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Beneficial Owners

Written by Adinda Tuffahati on 16/07/2024
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.

Introduction

Identifying and reporting beneficial owners is a legal obligation that companies must fulfill. In the context of transparency, integrity, and compliance, this understanding gives companies an advantage in building a good reputation, attracting business opportunities, and ensuring clear responsibility and accountability. Putranto Alliance ensures compliance with disclosure requirements by properly identifying and verifying beneficial owners.

Definition

According to Presidential Regulation of the Republic of Indonesia Number 13 of 2018 on the Implementation of the Principle of Recognizing Beneficial Owners of Corporations in the Context of Preventing and Eradicating the Criminal Acts of Money Laundering and the Criminal Acts of Financing Terrorism (PerPres No. 13/2018), in article 1 defines:

“The beneficial owner as an individual who has the authority to appoint or dismiss the directors of the board of commissioners, management, supervisors, or supervisors of the Corporation, has control over the Corporation, is entitled to and/or receives benefits from the Corporation either directly or indirectly, is the actual owner of the funds or shares of the Corporation and/or meets the criteria as referred to in this Presidential Regulation.”

The Importance

Identifying beneficial owners is essential for corporate transparency, integrity, and legal compliance. Based on Article 11 of PerPres No. 13/2018, corporations can determine the beneficial owner based on information obtained through:

Articles of association, including documents amending the articles of association and deed of establishment of the corporation.
Corporation establishment agreement documents.
Decision document of the general meeting of shareholders (GMS), decision document of the foundation organ meeting, decision document of the management meeting, or decision document of the members meeting.
Information about the authorized agency.
Information regarding private institutions that receive placement or transfer of funds in the context of purchasing limited liability company shares.
Information regarding private institutions that provide or receive benefits from corporations for beneficial owners.
Statement of members of the board of directors, members of the board of commissioners, members of the supervisory board, administrators, supervisors, supervisors, and officers or employees of the corporation that can be accounted for.
Documents owned by the corporation or other parties show that the individual concerned is the owner of the limited liability company share ownership fund.
Documents owned by the corporation or other parties showing that the individual concerned is the actual owner of the funds originating from assets or other investments in the corporation.
Other information that can be accounted for

The Best Time to Act

Corporations must submit Beneficial Owner information to the authorized agency no later than 7 (seven) working days after receiving a business license or company registration mark from the authorized agency or institution.

Companies that do not report the Beneficial Owner will be sanctioned by blocking their access to the Administrasi Hukum Umum (AHU) Online System and the Online Single Submission (OSS) System.

The blocking prevents the company from changing, adding, or updating its data and articles of association in the AHU Online System. The company is also unable to make data changes to the OSS System, which results in business activity data that does not match its practice in the field. This automatically makes the business licenses issued inappropriate and can be considered violating and subject to administrative sanctions in the form of revocation of business licenses.

Benefits

Accurately disclosing beneficial ownership information offers several benefits:

Comply with prevailing laws and regulations.
Security in operating business activities under the business license.
Enhances reputation and credibility.
Facilitates transparency and accountability.
Mitigates risks associated with financial crimes.

The Process

Corporations must apply the principle of recognizing the beneficial owners of the corporation, which includes:

Identification of the beneficial owner.
Verification of beneficial owners.

Identification through the collection of information includes:

Full name.
National Identity Number/passport.
Driver’s license (SIM).
Place and date of birth.
Citizenship.
Residence address as stated on the identity card.
Address in the country of origin for foreign nationals.
Taxpayer Identification Number or similar tax identification number; and
Relationship between the corporation and the beneficial owner.

Verification is carried out through research on the suitability of the beneficial owner information with supporting documents.

The information submission is attached with a Statement Letter from the corporation regarding the truth of the information submitted to the authorized agency. Parties that can submit beneficial owner information to the corporation include:

Founder or management of the corporation.
Notary; or
Other parties authorized by the founder or management of the corporation to submit information on the beneficial owners of the corporation.

Corporations are required to update beneficial owner information annually. This regular update is a key part of maintaining compliance and the integrity of the corporation.

How We Can Help

Putranto Alliance provides comprehensive assistance with beneficial ownership reporting. Our services include legal, accounting, and tax advisory services to ensure regulatory compliance. We can help prepare and expedite the process of identifying, verifying, and reporting beneficial owners.

FAQs

Can someone be considered a beneficial owner if they only have a stake below 25% in a company?

Yes, according to Presidential Regulation No. 13/2018, an individual may be deemed a beneficial owner if they derive income or profits from ownership exceeding 25% of shares, capital, or other rights within the corporation. Additionally, individuals exercising significant control over corporate management without requiring approval from any party can also be categorized as beneficial owners.

Is there a connection between the beneficial owner and the consolidated company?

Yes, the beneficial owner plays a pivotal role in corporate governance and decision-making processes, including mergers, consolidations, and acquisitions. Their authority to appoint or dismiss key personnel and control corporate affairs influences strategic initiatives aimed at improving company performance and governance standards.

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