The establishment of a Limited Liability Company in Indonesia, better known locally as Perusahaan Terbuka or PT, is regulated in Chapter VI of the Ease of Doing Business, specifically in Section Five on Limited Liability Companies. It is outlined in Law Number 6 of 2023, which ratifies the Government Regulation in Lieu of Law Number 2 of 2022 on Job Creation (“Job Creation Law”). The main goal of this law is to simplify the business process.
According to Article 1, paragraph 1 of Law Number 40 of 2007 on Limited Liability Companies (LLC Law) and Article 109 of the Job Creation Law, a Limited Liability Company, referred to as a Company, is a legal entity formed by a partnership of capital. It is established through an agreement and conducts business with capital that is entirely divided into shares. It can also refer to an individual legal entity that meets the criteria for micro and small enterprises as specified in relevant legislation.
There are two types of Companies, as regulated in Article 2, paragraph (1) of the Regulation of the Minister of Law and Human Rights Number 21 of 2021 on the Requirements and Procedures for Establishment, Amendments, and Dissolution of Limited Liability Companies (“Permenkumham 21/2021”):
- Capital Partnership Company; and
- Individual Company.
Differences in Establishment Requirements
The requirements for establishing these two types of companies differ, including the criteria for the business actors. Here is a more detailed explanation:
Requirements for Establishing a Capital Partnership Limited Liability Company (PT Biasa)
Under Article 7 of the LLC Law and Article 109 of the Job Creation Law, a Capital Partnership Company must be established by at least two individuals with a notarial deed written in the Indonesian language.
Each founder is required to subscribe to shares upon the Company’s establishment. The Company obtains legal entity status once it is registered with the Minister of Law and Human Rights and receives a registration certificate.
If the number of shareholders falls below two within six months of this occurrence, the shareholders must transfer part of their shares to another individual, or the Company must issue new shares to another party.
Also read: Pentingnya Pemahaman Menyeluruh terhadap Legalitas Kontrak Bisnis
Requirements for Establishing an Individual Limited Liability Company
According to Article 153A, paragraph (1) of the LLC Law in conjunction with Article 109 of the Job Creation Law, an Individual Limited Liability Company can be established by one individual who meets the criteria for micro and small enterprises.
Article 6, paragraph (1) of Government Regulation Number 8 of 2021 (“PP 8/2021”) stipulates that an Individual Company must be established by an Indonesian citizen who completes a Statement of Establishment in the Indonesian language.
The individual must be at least 17 years old and legally competent.
A crucial legal document for all business actors, whether individuals or companies, is the Business Identification Number (Nomor Induk Berusaha/NIB). This requirement replaces the previous mandate for companies to possess a Company Registration Certificate (Tanda Dafter Perusahaan/TDP). The NIB serves as the official identification for business actors, demonstrating their registration for conducting business activities.
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Also read: Panduan Lengkap Pendirian Yayasan
Legal References:
- Law Number 6 of 2023 concerning the Ratification of the Government Regulation in Lieu of Law Number 2 of 2022 on Job Creation.
- Law Number 40 of 2007 concerning Limited Liability Companies (“LLC Law”).
- Regulation of the Minister of Law and Human Rights Number 21 of 2021 on the Requirements and Procedures for Establishment, Amendments, and Dissolution of Limited Liability Companies (“Permenkumham 21/2021”).
- Government Regulation Number 8 of 2021 concerning Basic Capital of Companies and the Registration of Establishment, Amendments, and Dissolution of Companies Meeting Micro and Small Business Criteria (“PP 8/2021”).
- Government Regulation Number 5 of 2021 on the Implementation of Risk-Based Business Licensing (“PP 5/2021”).