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limited liability company

Guidance to Setting Up Limited Liability Companies (PT) in Indonesia

Indonesia, currently ranked 73rd in the world for the Ease of Doing Business, continues to strive to invite entrepreneurs or investors from both within and outside the country to set up businesses or conduct investment activities in Indonesia. 

In line with the above, this article will help entrepreneurs who see this market opportunity and Indonesia’s position to get an overview of the basic steps needed to set up a company, especially a limited liability company.

Definition

A limited liability company (Perseroan Terbatas/”PT”) is a business entity whose capital is stated in its articles of association. A company’s wealth is separate from the owner’s wealth, so the company has its assets. Each shareholder can own more than one share, each of which shows proof of ownership of PT.

Why Limited Liability Company?

There are many types of business entities in Indonesia that are recognized by Indonesian laws and regulations, but among the existing types, limited liability companies are the most common form of business entity. 

Some of the advantages of PT compared to other forms of business are:

  1. There is separation of ownership of personal assets/properties and company assets so that owner assets or assets of shareholders are not exposed to the risk associated with the company’s operation;
  2. There is a clear separation of duties and authority for each organ within PT based on Law Number 40 of 2007 (“PT Law”) so that in company operations, one and another organ can share implementation and supervision functions collectively. This also allows PT to operate for a longer period compared to other forms of business entities because apart from organs, share ownership can also be transferred.
  3. Ease of obtaining funding (investment) facilities for companies through various options.

limited liability company

Read More: PMDN VS PMA

Steps to Establish a Limited Liability Company (PT)

  1. Know Exactly What Business to Run
    It is important to know what businesses you will run in Indonesia, both for short and long-term business plans. The business fields to be undertaken are adjusted to the Indonesian Business Field Standard Classification Code (KBLI) based on the provisions of each related authority institution. For example, to establish a company engaged in selling car equipment without any export activities, the correct KBLI code is Retail Trade in Car Spare Parts and Accessories (Code 45302). KBLI checking can be carried out on the Online Single Submission (OSS) page.
  2. Determine the Shareholders and the Amount of Business Capital
    The establishment of a PT commonly requires at least 1 (one) Director and 1 (one) Commissioner as stipulated in Article 4 Law No. 40 of 2007. In fact, it now is possible to set up a PT with only one person (WNI) as director and commissioner as stipulated in Article 1 Government Regulation No. 8 of 2021 on Authorized Capital of a Company and Registration of Establishment, Amendment and Dissolution of a Company that Meets the Criteria for Micro and Small Enterprises.
    The next thing to know is that the amount of paid-up capital determines the scale of the business. For PT Penanaman Modal Dalam Negeri (PMDN), the amount of paid-up capital is detailed in classification as follows:

    • Small Business Scale: <IDR 5 billion
    • Medium Scale Business: IDR 5 billion – IDR 10 billion
    • Large Business Scale: >IDR 10 Billion 

    Furthermore, for PT Penamaman Modal Asing (PMA), the minimum paid-up capital is IDR 10 billion, which is classified as a Large Business. (See the article: PMDN VS PMA: The Fundamental Differences).

  3. Company names in Indonesia to be recorded by the government’s OSS system must consist of 3 words. To ensure that there are no similarities in name with other previously established companies, checking the company name can be done on the government website of the General Legal Administration (AHU).
  4. Make and Legalise the Deed of Establishment with a Notary
    After all the previous steps have been carried out, immediately contact the Notary for the process of making and signing the deed of establishment, which continues with the issuance of the Decree from the Notary, and is followed by the issuance of the Decree from the Ministry of Law and Human Rights.
  5. Register with the OSS System
    The next step is to register the company with the OSS system to obtain a Business Identification Number (NIB) and/or additional documents required, including Business Licenses to Support Business Activities (PB-UMKU), standard certificates, and so on.This overview is expected to help understand the flow of setting up a limited company in Indonesia.

limited liability companyTo Know the Flow in Detail

There are many challenges and further details in establishing a company, especially a Limited Liability Company. If you have any inquiries or questions, feel free to contact our consultants via the WhatsApp hotline or our email address to learn more about the establishment of PT or any other forms of business.

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ET Consultant is a Business Consultant and Legal Consultant Expert that provides support for local and multinational clients to start and manage their business operations in Indonesia. ET Consultant specializes in Business Incorporation, Licensing & Legal, Accounting & Taxes, Immigration, and Advisory Services.

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Jakarta Selatan, 12940 Indonesia.
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Email : [email protected]

ET-Consultant
ET-Consultant
An Indonesian group advisory or consulting firm that provides Business and Legal Consultant for local and multinational client support for start-ups and managing business operations in Indonesia. ET Consultant provides a solid legal foundation with experience, reasonable cost, reliable corporate & business legal services with excellence, integrity, and trusted services for ease of doing business in Indonesia.

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