What is the main source of law authorising this entity form?

Law No. 40 Year 2007 regarding Limited Liability Company (Perseroan Terbatas) (the “Initial Company Law”) which has been amended by Law No. 6 Year 2023 regarding Enactment of Regulation of the Government in lieu of Law No. 2 of 2022 on Job Creation into Law (the “Omnibus Law” together with the Initial Company Law shall collectively be referred to as the “Company Law”).

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

1. A PT has a separate legal personality from its founders/shareholders. It obtains status as a legal entity upon being legalized by the Minister of Law ((MOL) or previously known as Minister of Law and Human Rights) and obtaining proof of legalization.

(Maximum) period of existence

2. There is no maximum period of existence.

Governing document(s)

3. A PT is governed by its Articles of Association, which can be found in its Deed of Establishment and subsequent notarial Deed of Amendment of Articles of Association.

Liability of incorporators / shareholders

4. Founders/shareholders are not personally liable for contracts made on behalf of the PT and are not liable for the PT's losses exceeding the value of the shares they have subscribed to, unless: a. The PT has not met the requirements to be a legal entity; b. The founders/shareholders, either directly or indirectly, have misused the PT for their personal interest in bad faith; c. The founders/shareholders are involved in unlawful acts committed by the PT; or d. The founders/shareholders, directly or indirectly, have unlawfully used the PT's assets, causing the PT's assets to become insufficient to meet its liabilities.

(Governing) bodies

A PT is governed by the General Meeting of Shareholders (GMS), Board of Directors (BOD), and Board of Commissioners (BOC).

A PT must (subject to the comment below) be established by two (2) or more persons by way of a notarial deed drawn up in Bahasa Indonesia. Each founder of the PT must subscribe to the shares at the time the PT is established. The PT must have objectives and purposes and business activities that are not in contravention of the laws and regulations, public order, and/or decency.

The provision requiring a PT be established by two (2) or more persons does not apply to:

1. State-owned enterprises (Persero), where all shares are owned by the state;
2. Regional-owned enterprises (Badan Usaha Milik Daerah);
3. Village-owned enterprises (Badan Usaha Milik Desa);
4. A PT which manages stock exchanges, clearing and underwriting institutions, depository and settlement institutions, and other institutions in accordance with the Indonesia laws on capital market; or
5. A PT which meets the criteria for micro- and small enterprises (Usaha Mikro dan Kecil – UMK) as stipulated in the Indonesian laws and regulations on UMK.

In the event that a PT has obtained legal entity status and the shareholder has become less than 2 (two) persons, within a maximum period of 6 (six) months the shareholder must either:

1. transfer some of their shares to other persons; or
2. the PT issues new shares to other persons.

If such requirement is not fulfilled within that period of 6 (six) months, the following conditions shall be applicable to the PT:

1. the shareholder must be personally responsible for all engagements and losses of the PT; and
2. at the request of interested parties, the relevant district court may dissolve the PT.

Other particularities

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions and divestitures, equity acquisitions, conversions etc.)?

A PT can only merge and consolidate with other PT’s. However, a PT can acquire assets from, or equity of, a foreign legal entity.

Can this type of entity be publicly listed or held, or its securities be issued to members of the public?

Yes, a PT can be listed or publicly held by submitting a registration statement to the Financial Services Authority (Otoritas Jasa Keuangan – OJK) and listing application to the Indonesia Stock Exchange (Bursa Efek Indonesia – BEI).

Can this type of entity be used for a non-profit or charitable organization?

No, a foundation is the go-to entity for non-profit or charitable organisations.

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

The main documents required are:

• Deed of Establishment, namely the incorporation deed drawn up by notary in Bahasa Indonesia.
• Documents for the registration of shareholders:

If the shareholder is a local PT:

• All its Articles of Association, the amendments, along with the approval from the MOL;
• Notarial deed reflecting current capital structure, shareholding composition, and incumbent members of BOD and BOC;
• Taxpayer Number – Nomor Pokok Wajib Pajak (NPWP);
• Single Business Number – Nomor Induk Berusaha (NIB).
• If the shareholder is a foreign company:
• Articles of Association or business profile;
• Copy of identity of its BOD and BOC.
• If the shareholder is an individual:
• Full name;
• Identification number;
• Place and date of birth;
• Nationality;
• Address as set out in the personal identity document/in origin country (for foreigners only); and
• Taxpayer identification number.
• Documents (copy of identity, i.e. identity card or passport) for the registration of the PT's BOD and BOC.
• A notary is to draw up the Deed of Establishment. Any amendments to the Articles of Association must be done by notarial deed.

Involvement of notary, company register, governmental authorities

In addition to the documents stated above, a PT must submit information about its beneficial owners to the MOL, through the notary/legal counsel/its authorised third party. The information about beneficial owners must, at a minimum, cover the following:

• Full name;
• Personal identification number;
• Place and date of birth;
• Nationality;
• Address as set out in the personal identity document/in origin country (for foreigners only);
• Taxpayer identification number; and
• Relationship between the PT and the beneficial owner.

Timing (estimate)

The incorporation is not subject to any waiting periods or governmental filings. The PT is incorporated once the Deed of Establishment is drawn. However, to obtain its status as a legal entity, the PT must be legalised by the MOL and obtain proof of such legalisation.

Main costs, including registration and similar fees (excluding legal fees)

The main costs are the notary fees. In respect of registration of a PT, founders will have to pay the following non-tax state revenues to the MOL:

Legalisation of PT establishment:

• If the authorised capital is not more than IDR25,000,000, the fee is IDR300,000/application;
• If the authorised capital is between IDR25,000,000 and IDR1,000,000,000, the fee is IDR600,000/application;
• If the authorised capital is more than IDR1,000,000,000, the fee is IDR1,100,000/application.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

The description of the objectives and purposes, as well as business activities, must be written in the Articles of Association within the Deed of Establishment.

Minimum number of incorporators / shareholders and residency requirements

Principally, a PT must be established by at least two (2) persons or entities as shareholders, unless (a) it is a form of PT which falls into the Company Law exceptions, and/or (b) it will be subject to the conditions applicable to PT with less than two (2) shareholders (outlined above).

There is no residency requirement for incorporators. However, certain business sectors are limited or prohibited for foreigners based on applicable laws and regulations.

Minimum number of directors (or other applicable officers) and residency requirements

A PT must have at least one (1) director and one (1) commissioner, except for specific business sectors which require more, for example, the financial industry.

Generally, there is no residency requirement for commissioners (unless required otherwise in sectoral regulations) but directors must be resident of Indonesia or hold a temporary working permit (foreigners). For the avoidance of doubt, commissioners must also hold a temporary working permit (foreigners). The obligation to obtain a temporary working permit for foreign commissioners and directors does not apply if such commissioners and directors also own shares in the relevant PT with the minimum value of IDR 1,000,000,000 or the equivalent USD amount as stated in the Articles of Association.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

A PT must have authorised capital. The Omnibus Law revokes the requirement of minimum authorised capital of IDR 50,000,000 (US$3,061 in 2025) and minimum paid-up capital of IDR 12,500,000 (US$765.26 in 2025) as previously governed under the Initial company Law.

However, in practice, the MOL system up to the date of this publication still requires a minimum authorised and paid-up capital amount in the amounts set out above.

A foreign-owned PT must have a minimum total investment value of at least IDR 10,000,000,000 (US$613,005 in 2025) (excluding land and buildings) for each line of business and a minimum paid-up/issued share capital of IDR 10,000,000,000 (US$613,005 in 2025).

Certain business sectors may have higher minimum capital requirements in accordance with the prevailing laws and regulations.

Is the physical presence of incorporators/directors/shareholders required in the jurisdiction for incorporation, formation, or organisation?

No. Execution of the notarial Deed of Establishment may be carried out by proxy for and on behalf of the incorporators if there is a power of attorney in place.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

A PT must obtain a taxpayer number (Nomor Pokok Wajib Pajak – NPWP) once it is established.

The PT shall be required to submit an application to obtain NPWP to the tax office.

What is the title of the applicable company registry?

Company Registry of the MOL. The registry is available online, however, currently it is only available in Bahasa Indonesia.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.: Articles or other formation document, Articles or other formation document, Group structure, Share capital, Directors, Accounts, Insolvency, good-standing, liquidation, Liens and encumbrances on the shares, Liens and encumbrances on assets of the entity, Other (e.g. litigation, tax matters)

As the system is now online, the notary will input the information into the system. The following information must be in the Company Registry and will be publicly available:

• Name and domicile;
• Objectives, purposes, and business activity;
• Period of establishment;
• Total amount of capital;
• Full address of the PT;
• Number and date of Deed of Establishment and Ministerial Decree on the legalisation of PT's legal entity;
• Number and date of the Deed of Amendment of the Articles of Association and Ministerial Decree on approval and/or receipt of notification from the MOL;
• Number and date of the Deed of Shareholders’ Resolution approving the change of shareholders and receipt of notification from the MOL;
• Number and date of the Deed of Shareholders’ Resolution approving the change of members of BOD and/or BOC and receipt of notification from the MOL;
• Name and domicile of the notary that prepared the Deed of Establishment and the deed of amendment of the Articles of Association, change of shareholders and members of BOD and BOC;
• Full name and address of shareholders, BOD and BOC;
• Number and date of the deed of dissolution, or number and date of the court order on the dissolution of the PT, which must be provided to the MOL;

The PT's status – i.e. whether it is a public/private company.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

Board of Directors (BOD);

• BOD represents the PT inside and outside of the courts. Each director must carry out management duties (as assigned to each of them in the Articles of Association) in the interest of the PT and in accordance with the PT's objectives and purposes in the PT's Articles of Association. The PT's Articles of Association will determine which director has an authority to represent PT and distribution of authority between each director (if any).
• BOD's responsibility includes:
• Prepare the annual work plan;
• Prepare the annual report;
• Prepare and update the shareholders' register;
• Prepare and update the special register. The special register is a list containing information regarding the shares held in the PT by members of the Board of Directors and the Board of Commissioners, together with their families, in the PT, as well as the date the acquisition of such shares;
• Prepare minutes for the GMS;
• Prepare minutes for BOD's meetings;
• Prepare the PT's annual report and financial statements;
• Maintain all the PT's lists, minutes, and financial documents;
• Arrange the annual GMS.

Board of Commissioners (BOC);

The BOC supervises management policy, implementation of the management in general, with respect to both the PT and the business of the PT and advises the BOD. Such supervision and advice shall be made in the interest of PT and within the objectives and purposes of the PT. Hence, the BOC's main responsibility is to supervise the PT. The BOC is appointed, removed, and replaced in the same way as the Directors by the GMS.

How are the members of the executive body appointed, dismissed and replaced?

The incorporators/shareholders initially appoint the BOD in the Deed of Establishment.

The subsequent appointment, dismissal, or replacement of the BOD takes place at the GMS by the majority approval. Further procedure and process for appointment, dismissal, or replacement of the BOD will be set out in the Articles of Association. Any appointment, dismissal, or replacement of a director must be notified to the MOL within 30 days from the decision of the GMS.

Is it possible to appoint corporate directors or must all directors be natural persons?

No. Only an individual can be appointed as a director of a PT. In addition, a commissioner of a PT also must be an individual.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

In principle, Indonesia does not recognise the concept of non-executive directors. Indonesia adopts a two-tier structure, BOD and BOC.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The GMS controls the PT by making decisions that substantially affect the PT, including:

• Deciding on actions such as merger, acquisition, consolidation, dissolution, separation;
• Deciding on any amendments to the Articles of Association;
• Deciding on the appointment of directors and commissioners; and
• Deciding on the declaration and distribution of dividends.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

GMS decisions are made by consensus. If the GMS cannot reach a consensus, resolutions require the approval of more than 50% of the shares with valid voting rights in attendance or represented, or the greater percentage required by the Company Law and the Articles of Association.

The Company Law determines that for a decision/resolution with regard to:

• Merger, acquisition, consolidation, dissolution, separation of the PT, submission of an application for bankruptcy, and an extension of the PT's term of establishment, where 75% of the total number of shareholders with valid voting rights must be present (the quorum) and 75% of those present (or represented) in the GMS must vote in favour.
• However, if this is the second GMS called, the GMS quorum is two-thirds of the total shares with valid voting rights (either present or represented) and 75% of the votes must be in favour.
• Amend the Articles of Association: Two-thirds of the total shareholders with valid voting rights must be present (or represented) in the GMS and two-thirds of those present must vote in favour. However, if this is the second GMS called, the quorum for a valid GMS is three-fifths of the total shares with valid voting rights (either present or represented) and two-thirds of the votes must be in favour.
• Other matters: more than 50% of the entire shares with voting rights that are present (or represented) must be present and 50% of votes must be in favour. However, if this is the second GMS called, the quorum is one-third of the total shares with valid voting rights (either present or represented) and at least 50% of the votes must be in favour.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

No, there is no special governance regime in the Company Law but there may be special governance regulations for specific business sectors (e.g. bank, insurance, public company etc.).

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

The entity must prepare financial statements consisting of at least the previous fiscal year balance compared with current balance, profit and loss statement of the current financial year, cash flow report, equity modification report, and notes to the financial statements, which must be included in the annual report. The financial statement must be prepared in accordance with financial accounting standards. The directors must submit the annual report to the GMS after the BOC has reviewed it.

For a PT whose balance sheet and loss and profit statement must be audited (please see Question 25 below), such PT shall submit its audited balance sheet and loss and profit statement to the MOL.

Is the entity permitted to determine its own financial year?

Yes.

Is the entity subject to any statutory (external) auditor obligations?

Yes, the BOD has the PT's financial statement audited by a public accountant if:

• The PT's business activity involves collecting and/or managing public funds;
• The PT issues bonds to public;
• The PT is a public company;
• The PT is a state-owned company;
• The PT has assets and/or total business distribution over IDR 50,000,000,000.00; or
• It is required by law and regulation.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

A PT which conducts 'sharia' business must appoint a Sharia Supervisory Board;

A public/listed PT requires at least two (2) members on its BOC. In the event that there are more than two (2) commissioners, 30% of those commissioners must be independent commissioners. Thus, in a PT with two (2) members on its BOC, one of them must be an independent commissioner; and

A public PT must also have (i) audit committee; (ii) internal audit unit; (iii) nomination and remuneration committee; and (iv) corporate secretary.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

Shares.

Are different classes of ownership interests possible? If so, what are some examples of different classes?

Different classes of shares are possible, and the common share shall be determined in the Articles of Association. Classes of shares include:

• Shares with voting right or without voting right.
• Shares with special right to nominate members of the BOD and/or the BOC.
• Shares which after a certain period will be redeemed or replaced with another class of shares.
• Shares that carry dividend rights ahead of another class of shares against cumulative and non-cumulative dividend sharing.
• Preferential shares that carry the right to receive the PT's remaining assets post-liquidation ahead other class of shares.

What documentation is required for the transfer of ownership interests?

An agreement for the sale purchase and assignment of shares. The agreement can either be a private deed or a notarial one, depending on the type of transfer. If the transfer of shares constitutes an acquisition (change of control) then the deed of assignment of shares must be made in notarial form.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

BOD registers the transfer of ownership in the list of shareholders and/or special list (similar to the list of shareholders, but it only records ownership of shares by BOD, BOC and their respective family members).

If the transfer constitutes an acquisition (change of control), the agreement for the sale purchase and assignment of shares must be made in notarial form.

Are there any applicable stamp duties imposed when transferring ownership interests?

Yes, stamp duty is required for all contracts executed in Indonesia. The cost is the nominal sum of IDR10,000 (US$0.61).

How are shares issued? (including information on payment obligations, registration requirements)

Subject to the Articles of Association, shares are issued on the decision of the GMS and shall be fully paid upon subscription by the relevant shareholder(s). The notary must notify the share issuance to the MOL.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

Company Law allows non-cash payment on shares (in-kind contribution or inbreng) provided the non-cash payment has an economic value. The value is determined by the reasonable market value or by an independent appraiser (mandatory for fixed asset(s)).

The in-kind contribution in the form of fixed asset(s) must then be announced in one (1) or more daily newspaper within 14 days after the Deed of Establishment is signed or after the GMS approved such in-kind contribution.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

The two (2) methods of capital reduction are through share repurchase or decreasing the value of each share. The GMS must determine any capital reduction. If the capital reduction adversely affects a certain class of shares, the GMS must obtain the consent of all the shareholders of the adversely affected class of shares. The BOD must advertise the decision to the PT's creditors by newspaper within seven (7) days of the decision. The creditors have 60 days to object to the decision by writing to the PT with a copy sent to the MOL. The PT must answer the objection in writing within 30 days of receiving it.

Any capital reduction of a PT is a modification of the PT's Articles of Association, so approval is needed from the MOL. Approval will be granted if (i) there is no written objection from a creditor within the 30-day period, (ii) or the objection is resolved, or (iii) the court refuses the creditor's claim in a decision which has legally entered into force.

Repurchase of shares does not cause a capital reduction unless the shares are cancelled. Requirements for share repurchase are:

The repurchases cannot cause the PT's net worth to drop below the total subscribed capital and necessary reserves.
• Total nominal value of the repurchased shares (together with pledged shares or shares under fiduciary security controlled by the PT itself and/or another PT) must not equal more than 10% of the PT's total subscribed capital unless the capital market laws and regulations provide otherwise.
• The PT has obtained the approval of the GMS, unless capital market laws and regulations do not require it. The GMS must meet the procedure and requirements set out in the Articles of Association or Law no 40 of 2007.

The PT can hold repurchased shares for a maximum of three (3) years.

Any requirements with respect to distributions to shareholders?

The PT can only distribute dividends if the PT has made a profit for the financial year and the GMS approves the distribution, subject to fulfilment of reserved fund amounting up to 20% of the issued and paid-up capital from time to time.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes, but it must not contradict the Company Law and/or the Articles of Association.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

The PT has a business address and has at least one (1) director as well as one (1) commissioner. The shareholders must each year hold their annual general meeting. In addition, annual accounts must be prepared and adopted each year and the applicable tax filings must be made.

There are no fees for filing the annual report with MOL nor any annual fees.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

The previous corporate tax rate was 25%. As part of the Government's COVID-19 economic policy the Income Tax Rate for domestic corporate taxpayers and permanent establishment is reduced at 22% for the 2020/21 Fiscal Year. Up to the date of this guide, the Government still maintain tax rate of 22% for domestic corporate taxpayers and permanent establishment.

Summary of any specific matters, e.g. recent or prospective major legal developments

The Omnibus Law has amended several existing laws, including the Initial Company Law and investment law, as well as business licensing aspects:

• For company law, the main changes introduce a new licensing process for the UMK sector, the Online Single Submission (OSS), intended to make it easier to submit a New Business permit, and allow the establishment of a single-person PT, being a PT with only one (1) shareholder. In addition, the Government also updates the criteria of businesses that will fall into the category of UMK as well as simplifying the registration requirement;
• For investment law, the Law abolishes the Negative Investment List, which prevented foreign investment in certain industries, and introduces a priority list, which offers incentives or tax breaks on investments in certain industries. The aim is to attract greater foreign and domestic investment;
• For business licensing, the Law introduces a risk-based approach to issuing business licenses, categorising new businesses as low, medium, or high-risk, based on the hazards that the new business could potentially create. Medium and high-risk PTs will require additional licenses, such as a certification to operate, in addition to the single business number (Nomor Induk Berusaha) issued by OSS system; and
• For employment law, two (2) major changes intended to enhance the ease of doing business and investment activities are the leniency for outsourcing business arrangements and minimum wage adjustments.