All the money invested by the shareholder in a company is called as share capital. As a result, the shareholders will receive some return for their investment in the form of share ownership of the company. In Indonesia, the share capital for local PT and PT PMA is regulated under the Lam No. 40 Year 2007 on Company Law, which includes all the regulations on the minimum authorized capital and paid-up capital, as well as the purchase and sales of the shares.
The minimum of the total amount of share capital for a single local company (PT) is 50 million rupiah and for a single foreign investment company (PT PMA) is 1 billion rupiah. The amount of the total share capital should be determined during the registration process of your company. However, the amount can be raised by changing the company’s article of association plus getting new government licenses like the company’s principle permit (ijin prinsip).
Based on the Company Law, a minimum of IDR 10 billion of the total share capital is issued and paid up in full, whereas the remaining can be used to obtain extra capital for the company. Based on Article 33 verse (3) of the Company Law, the further increase of the capital should then be paid in full.
The company’s shares can only be issued under the owner’s name. The payment made in selling and purchasing shares must be made in the form of money. The value of the shares MUST BE stated in rupiah. However, the real payment can be made in other currencies (see also the new regulation on the mandatory use of rupiah in Indonesia territory).
In addition, there is also possibility that the payment of shares is done in the form of tangible and intangible assets/goods. One thing for sure is that the goods used as a payment method should have a monetary value, which is proven by authentic documents. Because Indonesian Law does not acknowledge land and building to be included in the share capital, they cannot be used as method of payment in selling and purchasing shares.
To fulfill divestment requirement stated in the company’s principle license, companies usually use a sale-and buyback strategy. In this strategy, the shares are temporally sold to a trusted Indonesian party and after the requirements set by the government has been met, the shares are brought back by the company. The minimum amount of shares divested by the company is usually 10 million rupiah for one shareholder.
In order to change the structure of the shareholder or the amount of shares ownership that happen because of the transfer of shares, several documents that must be submitted to the Minister of Law and Human Rights are needed, including:
If the company makes changes in the: (1) name of shareholders; (2) the amount of capital and share a shareholder has; and/or (3) the nationality of the shareholder, the company must file a request to BKPM to change the company’s principal permit (Ijin Prinsip Perubahan).