LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name. The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP. Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct. Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity. Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.

Company Registration in Indonesia |

Overview of Company Registration in Indonesia

Numerous small islands make up the country of Indonesia, which is one area. This nation is renowned for its rich history and varied cultures. It is situated halfway between the Pacific and Indian oceans. It is the fourth-largest economy in Asia. Its population is the fourth-largest in the world. As a result, Indonesia offers investors many chances.

Overview

After China and India, its domestic markets are the largest in all of Asia. The services industry has recently been fostered by the Indonesian government. As a result, several types of services are flourishing in Indonesia. The GDP is expanding quickly and steadily. Indonesia's GDP is currently 6.1%. This indicates that things are looking up for investors in Indonesia. Thus, an investor should take into account all of the aforementioned factors while registering a company in Indonesia.

In terms of daily costs, rent, and utilities, Indonesia has a very low cost of living. As a result, investors can easily establish a business in Indonesia. Various double taxation agreements exist between Indonesia and other nations, including those with China, Japan, and India. Indonesia is ranked 34th globally for competitiveness, according to this metric. This would also include access to cheap labor and local manufacturing services that are available in Indonesia for business. An investor should therefore weigh all of the aforementioned advantages before registering an Indonesian company.

Benefits of Indonesian Company Registration

The advantages of registering a company in Indonesia are as follows:
Multiple Cultures- Indonesia has a rich cultural history. Due to migration of many ethnic groups, the nation has diverse civilizations. An investor can so conduct business in Indonesia with ease.

Economy- After China and India, its domestic markets are the largest in all of Asia. The services industry has recently been fostered by the Indonesian government. As a result, several types of services are flourishing in Indonesia. Indonesia's GDP is at 6.1% and is steadily increasing. This demonstrates Indonesia's favourable status for foreign investment. Thus, an investor should take into account all of the aforementioned factors while registering a company in Indonesia.

Special Economic Zones- In Indonesia, various SEZ have been developed. These SEZs offer a variety of advantages to investors, including tax rebates. subsidies of various kinds and manufacturing benefits. There would also be tax breaks available, like a VAT exemption and a lower corporate income tax rate.

Low-cost labor- When compared to other Asian nations, Indonesia has relatively low labor costs. Therefore, labor can be hired to complete work. In addition, Indonesia has a diverse labor force, which presents a variety of opportunities.

Eligible Business Structures for Indonesian Company Registration

The following business structures are acceptable for company registration in Indonesia-
Entity wholly owned by foreigners- The term "Penanaman Modal Asing (PMA)" is also used to refer to this type of corporate entity. A foreign shareholder may be the owner of this type of entity. This would apply for the first 15 years. The business is required to designate a resident Indonesian after this time frame is over. The local Indonesian must own 5% of the business. Setting up this kind of corporate structure is advantageous for a foreign company. One resident director must be chosen in order to create this type of entity. In addition, two shareholders must be chosen. For this kind of organization, USD 300,000 is the required minimum paid up capital.

Limited Liability Company (LLC)- This type of legal entity is also referred to as a "Perseroan Terbatas." The most popular form of business in Indonesia is an LLC. A foreign shareholder is possible for an LLC. The e Capital Investment Coordinating Board's (BKPM) prior approval is required before an LLC may begin doing business. Division Office

Branch Office- A branch office established in Indonesia is merely an addition to the parent business. A branch office would do business on behalf of the parent corporation. The branch office is not subject to a distinct limited liability.

Representative Office- An Indonesian representative is only an outgrowth of the parent corporation. A representative office would handle non-project duties such as liaising. This will involve work on the promotion of services. Any sales that are profitable, however, cannot be made.

Trading Company Nominee- Typically, a company of this kind would use foreign capital to buy a property. The land would be purchased in the nominee trading company's name. This type of corporation allows a business to overcome any limits on international investment. Two shareholders, two directors, and a minimum capital of 50 million Rupiah are needed to establish this sort of organization. To function, this kind of entity needs to have a registered office address.

Joint Venture- A candidate for Indonesian company registration may choose for a joint venture to conduct business there. The Indonesian government encourages partnerships between domestic and international businesses. A PMA business is created when a joint venture is founded in Indonesia. A minimum of two shareholders and directors must be chosen in order to create this kind of business.

Public Limited Company- The public may purchase shares from this type of company. An initial public offering can be used to sell shares to the general public (IPO). A corporation is referred to as a public limited company if it has more than 300 shareholders and a paid up capital of three billion rupiah.

Minimum Requirements for Indonesian Company Registration

Minimum Requirements for Indonesian Company Registration
Lowest Share Capital- A corporation must have a minimum amount of share capital to register in Indonesia. Each corporation would have a unique share capital. For instance, USD 300,000 in share capital is needed to establish a PMA. In a similar manner, 3 billion rupiah in share capital is the minimal amount needed to establish a public limited company. In Indonesia, an LLC must have 50 million rupiah in minimum capital. a minimum of one shareholder

Minimum number of Shareholders- According to the type of company, these needs would once again vary. One shareholder and one director, for instance, are needed to register the PMA. However, there must be a minimum of two shareholders when forming other companies.

Registered Office- For a corporation to be registered in Indonesia, a physical registered office is necessary.

Minimum of two directors- According to the type of company, these needs would once again vary. One director, for instance, is necessary in order to register the PMA. However, a minimum of two directors is needed to form other corporations.

Requirements for residency- There are some corporate structures where stockholders are required to be Indonesian citizens. There are some organizations, though, where a resident need not apply.

Indonesian Company Registration Process

For the registration of a corporation in Indonesia, the following process must be taken into account-
Foreign Limited Liability Company
The process outlined below is used to establish a foreign limited liability company under Indonesian company registration.

Reservation of Name- The applicant for Indonesian company registration must first reserve the name of the company. The Ministry of Law and Human Rights must hold the LLC's name in reserve (MOLHR). Such a name must be in Indonesian in order to meet the name requirements. Government Regulation No. 43 of 2011, which is dated 4 October 2011, outlines the requirements for name registration.

Approving the Association's Articles of Incorporation- It is necessary to file the articles of association to the MOLHR using digital tools. The appropriate notary can complete this. The aforementioned must be submitted within 60 days. This must occur 60 days after the deed of establishment's execution, which contains the articles of organization.

Acceptance of Company- If the business can register as an LLC within 14 days, the MOLHR will assess the application electronically and grant approval. This endorsement would serve as official proof that the business has been created.

LLC domicile- After completing the aforementioned procedure, the company's domicile would be received from the relevant Sub-District Office.

Number for Tax Registration- The relevant tax body would obtain the taxpayer's Nomor Pokok Wajib Pajak (NPWP) registration number.

Obtaining approval from the ministry of trade (MOT)- Following MOLHR clearance, the business must register with the companies registration. Within three months of the business' incorporation, this can be done at the relevant MOT regional office. The Online Single Submission (OSS) technology would then be used to integrate the application after that. For the registration of companies in Indonesia, this would provide a business registration number. The Nomor Induk Berusaha, or NIB, is the company's business registration number and is issued by the OSS.

Publication- The Articles must be delivered to the State Printing Office after receiving the aforementioned permissions in order for this registration to be published in the State Gazette. The notary public will handle this. Such a procedure would be used 14 days from approval.

Post Compliance Requirements for Indonesian Company Registration

Following a company's registration in Indonesia, there are specific post-compliance obligations that it must adhere to-
Shareholder Meetings- Annual General Meetings must be convened no later than six months after the fiscal year's end. LLC is required to do accomplish this. The firm may, however, also call an EGM at its discretion.

Board of Directors Meeting- The LLC would not be required to have Board Meetings until it was specified in the company's articles of organization. Board meetings are required for public limited corporations.

Corporate Tax- In Indonesia, a 25% business tax is imposed. The official tax authorities must receive the annual tax return. This can be done via the online tax system provided by MOLHR.

Business Registration Compliances- LLCs must complete their initial registration with the ministry of trade within three months. The establishment would then need to undergo a renewal, which is done every five years.

Documents Required for Indonesian Company Registration

For the registration of a corporation in Indonesia, the following documentation is needed:

Articles of Association

Memorandum of Association

Notarized Company Documents

Deed of Appointment, and Approval Regarding Company Name

The Notary Akta (Notarial Deed)

Ministry of Law and Human Rights endorsement

Copy of a Domicile Letter and a Current Passport

A copy of the shareholders' and directors' passports, if they are foreign residents.

Appointment letter from a foreign parent firm (for directors and shareholders) (This would be necessary for particular institutions like the representative office and branch office)

Registration with the foreign parent company's chamber of commerce

Intended letter (for starting a branch office and representative office).

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FAQs

Concept of LLP

LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.
The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.

Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.

Structure of LLP

LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession.

Advantages of LLP

LLP form is a form of business model which:

(i) is organized and operates on the basis of an agreement.

(ii) provides flexibility without imposing detailed legal and procedural requirements

(iii) enables professional/technical expertise and initiative to combine with financial risk-taking capacity in an innovative and efficient manner

Other Countries where this form is available

The LLP structure is available in countries like United Kingdom, United States of America, various Gulf countries, Australia and Singapore. On the advice of experts who have studied LLP legislations in various countries, the LLP Act is broadly based on UK LLP Act 2000 and Singapore LLP Act 2005. Both these Acts allow creation of LLPs in a body corporate form i.e. as a separate legal entity, separate from its partners/members.

Difference between LLP & ‘Traditional Partnership’

Under “traditional partnership firm”, every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner.
Under LLP structure, liability of the partner is limited to his agreed contribution. Further, no partner is liable on account of the independent or un-authorized acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful acts or misconduct

Difference between LLP & Company

A basic difference between an LLP and a joint stock company lies in that the internal governance structure of a company is regulated by statute (i.e. Companies Act, 1956) whereas for an LLP it would be by a contractual agreement between partners.
The management-ownership divide inherent in a company is not there in a limited liability partnership.
LLP will have more flexibility as compared to a company.
LLP will have lesser compliance requirements as compared to a company.

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Overview Benefits of Indonesian Company Registration Eligible Business Structures for Indonesian Company Registration Minimum Requirements for Indonesian Company Registration Indonesian Company Registration Process Post Compliance Requirements for Indonesian Company Registration Documents Required for Indonesian Company Registration How to contact Estabizz for registration of a sole proprietorship FAQs Blog