Private Limited Company

Private Limited CompanyA Private Limited Company, commonly known as Perseroan Terbatas (PT) in Indonesia, is a distinct legal structure for businesses. One of its defining characteristics is the separation of a company’s wealth and assets from its owner’s personal assets.

 

Limited Liability and Share Capital

Private Limited Companies in Indonesia typically operate with capital shares, allowing ownership to be divided among shareholders. An essential feature is the limited liability of shareholders, which means that the owner is not personally responsible for any company’s financial liabilities. This structure is particularly favoured by foreign companies operating in Indonesia.

Composition and Requirements

Specific requirements must be met to establish a Private Limited Company in Indonesia. It must have at least one commissioner, one director, and a minimum of two Indonesian citizen shareholders.

Distinctions Between PTs

Indonesian company law has introduced distinctions between PTs based on their size and financial criteria:

  • Micro Company: Requires a minimum share capital of at least IDR 50 million and has a maximum annual income of IDR 300 million.
  • Small Company: Has a minimum share capital ranging from IDR 50 million to IDR 500 million, with an annual income falling between IDR 300 million and IDR 2.5 billion.
  • Medium Company: Requires a share capital between IDR 500 million and IDR 10 billion, with an annual turnover ranging from IDR 2.5 billion to IDR 50 billion.
  • Large Company: Has a substantial net share capital exceeding IDR 10 billion and an annual income surpassing IDR 50 billion.

 

Foreign-Owned Limited Liability

Foreign investors seeking to establish a limited liability company in Indonesia must navigate specific regulations. This business structure, Penanaman Modal Asing (PMA), requires approval from local authorities, particularly the Capital Investment Coordinating Board. 

A PMA business must meet certain conditions to obtain full approval, such as a minimum investment of US $1.2 million, a resident director, one commissioner, and two shareholders. Additionally, PMAs must sell at least 5% of their shares to an Indonesian citizen within the first 15 years of establishment unless they opt for a joint venture with an Indonesian entity.

Nominee Limited Liability

The Nominee Limited Liability structure allows foreign investors to establish a company in Indonesia through an Indonesian citizen acting as a nominee. This approach circumvents some stringent PMA rules, providing a quicker startup process. While it offers advantages, it’s crucial for investors to fully understand the implications of this structure and comply with local regulations.

Other Business Structures

Apart from Private Limited Companies, Indonesia also offers business structures such as Representative Offices, primarily used for promotional activities, market research, or acting as intermediaries for parent companies. These offices have a limited operating license duration of two years.