Incorporation Local Limited Liability Company (PT)
A local limited liability company (PT) must be 100% owned by Indonesian shareholders and is easy to set up as compared to a foreign owned limited liability company (PMA). Although all the shareholders in the PT are Indonesia, foreign investors are able to obtain full control by way of a nominee structure, where they will appoint a local nominee shareholder often in combination with a local nominee director.
Minimum Establishment Requirements
Compared to a foreign owned limited liability company (PMA), a PT requires only a low initial investment. Depending on the size of the company, the initial paid-up share capital requirements are as follows:
- Small sized company: paid-up capital between 50 – 500 million rupiah
- Medium sized company: paid-up capital of more than 500 and less than 10 billion rupiah
- Large sized company: paid-up capital of 10 billion rupiah or more
To be able to hire foreign workers, a PT is required to be at least a medium sized company with a minimum paid-up capital of 2 to 3 billion rupiah.
Advantages Compared to PMA
Even though a foreign investor cannot directly own shares in a local PT, they are able to obtain 100% control over the PT by way of a shareholder nominee structure. Depending on the type of business, a local PT may have the following advantages over a foreign owned PMA:
- A PT is not subject to investment restrictions. Foreign investment companies (PMA) are subject to the so-called Negative Investment List , which consists out of a list of business activities which are either partially or fully restricted for foreign investors. This Negative Investment List only applies to foreign investment companies (PMA);
- Lower initial investment requirements. The minimum paid-up capital amount is significantly lower than that of a foreign investment company (PMA). A PMA must have a paid-up capital of at least 2.5 billion rupiah. In addition a PMA is required to invest / spend 10 billion rupiah within a year as of the establishment of the company.
The corporate structure of a local PT is as follows:
- Shareholders: there must be at minimum 2 Indonesian shareholders. These shareholders can be either in the form of a legal entity or an individual;
- Board of Directors: the director(s) manage the daily operations of the company. The shareholders must appoint at least 1 Indonesian director. If there is more than 1 director, a president director must be appointed. The president director must be an Indonesian national.
- Board of Commissioners: the commissioners supervise the board of directors of the company. Similar to the positions in the board of directors, at least 1 Indonesian commissioner must be appointed and if more there is than 1 commissioner, an Indonesian president commissioner must be appointed.
The appointment of members of the board of directors and board of commissioners must be approved by the shareholders of the company and concluded in a notarial deed of appointment.
Processing Timeline Local PT
The below timeline shows the average processing times of company licenses for a PT company established in Jakarta. In case a PT is established outside Jakarta the processing times may vary.