How to Register Company in Indonesia?

Ashish M. Shaji

22 Apr, 2022

Registering a company anywhere in the world requires going through the due process of law prescribed by the respective country. Business owners need to do a lot of planning, decision making etc. before setting up a company. Factors like location play a pivotal role in the success of the company’s prospects. Countries like Indonesia is one of the most preferred locations for business owners due to a number of factors. In this article, we provide you with complete information on how you can Register Company in Indonesia.

Types of business entities in Indonesia

Some of the common types of business entities have been mentioned below:

• Representative Office

Representative office is the branch of an overseas parent company. It can be set up for marketing, market research or buying or selling agents. Once all permits have been obtained it can be easily established. It has a simple corporate structure with no requirements of a shareholder or a director.

• Local Company (PT)

This is one of the common forms of legal entities in Indonesia. Although it is intended for citizens of Indonesia, a foreign company or an entrepreneur willing to set up a company in Indonesia can also set up a local company under a local nominee arrangement. When compared with a foreign owned company, the paid up capital of a local company is less.

• Foreign owned company

This is a type of legal entity that can be owned entirely by foreigners. However, the maximum ownership by foreigners is determined by the business sector and business activities.

Procedure to Register Company in Indonesia

Pre-registration stage-

• Before the company is registered, you have to reserve the name of the company by applying to the respective authority in Indonesia responsible for company registration. Once you apply with the name, the name of the prospective company shall be verified by the Legal Entity Information System. This is done in order to ensure that the name of the company doesn’t coincide with any other company already registered there.
• In Indonesia, companies require minimum 2 shareholders, 1 director and one commissioner. In case of locally owned company, the stakeholders should be local whereas foreign stakeholders are allowed in case of foreign owned companies.

Registration Stage-

• Once you have a company name, then you need to draft AOA^[1]. The Articles of Association should comprise of the authorised capital, name of the company, objective of the company, number of members, methods of holding shareholders meeting, manner of distributing company profits and dividends, number of shares etc. When the articles of association is drafted, shareholders are required to sign it. 
•  Once the authority approves the AOA, it shall issue a deed of establishment. It means that the government has registered the company as legal entity. The deed of establishment includes information of founders, board of directors and shareholders.
• In case the company is proposed to be set up outside Jakarta then the company should obtain letter of domicile from the government department where the company is located. The letter of domicile is a letter from the government authority certifying residential address.
• In order to obtain other permits and licenses, meet tax obligations and open a corporate bank account, you need to register for a taxpayer identification number. The registration can be availed online. 

Post registration stage-

• Apply for the business identification number that serves as a identify proof for the existence of the business & can be used to apply for commercial licenses and operational licenses. Business identification number can be revoked by the authority if the business violates its terms and conditions.
• After the company registration in Indonesia, open a corporate bank account so that you can easily handle foreign currencies.

Documents required during registration process

The following documents will be required during the company registration process:

• deed of establishment;
• AOA;
• MOA;
• Notarised Company documents;
• Approval from the ministry of law and human rights;
• Domicile letter;
• Copy of valid passport;
• Letter of appointment from foreign parent company;
• Letter of intent to start branch office or representative office;
• Copy of the rent agreement or lease of business office;
• Reference letter from the owner of the building or landlord;
• Proof of property tax;
• Photograph of the director.

Why should you consider registering your company in Indonesia?

The following reasons attract investors to Indonesia:

• Attractive industries to do business;
• Largest economies in Southeast Asia;
• Dynamic and diverse economy;
• Strategic location;
• Welcoming to foreign businesses and investment.

Conclusion

In a nutshell, the process of registering company in Indonesia involves steps such as approval of the company name, preparation of articles of association, obtaining deed of establishment, getting the tax identification number and obtaining business identification number. As Indonesia’s economy grows steadily, it will open up lucrative investment opportunities for entrepreneurs to register company in Indonesia. Therefore, if you are planning to expand globally, then Indonesia can be a good choice to consider.

Read Our Article: Different types of Business entities in Indonesia