Structure of PT PMA in Indonesia

Company hierarchy

Structure of PT PMA is same as that of any other company in Indonesia.  If you look closely in the organisational layout of a Foreign-owned company (PT PMA), it requires a minimum of two shareholders, a commissioner and a director. What are their functions? Let’s find out.

Shareholders of Foreign Investment Company (PT PMA)

Shareholders are the individuals or legal entities who own the company. In other words, they are in the highest position in the company’s hierarchy. This is because they are the decision-makers and their role is to make the decisions through the general meeting of shareholders (GMS). According to Indonesian law, all the companies in Indonesia, including Foreign-owned company (PT PMA) must have at least two shareholders. Who can be a shareholder? The shareholders can be individuals or legal entities of Indonesia or foreign countries.

Furthermore, a Foreign-owned company (PT PMA) is not required to have a local shareholders if a particular industry or business activity is not listed in the Negative Investment List (Read more about Negative Investment List here). It means that foreign investor can own the 100% shares of Foreign-owned company (PT PMA) if Negative Investment List allows as such. However, if a particular business activity is in the Negative Investment List then the rule is entirely different. In such a situation, the Indonesian law states that the local Indonesian shareholders must own a specified percentage shares of the company. This local shareholding percentage can range anywhere from 20% to 95% depending on the business field in the Negative Investment List.

Commissioner of Foreign Investment Company (PT PMA)

In all corporate structures in Indonesia, commissioners hold the second highest position in the company including in a Foreign-owned company (PT PMA). The commissioners are not part of the daily company’s management and they are not required to have part of the company shares. However, they have an important role which is supervising the Board of Directors (BoD) and giving advice to the directors. Besides that, commissioners also monitor the company’s management to make sure that every activity and decision is in line with the company’s objective. If you decide to establish a company in Indonesia, make sure your company have at least one commissioner.

Who can be the commissioner of Foreign Investment Company (PT PMA)?

A foreigner is allowed to be a commissioner in the Foreign-owned company (PT PMA). However, company must sponsor the suitable Visa (KITAS) for the commissioner. MAM Corporate Solutions can help you to process the KITAS for your company officials. If you need more information about company sponsored KITAS, click here.

After having KITAS, commissioner can open a local bank account and can receive payment from the company legally. After 3 years of resident permit, commissioners can then apply for a permanent resident.

Directors of Foreign Investment Company (PT PMA)

Just below the commissioners in the company’s hierarchy are the directors of the company. Unlike commissioners and shareholders who do not take part in the day-to-day management of the company, the directors handle the company’s daily management. Some of their responsibilities include producing annual financial statements, signing contracts with vendors, suppliers, and clients, handling tax returns, management of employees’ health insurance and other business activities. Click here if you need any assistance with Accounting & bookkeeping and corporate tax.

Although directors are responsible for lot of operations, directors are not employees of the company and therefore they are treated differently.

For example, directors’ salaries, health insurance, festive payments, and other benefits are decided by the General Meeting of Shareholders (GMS). Every company including Foreign-owned company (PT PMA) must have at least one director and if there are more than one directors, one of them will be appointed as a President Director to lead the Board of Directors (BoD)

Can foreigners be directors?

Of course they can. All the foreigners who act as directors are required to have residence permits (Company sponsored KITAS). Without KITAS, directors cannot be legally hired by a Foreign-owned company (PT PMA). If you need more information about company sponsored KITAS, click here.

How MAM Corporate Solutions can help?

At MAM Corporate Solutions, we will review your business activities and our experts will advise you on the most suitable company structure which will not only comply with all laws of Indonesia but will also prove to be effective.

Contact MAM Corporate Solutions

If you need help with accounting, bookkeeping or your tax matters, Contact us here or provide below as much detail about your inquiry as possible to receive the most relevant response.

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