Establishing and running a representative office

Including legalization of deed of statutory head office.

• Preparation of application forms.
• Obtain business licences of Rep. Office (SIUP3A).
• Registration with the relevant Ministry.
• Obtaining a tax registration number (NPWP).
• Obtaining an assertion letter of the utilized office space.
• Obtaining a letter of domicile.

Establishing and running a foreign-investment corporation

There are three phases for setting up a PMA Company:

• Preparation of PMA application and submission of the application to BKPM until completion on obtaining the initial business approval.
• Establishing the limited liability company by liaison with a Notary in regard to the proofing and notarization of the Articles of Association and subsequent submission to the Minister of Law and Human Rights for approval and publishing in the State Gazette.
• Obtaining the basic permits and licenses, including work-permits for expatriates.

1.Formation of company:

• The most common legal entity for the business community is a limited liability Company – Perseroan Terbatas (“PT”), either foreign direct investment or domestic direct investment. But for foreign direct investment, it must be in the form of a PT.
• Representative Office. Such an office is not allowed to undertake any business transactions with companies or persons in Indonesia either for export or import or domestic trading, except for marketing.

2.Cost of Formation

The range of fees for conducting the establishment of a PMA Company lies between US$5,000 and US$ 9,000, depending on the difficulty of the business sector. This excludes the VAT, Notary fee and other administration fees.

3.Capital

According to the Company Law No.40 year 2007, a company’s capital consists of authorized, issued and paid-up capital.

Minimum authorized capital for the establishment of a company is fifty million Rupiah (Rp. 50,000,000). Furthermore, a minimum of 50% of the authorized capital must be issued and a minimum of 25% of the issued capital must be paid up by the shareholders.

4.Shares

According to Government Regulation No.20 Year 1994 concerning share ownership, a PMA company may be established as a direct investment or 100% foreign ownership. However, within 15 years of commercial operation, the company must sell a minimum of 5% of its shares to Indonesian legal entities (corporations) or individual(s) through direct placement and/or indirectly through the domestic stock exchange.

5.Transfers

In the Articles of Association there may be provisions that regulate the limits on the transfer of shares, namely a requirement to make an initial offer to a specific group of shareholders or to other shareholders and/or to obtain prior approval from an accompanying organ, and the transfer of shares in a PMA Company is also subject to BKPM approval

In the case where the Articles of Association require a shareholder to first offer his shares to a specific group of shareholders or to other shareholders whom he himself did not select, the company is obliged to guarantee that all shares offered are bought at a fair price and paid for in cash within thirty (30) days calculated from when the offer is made.

6.General Meeting of Shareholders (“GMS”)

A GMS must take place at least once a year and shall be held at the company’s domicile or at the place where the company carries out its business activity, unless otherwise provided for in the Articles of Association.

A GMS comprises of the Annual GMS or other GMS. The Annual GMS must be held not later than six (6) months after the end of the financial year. However, the other GMS may be held from time to time based on need.

7.Board of Directors

The Board of Directors is appointed by the GMS. A member of the Board of Directors is elected for a specific period with the possibility of being re-elected.

The GMS determines all the duties and powers of each member of the Board of Directors, including the day-to-day management, as well as the amount and type of remuneration for each of its members.

8.Board of Commissioners

A Board of Commissioners has the duty of supervising the policies of the Board of Directors in operating the company, along with providing advice to the Board of Directors. A Board of Commissioners has a right to temporarily suspend directors who neglect their duties or act against the Articles of Association or laws and regulations.

The GMS determines all the duties and powers of each member of the Board of Commissioners, as well as the amount and type of remuneration for each of its members.