Jun

07

KNOW YOUR BENEFICIAL OWNERS PRINCIPLE

Who’s in charge? Where’s the head hancho? How do I find the big boss?

Sometimes discerning just who is legally responsible for a company can be problematic. In Indonesia however, the process of identifying the top dog is one step closer to transparency in business.

On 5 March, 2018, The President of Indonesia issued President Regulation No.13 Year 2018 concerning the Implementation of the Principle on Recognizing Beneficial Ownership of Corporations in the Framework of the Prevention and Eradication of Money Laundering and Criminal Acts of Terrorism Financing (“PR13”) .Other regulations regarding Money Laundering and Terrorism Financing can be found in the Financial Services Authority Regulations No.12/POJK.01/2017.

Highlights of PR 13

– Corporations

According to Article 1 Point 1 PR13, ‘Corporations’ is defined as “Organized groups of persons or assets, whether being in the form of a legal entity or not” . Hence, the definition clearly covers and applies to all kinds of business entities legal or non-legal. Furthermore, Article 2 Point 2 PR13 clarifies that ‘Corporations’ include:

  1. Limited liabilities companies;
  2. Foundations;
  3. Associations;
  4. Cooperatives;
  5. Limited Partnerships;
  6. Firm Partnerships and;
  7. Other forms of corporations.

Every Corporation that fulfills the criteria as ‘organized groups of persons or assets’ or classified as an A to G type corporation as mentioned above is obliged to determine the Beneficial Owners of the Corporation. Moreover, PR13 regulates that Corporations shall apply the Know Your Beneficial Owners Principle with the method of appointing one employee to identify and verify the Beneficial Owners of Corporation and to provide all related information of the corporation and its Beneficial Owners to any Related Government Institution/Government Agency when requested.

In reference to PR13 Article 1 Point 2, ‘Beneficial Owners’ is defined as “an individual who possess the power to appoint and remove the directors, commissioners, managers, trustees, or supervisors of a corporation, who has control over the corporation, who is entitled to receive, and /or actually receives, direct or indirect benefit from the corporation,who is the true owner of the assets or share capital of the corporation, and / or who fulfill the other criteria set out in this Presidential Regulation”. As you can see, this definition does not explicitly define whether a corporation such as a limited liability company can be referred to as Beneficial Owners. However, the definition of “true owner of the assets or share capital” is explicity referring to a person.

The regulations regulate a criteria to identify Beneficial Owners from Point A to Point G as mentioned above. For more specificity, the criteria to determine a limited liability company’s Beneficial Owners are as follows :

  1. The Beneficial Owners possess more than 25% of the shares in the limited liability company as stated in the articles of association.
  2. The Beneficial Owners possess more than 25% of the voting rights in the limited liability company as stated in the articles of association.
  3. The Beneficial Owners receive more than 25% of the annual profits earned by the limited liability company.
  4. The Beneficial Owners possess the authority to appoint and remove member of Board of Directors and Board of Commisioners.
  5. The Beneficial Owners possess the Power to influence or to control the limited liability company without authorization from any party.
  6. The Beneficial Owners receive benefits from the limited liability company.
  7. The Beneficial Owners are the actual owners of the fund used to subscribe for the shares of the limited liability company.

Moreover, PR13 Article 4 point 2 has stated that an individual who fulfills the criteria in Points E, F and G is an individual (person) who does not fulfill the criteria in Points A, B, C, and D.

Further interpretation of Article 4 point 2 on Letterlijk reveals that Points A to D are the criteria to determine the Beneficial Owners on general terms as stated in Articles of Association; however Points E, F, and G are the criteria to determine the Beneficial Owners in the event there’s some kind of shares ownership arrangement.

Company Obligations in Relation to PR13

The obligations of a Company subject to PR 13 are the following :

  1. To appoint one of its employees to implement Know Your Beneficial Owner Principle and to provide related information to relevant authorized government institutions or agencies.
  2. To determine the Beneficial Ownership through identification and verification.
  3. To update the information on the Beneficial Ownership on an annual basis.
  4. To provide a statement letter or registration of the Beneficial Ownership to a related government agency.
  5. To fill the Beneficial Ownership data and information in terms of a minimum of five years.

The Beneficial Ownership data and information to be collected include the following :

  1. Full name of the Beneficial Owner; Identity card number or driving license number or passport of the Beneficial Owner;
  2. Place and date of birth of the Beneficial Owner;
  3. Residential address on the identity card of the annual ;
  4. Residential address in the country of origin if the Beneficial Owner is a foreign citizen;
  5. Taxcard number of the Beneficial Owner;
  6. The link between company and the Beneficial Owner.

Yet at the end of the day, the complete guide to implement a report on Know Your Beneficial Owner Principle is still not entirely clear under the PR13. However, we do anticipate further regulations on implementation will be issued in the near future.

Written by Erick Sanjaya Perkasa, SH., M.Kn

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Dear valued Visitor,

Data is a valuable currency in this new world. In the midst of digital transformation, the Indonesian government has taken the final decision to pass the Pelindungan Data Pribadi (PDP) Bill by September 2022. The PDP Law applies to all businesses established in Indonesia and puts the consumer in control. The task of complying with this regulation falls upon businesses.

The PDP Law affects a variety of business operations, including how your sales team prospect and how marketing initiatives are managed. Businesses have had to reassess their business procedures, applications, and forms. Additionally, all businesses that work with personal data should designate a Data Protection Officer (DPO) or data controller to oversee PDP compliance.

In line with this spirit, it gives us great pleasure to announce and share with all our esteemed clients and business associates that Schinder Law Firm is prepared to assist your company to understand the impacts of the Personal Data Protection Law (PDPL) and take the required measures to comply with the law. Our Privacy, Data Protection, and Cybersecurity practice group is a pioneer in providing data privacy law services in Indonesia. Personal data protection services include but are not limited to:

  • Assessing the existing systems, processes, and controls, etc.
  • Providing provide gap assessment on the existing systems, processes, and controls, etc.
  • Developing and ensuring contracts and agreements comply with the PDP Law
  • Developing policies, best practices, and procedures
  • Advising on the security of personal data and managing data breaches
  • Acting as the Data Protection Officer (DPO) and advising upon the appointment, role, and responsibilities of a data protection officer
  • Advising on cross-border transfers of personal data
  • Carrying out data protection impact assessments and data protection audits
  • Recommending other necessary corrective actions in order to comply with the PDP Law
  • Training on the PDP Law tailored to clients’ businesses

We look forward to many more opportunities in the year ahead with your continued support and trust. For consultation, please send us a WhatsApp or Email.

Warmest regards,
Naz Schinder
Managing Partner

Keep Up with the New Law in Indonesia: Personal Data Protection

  • Assessing the existing systems, processes and controls, etc.
  • Providing provide gap assessment on the existing systems, processes and controls, etc.
  • Developing and ensuring contracts and agreements comply with the PDPL.
  • Developing policies, best practices and procedures.
  • Advising on security of personal data and managing data breaches.
  • Acting as the Data Protection Officer (DPO) and advising upon the appointment, role and responsibilities of a data protection officer.
  • Advising on cross-border transfers of personal data.
  • Carrying out data protection impact assessments and data protection audits.
  • Recommending other necessary corrective actions in order to comply with the PDPL.
  • Training on the PDPL tailored to clients’ businesses.
Privacy, Data Protection and Cyber Security
We help our clients to understand the impact of the Personal Data Protection Law (PDPL) on their companies and take the required measures to comply with the law.
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