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Everything to Know about Resident Director in Indonesia

In Indonesia, your job as an foreign entrepreneur when starting your company does not stop after you have finished the company incorporation.

Not only that you need to have a deep understanding of the statutory requirements for setting up and operating a company in Indonesia, but you will also need to possess a good interpretation of the mandatory organisational structure in the country.

Within the organisational structure, a resident director is compulsory and it plays a vital role in the company’s operation.

In this guide, you will have a better understanding of what the mandatory organisational structure is and the things you need to know about the resident director in Indonesia.

Mandatory Company Structure in Indonesia

In accordance with Indonesian Law, an Indonesian organisational structure for both local and foreign companies must have a minimum of one director, one commissioner and two shareholders.

The company structure’s hierarchy can be summarised into:

  • Shareholders
  • Board of Commissioners (BOC)
  • Board of Directors (BOD)

If a company in Indonesia has foreign ownership involved, the company should then have at least one resident director.

The Necessity of a Professional Non-Executive Director in Indonesia

The Indonesian Company Law states that foreign-owned limited liability companies (PMAs) are required to have one resident director at the minimum for their board of directors. As the name implies, a resident director must be a resident of Indonesia.

A resident director, also recognised as a professional non-executive director by foreign investors, plays a critical role in the company’s managerial hierarchy. The role of a resident director is below the shareholders and the BOC and they are in charge to make sure that all shareholder’s strategic objectives are met and to report the company performance to the company’s shareholders.

Though reporting to shareholders, a resident director is not an employee of the company and they can only be appointed or removed by the shareholders.

There are many other reasons companies require a resident director, which are often overlooked by many businesses. Some of the reasons are in the following:

  • It is part of the regulatory requirements
  • A resident director is involved in the company’s day-to-day management
  • Leads employees to achieve strategic goals and objectives
  • Acts as the signatory to the back account of the company
  • Serves as the company’s representative and represent shareholders’ view
  • Signs agreements and contracts on behalf of the company
  • Takes out loans and mortgage company assets for company’s capital raise
  • Accelerates and facilitates the receipt of employment visa for new employees

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Eligibility for Being a Resident in Indonesia

In order to be eligible for being a resident director in Indonesia, the individual must be a resident or a local.

Therefore, a resident director has to fulfill either one of these requirements to be regarded as an Indonesian resident:

  • An Indonesian citizen with a tax ID
  • A foreign individual with valid Indonesian work and stay permit (KITAS)
  • A foreign individual with valid permanent residency

A Professional Director Service through a Company Providing Professional Directors (Special Purpose Vehicle Company) in Indonesia

After the company incorporation, the local or resident can become the resident director or professional non-executive director. Of course, the company must first fulfill all regulations set out under the Indonesian Company Laws.

A resident director can be selected from the BOD and the shareholders of the company will have the final say on the terms and conditions a candidate has to fulfill for this position.

Another option for having a resident director in a company is through a company with professional shareholders/directors/commissioners in Indonesia, also known as a Special Purpose Vehicle company. Through this company in Indonesia, a highly professional and skilled resident director can be recruited via a Special Purpose Agreement.

Professional Director Services from Cekindo as A Registered Special Purpose Vehicle Company in Indonesia

Finding a credible and trustworthy Special Purpose Vehicle company Indonesia service for your company’s resident director can be a challenging task.

That’s why Cekindo is here to take care of the entire process for you. Contact us through the form below to discuss your need for a resident director in Indonesia.

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