Buying a Local PT: PMDN-to-PMA Conversion Due Diligence

A local PT may operate lawfully as a wholly Indonesian-owned company today. It can become unlicensable the moment its shares pass to a foreign buyer.

In this article, we discuss the PMDN to PMA conversion due diligence checks a foreign buyer should run before signing. It covers KBLI-by-KBLI eligibility under the Positive Investment List. It also covers AHU-versus-OSS record matching, PMA capital rules, LKPM history and the statutory acquisition process. The aim is to price the transaction on verified facts rather than the seller's representations.

Why Does PMDN to PMA Conversion Due Diligence Start With the Business Lines?

The first and most consequential gate is KBLI-by-KBLI eligibility. A company that lawfully operates as a local PT may be off-limits to the intended foreign ownership percentage.

Under Indonesia's investment framework, foreign-entry eligibility is tested activity by activity. It is not tested company by company. The Positive Investment List is set by Presidential Regulation No. 10 of 2021. Presidential Regulation No. 49 of 2021 amends it. Sector-specific regulations may add further conditions on top of it (as of 11 October 2026).

The licensing architecture has also moved. Government Regulation No. 28 of 2025 replaced Government Regulation No. 5 of 2021. The new regulation is the risk-based business-licensing framework. Regulation of the Minister of Investment (Permeninves/BKPM) No. 5 of 2025 governs OSS procedures under that framework.

For readers new to this area: KBLI is the business classification code. NIB is the business identification number. AHU is the legal-administration registry. OSS is the licensing portal. LKPM is the investment activity report.

The screen is administered through the Investment Coordinating Board (BKPM) and the OSS system. However, selecting a KBLI in OSS does not alone prove foreign-investment eligibility. Buyers should test every active and planned five-digit KBLI. They should check it against current investment-field rules and sector rules. They should repeat that check before signing and again before closing. The outcome is always activity-, ownership-, sector- and location-specific.

In practice, the team's screening work focuses on five questions for each business line:

• Whether the intended foreign ownership percentage is capped for that KBLI.
• Whether the activity is reserved for Indonesian nationals or requires an Indonesian partner.
• Whether minimum qualifications, personnel or facility conditions attach to the activity.
• Whether combining several activities in one company is permitted.
• Whether each project location triggers additional conditions.

The deal pattern is consistent. A target may hold a perfectly valid NIB as a local company. The buyer's intended percentage may then hit a cap, qualification, capital or location condition. That condition was never priced into the negotiation.

How Do You Reconstruct the Target's Corporate and Licensing Records?

You reconstruct the record from several sources. These are the corporate chain, the OSS profile, sector approvals, contracts, tax, employment, litigation, land and LKPM filings.

Once eligibility is established, rebuild the target's legal and operational record from its own sources. The matrix below is a recommended diligence method. It is not a statutory checklist. Final document lists should be settled with Indonesian corporate counsel.

The starting point is the corporate chain. Collect these documents:

• The establishment deed.
• Every amendment and share-transfer deed.
• Ministry approvals or acknowledgements.
• GMS and board resolutions.
• Director and commissioner appointments.
• Share certificates.
• Beneficial-owner filings.
• Any pledge or security documents.

Read this chain against the OSS profile. The OSS profile includes the NIB. It also includes all registered KBLIs and locations. It includes risk classifications, investment values, business-licensing status and certificates. It includes any warnings or supervisory correspondence.

The buyer should then examine a wider scope:

• Share ownership, transfers and issuances.
• GMS authority, shareholder and special registers, and security interests.
• Contracts, tax history, employment records, litigation and land rights.
• Underlying sector licences, environmental approvals, spatial confirmations and building approvals.
• The investment plan and every quarterly LKPM filing, reconciled against accounting records.

1. Corporate records under the AHU system

The deeds and corporate filings accepted by the Ministry of Law establish who validly owns and governs the company. Every later record — the cap table, the OSS profile, bank mandates — is tested against this chain.

2. The OSS and NIB profile

The NIB shows what the company has registered to do, where, at what risk rating and with what investment plan. It does not, by itself, prove that every underlying licence exists or remains valid.

3. Underlying licences and location approvals

Sector licences, spatial approvals, environmental approvals and building approvals are issued by different authorities and often tied to a specific facility, so they must be collected separately and checked at each actual location.

4. Commercial, employment, tax and litigation exposure

Change-of-control clauses, pending disputes, unpaid withholdings and land title defects all survive the share transfer, because the company — not the seller — carries them.

5. Investment-plan and LKPM history

The target's reported investment realization shapes what the buyer can file after closing, so it must be tied to financial statements, fixed assets and funding evidence.

What Does an AHU-Versus-OSS Mismatch Tell the Buyer?

An AHU-versus-OSS mismatch is a diligence flag. It requires validation or correction before closing. It is not proof of invalidity or illegality.

Indonesia runs two parallel registries that must agree. The Directorate General of General Legal Administration (AHU) holds corporate legal data. It sits under the Ministry of Law. The Online Single Submission (OSS) system holds business licensing and investment data. In team reviews, the useful findings come from reconciling the two. Treat any mismatch as a flag to resolve. Never treat it as an automatic legal conclusion.

Two KBLI mismatches commonly need attention. The first is a KBLI registered in the NIB but absent from the articles of association. That may indicate the company lacks corporate authority for the activity. It is a legal-review issue. It may require a purposes-and-objectives amendment. The second is an activity stated in the articles but absent from OSS. That activity may lack the required operational licensing record. Confirm both findings against the actual deeds and OSS output before drawing a conclusion.

More broadly, identify which licences and approvals are tied to the company. Check the activity, location, facility, qualification or quota. Check the ownership composition and change-of-control triggers. An NIB does not settle every underlying licensing issue. Avoid blanket language such as licences transfer. Identify the authority and rule behind each material licence individually.

What PMA Investment Requirements Apply After the Conversion?

Under Permeninves/BKPM No. 5 of 2025, two general rules apply. Total investment must exceed IDR 10 billion per business field and project location. Paid-up capital must be at least IDR 2.5 billion per company.

Permeninves/BKPM No. 5 of 2025 Article 26 sets the general PMA minimum-investment threshold. Total investment must be more than IDR 10 billion. Land and buildings are excluded. The rule applies per five-digit KBLI business field and per project location. It is subject to stated exceptions. It is also subject to stricter rules in other laws.

The same article provides special calculations or aggregation treatments for certain activities. These include:

• Wholesale trade.
• Food and beverage services.
• Construction.
• One production line of industrial products.
• Property.
• EV charging stations.
• Certain KEK (special economic zone) activities.

These treatments differ clause by clause. Advisers should check the exact provision that matches the target's KBLI, location and business model. Do not apply a generic aggregation assumption.

Article 26(10) separately fixes the minimum issued and paid-up capital. It is IDR 2.5 billion per limited liability company. Another law may provide otherwise. This is a capital rule. It is not the total-investment requirement. A stricter sector-specific rule can still apply. Readers comparing structures can read our related guide on the minimum capital of a PT PMA in Indonesia.

Article 27 adds a stability rule. Paid-up capital generally may not be moved out of the company's bank account for at least 12 months. Exceptions cover permitted asset purchases, building construction and company operations. The 12-month restriction is made through an OSS self-declaration. In a share acquisition, the price paid to the seller is not qualifying project investment. Counsel must verify funding evidence, timing and permitted use. Do not assume the target's investment plan will satisfy PMA thresholds.

What Should a Buyer Verify in the Target's LKPM History?

LKPM history can expose a buyer to unsupported inherited investment data. Medium and large businesses file quarterly through OSS by 15 April, 15 July, 15 October and 15 January.

The LKPM is the periodic investment activity report. Medium and large businesses file it through OSS. Permeninves/BKPM No. 5 of 2025 sets this duty. For a buyer, the target's LKPM history is a compliance record. It can also create exposure after closing. The converted company's next report must stand on inherited investment data. Investigate any unsupported realization before carrying it into the buyer's first report.

The recommended buyer-side risk assessment compares two sets of data. First, compare the target's investment plan and historic LKPM realization with its accounting records. Second, compare them with fixed assets, funding evidence and actual project locations. Do this before assuming PMA compliance. This is risk assessment, not an assertion that a discrepancy automatically creates a penalty or invalidates a licence. Investigate discrepancies. Never carry unsupported figures into the buyer's first filing. Where the target's accounts need review, 3E Accounting Indonesia also provides statutory financial auditing and reporting services in Indonesia.

In Indonesia LKPM diligence, the team looks for three patterns:

• Realization figures that exceed what the financial statements support.
• Land and building values counted inconsistently against investment exclusions.
• Project locations that appear in LKPM filings but not in the NIB.

Each is a flag. It needs documentary evidence before the figures are accepted.

What Statutory Steps Does the Company Law Require for the Acquisition?

Where applicable, the acquisition process can include shareholder approval. It may also include employee and newspaper notice, a creditor-objection window, notarial documentation and notification to the Minister.

A share acquisition changes control of the existing PT. It does not create a new legal entity. The Company Law defines acquisition as a share acquisition that transfers control. The company survives with its history, contracts and liabilities.

Where the statutory acquisition provisions apply, the process can include several steps:

• Approval by the general meeting of shareholders (GMS).
• Notice to employees and publication in a newspaper at least 30 days before the GMS is called.
• A 14-day window for creditors to object.
• Documentation by notarial deed.
• Notification to the Minister.

These steps apply where applicable. Indonesian corporate counsel must determine whether a particular direct share transfer triggers each step. That determination should be made before drafting the sale and purchase agreement.

Survival of the company does not mean survival of every licence. Continuity depends on the relevant licence and sector rule. The buyer's conditions precedent should capture licence continuity explicitly. On the tax side, the company's tax identification numbers (NPWP) continue. Verify registrations, VAT status and withholding history before closing.

When Is Buying a Local PT Preferable to Incorporating a New PT PMA?

Buying an existing PT is commercially preferable only in one situation. The continuing legal entity must have material value that a new PT PMA cannot efficiently recreate.

The decision framework the team applies is straightforward: a purchase makes sense where the target's operating history, contracts, facilities, workforce or approvals carry real value and remain usable after a change-of-control review. Where they do not, a new PT PMA can offer a cleaner liability perimeter. This may be so where key licences will not survive new ownership or the KBLI screen caps the buyer at a minority position. The trade-off is building the corporate and licensing structure from scratch. Our guide to company registration in Indonesia walks through that alternative route.

The right choice always depends on transaction structure, contracts, licences, employees, tax and other liabilities, and it should follow — not precede — the legal and tax review. This is a commercial judgement, not a promise that any particular approval will continue; each material licence must be tested against its own authority and rule.

What Should the Buyer Align Between Signing and the First LKPM?

The recommended closing-to-first-LKPM plan is to align several records. Align corporate records, OSS data, licences, responsible persons, investment information and the first required report.

The period between signing and the first post-closing LKPM is best used to bring every record system into agreement. This is a recommended buyer-side plan. It is not a mandated workflow.

The sequence that works in practice is:

1. Complete corporate amendments and file director, commissioner and shareholder changes.
2. Correct the OSS profile to reflect ownership, investment plan, KBLIs, locations and responsible persons.
3. Regularise or reissue licences flagged as location-, qualification- or control-dependent, with evidence.
4. Reconcile post-closing capital, assets and funding evidence for the first LKPM.
5. Confirm the reporting calendar and responsibility for the first filing.

Conclusion

Buying a local PT is not a shortcut around Indonesia's foreign-investment rules. It is a diligence exercise. The company's legal, licensing and reporting history is inherited along with its assets. Key checks should be settled as conditions precedent. These include KBLI eligibility, AHU-versus-OSS alignment, licence continuity, PMA capital thresholds and LKPM reconciliation.

3E Accounting Indonesia is a Corporate Services Provider. It supports foreign buyers throughout this process. Its support can include:

• Pre-signing KBLI and licence screening.
• Corporate and registry reconciliation.
• Acquisition documentation with Indonesian counsel.
• OSS and AHU filings after closing.
• The first LKPM submission under new ownership.

Our team combines local regulatory knowledge with the reach of the 3E Accounting International Network. That network spans more than 110 countries.

If you are weighing a PMDN to PMA conversion, speak with our team before you sign. A structured due diligence review is the cheapest insurance on an Indonesian acquisition. Contact us to scope the checks your target actually needs.

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