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Indonesia Business Setup: Are Shareholders Required?

Does Every Company Setup in Indonesia Require Shareholders?

InCorp Editorial Team
  • 7 July 2020
  • 4 minute reading time

Table of Content

Not only should every entrepreneur have the fortitude and energy to start a new venture through a business setup in Indonesia, but they should also meticulously consider several factors and be constantly informed to pursue a business idea.

With the right information, only you can spin your brilliant idea into an enterprise that will eventually bring you sustainable profit. You will first have to consider the type of legal entity for your business, and the requirement of the shareholder for each entity.

Conditions when Shareholders are Required

How many shareholders do you need for company incorporation in Indonesia? It depends on the business structure that you choose.

A foreign-owned company, or a PT PMA, is one of the legal entities in Indonesia that require shareholders.

So if you plan to start a PT PMA in the country, you will need at least two shareholders. Your PT PMA’s shareholders can be corporate entities, individuals (locals or foreigners), or a combination of both.

If your PT PMA is fully owned by foreign nationals, the foreign owners must sell a minimum of 5% shares to an Indonesian citizen or an Indonesian legal entity in the country.

Furthermore, a public company has the most rigorous requirement compared to the PT and PMA: it needs at least 300 shareholders.

Conditions when Shareholders are Not Required

The shareholder requirement in terms of its number does not apply to every entity in Indonesia.

If you are running a business with sole proprietorships or civil partnerships, you don’t need any shareholders.

Business owners set up a sole proprietorship to have full control of the company and prevent others from owning the company’s shares. As a result, shareholders are not necessary for this type of structure.

Civil partnerships can be divided into limited partnerships (CVs) and firms. Both of them do not need any shareholders either. Partners who are in a civil partnership have their own active or passive roles to play in the company and that’s why shareholders are not required.

Business Setup in Indonesia: Differences between PT and PT PMA

Here are some important distinctions between PT and PT PMA you should be familiar with before deciding to incorporate your company in Indonesia.

Local-owned Company (PT)

Here are the main characteristics of a PT in Indonesia:

  • Only an Indonesian citizen can own a PT. A foreigner can only start a PT through a Special Purpose Agreement in Indonesia
  • Local ownership: 100%
  • Foreigners choose PT when certain sectors are not open for foreign investments
  • Minimum capital investment: between IDR 600 million and IDR 10 billion (depending on the company size)
  • According to the latest changes laid out in  Job Creation Law, the classification of Local PT in Indonesia based on paid-up capital as follows:
    1. A micro-enterprise: less than IDR 1 billion
    2. A small enterprise: IDR 1 – 5 billion
    3. A medium enterprise: IDR 5-10 billion
    4. A large enterprise: more than IDR 10 billion

 

Foreign-Owned Company (PT PMA)

A foreign-owned company in Indonesia has the following distinctions compared to a PT:

  • Permission for foreigners to be the shareholders but it may require a local shareholder
  • Maximum foreign ownership: 100%
  • The percentage of foreign ownership allowance is based on the business classification under the latest BKPM’s Negative Investment List
  • Minimum investment plan: IDR 10 billion
  • Minimum paid-up capital: IDR 10 billion
  • It can sponsor foreign employees
  • Required to submit monthly investment activity report and tax reports

How Cekindo can Assist with Business Setup in Indonesia

These are several important steps that you will need to take if you are considering company incorporation in Indonesia.

It is prudent to partner with a professional provider with local expertise to ensure your business complies with every step of your business venture.

Cekindo offers tailored business solutions for your company incorporation in Indonesia, including legal and financial consultancy. Our highly-qualified team offers expert support with both global and local perspectives to ensure a smooth incorporation process.

Contact Cekindo now and we’ll help you construct the best strategy to capitalise on your market opportunities in Indonesia. Fill in the form below.


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Pandu Biasramadhan

Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

Get in touch with us

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Frequent Asked Questions

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.

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