Corporate compliance requirements for Indonesian companies.

This is a complete list of the corporate compliance requirements for Indonesian companies.

When incorporating a company, there are several corporate compliance requirements that you will need to complete both before and after setting up your company.

Let’s take a look at the requirements.

Company set up requirements

Company name

The name of a company in Indonesia must consist of at least three different words, as required by the Ministry of Law and Human Rights.

You have to reserve the company name by applying to the Directorate General of Legal Administration Affairs. The company name will be verified by the Legal Entity Information System to make sure that other companies have not already used the name.

The company name can be in English or other languages for foreign companies (PT PMA), while local companies can only use Indonesian. Company names must be followed by Perseroan Terbatas or PT (limited liability companies), and TBK must be added to the end of public company names.

Other company name requirements include:

• Combinations of letters and numbers that do not have a meaning is not allowed
• Shall not be similar to government institutions and existing organisations or companies
• Shall not be misleading and must be relevant to the business activities and objectives
• Words that are against morality are not permitted
• Shall consist of at least 3 Indonesian words

Directors of Indonesian companies

A company must have one director to operate. A PT PMA (foreign-owned company) can have either a foreign director or a local director.

At least one of the director members must have a local tax ID. If there is more than one director, the general meeting of shareholders (GMS) must appoint a president director to lead the board of directors.

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Shareholders of Indonesian companies

Shareholders of an Indonesian company can be a local or foreign individual or entity. There must be at least two shareholders.

Commissioners of Indonesian companies

An Indonesian company must have at least one commissioner, and if a company has more than one commissioner, one of them must be appointed as the president commissioner.

What must the deed of establishment include?

The deed of establishment provides information related to the company’s establishment. The deed of establishment must contain:

• Name, place of birth, date of birth, occupation, residence and the nationality of the individual founder, or name, domicile and full address, and the number and date of the Ministerial Decree regarding the ratification of legal entity founders of the company;
• Name, place of birth, date of birth, occupation, residence and the nationality of the members of the board of directors and the board of commissioners to be appointed; and
• The name of the shareholders who have subscribed shares, detail of the number of shares and the nominal value of shares subscribed and paid-up.

Articles of association

The articles of association of an Indonesian company should contain:

• Amount of authorised capital, issued capital and paid-up capital
• Company’s business activities
• Company period of incorporation
• Purposes and objectives of the company
• The name of the company
• The domicile of the company
• The number of shares, shares classification (if any), number of shares for each classification, rights attached to each share and nominal value for each share
• The name and number of the members of the board of directors and members of the board of commissioners
• The place and procedures for holding a general meeting of shareholders
• The procedures of appointment, replacement and dismissal of the members of the board of directors and board of commissioners
• The procedure for profit utilisation and dividend distribution

Data protection and data protection officer

The appointment of a data protection officer in Indonesia is not mandatory under the Indonesian law. However, according to Government Regulation No.71 of 2019 on the Implementation of Electronic Systems and Transactions (GR 71), the electronic system operator must appoint an expert in electronic systems and information technology.

The duties of the electronic system operator are to:

• Notify the personal data owner of any failure in personal data protection in the electronic system within 14 days since being aware of the failure
• Give access to personal data owners to change or update their personal data
• Eliminate any personal data in accordance with the laws and regulations
• Provide a contact person who can be contacted by the personal data owners regarding their personal data

Personal data owners are entitled to several rights, which include:

• Privacy notices – The entity collecting personal data must inform the personal data owner about how their personal data will be used and processed.
• Right to access information – Personal data owners have a right to review and update personal data.
• Right to be forgotten – Personal data owners can request that the electronic system operators remove any irrelevant data related to them. Irrelevant data includes:
  • Personal data that are obtained and processed without consent and illegally
  • Personal data that are no longer in accordance with the purpose of its collection
  • The use of the personal data has exceeded the period of use
• Objection to digital marketing – Inform personal data owners if their personal data will be used for digital marketing in order to receive content to use it.

Business licenses for companies in Indonesia

If your company engages in trading, goods or other services, you must obtain a business license.

Companies involving the manufacturing industry, excluding oil, gas and geothermal energy should secure an industrial business license.

Construction companies need to acquire a construction business license and importing goods to Indonesia needs a general import license or product import license.

Other licenses may include medical & BPOM distribution license, cosmetic distribution license, food & beverages distribution license and health supplement distribution license.

You can apply for a business license through the Online Single Submission (OSS).

Display of company name and unique entity number (UEN) on required documents

Any announcements or printed materials should have the name and full address of the company displayed.

On-going compliance requirements

Company registry requirements

Under article 29 of the Company Law, the company registry must contain:

• Address of the company
• Company’s business activities
• Company’s capitalisation
• Full name and address of the shareholders, members of the board of directors and members of the board of commissioners of the company
• Number and date of deed of amendment of the articles of association and approval from the Minister
• Number and date of the deed of establishment and the Ministerial Decree regarding the ratification of the company as a legal entity
• Number and date of deed of amendment of the articles of association and the date of receipt of the notification by the Minister
• Name and domicile of the notary who made the deed of establishment and deed of amendment of the articles of association
• Number and date of deed of winding up or the number and date of the court ruling on the winding up of the company
• The balance sheet and profit and loss statement from the financial year concerned for the company
• The company’s period of incorporation
• The domicile of the company
• The expiry of the company’s status as a legal entity
• The name of the company
• The purpose and objectives of the company

Annual general meeting of shareholders

The annual GMS should be held no longer than six months after the end of the accounting year.

The GMS should be held at the domicile of the company or at the location that the business activities are carried out as stated in the articles of association. The GMS can also be organised through a teleconference, video conference or other electronic channels which the GMS participants can see, hear and participate in the meeting.

The following should be submitted in the annual GMS:

• Cash flows
• Details on issues which occurred during the accounting year that affected the company’s activities
• Financial statement containing the current balance sheet of the latest accounting year in comparison with the previous accounting year
• Name of the members of the board of directors and board of commissioners
• Profit and loss statement from the latest accounting year
• Report on equity changes
• Report of the company’s changes
• Report on the implementation of social and environmental responsibility
• Report on supervisory duty that has been performed by the board of commissioners during the previous accounting year
• Salary and compensation for the members of the board of directors and board of commissioners for the previous accounting year

Accounting requirements

What is the date of financial year-end?

The financial year-end for an Indonesian company is the same as the calendar year, which is 1 January to 31 December.

If your company’s financial year is not the same as the calendar year, the reporting deadline is four months after the end of the financial year.

How are auditors appointed?

The appointment of an auditor must be done during the GMS and appointment is assigned by the board of commissioners.

Tax payment and filing deadlines

Indonesian tax deadlines

Tax penalties in Indonesia

Conclusion

Every step of the business compliance for Indonesian companies is important and can affect the incorporation of your company if not done correctly. We at Acclime have services that will guarantee that your company satisfies with the requirements of the business compliance. Feel free to get in touch with us if you need support.