Most foreign owned companies in Indonesia have the same corporate structure – shareholders, commissioners and directors.
In this article we’ll explain who can fill which role and what are their rights and responsibilities. If you look for information about changing people in those roles, we have another article about company restructuring.
These are the conditions for limited liability foreign company (PT PMA) positions:
Every company (even locally owned PT-s) needs at least 2 shareholders. Those can be both individuals and companies from any country.
Each shareholder needs to have shares for at least 10 million Indonesian Rupiah (approximately 1000 USD). Total minimum capital is a different regulation and has been explained in one of our previous articles.
Corporate shareholders need to have Articles of Association approved by public notary in their respective country.
In some countries, for example Thailand and Australia, companies are usually not required to have AoA by law. In such cases the companies need to make AoA prior to becoming a shareholder in Indonesia.
In case the business classification is in the negative investment list, there is an additional requirement of a certain percentage that needs to be owned by Indonesian citizens or companies.
If the business classification is not in the negative investment list, there is no requirement for having local shareholders and PT PMA can be owned up to 100% by foreign capital.
Commissioners are supervising the company and are not expected to take part of the daily management of the company.
Commissioners can but are not required to have shares in the company.
Both local and foreign commissioners are allowed. Foreign commissioners are entitled to apply for residence permit.
If there is more than one commissioner, one of them needs to be appointed as president commissioner and is in charge of board of commissioners.
A director is responsible for the management of the company and is appointed by the general meeting of the shareholders.
A company needs to have at least one director. If there is more than one director, one of them will be appointed as president director and will be in charge of the company and other directors.
At least one of the directors needs to have Indonesian tax card (NPWP). Until 2013, acquiring it was very easy but now foreigners are required to either hold a KITAS (residence permit) or personal domicile letter.
Since a company can issue work permits only after the registration process is completed, KITAS would have to come either from another company or from an Indonesian spouse.
Personal domicile letter can be attained from the building management and is a proof that the foreigner is living there. In case the domicile letter is from a house owner, an additional letter from the district government is often requested.
Frequently foreign companies don’t have a local director or foreign director that meets the aforementioned conditions. In such case the use of a nominee director is a common practice. Once one of the directors obtains a KITAS then the nominee director can be removed
As long as there is another president director, using nominee directors is a safe practice because any decisions could be overruled by the president. Also the nominee director can be called back by the general meeting of shareholders.
General division between commissioner and director of PT PMA
Just to make absolutely clear the differences between directors and commissioners: