“During the company liquidation process in Indonesia, the Company will not allowed to conduct any legal action, except if it is required to settle all of the Company’s business limitedly only for the purpose of liquidation process.”
Indonesia is known as one of Asia’s most attractive emerging markets and investment target (source: indonesia-investments.com). Many investors have established their direct investment here in the form of a Company i.e. Limited Liability Company (PT).
However, after the establishment of their Company, in reality, aside from potentially will earn profit, a Company could potentially also deal with an unexpected situation e.g. capital loss (deprivation) or other event that could impacted and compel the investors to close down their Company here in Indonesia.
When a Company has decided to dissolve their entity (liquidation), they need to proceed certain agenda as stipulated on Law No. 40 of 2007 on Limited Liability Company (Company Law).
Things To Know in Company Liquidation Process in Indonesia
Please be informed that based on Company Law, company liquidation process in Indonesia can only proceed because of these following reasons:
a. Based on the resolution of General Meeting of Shareholders (GMS);
b. Due to the termination of the Company’s duration as stipulated in the articles of association;
c. Based on the court order (verdict);
d. Due to the revoked bankruptcy statement based on binding order of the commercial court, and the bankrupt assets of the Company is not sufficient to pay the bankruptcy cost;
e. Due to the condition that the bankrupt assets of the Company has been declared in the condition of insolvency as regulated in the Law regarding Bankruptcy and the Suspension of Debt Payment; or
f. Due to the revocation of the Company’s business permit, so that the Company is obliged to conduct liquidation in accordance with prevailing regulation.
Further, in the event of Company liquidation occur or has been stipulated, it must be followed with the appointment of liquidator (appoint by GMS or Court Order).
Liquidator will play a significant role in Company’s liquidation process, with the following example:
a. Responsible to report all of the liquidation process to GMS or Court.
b. Notify all creditors regarding the Company’s liquidation process, by way of announcing the Company’s dissolution in a National Newspaper and in the State Gazette of the Republic of Indonesia.
c. Performing settlement of the Company’s assets during the process of liquidation.
During the liquidation process, the Company in Indonesia will not allowed to conduct any legal action, except if it is required to settle all of the Company’s business limitedly only for the purpose of liquidation process.
However, please note that Company will not lose its status as legal entity until the completion of liquidation process and the report of the liquidator is accepted by the General Meeting of Shareholders or by the court.
Further, title “in liquidation” must be attached on each outgoing letter of the Company correspondence with any third party.
Moreover, once all of the Company Liquidation process has been completed finish, The Minister of Law and Human Rights will announce the termination of the Company’s status as legal entity in the State Gazette of the Republic of Indonesia.
Gaffar & Co.
Gaffar & Co. is an Indonesian Law Firm that Focus on Commercial Law Area which includes investment regulatory.
For further queries and information, contact us:
+62-21- 50806536| info@gaffarcolaw.com | www.gaffarcolaw.com
Author: Arif Gaffar
