a significant difference.
At CPT Corporate, we specialize in providing comprehensive support for businesses navigating complex legal landscapes, including company dissolution. Our team of professionals will guide you through every step, ensuring a smooth and efficient process. Whether you’re facing challenges in your business or need expert advice on PT dissolution, CPT Corporate is here to help you close your company with confidence. Contact us today to learn how we can assist you in this critical transition.
