“Under the President Regulation No. 13 of 2018, every corporation is required to report its beneficial ownership information to the Ministry of Law and Human Rights. This reporting duty is conducted through the General Legal Administration (AHU) Online web portal system, which can be conducted by notary, founder or management of the company, or any other person authorized by the company.”
According to President Regulation No. 13 of 2018 on the Implementation of the Knowing the Beneficial Owner Principle by Corporations for the Purpose of Prevention and Eradication of Money Laundering and Terrorism Financing (“PR 13/2018”), Beneficial Owner (“BO”) is an individual who may appoint or dismiss the board of directors, board of commissioners, management, advisor, or supervisor in a corporation, has the ability to control corporation, is entitled to and/or obtain benefit from corporation either directly or indirectly, is the actual owner of the fund or Corporation shares and/or complies with this criteria.
Through this PR 13/2018, every corporation is required to report BO to the obligated institution which is the Ministry of Law and Human Rights and will get sanctions for corporations that do not report BO. Therefore, it is important to know the procedures for reporting the BO of the company.
Procedures for Beneficial Owner Reporting
Procedures for reporting company beneficial owners are regulated in PR 13/2018 and Minister of Law and Human Rights (“MLHR”) Regulation No. 15 of 2019 on Implementing Procedures for the Application of Knowing the Beneficial Owner Principles by Corporations (“MLHR Reg. 15/2019”). Corporations are required to submit valid BO information to the authorized institution, which is MLHR through the General Legal Administration (Administrasi Hukum Umum or “AHU”) Online web portal system. The information regarding BO is submitted by the following procedure:
1. Submission of beneficial owner information of the corporation for application, registration, and/or ratification of the corporation is executed by a notary via AHU Online. This submission can be done in a number of ways:
a. provision of information on the BO of the corporation in the condition that the corporation has determined the BO;
b. submission of a statement letter on the willingness of the corporation to submit information on the BO of the corporation to the MLHR in the condition the corporation has not determined the BO. However, the corporation is required to determine and submit information on the BO of the corporation no later than 7 (seven) working days after the corporation has obtained a business license or registration certificate from the authorized institution/agency;
2. Submission of beneficial owner information when the corporation is running its business or activities can be done by:
a. Notary;
b. Founder or management of a corporation; or
c. Other parties authorized by the founders or management of the corporation by a power of attorney.
This reporting duty must be fulfilled upon every change and/or update of information on the BO to the authorized institution through AHU Online. Submission of changes to BO information by corporations to MLHR must be submitted no more than 3 (three) working days after changes to BO information. Furthermore, there is an obligation for corporations to update BO information periodically every 1 (one) year.
Application of Knowing the Beneficial Owner Principle
Corporations are required to apply the principle of knowing the beneficial owners of the corporation. This is conducted by:
1. apply the application of knowing the BO of the corporation;
2. provide information about the corporation and the BO of the Corporation at the request of the authorized institution and law enforcement agencies.
Knowing the BO principle by the corporation consists of BO identification and BO verification. Identification of corporate BO through BO information (which is also inputted through AHU Online) which includes:
a) full name;
b) identity number, driver’s license or passport;
c) place and date of birth;
d) nationality;
e) the address listed on the identity card;
f) address in the country of origin in the case of a foreigner;
g) Taxpayer Identification Number (Nomor Pokok Wajib Pajak or NPWP) or similar tax identification number; and
h) correlation between corporations and BO.
In addition, corporations must also verify through suitability research between BO information with supporting documents, and if necessary, the authorized institution can carry out verification.
Beneficial Owner Determination Category
The corporation determines the category of the BO of the corporation in accordance with the information that has been submitted by the corporation to the authorized institution, the category of the BO is:
a) Identified BO, is a corporation that has determined BO after identification and verification of the BO;
b) Unidentified BO are corporations that have determined BO but have not been identified and verified; and
c) Unverified BO, a corporation that has determined a BO after identification, but has not been verified.
Report Obligation of the Beneficial Owner
As mentioned earlier, every corporation is required to report BO to the obligated authority which is the Ministry of Law and Human Rights and will get sanctions for corporations that do not report beneficial ownership. These sanctions are not clearly explained in the regulation but based on our confirmation with the Directorate General of Public Legal Administration, we were informed that in the regulation the word ‘mandatory’ to determine the BO based on PR 13/2018 and sanctions will be given to those who do not report beneficial ownership will result in the blocking of the corporation’s AHU Online account. This is because those who do not report BO have neglected its obligation.
Furthermore, based on practical experience, if corporation does not conduct beneficial owner reporting then AHU Online will give administrative sanction in the form of blocking process, in which the corporation cannot access AHU Online for obtaining decision or notification letter from MLHR if there is a change of the corporations’ Article of Associations, change of corporation’s data, other corporate actions such as merger, acquisition, liquidation, etc., as well as the blocking of the usage of the corporation’s Online Single Submission (OSS) user account.
Author: Adam Kausar
Gaffar & Co., an Indonesian Boutique Law Firm specializing and focusing on commercial law areas which included investment regulatory and corporate secretarial services.
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