New Procedures on the Application for the Incorporation, Amendments and Dissolution of Limited Liability Companies
On April 30, 2021, the Minister of Law and Human Rights (the “Minister”) issued his Regulation No. 21 of 2021 on Requirements and Procedure for the Registration of Incorporation, Amendment and Dissolution of Limited Liability Companies (the “Regulation 21/2021”) to further implement Government Regulation No. 8 of 2021 dated February 2, 2021 on Authorized Capital as well as the Incorporation, Amendments, and Dissolution of Companies that Qualify as Micro and Small Enterprises (the “GR 8/2021”).
GR 8/2021 mostly regulates on the application procedures for: (i) “regular” Limited Liability Companies or what Regulation 21/2021 dubs as “Capital Contribution Company”, which is the commonly known limited liability companies that have at least 2 shareholders, and (ii) Individually Owned Companies which was newly introduced in the amendment of Law No. 40 of 2007 dated August 16, 2007 on Limited Liability Companies under the Law No. 11 of 2020 dated November 2, 2020 on Job Creation and GR 8/2021.
The Regulation 21/2021 regulates the process for the incorporation, amendment and dissolution of companies, which was previously regulated in the now-revoked Minister of Law and Human Rights Regulation No. 4 of 2014 dated March 25, 2014 on the Procedure to Submit Legal Entity Ratification Application and Amendment of Articles of Association and Notification Regarding Amendments of Articles of Association and Company Data, as lastly amended by Minister of Law and Human Rights Regulation No. 14 of 2020 dated May 18, 2020 on the Second Amendment of Ministry of Law and Human Rights Regulation No 4 of 2014 (collectively, the “Previous Regulation”). Most of the new provisions introduced in Regulation 21/2021 are regarding the procedures for Individually Owned Companies, with the highlights being as follows.
- Capital Contribution Companies
Incorporation of Companies
Capital Contribution Companies are to be incorporated by an applicant through a notary by filling out an electronic form in the Legal Entity Administration System (Sistem Administrasi Badan Hukum or the “SABH”). To do this, applicants must submit supporting documents, such as a copy of the Company’s deed of establishment, proof of capital injection, relevant statement letters from the company’s founders, etc.
Differ as regulated under the Previous Regulation whereby the Minister issues his Decree approving the granting of the legal status as a legal entity to such company, under the Regulation 21/2021the Minister will then issue a certificate of registration upon receiving the application.
Amendment of Articles of Association/Company Data and Dissolution of Company
Capital Contribution Company that wishes to amend its Articles of Association (“AOA”) must register the amendments to the Minister, the amendments include the change of name and/or domicile, objectives and business activities, duration, amount of issued capital, reduction in paid-up capital, and/or change in status of a limited liability company to a public company or vice versa.
In addition to the above, the following changes to the Company’s Data must also be registered to the Minister, which are as follows:
- changes to the shareholding structure due to a transfer of shares/change to the amount of shares owned;
- change in the board of directors/commissioners;
- mergers, acquisitions and spin-offs that are not accompanied by a change in the AOA;
- dissolution;
- expiry of the legal entity status;
- change in the name of shareholder due to the shareholder changing his/her name; and
- change to company’s complete address.
Please note the abovementioned changes to the Company’s AOA and Company Data (except letters (f) and (g) of Company Data changes) are required to be resolved by the General Meeting of Shareholders (“GMS”) under Regulation 21/2021. This was not expressly stated in the Previous Regulation. The abovementioned changes must also be stated in a notarial deed using Bahasa Indonesia within 30 days after the GMS. Furthermore, the above changes, except changes to the board of directors/commissioners, must then be submitted to the Minister within 30 days after the date of the notarial deed. Submission of the application for the amendment of the Company’s AOA/Data is also done through filling out a form in the SABH and uploading supporting documents.
- Individually Owned Companies
Incorporation
Similar to its multi-shareholder counterpart, applications for the incorporation of Individually Owned Companies are also done through the SABH. However, in the case of Individually Owned Companies, the founder (and not a notary) shall fill out a Statement of Incorporation form. Upon receiving the application, the Minister will then issue a certificate of statement of incorporation (“Statement of Incorporation”).
Amendments to Statement of Incorporation
The Statement of Incorporation as previously mentioned may be amended by filling out the data to be amended on a Statement of Amendment Form. After receiving the Statement of Amendment, the Minister will then issue a Statement of Amendment Certificate.
Change of Company Status from Individually Owned Company to Capital Contribution Company
GR 8/2021 stipulates that if an Individually Owned Company has more than 1 shareholder or no longer fulfills the criteria of a micro and small enterprise, its status shall be changed into a Capital Contribution Company. In order to do this, the Individually Owned Company must change their status through a notarial deed and register it to the Minister.
Financial Statement Reporting
For Individually Owned Companies, financial statements must be reported through the SABH by latest 6 months after the current accounting period, which report contains the report on financial position, profit/loss report, and notes on the current year financial report.
The Minister shall issue a receipt for the financial report; and failure to submit financial reports would warrant administrative sanctions in the form of written warning, suspension of access rights to service, or revocation of legal entity status.
Dissolution and Deletion of Legal Entity Status
Similar to the other processes, dissolution of an Individually Owned Company is done through the SABH. If the Individually Owned Company is declared bankrupt, the dissolution may be done after the curator has settled all of the company’s bankruptcy assets. The dissolution of the Individually Owned Company itself is done through the deletion of the Individually Owned Company’s name from the Companies Registry maintained by the Minister.
Regulation 21/2021 provides more clarity towards the administration processes of Individually Owned Companies, and we may expect to see the start of the era of these new Individually Owned Companies.
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June 2, 2021
Please contact Inka Kirana (ikirana@aksetlaw.com), N. Sekar Lestari (nlestari@aksetlaw.com), or Caleb Sitorus (csitorus@aksetlaw.com) for further information.
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