Based on Article 41 of Law No 40 of 2007 concerning on Limited Liability Company (”Company Law”), Perseroan Terbatas or Limited Liability Company (“PT”) capital is authorized capital, issued capital, and paid-up capital. Whereas, authorized capital is the target amount of capital which is intended to be fulfilled by the PT. On the other hand, issued capital and paid-up capital are the capital which has already been subscribed by the current shareholders, which constitutes the realized assets of the PT.
Pursuant to the investment status, PT can be in either 1 (one) of 2 (two) forms, namely local and foreign direct investment. Local PT is a PT that is established by Indonesian individuals or other Local PT (“Local PT”), while Foreign Direct Investment PT is established by at least 1 (one) foreign individual or other Foreign Direct Investment PT (“PT PMA”).
Authorized Capital for PT
Based on Article 32 of Government Regulation In Lieu of Law Number 2 of 2022 (“GR 2 of 2022”) which amended Article 32 of Company Law, set as follows:
1) PT must have the authorized capital of the PT.
2) The amount of authorized capital of the PT is as follows referred to in paragraph (1) is determined based on decision of the founders of the PT.
3) Further provisions regarding authorized capital of PT are regulated in Government Regulations.
In line with the GR 2 of 2022, Government Regulation Number 8 of 2021 concerning Authorized Capital of Companies and Registration of the Establishment, Amendment, and Dissolution of Companies that Meet the Criteria for Micro and Small Enterprises (“GR 8 of 2021”) stipulates that the amount of the authorized capital of PT is determined based on the decision the founder of PT
Thus, it can be concluded that currently there is no longer any set minimum authorized capital limit for PT.
However, for a PT that engage on certain business activities or a Foreign Direct Investment Company, the minimum amount of authorized capital must comply with the provisions of the regulations. For example, based on Financial Services Authority Regulation Number 67/POJK.05/2016 of 2016 concerning Business and Institutional Licensing of Insurance Companies, Sharia Insurance Companies, Reinsurance Companies, and Sharia Reinsurance Companies. For an insurance company, by the reason of the minimum paid-up capital at the time of establishment is IDR 150,000,000,000 (one hundred fifty billion rupiah), the authorized capital cannot be less than that amount.
Paid-up capital for Domestic Capital Investment Company (Local PT)
Paid-up capital is capital that has been entered by the shareholder as payment for the shares he has taken as issued capital from the authorized capital of the company. Thus, paid-up capital is shares that have been paid in full by the shareholders or founders of the PT.
Based on Article 33 of Company Law, a minimum of 25% (twenty-five percent) of the authorized capital must be placed and fully paid as proven with valid proof of deposit to the bank account of the PT.
Authorized capital for Foreign Direct Investment Company (PT PMA)
Authorized capital of more than IDR 10,000,000,000 (ten billion rupiah), excluding land and buildings, applies to each KBLI line of business and each project location.
Paid-up capital for PT PMA
Based on Article 12 paragraph (7) of BKPM Regulation Number 4 of 2021 Concerning Guidelines and Procedures for Risk-Based Business Licensing Services and Investment Facilities (“BKPM Regulation 4 of 2021”), a company classified as PMA has a minimum capital requirement, namely a minimum Issued/Paid-up Capital of IDR 10,000,000,000 (ten billion rupiah) unless otherwise stipulated by law.
While according to the Company Law, paid-up capital must be at least 25% (twenty-five) percent of the authorized capital, BKPM Regulation 4 of 2021 stipulates that the minimum paid-up capital of a PT PMA must be at least IDR 10,000,000,000 (ten billion rupiah). As such, insofar as the paid-up capital requirement is fulfilled, the paid-up capital can be made to be only 25% (twenty-five percent) of the authorized capital. This means that the PT PMA can determine the authorized capital to be more than the paid-up capital, depending on the discretion of the shareholders.
Provisions for the minimum of investment above is exempted for some activities, as below:
a. specifically for trading activities large, greater than IDR 10,000,000,000.00 (ten billion rupiah) excluding land and building, is per 4 (four) initial digits of KBLI;
b. especially for food and service business activities drinks, greater than IDR 10,000,000,000.00 (ten billion rupiah) excluding land and building, is per 2 (two) initial KBLI digits per one point location;
c. specifically for construction services business activities, greater than IDR 10,000,000,000.00 (ten billion rupiah) excluding internal land and buildings one activity, is per 4 (four) initial digits KBLI;
d. specifically for industrial business activities produce types of products with KBLI 5 (five) different digits in 1 (one) production line, greater than IDR 10,000,000,000.00 (ten billion rupiah) excluding land and buildings; or specifically for business development activities and Property management applies the following conditions:
• in the form of property in the form of buildings building as a whole or complex integrated housing the terms of the investment value is greater than IDR 10,000,000,000.00 (ten billion rupiah) including land and buildings; or
• in the form of property units not in 1 (one) building as a whole or 1 (one) residential complex in an integrated manner, value investment greater than IDR 10,000,000,000.00 (ten billion rupiah) excluding land and buildings.
Classification of PT size (micro, small, medium, large enterprises)
Based on Article 35 paragraph (3) of Government Regulation number 7 of 2021 concerning Ease, Protection, and Empowerment of Cooperatives and Micro, Small, and Medium Enterprises, the criteria for size are based on the capital of PT, are as follows:
a. Micro Enterprises have business capital of up to with a maximum of IDR 1,000,000,000 (one billion rupiah) excluding land and business premises building;
b. Small Enterprises have business capital of more than IDR 1,000,000,000 (one billion rupiah) up to with a maximum of IDR 5,000,000,000 (five billion rupiah) excluding land and business premises building;
c. Medium Enterprises have business capital of more than IDR 5,000,000,000.00 (five billion rupiah) up to a maximum of IDR 10,000,000,000 (ten billion rupiah) excluding land and business building; and
d. Large Enterprises have business capital of more than IDR 10,000,000,000 (ten billion rupiah) excluding land and business building.
Considering the minimum requirement of paid-up capital for PT PMA, by the elaboration above, all PT PMA should constitute a Large Enterprise. Whereas, Local PT can either be Micro Enterprise, Small Enterprise, Medium Enterprise, or Large Enterprise.
Author: Austin Justicio
Gaffar & Co., an Indonesian Boutique Law Firm specializing and focusing on commercial law areas e.g. Investment Regulatory, Capital Market & Financial Services, Corporate Secretarial.
For further queries and information, contact us:
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