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Understanding Benefits of Nominee Agreement in Indonesia

Posted 4.12. 2018 by Cekindo

Understanding Benefits of Nominee Agreement in Indonesia Review by tenissa.tjahjono on 4. 12. 2018 Company Registration in Indonesia, Market Research in Indonesia, Work Permit in Indonesia, Product Registration in Indonesia, Local Partner Selection in Indonesia, Trade Mission in Indonesia, Company Formation in Indonesia, Company Establishment in Indonesia, Company Set Up in Indonesia, Payroll Outsourcing in Indonesia, Tax Reporting in Indonesia, Medical Product Registration in Indonesia, Medical Device Registration in Indonesia, Cosmetic Registration in Indonesia, Food Supplement Registration in Indonesia.
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There are two major reasons why business owners use a nominee agreement when registering a company in Indonesia. First of all, the owner may want to fulfil legal requirements set out by the Indonesian government; and second of all, the owner or beneficiary owner would like to remain anonymous as a shareholder and do not want their shares registered under his or her own name.

In addition to those two mentioned reasons, a nominee structure is also a cheap, easy and relatively quick company setup.

In this article, you will be able to understand what a nominee agreement is, what the benefits are, and decide if this is what you need for your business in Indonesia.

Knowing Nominee Agreements

In Indonesia, nominee agreements are used by foreign investors when registering a foreign liability company, known as PT PMA, mainly.

Under a nominee arrangement, the beneficiary owner appoints a nominee if he or she does not want to have the shares registered under his or her own name.

A nominee shareholder can be a legal entity or an individual, who is an Indonesian and unrelated to the foreign company or individual. However, we strongly do not recommend to use individuals whether they are relatives, friends or business partners.

According to the Negative Investment List, Indonesia has partially or fully closed business sectors for foreign investments.

Even though the list was updated recently, some sectors remain untouched by foreigners due to the government’s policy. Besides, some business sectors would require a minimum foreign investment plan of IDR 10 billion, and IDR 2.5 billion in the investment plan needs to be paid immediately.

Under this limitation and high investment amount, foreign individuals or foreign companies often opt for a nominee arrangement to fulfil the policy in Indonesia.

By doing so, a foreigner can do business that is closed in Negative Investment List or a business that needs high investment amount. Also, they do not have to comply with complex requirements under PT PMA.

Reliability of the Nominee Agreement

Of course, not all nominee agreement or nominee shareholders are reliable and safe especially when you do not have full control of your assets.

Cekindo is a credible and trustworthy expert who can provide you with reliable nominee service with a legal set of agreements, drafted formally by qualified and authorised lawyers.

Related Laws and Regulations

Although commonly used by many organisations in Indonesia, nominee agreement is still not favoured by the government according to the Indonesian Investment Law. As a result, whoever that is recorded in the Articles of Association of a limited liability company, he or she is both the beneficiary and legal owner. There is no difference between the two.

On top of that, according to the new regulation 13/2017 issued by BKPM, no agreements are allowed for investors to state that they are not the owner of a business or company.

What can you do?

You will need a nominee agreement service through Cekindo to set up a company in compliance with the requirements for local companies in Indonesia. Along with a set of legal agreements, you will be able to manage and control your company’s property and earnings even when you assign a nominee.

You can use nominee shareholders in Indonesia as secure as possible with the below commonly arranged agreement, by running a business in a prohibited sector but still complying to the law:

  1. Loan agreement
  2. Dividend assignment
  3. Pledge of shares arrangement
  4. Indemnity agreement
  5. Pre-signed shares transfer agreement
  6. Corporation agreement

 

Contact Cekindo for more information. We can assist in setting up all types of legal entities such as PT, PT PMA, representative offices, or shelf companies. We will be also happy to meet you at our offices in Jakarta, Semarang and Bali.






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