Explore Indonesia’s Company Registration Requirements for a successful business venture. In this comprehensive guide, we delve into the essential steps and regulations involved in establishing a company in Indonesia. We’ll explain the government’s rules and guide you through starting your company.
If you’re starting a business in Indonesia or investing from abroad, it’s essential to know and follow the country’s rules for registering a company. Join us as we uncover the essential elements and procedures necessary for a seamless company registration process in Indonesia.
Foreign Company Registration Requirement In Indonesia
1. Indonesia’s Unique Business Environment
Indonesia, the fourth most populous country in the world, presents a unique landscape for entrepreneurs. Indonesia’s membership in the G20 makes it a good place for businesses. In addition, throughout 2023 Indonesia received foreign direct investment (FDI) realizations of around US$50.27 billion. This figure is recorded on the National Single Window for Investment website owned by the Investment Coordinating Board (“BKPM”). However, navigating the process of establishing a company requires a clear understanding of Indonesia’s Company Registration Requirements.
2. Navigating the Bureaucratic Nature of the Indonesian Government
One aspect to consider is the bureaucratic nature of the Indonesian government, which is vital to grasp when navigating the process of establishing a company. The Indonesia Investment Coordinating Board (BKPM), holds a pivotal role in overseeing and regulating foreign investment, in line with the country’s company registration requirements. The Limited Liability Company Law number 40 of 2007 serves as the cornerstone for facilitating the establishment of companies in Indonesia, with updates introduced through the Omnibus Law in the Job Creation Law number 11 of 2020 on November 2, 2020.
3. Key Steps in Establishing a Company
The journey to forming your company commences with securing a business name and obtaining its approval, crucial steps outlined in Indonesia’s company registration requirements. The essential details of the document:
- Company Name
- Company Address
- Company Purpose (specifying your business operations or industry)
- Capital Details (including issued capital, paid-up capital, and authorized capital)
- Share Information (specifying the quantity and worth of company shares)
- Shareholder Structure (requiring a minimum of two shareholders)
- Board Composition (requires one director and one commissioner, who cannot be the same person)
- Board Duties (clearly defining the roles and responsibilities of commissioners and directors)
- Meeting Procedures (establishing protocols for holding and scheduling shareholder meetings)
- Profit Sharing (outlining a mechanism for allocating and using dividends and corporate earnings)
- Disclosing the beneficial owner of the company
Once the Articles of Association have been finalized, the subsequent step entails applying for a company registration number, tax number, and licenses, adhering to Indonesia’s company registration requirements. Initiating a business in Indonesia necessitates the initial submission of the Deed of Establishment, followed by securing approval from the Ministry of Law and Human Rights. Furthermore, compliance involves furnishing identity documents for all shareholders, directors, and commissioners, as stipulated by the company registration requirements.
Company Registration Requirement of Investment For Foreign Companies
1. BKPM Regulations Governing Company Registration Demonstrating Paid-up Capital
Foreign companies investing in Indonesia must adhere to the minimum paid up capital requirement of Rp 10,000,000,000 (ten billion Rupiah), as mandated by the company registration requirements. This specific criteria is outlined in the BKPM regulations governing company registration. Compliance with these regulations is essential for foreign companies seeking to register their presence in Indonesia.
2. Depositing Funds or Providing Capital Statement Letter Signing the Articles of Association
To meet the company registration requirements, you can demonstrate to the authorities that you have sufficient paid-up capital in two ways. Firstly, you can deposit the required funds into your company’s bank account. At this point, we understand that the company’s bank account may not be able to be opened since the company is not yet established. Therefore alternatively, you can provide a Capital Statement Letter. This letter serves as confirmation of the shareholders’ ability to invest in the company once it is established.
Each shareholder must sign the Articles of Association in the presence of a notary public. If a shareholder is unable to sign in person, they can appoint a power of attorney to act on their behalf.
3. Notarization process and Submission to the Ministry Approval and Authorization
Following the signing of the Articles of Association as provided in number 2 above, the notary will submit the Articles of Association to the Ministry of Law and Human Rights (“MOLHR”). Upon approval, the MOLHR will concurrently issue the approval and authorized Deed of Establishment.
To start a business in Indonesia, it’s important to meet the country’s registration requirements. This will help ensure a successful launch in the growing market.
Summary
Establishing a company in Indonesia is regulated by the government through various laws and policies, ensuring a structured process for entrepreneurs. The Indonesian Investment Coordinating Board (BKPM) oversees foreign investment and plays a pivotal role in the registration process. The Limited Liability Company Law and BKPM regulation serve as the legal basis for company establishment, outlining key requirements and procedures. These include securing a business name, finalizing Articles of Association with a notary, and obtaining necessary licenses. Compliance with regulations, such as minimum capital requirements and documentation submission, is crucial for foreign companies. Despite bureaucratic procedures, the process is manageable with careful navigation and adherence to company registration requirements. Ultimately, starting a business in Indonesia offers promising opportunities in a growing market.
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