One of the most important requirements for setting up a company in Indonesia is that at least one of the directors needs to be an Indonesian resident. In this article, we will explore the roles and responsibilities of a resident director in Indonesia, as well as the legal criteria you need to follow when appointing one for your company.
What is A Resident Director in Indonesia?
Based on Indonesian law, every limited liability company (PT PMA) is required to have at least one resident director. Without this, your company cannot sign commercial agreements, open corporate bank accounts, or file tax reports in Indonesia. The key responsibilities of a resident director include:
- Serving as a legal representative of your company in Indonesia
- Signing authority for legal compliance in local documentation
- Ensuring the company adheres to local laws and regulations
- Statutory duties (recording of share transfers, notifying of changes to the board, coordinating with creditors)
At least one of your directors must be an Indonesian resident, which can be either an Indonesian citizen or a foreigner. In the case of a foreigner, however, you must first finalize incorporation, at which point the foreigner can act as resident director after they have secured a valid work permit through the company and a personal tax card in Indonesia.
Requirements for Choosing a Resident Director in Indonesia
When choosing your resident director in Indonesia, you must ensure that the individual meets the following legal requirements:
- An Indonesian citizen with a valid ID
- Must be 18 years or older
- Must not be bankrupt
- Must not be previously disqualified as a company director
If none of your directors is an Indonesian resident, Emerhub can assist you in outsourcing a resident director to ensure compliance with local governing laws and administrative purposes for your company in Indonesia.
How to Choose a Resident Director
Considering the legal responsibilities associated with the role, it is important to perform thorough due diligence when choosing or outsourcing a director in Indonesia. Below are some of the key considerations and best practices that you should take into account when choosing a resident director:
- Conduct a background check on your candidate, which should include investigating their financial history, business activities, and any potential legal issues.
- Request for a SLIK OJK (Sistem Layanan Informasi Keuangan Otoritas Jasa Keuangan) which provides a record of a debtor’s credit history to ensure that the Bank of Indonesia does not blacklist the candidate.
- Ensure that the resident director is available for all local representational needs which include appearing before government officials.
- Specify a duration of one year for the resident director’s tenure, which is documented in the company’s article of association.
- Create a clear resident directorship agreement between the company and the appointed resident director that details their responsibilities and liabilities.
Emerhub’s team of local experts can help you navigate all the key steps of company registration in Indonesia. Our comprehensive service includes the option of outsourcing a resident director in Indonesia if you do not already have one available. We will perform the necessary background checks to ensure they can perform the required duties and meet the legal criteria.
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