• Indonesian

Doing Business in Solo with Professional Shareholders, Directors, or Commissioners: What Does It Mean?

The ever-increasing business opportunities in Indonesia have captivated so many foreign investors from around the world to set up a business in Solo, particularly in the form of a foreign company (PT PMA).

Thanks to the adoption of the Online Single Submission System (OSS), Solo has created an investment-friendly environment for local and foreign businesses of all sizes since 2018.

The year when OSS was implemented recorded an astonishing investment value of IDR 30 trillion in Solo. In addition to the implementation of OSS, other benefits that attract foreigners to do business in Solo are its lower import duties, available foreign employment sponsorship, and convenient license and permit acquisition.

However, sometimes a PT PMA may not always be a foreigner’s best option due to its restrictions. Under the Negative Investment List, the Indonesian government limits or prohibits foreign ownership in certain business sectors and activities.

How a Local Nominee Company Works for Foreigners

When a business category or industry is partially or entirely close to foreign ownership under the Negative Investment List, foreigners can set up a local nominee company that provides professional local shareholders, directors and commissioners.

A local nominee arrangement allows foreign investors to set up a nominee company in the form of a local company or PT. This arrangement will be carried out through a stringent and secure loan agreement with the assistance from a professional local nominee arrangement firm.

Even though the local nominee company is owned by an Indonesian citizen on the registered documents, they do not have any power or authority over the company. It is the foreign investor who can control and make decisions for the company.

Legal agreements you will have to protect your rights as the real owners are the pledge of share agreement, cooperation agreement, and director appointment letter.

Types of Local Nominees Available for Your Business in Solo

Three common types of local nominees are available in Solo: local nominee shareholders (professional shareholders), local nominee directors (professional directors), and local nominee commissioners (professional commissioners).

1. Local Nominee Shareholders (Professional Shareholders)

A local nominee shareholder will be your company’s registered shareholder. They will appear as the real shareholders on legal business and public documents. Although they are the registered shareholders, they don’t have any authority over the management and control of your company.

2. Local Nominee Directors (Professional Directors)

This is also a passive role and does not have any control over your company. A local nominee director has no permission to be the corporate bank account signatories.

You will need a local nominee director at the beginning of your business during the business registration. This is because a foreign director is required to get a KITAS or work permit before they can work in Indonesia. The registered director can be changed in the future.

3. Local Nominee Commissioners (Professional Commissioners)

A local nominee commissioner acts on the behalf of the real commissioners to supervise the activities of the directors and your company.

If you want to establish a local company in Solo instead of a PT PMA, a local nominee commissioner arrangement can be a great solution.

Also, do keep in mind that the local nominee commissioner shall be a different individual from the local nominee director.

How Cekindo can Assist

Cekindo offers nominee arrangement services for your business in Solo. The names of these nominees will appear in your business documents and public records.

Upon appointment of nominee shareholders, commissioners or directors, Cekindo will initiate a nominee agreement or trust declaration. This agreement has to be signed by you (the client) and the nominees.

Professional shareholders, directors or commissioners from Cekindo’s nominee arrangements can help your business establishment with the highest level of confidentiality and integrity.

Now, you can attain anonymity as the beneficial owner and tap into profitable industries that are only permitted for Indonesian nationals. Fill in the form below to discuss more.