There are many reasons companies want to do some company restructuring in Indonesia. Because of the dynamic condition of the market as well as the industry, plus the advancement of information technology, change is something inevitable for every company.
The reasons vary from the company’s intention to change its business nature, products improvements or even changes, management restructuring, to financial issues.
Some are triggered by inner intentions and some others are outer drivers. Nevertheless, all company restructuring attempts aim to improve and maximise performance, effectiveness, and efficiency.
However, performing company restructuring is not as easy as it sounds. Every country has its own law to regulate the way all companies in its jurisdiction run their business. Therefore, every small and minor change matters.
In Indonesia, there is a special regulation regarding company restructuring, especially the one related to the legal affair. Below are some examples of company restructuring involving Foreign Direct Investments (known as PMA/Penanaman Modal Asing) that commonly occur in Indonesia.
The basic rule for this is to discuss the problem in the General Meeting of Shareholders.
This meeting invites all shareholders as they have the biggest authority to become the decision makers in the company. Their voice is at least 51% of the total company’s shares.
Given that the percentage is not met, hold another meeting by inviting all the shareholders once again and making sure that 1/3 of them come to resolve and make a decision about shareholder changes.
The company’s registry includes the name and domicile of the company. They are subject to change. Especially for the company’s name, a PT PMA should follow the subsequent suggestions.
In addition, there is a new regulation issued by the Ministry of Law and Human Right. All companies must have at least 3-word name. The ministry should approve the name. The Indonesia Investment Coordinating Board (BKPM) and the tax office should also acknowledge it.
On the other hand, when your company wants to change location, you need to know exactly whether or not your new company address is in the same district. Different rules apply.
When the new address is in the same district with the old one, all you have to do is to report your new address to the local tax office to change your taxation data.
However, when the new location is in a different district, close your old taxation account so that you can open a new one in the new address.
Before that, you need some permits from the local authorities. An example is a location permit signed by the district and sub-district heads where your new office is located.
When it comes to the capital revision, a company may decrease or increase its capital based on the minimum capital requirements.
Basically, all PT PMAs must have at least Rp. 10 billion (~USD1 million) capital. The amount can be higher depending of the field of industries. When you want to revise the capital, you don’t need to give the proof of company bank balance, like when you first registered your company.
Instead, you need to show the proof of the paid up capital, which is at least 25% of your investment plan (no less than Rp. 2.5 billion). It is because as an operating company, it has already had a company bank account unlike the company that is in the progress of registration.
After that, you will need this document along with the copy of the company’s Article of Establishment and other documents. Send them to BKPM and Ministry of Law and Human Right to get their approval letters.
Most PT PMAs in Indonesia appoint a local director to smoothen the company registration process. Meanwhile, the company can have time to prepare the documents for the “real” owner and/or director to have a legal working permit.
When the working permit is ready for a foreign new director to take over the PT PMA, the company, through the GMS meeting, makes a decision of his/her appointment.
A public notary will then issue an amendment of Article of Association. The next process is to get Tax Registration Code Number (NPWP) for the new director or commissioners. Then, submit the copy of this NPWP and the copy of the amendment to notify the Ministry of Law and Human Right.
Before a PT PMA decides to do some restructuring, the company should follow these regulations:
The common documents to complete the restructuring process is basically all the company’s documents and permits. They include Tax Registration Code Number (NPWP), Article of Establishment, Article of Association, and a valid passport.