Company registration in Indonesia is the most crucial step for doing business in the country. In Indonesia, any individual or organization who seeks to do business must do it under the form of a company. Since it is a very crucial step, company registration in Indonesia is not quite a straightforward process. There are several types of company you can register, each having its own requirements and procedures.
What is a Company Registration in Indonesia?
Company registration is a legal process of forming a brand new company or business entity in accordance with the laws and regulations of the country you are operating in. In Indonesia, company registration is the domain of the Ministry of Law and Human Rights. In that regard, the corresponding ministry will check all your company registration documents. They also have the jurisdiction to accept or reject your registration.
What are the types of Company Registration in Indonesia?
Company registration in Indonesia consists of two different types, divided by the origins of the applicant: local company registration and foreign company registration. Each type of company has its own requirements (e.g documents) and stringent procedures. The requirements and procedures are two important aspects to ensure the successfulness of the registration.
What are the Requirements of Company Registration in Indonesia?
As mentioned above, each type of company has its own requirements. Here are the requirements you must have for a company registration process in Indonesia:
1. Requirements of Local Company Registration in Indonesia
- Perseroan Terbatas (Limited Liability Company) registered by more than one person
There are certain requirements to meet, in order to register a Limited Liability Company, :
- Established by a minimum of two people, bound by the Deed of Establishment written in Bahasa Indonesia, signed in the presence and assistance of a Notary.
- All owners must all have an amount of shares in the company.
- The company must have an Authorized Capital. The amount is according to the agreement of the owner.
- The company must have a Paid Capital, which is at least in the minimum amount of 25% of the Authorized Capital.
- Should the number of shareholders are reduced to less than 2 people, a replacement must be appointed within 6 months.
- The minimum Authorized Capital for a PT is 51 million IDR registered in the Articles of Association within the Deed of Establishment.
- Perseroan Terbatas Perseorangan (Individual Limited Liability Company), registered by one person.
In order to register an individual, local-owned company, the owner must meet the following criterias:
- Registered under the name of one person, at least 17 years of age, Indonesian citizen (WNI).
- That one person for the single shareholder and Director of the company.
- The company must be a micro or low level enterprise.
- The company must have an Authorized Capital, in which the amount is decided by the agreement of the owner.
- The company must have a Paid Capital, which is 25% of the Authorized Capital, for a deposit in advance at the company’s establishment as PT Perorangan.
2. Requirements of Foreign Company Registration in Indonesia
There are four requirements that foreign owned companies must meet in order to register their companies in Indonesia:
- Foreign-owned companies must be established as Perseroan Terbatas (PT) or Limited Liability Company.
- Foreign-owned companies can only participate in large scale businesses. Furthermore, foreign-owned companies are prohibited to partake in sectors like: narcotics, gambling and casino, utilization and/or extraction of sea corals,and chemical weapons.
- The minimum paid up capital value for foreign companies stands at IDR 10 billion, excluding land and buildings, as regulated by the government in the Standard Classification of Indonesian Business Fields (KBLI) 2020.
- The minimum capital value for foreign companies stands at IDR 10 billion with exceptions for financial services, natural resources, and the manufacturing industry.
What are the Procedures of Company Registration in Indonesia?
Both types of company have their own specific procedures that you must comply with in order to fulfill the company registration process.
Procedures of Local Company Registration in Indonesia
- Processing the Deed of Establishment/Akta Pendirian.
This is the official document stating the legal validity of the company, containing the Articles of Association which contains the proposed company name, capital, structure, and purpose of the company. With the assistance of a Notary, the documents will then be processed for approval by Ditjen AHU (Directorate General of General Laws) under the Ministry of Law and Human Rights. Upon the Approval the Ministry of Law and Human Rights will issue Surat Keputusan / Approval Notice of the establishment. The PT will be considered as a legal entity after acquiring the Approval by the Ministry.
- Acquiring Nomor Pokok Wajib Pajak (NPWP) or Tax ID Number
As a business that is going to generate revenue, your PT will have the obligation to pay tax to the Indonesian government. Furthermore, to get your NPWP number, you can submit an online application on the website of the Directorate General of Tax (Direktorat Jenderal Pajak).
- Acquiring Nomor Induk Berusaha (NIB) or Business ID Number
NIB or Business ID Number is an identification that needs to be owned by prospective businesses. Therefore, After acquiring a Business ID number, your PT will be able to apply for more permits like Business Permit or Commercial Permit. The Business ID number is issued by the Indonesia Investment Coordinating Board (BKPM) through their Online Submission System (OSS). Therefore the OSS system will also cover the issuance of certain business licenses and location permits to legalize the operation of the PT.
2. Procedures of Foreign Company Registration in Indonesia
There are two procedures for foreign company registration in Indonesia:
- Preparations of Establishment Documents:
- A company name selection that consists of minimum 3 (three) words.
- Authorized Capital and Paid-Up Capital Value (for a Foreign-Owned Company, the minimum is IDR 10 billion).
- Address of the Company that links to the Tax ID registry.
- Determination of Company’s structures, at the minimum of 1 (one) Director, 1 (one) Commissioner, and 2 (two) Shareholders and its ownership percentage
- The Business Activities in accordance with the Business Classification Code as regulated in Indonesia.
- Electronic Letter of Completion, stating that the applicant has collected all the necessary documents
- Deed of Establishment (Akta Pendirian), a document that verifies the establishment of the company. This document will be uploaded to the Legal Entity Administration System (SABH) by the Notary.
- The Deed of Establishment will be submitted to the SABH in accordance with the Company Establishment Form and uploaded to the system by the Notary.
- The publication of the Certificate of PT Registration (Sertifikat Pendaftaran PT)
Upon submission, the documents uploaded for the application will be verified and processed by the Ministry of Law and Human Rights. As a result, when the submission is accepted, the certificate will be issued and the Company would acquire the legal entity status afterwards.
How can Double M help?
Company Registration in Indonesia can be complex. Therefore Management Consulting will immensely help your business operations. Double M offers you exceptional Management Consulting services in Indonesia. Should you have any inquiries, please contact us.