Company Incorporation

Depending on your needs and situation, we can help you setting up the appropriate presence in Indonesia.

There are three types of business presence which we offer to assist you in setting it up:

• Foreign Company Representative Office
• Limited Liability Company (Domestic Company or Foreign-Owned Company/PMA)
• Foundation (Yayasan)

Types of Business Presence in Indonesia

A foreign representative office (or commonly known as “KPPA”) is a type of business entity that can be established in Indonesia by a foreign company. A KPPA is not a legal entity and its rights and obligations are not the same with a limited liability company incorporated under the laws of Indonesia. In principle, KPPA acts as an “extended arms” of a foreign company in Indonesia. Several activities that are allowed for a KPPA to engage are as follow:

• Conducting Market Research
• Networking
• Coordinating or liaising with the parent company
• Preparing for the establishment of a subsidiary or branch in Indonesia (PMA Company)

A KPPA is not allowed to engage in commercial activities that generate income, such as selling products or providing services. If a foreign company wants to engage in commercial activities in Indonesia, it must establish a subsidiary or branch office in the form of PMA Company.

To establish a KPPA in Indonesia, a foreign company must obtain a KPPA registration from the Ministry of Investment.

The benefits of establishing a foreign representative office in Indonesia are as follow:

• It is a relatively inexpensive way to establish a presence in Indonesia
• It allows you to conduct market research and networking activities
• It can help you prepare for the eventual establishment of a subsidiary or branch office in Indonesia

On the other hand, the drawbacks of establishing a KPPA in Indonesia are as follow:

• It cannot engage in commercial activities
• It is subject to Indonesian laws and regulations
• There may be some difficulties obtaining a work permit for your employees

If you are considering establishing a foreign representative office in Indonesia, it is important to weigh the benefits and drawbacks carefully. Consult with our experienced attorney to ensure that you comply with all applicable laws and regulations.

The most common legal entity in Indonesia is limited liability company or commonly called as Perseroan Terbatas ("PT"). As the name suggests, the liability of the shareholders will be limited to the amount of capital injected to the company. There are two types of limited liability company in Indonesia, (i) wholly owned by locals and (ii) foreign owned company ("PT PMA").

Domestic Company

Domestic Company is a company wholly owned (100% of the shares) by Indonesian citizen and/or Indonesian domestic company. As it needs to be fully locals, any minor foreign ownership (despite only one share of the company) would require the domestic company to be converted into a PMA Company (foreign owned company).

Domestic Company has several sizes according to the investment amount: small size (with minimum capital of IDR50 million); medium size (for capital more than IDR500 million but less than IDR10 billion); and large size (for capital more than IDR10 billion).

Foreign-Owned Company (PMA Company)

PMA Company is a company fully owned or partially owned by foreigner(s) and/or foreign entity(es).

PMA Company requires at least two shareholders, board of directors (BOD) and board of commissioners (BOC). A shareholder of the company can be appointed as a member of the BOD or member of the BOC. The BOD represents the company to third party and manages the operations, meanwhile the BOC supervises the management of the company by BOD.

Every PMA Company is considered as a large scale PT, therefore it has to meet the minimum capital/investment requirement in order to establish a PMA company. There are also certain line of businesses which are restricted or limited to foreign ownership. Consult with our experienced attorneys to ensure that your business is in compliance with the prevailing laws and regulations.

In general, we would provide the following services:

• Checking the availability of company's proposed names
• Identifying the appropriate classification number of line of business and ensuring any foreign ownership restrictions to the business activities at hand
• Preparing and revising the draft articles of association of the company
• Liasing with the public notary and the other government authorities
• Obtaining the relevant licenses of company

Besides the basic PMA Company incorporation service, we are well versed in preparing other ancillary legal documents if relevant to your business, such as:

• Founders Agreement or Shareholders Agreement
• Joint Venture Agreement
• Cooperation Agreement
• Investment Agreement
• Loan Agreement and Pledge of Shares Agreement
• Mandatory Convertible Note Agreement, etc

Consult with us for more detailed information whether you and your business would need any of those agreements to protect your legal and business interests.

If you intend to establish a non-profit organization in Bali or anywhere in Indonesia, your best option is to set up a foundation or commonly called as Yayasan. Yayasan can establish other business entities which generate income to support yayasan's or such business entities operational expenses. Yayasan shall be established by a group of people with a certain cause to contribute to the society, that is clear and specific. To establish a yayasan, you need to submit a registration application to the Ministry of Laws and Human Rights. Consult with our experienced attorneys to ensure that you comply with all the prevailing laws and regulations in setting up a yayasan in Indonesia.