Indonesian Government Introduces New and Integrated Submission Procedure for Companies’ Annual Financial Report
On March 19, 2020, the Minister of Trade (“MOT”) issued MOT Regulation No. 25 of 2020 on Annual Company Financial Reports (“MOT Reg. 25/2020”). MOT Reg. 25/2020 revokes the previous regulatory framework stipulating the annual financial report submission, i.e., Minister of Industry and Trade Decree No. 121/MPP/Kep/2/2002 dated February 25, 2002 (“Decree 121/2002”) and has entered into force on the date of its promulgation.
MOT Reg. 25/2020 sets forth a new procedure for business entities (that fulfill certain criteria to submit their annual financial reports to MOT) in submitting their annual financial reports based on the original requirement under Decree 121/2002. This new procedure is in line with the Indonesian Government’s intention to establish seamless submission of licenses and compliances process into the integrated Online Single Submission (“OSS”) system.
- SUBMISSION REQUIREMENT
MOT Reg. 25/2020 requires Companies to submit Annual Financial Report (“LKTP”) to the Ministry of Trade through the Directorate General of Domestic Trade (“Directorate General”). Companies under the MOT Reg. 25/2020 are defined as any type of business with permanent and continuous activities having the aim to obtain profit, undertaken by individuals or business entities in the form of legal or non-legal entities, as well as being established and domiciled within the territory of the Republic of Indonesia.
Based on the definition of Companies as above, MOR Reg. 25/2020 requires all Companies with the following status to submit LKTP:
- Limited Liability Companies (or PT) having fulfilled either one of these criteria:
- Being a Publicly Listed Company;
- Having a line of business in managing public funds;
- Issuing a letter of acknowledgement of indebtedness;
- Having total assets of at least Rp25,000,000,000 (twenty five billion Rupiah); or
- Being a debtor required to submit annual financial report to banks for audit purpose;
- Foreign Companies, having a domicile and running its business in the territory of the Republic of Indonesia, including their branch offices, auxiliary offices, subsidiary companies, agents, and representatives of such companies having authority to enter into agreements;
- State-Owned Companies (PERSERO), Public Service Companies (PERUM), and Region-Owned Companies (“Companies”).
Previously, Decree 121/2002 only required submission of LKTP to be conducted by head offices. MOT Reg. 25/2020 seems to broaden the definition and try to clear some uncertainty on categories of companies being required to submit LKTP.
Similar with Decree 121/2002, Companies are required to submit its LKTP after it has been audited by a public accountant and approved by the General Meeting of Shareholders or any of the authorized company organ based on laws and regulations. Submission of LKTP must be conducted at the latest six months after the financial year of a Company ends.
- THE NEW AND INTEGRATED SUBMISSION SYSTEM
Under MOT Reg. 25/2020, Companies having obtained their Business Identification Number (“NIB”) are required to submit their LKTP online through the Licensing Information System (“SIPT”) which has been integrated to the OSS system. In turn, the Directorate General will issue an LKTP Submission Receipt (“LKTP Receipt”) within 5 (five) days of the LKPT being duly submitted. In the previous regime, the Companies had to perform submission of their LKTP physically to the Directorate of Business Development and Company Registration at the MOT.
Furthermore, MOT Reg. 25/2020 also acknowledges LKTP submission required by other institutions. Therefore, if a Company has submitted its LKTP to: (i) regulators, (ii) authorities regulating submission of financial reports, (iii) Minister of State-Owned Enterprises, and/or (iv) Minister of Finance, the Company will be deemed to have submitted its LKTP. Companies will be required to submit the submission receipt through SIPT in order to obtain the LKTP Receipt.
- THE OPENNESS AND TRANSPARENCY OF COMPANIES’ FINANCIAL INFORMATION
The LKTP data submitted by the Companies constitutes open information and accessible to the public by submission of written request and payment of certain fees pursuant to regulations. The foregoing is also applicable to any ministerial body and/or state institution without the requirement to pay any fees.
- ADMINISTRATIVE SANCTIONS
Any incompliance with respect to the obligation to submit LKTP will be subject to administrative sanction of 3 (three) written warnings, each given with a period of 14 (fourteen) days in between each warning. Failure to comply with such warnings will result in revocation of business license for the Companies operating in trade sector, or recommendation of revocation of business license for the Companies with non-trade sector businesses.
Furthermore, if the Companies fail to submit LKTP in a complete and valid manner, the Companies will also be subject to administrative sanction of 3 (three) written warnings, each given with a period of 14 (fourteen) days in between each warning and followed by the revocation of the LKTP Receipt. Should the Companies fail to correct the submission within 14 (fourteen) days after the LKTP Receipt revocation, the Director General will impose an administrative sanction of license revocation or recommendation of license revocation, as relevant.F
April 27, 2020
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- April 27, 2020