Shareholder Rights in Private and Public Companies

Legal Updates
Shareholder Rights in Private and Public Companies
9 September 2015

SSEK Legal Consultants founding partner Ira A. Eddymurthy and Tengku Almira Adlinisa, an associate at the firm, have contributed the Indonesia chapter of the new Practical Law global guide to Shareholders' Rights in Private and Public Companies.

SSEK Legal Consultants is one of the leading corporate and commercial law firms in Indonesia. It works with international and domestic companies on all aspects of their business in Indonesia. SSEK is widely experienced in the establishment of businesses in Indonesia and their ongoing operation.

The following is an extract from the Indonesia chapter of the Practical Law global guide to Shareholders' Rights in Private and Public Companies written by SSEK Legal Consultants.

Types of Limited Companies and Shares

Limited liability companies (Perusahaan Terbatas (PT)) are the only type of legal entity with limited liability and shareholders that are recognized under Indonesian law. A PT is a legal entity that is established by at least two shareholders (individuals or entities) based on a deed of establishment signed before a notary and approved by the Minister of Law and Human Rights (MOLHR). A PT is commonly used to conduct business in Indonesia.

Specifically for foreign investors who wish to invest in Indonesia, the Indonesian Investment Law requires foreign capital investment to be made in the form of a PT duly established in Indonesia. A PT that has foreign capital participation will be recognized as a foreign investment company (Perusahaan Penananaman Modal Asing (PT PMA)) licensed by the Indonesian Capital Investment Coordinating Board (Badan Koordinasi Penanaman Modal (BKPM)).

Minimum Share Capital Requirements for Companies

Indonesian law recognizes three types of capital in a PT (authorized, issued and paid-up capital). Authorized capital must be up to four times greater than the issued capital, and all issued capital must be fully paid up. The Company Law provides that the minimum authorized capital of a PT is IDR50 million (US$3,850 at current exchange rates).

For PT PMA, the BKPM also requires a minimum investment of more than IDR10 billion (US$771,000 at current exchange rates), which will be divided into equity (issued and paid-up capital) and debt. The amount of the issued and paid-up capital must be at least IDR2.5 billion (US$208,000, at current exchange rates). For a PT Tbk, the minimum issued and paid-up capital must be at least IDR3 billion (US$230,700, at current exchange rates).

Please note that for specific industries, depending on the line of business of the PT, there can be higher capital requirements required by the relevant supervisory institutions.

Types of Shares Issued by a Company

The Company Law only allows PTs to issue registered shares (saham atas nama), but does allow the classification of shares. In addition, PTs can issue derivatives in the form of:

  • Rights
  • Warrants
  • Options

Minimum Number of Shareholders in a Company

The Company Law requires PTs to have at least two shareholders. If a PT finds itself with only one shareholder, either:

  • The sole shareholder must transfer part of its shares to a second shareholder.
  • The PT must issue new shares to be owned by a second party within six months from the date that the PT has only one shareholder.

For a PT Tbk, the minimum number of shareholders that must be maintained is 300. However, please note that the Indonesia Stock Exchange (IDX) requires a higher minimum number of shareholders to be listed on the IDX.

This publication is intended for informational purposes only and does not constitute legal advice. Any reliance on the material contained herein is at the user\'s own risk. You should contact a lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and may not be reproduced without the express written consent of SSEK.

For More Information, Please Contact
-
Back to Indonesia Law Blog
Related Articles
Categories: