Introduction
It is very important to have clear understanding of all the steps involved and changes required whenever businesses in Indonesia are making changes in company documents. Sometimes revision in company documents is required because of the new changes in the company law requiring all businesses to change their company documents to align them with new laws and regulations. Changes in company documents may also happen due to business restructuring, merger of acquisition of businesses. Changes in company documents can be anything from changes in business location, to business activities, or to changes in shareholders, directors, or commissioners. For further details about the structure of companies in Indonesia, you may read this article.
This advice is rooted in the understanding that alterations to your company, whether in activities, location, or shareholders, demand a substantial investment of time and legal documentation. These changes almost every time also require engaging a public notary and producing a new set of company documents to reflect the latest changes. Businesses therefore should ensure that the need to revise business documents does not occur frequently. However, inevitably, businesses may find themselves at a juncture where restructuring or changes in company documents becomes imperative. This article aims to guide you through prevalent changes, providing insights crucial for business leaders.
Incorporating new or amending existing corporate shareholders
General Meeting of Shareholders (GMS)
Initiating changes to corporate shareholders necessitates approval from the General Meeting of Shareholders (GMS). This decision-making body extends invitations to all shareholders in compliance with the Articles of Association.
With a controlling stake of at least 51% from the attending shareholders, the GMS can endorse the transfer of shares, inclusion or exclusion of shareholders, or modifications to corporate governance. In the event the 51% quorum isn’t met, a subsequent invitation is mandatory, with a minimum of 1/3 presence.
Securing approval for changes in shareholders
The existing shareholders must approve the amendments in the shareholding structure of the company. It is important to highlight a crucial scenario here which is that certain business activities, particularly those involving direct foreign shareholding in the form of a Foreign Investment Company (PT PMA), may be restricted for foreigners. To engage in such activities, foreigners often opt for nominee shareholders to establish a Local Indonesian Company (PT Local). However, reliance on local nominees, whom they may not know well, can pose risks.
In some instances, when foreigners decide to change shareholders after the initial incorporation, nominee shareholders may refuse cooperation and decline to sign the necessary documents for the changes in company documents. This situation can escalate, with instances where nominee shareholders attempt to exploit the situation by demanding significant sums of money before agreeing to sign the required company documents for the changes in shareholders. The careful consideration of such factors is crucial when appointing nominee shareholders to navigate these intricate processes smoothly.
Tax implication on the share transfers
Shares in a company can be transferred based on nominal value or through donation. Tax implications arise when based on nominal value, while donations involve transferring shares without cost. The donation option is occasionally favored by foreign investors for various reasons.
Changes in the company's capital
Every company must adhere to minimum capital requirements in Indonesia. While changes in total capital of company typically involve increments, reductions are admissible if they don’t breach the minimum capital prerequisites. During adjustments, proof of paid-up capital is pivotal, showcasing the company’s operational capability to transfer funds directly. The process necessitates approval from BKPM and the Ministry of Law and Human Rights.
Changes in the company's name
While changing the company name is always possible however the same regulations govern the changes in company name as during the initial setup of company. For example, the Ministry of Law and Human Rights currently mandates a minimum of three words for new foreign company names.
Name alterations mandate approval from the local tax office, BKPM, and the Ministry of Law and Human Rights. A new tax card and an amendment to the Articles of Association by a public notary are also prerequisites.
Relocating company’s address
Shifting your company’s official location provides two alternatives: within the same district or to a different district. Even moving within the same building unit constitutes a location change.
Changes within the same district involve submitting a new domicile letter to the tax office. However, changing districts necessitates closing the current tax office account and opening a new one in the new district. This process warrants careful consideration due to the considerable time involved. Another important point to add here is that changes in tax office is not possible until the company has met all the compliance requirements at the existing tax office such as filing monthly taxes and annual corporate tax.
Altering commissioners and/or directors
Altering the commissioners and/or directors is a frequent structural change and can be implemented at any time. The General Meeting of Shareholders (GMS) plays a pivotal role in effecting these changes. With one director possessing an Indonesian Tax Card, an amendment to the Articles of Association by a public notary and notification to the Ministry of Law and Human Rights are sufficient.
A prevalent scenario of director change is when during the initial setup of Foreign Investment Company (PT PMA), foreigners have appointed a local director until the foreigner can get his/her work permit. Later once the foreigner has got the work permit then the local director is replaced with the foreigner.
Unlocking the benefits of MAM Corporate Solutions for changes in company documents
Choosing MAM Corporate Solutions for your business document revision offers distinct advantages:
Streamlined efficiency and cost savings
MAM Corporate Solutions’ service of changes in company documents ensures operational efficiency and ensures that your company documents are tailored with precision, leading to significant time and cost savings.
Navigating evolving regulations
MAM Corporate Solutions’ service of changes in company documents ensures business adjustments seamlessly align with the ever-evolving regulatory landscape, keeping you abreast of changes and ensuring compliance.
Comprehensive support
MAM Corporate Solutions’ service of changes in company documents presents a holistic solution for diverse business adjustments, serving as a one-stop-shop for your revision requirements.
How MAM Corporate Solutions can assist
Navigating the intricate landscape of corporate adjustments requires a trusted partner by your side. MAM Corporate Solutions emerges as the ideal service provider, offering comprehensive support for all your business document changes. With a commitment to efficiency, compliance, and a track record of successful client partnerships, MAM Corporate Solutions ensures a seamless journey through the complexities of restructuring. For a reliable ally in steering your business through changes, Contact us here or fill the form below and let MAM Corporate Solutions be your guide.