Domestic Reference

Transnational transaction around the globe has force many of the business players to establish a strong legal entity in order to build their business power. This entity may in the form of company or limited liability Company, foundation, BV, PT, CV, Legal Firm, organization, LLC, and others. This variation of form shall require a legal base line for many shareholders and or business player in order to enter the market. In Indonesia, every entrepreneur require them self to abide by the prevailing laws which commonly known as the Company Law or Act No 40 of 2007. In Indonesia, the core of law that regulates the establishment of the Company are Law No. 25 of 2007 regarding Capital Investment (hereinafter referred to as “Investment Law”), and Law No. 40 of 2007 regarding Limited Liability Company (hereinafter referred to as “Company Law”). Under the Company Law, every single person or legal entity who wish to build them self a legal company or corporation, they shall require to follow the requirements of 2 (two) shareholders at minimum. This means, that there will be 2 people or legal entity which act as the shareholders or owners. The capital injection which needs to be provided by the shareholders minimally shall be Rp. 50.000.000 (fifty million Rupiah). However this capital injection requirement does not apply should the shareholders wishes to build and established the Foreign Direct Investment Company or PMA/FDI (which in this matter considered as the foreign national legal entity, this due to foreign shareholders who reside under the company establishment). According to the Indonesia Investment Coordinating Board (Badan Koordinasi Penanaman Modal) any legal entity and or person who wish to build and established PMA/FDI shall require a minimum at around of $ 250.000 (two hundred fifty thousand United States Dollar). For most foreign entrepreneur, this capital injection is considered very high and creates obstacles for investment. Therefore, in order to simplify the process and bridging between the foreign investment action and the government, AM | Oktarina Lawyers has the ability to execute the most probable process for this type of foreign national licensing. For more detail, please contact our lawyer.   t #Incoming Search: Advokat Jakarta, Corporate Lawyer Jakarta, Legal Consultant Jakarta

By AM | Oktarina Lawyers: The Company structure is created based on the Law No 40 of 2007 Concerning Limited Liability Company (“Company Law”). According to this Company Law, the company organ can be established in 2 ways: 1. The establishment of the Board of Directors: According to the Company Law, the Directors can be appointed through the General Meeting of Shareholders (GMS). The GMS shall be responsible to determined who will become the Directors The Company Law and common practice by GMS provides that the Directors may be appointed for 5 consecutive years. During these years, the Directors shall be responsible for in and out of court obligation and all financial close. The Directors can be divided into 5 common titles: (i) the President Directors; (ii) the Vice President Directors; (iii) the Chief Executive Officer (CEO); (iv) Chief of Operation Officer (COO); and (v) Chief Financial Officer (CFO). The Directors is not an EMPLOYEE. According to the Company Law, the Directors are not part of the management team BUT part of the Executive level, which determined directly by the GMS. Therefore, Law No 13 of 2003 Concerning Employment (“Employment Law”) shall not apply for the Directors. Only the terms provided by GMS and the Company Law apply for the Directors. In this case, all rights reserve by the Company Law The Directors only answer to the GMS, however since the Directors has to provide a clarification once it’s needed by the Commissioner, in some cases the Directors has to answer to the Commissioner. 2. The establishment of the Board of Commissioners: Similar to the Board of the Directors, the Board of Commissioner can be appointed through the GMS and for 5 consecutive years. Commissioner only answer to the GMS The Board of Commissioner function is to provide the supervision mechanism for the Directors action. Therefore the Board of Commissioner has the authority over the Directors. In some cases, the Directors action based on the Article of Association shall require the written approval from the Board of Commissioner; ex: (i) Financing Process or borrowing money; (ii) pledging the company assets; (iii) purchasing other company assets; (iv) releasing some company assets to other third party. The Board of Commissioner shall entitled to the have Directors monthly report if required and warn the Directors should the Directors action beyond its company projected business plan Similarly apply with the Directors; the Employment Law not binds the Board of Commissioner. Only the Company Law and the GMS has authorization over the Board of Commissioner. Both, the Directors and the Board of Commissioner shall be appointed by using the amendment of the Article of Association (Deed of the Article of Association). Therefore, it is very important to determine this deed after the GMS appointment through the Circular Resolution of the GMS and register it at the Ministry of Law and Human Rights. That being said, the validity of the deed is mandatory by law and shall become a strong evidence the Directors and Board of Commissioner titles. For more detail, please contact our lawyer at info@amoktarina.co or n.pasaribu@amokatrina.