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Mar

08

Setting Up a Foreign Investment Company in Indonesia with One Shareholder – Is it Possible

The Government Regulation in Lieu of Law Number 2 of 2022 on Job Creation has amended Law Number 40 of 2007 on Limited Liability Company (“Law 40/2007”). The amendment has introduced new provisions on the requirements for the establishment of a limited liability company, including the shareholders' requirements. Before the amendment, Law 40/2007 stipulated that a limited liability company must be established by at least two shareholders. However, after the amendment, Article 7 jo. Article 153A (1) Law 40/2007 allows for the establishment of a company by only one shareholder, but only if the company meets the criteria of Micro and Small Enterprises.

Is it possible for a foreign investment company to be established with only one shareholder? The scale of an enterprise is determined by its capital. According to Article 11 (2) of the Regulation of the Investment Coordinating Agency Number 4 of 2021 on Guidelines and Procedures for Risk-Based Business Licensing Services and Investment Facilities (“PBKPM 4/2021”): a. A Micro Enterprise has a business capital of up to Rp1,000,000,000.00 (one billion rupiah) excluding land and property/business premises. b. A Small Enterprise has a business capital of more than Rp1,000,000,000.00 (one billion rupiah) up to a maximum of Rp5,000,000,000.00 (five billion rupiah) excluding land and property/business premises.

However, a foreign investment company is classified as a Large Enterprise, as per Article 12 (7) PBKPM 4/2021. The minimum capital requirement for a foreign investment company is the issued and paidup capital of at least Rp10,000,000,000.00 (ten billion rupiah). Therefore, a foreign investment company is not eligible for the establishment of a limited liability company by a single shareholder (individual limited liability company) because it does not meet the criteria of Micro and Small Enterprises.

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Author: Suryani Lim