PT Company Indonesia Explained for Foreign Investors

Its capital is divided into shares, and each shareholder's liability is limited to the value of the shares they hold.

Under Indonesian Company Law No. 40 of 2007, as last amended by Law No. 11 of 2020 on Job Creation ("Company Law"), a PT must be established by at least two shareholders.

The incorporation process begins with a deed of establishment executed before a notary and is completed upon approval from the Minister of Law and Human Rights. Once approved, the PT obtains legal entity status.

For foreign investors, understanding a PT goes beyond the formation steps. It also means understanding how the company is structured internally, who controls key decisions, how capital is calculated, and how foreign ownership rules apply. This article breaks down each of these elements so you know exactly what you are setting up before you commit.

How Is a PT Company Structured in Indonesia?

Every PT is built around a company name, a set of governing organs, and a capital structure, each of which is subject to specific legal requirements.

Under Government Regulation No. 43 of 2011 on the Procedures of Submission and Using Company Name, the company's name must meet the following requirements:

1. Written in Latin letters;
2. Not already used legally by another company, and not essentially the same as the name of another company;
3. Not in conflict with public order and/or decency;
4. Not the same, or essentially the same, as the name of a state institution, government institution, or international institution, unless permission has been obtained from the institution concerned;
5. Not consisting of numbers or a series of numbers, or letters or a series of letters that do not form a word;
6. Not carrying the meaning of "company," "corporate," "legal entity," "civil partnership," "incorporation," "limited liability company," or similar words;
7. In Indonesian, if the company is wholly owned by an Indonesian citizen or Indonesian entity. English or foreign words may only be used if the company has foreign ownership.

In addition, the Ministry of Law and Human Rights' system requires the company name to consist of at least three words, for example PT Anugerah Abadi Dunia or PT Nine World Champion.

Beyond the name, a PT is defined by three interlocking layers: its governing organs (who runs and supervises it), its shareholders and capital structure (who owns it and how much is invested), and its business classification (what it is legally permitted to do). Each of these is covered in detail below.

Who Owns and Controls a PT Company?

A PT is governed through three organs, each with a distinct role. No single organ holds unchecked authority; decision-making is distributed between day-to-day management, supervision, and ultimate shareholder control.

1. Shareholders and Their Rights

A PT must be established by at least two shareholders, who may be individuals, business entities, or a combination of both.

Shareholders hold ownership of the company through shares and exercise their rights collectively through the General Meeting of Shareholders.

Their liability is limited to the value of the shares they hold, meaning personal assets are generally protected from the company's obligations.

2. Board of Directors and Their Responsibilities

The Board of Directors leads the company's daily business operations. A company may appoint a single director; however, a public company must appoint at least two directors.

The Board of Directors is responsible for implementing the company's strategy, managing operations, and representing the company in its dealings with third parties, subject to the oversight of the Board of Commissioners and the authority of the GMS.

3. Board of Commissioners and Their Supervisory Role

The Board of Commissioners supervises and advises the Board of Directors. A company may appoint a single commissioner, but a public company must appoint at least two, one of whom must be an independent commissioner.

This organ does not manage daily operations but acts as a check on the directors' conduct and decisions.

4. General Meeting of Shareholders and Its Authority

The General Meeting of Shareholders (GMS) is the highest organ in the company.

It holds the authority to decide matters that fall outside the powers of the Board of Directors or Board of Commissioners, including approving the transfer of shares, declaring a dividend, and amending the articles of association.

How Does the Capital Structure of a PT Work?

A PT's capital structure is divided into three categories, each building on the one before it.

1. Authorised Capital

Authorised capital is the total capital amount determined based on mutual agreement among the founders or shareholders. It represents the ceiling of capital the company is permitted to issue.

2. Issued Capital

The Company Law mandates that a minimum of 25% of the authorised capital must be paid up by the shareholders to the company as issued capital.

3. Paid-Up Capital

Paid-up capital must equal 100% of the issued capital. It is important to note that specific business sectors may impose their own minimum requirements for authorised and issued capital, on top of the general statutory minimum.

How Does Foreign Ownership Affect a PT in Indonesia?

Shares in an Indonesian company may be held by Indonesian citizens or entities, foreign citizens or entities, or a mix of both. A PT whose shares are partly or entirely owned by a foreign citizen or foreign company is classified as a foreign investment company ("PT PMA").

Under Investment Coordinating Board (BKPM) Regulation No. 4 of 2021 on Guidelines and Procedures for Risk-Based Licensing and Investment Facilities, a PT PMA is subject to a minimum issued capital requirement of Rp10,000,000,000 (ten billion Rupiah).

Beyond this minimum capital requirement, the maximum foreign shareholding threshold for any given business line is governed by Presidential Regulation No. 10 of 2021, as last amended by Presidential Regulation No. 49 of 2021, on Investment Business Sectors (the "Positive List").

The Positive List classifies business activities into three categories:

• Open for 100% foreign shareholding;
• Partly open, with a capped percentage of foreign shareholding; and
• Fully closed to foreign shareholding.

Which category applies determines how much foreign equity a PT PMA can hold in a given line of business, and this should be checked before structuring any shareholding arrangement.

How Do Business Activities and KBLI Affect a PT?

Every PT must have objectives, purposes, and business activities that comply with prevailing laws and regulations, public order, and morality.

These objectives and purposes must be based on the Indonesian Standard Industrial Classification ("KBLI"), as regulated under Central Bureau of Statistics (Badan Pusat Statistik) Regulation No. 2 of 2020.

The KBLI code(s) selected for a PT determine which activities the company may legally carry out, and, in combination with the Positive List, also determine the applicable foreign ownership cap for that business line.

The full list of KBLI codes can be found through the OSS (Online Single Submission) system at oss.go.id/informasi/kbli-berbasis-risiko.

What Should Foreign Investors Review Before Setting Up a PT?

Before committing to a PT structure, foreign investors should review the following:

• Ownership structure: whether the intended business line is fully open, partly open, or closed to foreign shareholding under the Positive List.
• Capital requirements: the general Rp10 billion issued capital threshold for PT PMA, and whether the chosen business sector imposes a higher minimum.
• Governance design: how the roles of directors, commissioners, and the GMS will be allocated among shareholders and appointed management, and whether shareholders' agreements are needed to protect minority or majority interests.
• Business classification (KBLI): that the KBLI codes selected accurately reflect the intended business activities, since this affects both licensing and ownership limits.
• Company name compliance: that the proposed name meets all naming requirements before submission.

Reviewing these points early reduces the risk of restructuring the company, its capital, or its licensing further down the line.

Ready to Establish Your Company in Indonesia?

Choosing the right PT structure is an important first step, but getting the details right is where the process becomes more involved.

Your ownership structure, capital requirements, KBLI selection, and governance arrangements all need to align with the business you actually plan to operate.

If you are ready to incorporate, CPT Corporate can help you assess these requirements, establish the appropriate PT or PT PMA structure, and handle the company registration process in Indonesia.

If you are still deciding which structure or business activities are suitable, our team can help you work through the requirements before you file.

Explore CPT Corporate’s company registration service in Indonesia to discuss your planned business and the steps required to establish your company!