Author: Felicia Cindy Hanubrata
“Beneficial Ownership reporting is mandatory by law. Thus, companies must comply with the obligation to report.”
Beneficial Owner
Under the Regulation of the President of the Republic of Indonesia Number 13 of 2018 on the Implementation Of Know-Your-Beneficial-Owner Principle By Corporation For The Purpose Of Prevention And Eradication Of Money Laundering And Terrorism Financing (“PR 13/2018”), a Beneficial Owner is an individual who can appoint or dismiss directors, board of commissioners, administrators, and supervisors of the Corporation, has the ability to control the Corporation, has the right to and/or receives benefits from the Corporation either directly or indirectly, is the actual owner of the funds or Corporate shares. In essence, the beneficial owner is the true owner and beneficiary of the benefits and authority coming from the shares. An individual can be a beneficial owner in a limited liability company, foundation, association, cooperative, coomanditaire vennootschap, firm or other forms of corporation.
An individual is considered to be a beneficial owner in a limited liability company if they meet the following conditions:
- Owns more than 25% (twenty five percent) of the company’s shares;
- Has more than 25% (twenty five percent) of the voting rights in the company;
- Receives more than 25% (twenty five percent) of the company’s annual profit;
- Has the authority to appoint, replace or dismiss members of the board of directors and commissioners;
- Has the authority to influence or control the company without having to obtain prior approval from any party;
- Receives benefits from the company; and/or
- Is the true owner of the funds in the company’s share ownership.
Individuals who meet the conditions as intended in number 5, 6 and 7 are individuals who do not meet conditions mentioned in number 1 to 4.
Beneficial Ownership Reporting
Mandated in Article 3 of PR 13/2018, every corporation is obligated to determine the beneficial owner(s) of the corporation. Furthermore, each beneficial owner must be correctly reported to the Minister of Law and Human Rights (“MOLHR”) at the time of the corporation’s establishment. If the corporation does not report its beneficial owner at the time of establishment, the report must be done within 7 (seven) working days after the corporation obtains its business license. Should there be a change in the information of the beneficial owner, such change must be reported to the MOHLR within 3 (three) days after the change occurs. Moreover, the corporation is required to update the beneficial owner information periodically every year.
As governed in the Regulation of the Minister of Law and Human Rights Number 15 of 2019 on Implementing Procedures for the Application of Know-Your-Beneficial-Owner Principles by Corporations (“MOLHR 15/2019”), reporting of beneficial owner at the time of establishment can only be done by the notary. As for reporting once the corporation has started its business activities and the update of beneficial owner information can be done by the founder or management of the corporation, notary or other party authorized by the corporation. Reporting of beneficial owner(s) can be done electronically at https://bo.ahu.go.id/ .
Sanctions
Failure in reporting beneficial owner(s) will result in sanctions for the cooperation in accordance with the prevailing laws governing the corporation. One of the sanctions for such failure is the blocking of company access to both the Legal Entity Administration System (“SABH”) and the Online Single Submission System (“OSS”). This blocking mainly applies to limited liability companies, foundations and associations.
As a result of access blocking, the company will not be able to:
- Amend its articles of association in SABH;
- Amend, update or add its corporation information in the OSS;
- Submit application for business licenses in the OSS.
Should a corporation have not submitted its beneficial ownership report and its access has been blocked, the corporation can get its access back once they have fulfilled their obligation of beneficial owner reporting.
Author: Felicia Cindy Hanubrata
Gaffar & Co. is an Indonesian Boutique Law Firm focusing on commercial law, including corporate secretarial services and investment regulatory.
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