With the recent steady growth of Indonesian economy and the new investment regulations from BKRM Reg. 13/2017 to make the foreign investments friendlier than it used to be, year 2018 is definitely a year to look forward to with the substantial in-flow of investments to Jakarta.
The use of local nominee is far-reaching and popular in every city across the globe, Jakarta is no exception. This is because of the benefits of ease of doing business in Jakarta, and also the benefits of anonymity and tax flexibility.
On the other hand, Indonesian Law is regulated to control certain business and investment practices for foreigner under the Presidential Decree No. 44/2016, Lists of Business Fields.
Due to this limitation, it makes local nominee many times essential for foreigners to start a business in Indonesia.
Opting to have a nominee arrangement in Jakarta, usually through a nominee company, is a common practice when a third party is assigned as a legal owner of an entity for a foreign company. We will dive into the details of a local nominee in this article.
A local nominee is the registered owner of the shares held on behalf of the beneficial owner. Often, a beneficial owner would want to appoint a local nominee in Jakarta because he or she does not wish to register the shares under his or her own name, or maybe it is part of the requirement.
The local nominee, or nominee shareholder, can be a corporate body or an individual. Foreigners who desire to set up a company in Indonesia adopt this option to ease the administration and bureaucracy regulations.
The main function of a local nominee is to keep the real foreign owner anonymous and have the local nominee taking his or her place in all public records, except for the governmental sectors.
Foreign company searches for a local nominee who will possess a certain amount of shares, without owning any direct authority over the company.
In addition to that, nominees not only formally represent the business, but are also held accountable in respect of any wrongful acts or omissions, and are subject to tax liability.
As mentioned previously, particular businesses and industries are closed to foreign investments, or conditionally open to them, under the Negative Investment List (Daftar Negatif Investasi), which is issued every three years.
This list is intended to encourage greater and more competitive foreign investments while maintaining the protection for local businesses.
If a business sector is entirely closed to foreign investment, a foreigner will need to set up a local PT made up of 100% local shareholders.
For industry open for foreign investments under special condition, an establishment of PT PMA (Foreign Capital Limited Liability Company) is mandatory, with share distributed between the foreign shareholder and the local shareholder. The percentage of share between them depends on the business sector or industry.
Local nominee arrangements can turn into a nightmare if you intend to do this on your own without the legal procedure provided by a reliable nominee company. It can be a risky undertaking if you don’t do the due diligence with proper research and structure.
However, by appointing an authoritative nominee company like Cekindo, you are able to choose a credible nominee individual or corporate, whom Cekindo signs a nominee agreement with.
With this secure agreement and documentation, you, as the primary owner of your business in Jakarta, are protected under Indonesian law and able to conduct business activities safely.
At Cekindo, our local nominee service is brought to you by our trustworthy and reputable professionals, matching you with a highly competent local nominee to maintain your business’s good standing in Jakarta. Reach out to us now for additional information.