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.
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 professional shareholder if he or she does not want to have the shares registered under his or her own name.
A professional 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.
Of course, not all nominee agreement or professional 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.
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.
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 professional shareholder.
You can use professional 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:
Contact Cekindo for more information if you are interested in taking advantage of nominee agreement services in Indonesia. Whether you need a professional director or a professional shareholder, our experts can arrange it for you.
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