Curious about PT PMA Registration in Indonesia?
With its growing economy, Indonesia is an excellent place for foreign investors looking to start a business. For those interested in setting up a company in this exciting country, the main option is to create a PT PMA (Penanaman Modal Asing), the official term for a foreign-owned company in Indonesia.
This guide offers a straightforward and detailed look at the key roles and legal steps needed to set up a PT PMA, making it easier for you to understand and follow the rules of starting a business in Indonesia.
Basic Requirements for Starting a PT PMA
To establish a PT PMA, there are several fundamental requirements that must be met. These requirements are set by Indonesian law to ensure proper structure and governance of the company. Here are the key roles and their responsibilities, along with additional basic requirements:
1. Shareholders of a PT PMA:
To start a PT PMA, there must always be at least two shareholders. These can be individuals or legal entities (companies), and they can be either Indonesian or foreign. Shareholders are the owners of the company. They invest capital into the company and have the ultimate authority to make high-level decisions, including appointing directors and commissioners.
Each shareholder must own a minimum of Rp. 10 million in shares (approximately USD 700 to 1,000, based on the exchange rate). If the number of shareholders drops below two after the company achieves its legal entity status, the existing shareholders must either transfer some shares to others within six months or the company must issue new shares.
If, after six months, the count remains below two, the remaining shareholder assumes legal responsibility for all agreements and the company’s losses. The company can be dissolved based on a request to the District Court by concerned parties, which can include shareholders, the Board of Directors, the Board of Commissioners, prosecutors, creditors, and employees.
Notably, corporate shareholders in Indonesian foreign companies must have Articles of Association approved by a public notary. As long as the industry is on the Positive Investment List, a foreign company doesn’t need to have local shareholders, allowing foreigners to own the entirety of the company’s capital.
2. Commissioner(s) of a PT PMA:
The commissioner’s main duty is to oversee and scrutinize management’s actions, especially those of directors, ensuring alignment with company objectives. Every PT PMA must have at least one commissioner, who can be either local or foreign. If there are several commissioners, one of them should be the head, or “president commissioner.”
Additionally, foreign commissioners can apply for a residence permit, crucial for foreigners intending to reside and work in Indonesia. This permit, combined with a work permit, offers numerous benefits, including eligibility for permanent residency after three years, under specific conditions. Commissioners aren’t mandated to hold company shares, but they can if they want to.
3. Director(s) of a PT PMA:
Directors are appointed by the General Meeting of Shareholders and handle the company’s daily operations and third-party relations. Each PT PMA must have at least one director. If there are multiple directors, one should be the President of the Board of Directors. The BKPM (Indonesia Investment Coordinating Board) recommends a local director if the PT PMA has a local shareholder.
Every director must secure relevant permits, and specific requirements exist concerning domicile documentation. Companies can choose a temporary director if they face challenges with these requirements. After getting the necessary permits, this director can be replaced with a permanent foreign director. However, it’s wise to seek professional advice before taking this step.
Special Rules for Foreigners
In Indonesia, starting a foreign-owned company comes with its own set of rules and regulations. These are designed to ensure that foreign investors comply with Indonesian law. Here are some of the key rules that foreigners need to be aware of:
Eligibility to Hold Positions:
A foreigner can be a shareholder, commissioner, or director in a PT PMA. However, they must meet specific requirements set by the Indonesian Government.
Share Ownership:
Foreigners are allowed to own shares in a PT PMA, but the percentage of foreign ownership can vary depending on the business sector. Some sectors allow 100% foreign ownership, while others may require a certain percentage of local ownership.
Work and Stay Permits:
Foreign commissioners and directors must obtain a work and stay permit (KITAS) to legally work and reside in Indonesia. These permits come with their own set of requirements and must be renewed periodically.
Open a Foreign Company in Indonesia with Permitindo’s Assistance
It may be difficult for foreign investors to establish a PT PMA in Indonesia on their own. There are numerous regulations to understand, whether it is about strategic roles or foreign company registration documents. Allow us to take care of the hassle. Feel free to contact us using the form below or simply send us an email via contact@permitindo.com. We will reach you shortly.