Incorporation process involves seven governmental institutions, starting from investment application and finishing with the issuance of principal license (Izin Prinsip) that allows you to start operations in Indonesia.
Indosight manages the entire incorporation process for you and your involvement is required in the beginning to get the neccesary information about your company structure and classification. For some industries you are also required to present in front of the Investment Coordinating Board where you will be accompanied by our senior consultant.
Standard incorporation time is 10 weeks.
After the incorporation is completed, you are given 1-3 years (depending on your business classification) to apply for a permanent business license. Permanent business license marks the completion of investment plan and should be acquired as soon as you are eligible for that.
In case your investment plan doesn’t involve any long term investments, such as constructing a plant, you can apply for a perment business license immediately after incorporating.
Some business activities, such as importing or construction, require additional licenses from the respective Ministries. Indosight will advise you whether your business activities require it and then will acquire the licenses for you.
All companies with any foreign shareholders are considered as foreign direct investment LLC-s (PT PMA in Indonesian). Corporate law states that only large entreprises can be foreign owned.
For most business classifications Investment Coordinating Board expects an investment plan of at least 10 billion IDR (~1 million USD). This is higher for some capital-intensive industries and also when applying for more than one classification.
Investment plan states the amount of money that is going to be invested in Indonesia. From the beginning, the expected paid up capital is at least 25% of the investment plan (~250,000 USD).
In reality companies prove it only with a notary capital statement letter and no actual money transfer is going to be validated.
Indonesian corporate law does not state a common allowed foreign ownership for all businesses. Instead the foreign ownership is regulated by the Negative Investment List and limitations are based on business classification
Investment application must clearly state the planned business activities and this is the basis for the business classification. The allowed ownership varies from completely open to completely closed to foreign investment. Indosight consultant will advise you on the exact regulations concerning your activities.
Regardless of the industry, each company must have at least two shareholders. Those can be both individuals and corporate shareholders.
In addition to the shareholders, company must have at least one commissioner (essentially a chairman) and director. Those can be the same as shareholders but don’t have to be. Indosighht also provides the commissioner and director service if required.
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