COMPANY ESTABLISHMENT

Category: Business Establishment & Licenses, Notary Services
Written by Giovanni Leonardo on 23/03/2022
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.

A Perseroan Terbatas (PT) or a Company is a business entity that allows investors to conduct commercial activities in Indonesia. Perseroan Terbatas (PT) is the type of legal entity that a local or foreign company or local or foreign individual must use to run a revenue-generating business in Indonesia. For foreign companies or individuals, also known as a foreign investment limited liability company.

WHY DO YOU NEED TO ESTABLISH A COMPANY IN INDONESIA?

PT is a business entity most liked and chosen by businesspeople than other legal entities. PT can be used as a vehicle to run businesses and generate revenue from local and foreign investors. Many people choose PT because of the clarity of its legal entity status given by the law (Undang-Undang Nomor 40 Tahun 2007 Tentang Perseroan Terbatas). Because of this, PT has been accepted by all parties (practitioners, academics, and entrepreneurs) to do business in Indonesia.

The benefits of a company are income diversification, flexibility in doing business, ease of transfer of the company’s ownership, and legitimacy from the government. Another advantage of companies is that they create jobs. If the company grows, they often have to hire employees, which increases the number of jobs available, reduces unemployment, and contributes to the nation’s economy.

PT is established based on an agreement between two or more parties and is made using a notary deed. Furthermore, the established company must get approval from the Ministry of Law and Human Rights. Shares can prove the ownership in PT. The shares can be traded to others, which in doing so, changes the ownership of the company.

TYPES OF LEGAL ENTITY FOR BUSINESS IN INDONESIA

There are two types of PT in Indonesia, and each two has its characteristics. The two types are as follows

  1. Public Company

    A company owned by the public, the shares are traded in the capital market and must have a minimum of 300 shareholders. Private company can become a public company through a process called go-public.

  2. Private Company

    A privately owned company by individuals or companies. There are two types of private company in Indonesia, (1) Local Company, a company owned by 100% local entity, and (2) Foreign Company, a company owned by 100% foreign entity or both foreign and local entity

4 STEPS TO ESTABLISH A COMPANY IN INDONESIA

In order to establish a company in Indonesia, there are four simple steps that you need to do:

  1. Prepare the documents and the data needed for establishing a company

    The data needed for making a company, such as the company's name, the location, the address, the founders, business activities, etc., all those data must be ready when you want to start establishing a company. The supporting documents are ID cards and Tax ID Number (NPWP) of the founders, directors, and commissioners.

  2. Make a notary deed for establishing a company and get approval from the ministry of law and human rights

    According to law number 40 the year 2007, a notary deed is required to establish a company, and said deed must be registered to the ministry of law and human rights to get approval.

  3. Apply for Tax ID Number (NPWP)

    The Tax ID Number (NPWP) is the number given to the taxpayer as a means of tax administration which is used as a personal identification of the taxpayer's identity in exercising his rights and obligation in tax matters.

  4. Apply for Business Identification Number (NIB)

    NIB is the identity of a company-issued by the OSS. NIB functions as an identification for the company. NIB is issued after the company applies to the OSS. So, by having a NIB, a company can apply for a business permit and commercial or operational permit. NIB can also be a Company Registration Certificate, Importer Identification Number, and customs access rights.

There may be extra steps involved in setting up a company, depending on your situation. For example, for NIB, depending on the risk level of your business activities, you may need to apply for a standard certificate for your company.

WHEN CAN YOU START?

Setting up a company takes a reasonably short time. You can start once you have all the documents and the data needed to make a notary deed. The notary deed and the approval can be done in 5 working days. After receiving approval from the ministry of law and human rights, you can start applying for NPWP through online registration. Once you have the NPWP, you can start processing the NIB, which can be done online. All those processes can be done in 7 to 10 working days.

REFERENCES

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