Company Dissolution in Indonesia – A Guide to Dissolving Your Business in Indonesia
There are many reasons why you may choose to close your business. Should you choose to do so, there are certain procedures to follow for company dissolution in Indonesia.
Why Choose to Dissolve Your Business?
Dissolving a Limited Liability Company for Foreign Investment Company (PT PMA) does not always mean the business is in trouble. There could be many other factors that contribute to the decision. Among the common reasons for a company dissolution in Indonesia include the decision by shareholders to cease business, inability to generate sufficient profits, the dispute among company stakeholders, corporate restructuring of the group of companies, exit from the local market, etc.
Based on the Company Law, dissolution of companies shall occur:
- pursuant to a General Meeting of Shareholder (GMS) resolution;
- because the period of incorporation determined in the association’s article has expired;
- pursuant to a court order;
- on the revocation of bankruptcy pursuant to a decision of the commercial court which has absolute legal effect, the Company’s being insufficient to pay the cost of bankruptcy;
- because the bankrupt of a Company which has been declared bankrupt is in a state of insolvency as provided for in the Bankruptcy and Suspension of Payments Act; or
- because of the revocation of the Company’s business permits such that the Company must enter into liquidation in accordance with the provisions of legislative regulations.
You do not automatically lose your legal entity status should you decide to close the company. Per Indonesian Company Law, certain steps must be completed to officially dissolve the company.
Steps to Company Dissolution in Indonesia
To close your business, you must comply with the following steps:
- Propose and resolve the dissolution at a General Meeting of Shareholders (GMOS).
- Appoint a liquidator.
- Announce the dissolution in the newspaper and State Gazette of the Republic of Indonesia. This step must be completed within 30 days after the GMOS.
- Obtain approval from the Ministry of Law and Human Rights (MoLHR).
- Announce the division of assets in the newspaper.
- Make the final announcement publicly about the dissolution of the company.
Remember, before all of those steps above, you need to stop all your business operations including terminating your employment contract with your employees and give their severance.
Once you have obtained approval from MoLHR, you will need to close your tax card too. This can be done with the local tax authority. The tax card can only be closed by tax audit and verification. The audit process can take as long as 1 year to complete. The earliest completion can be within a 6-month timeframe.
Do I Need a Liquidator?
In some cases, a liquidator must be appointed to carry out a company dissolution (as mentioned in the Company Law), whereas in some cases, the board of directors can act as the liquidator and they need to engage a Notary Public to help with the dissolution. 3E Accounting can assist you with company dissolution and 3E Accounting’s associate can act as your appointed liquidator, if necessary, to carry out the following processes:
- Announce and record the company’s assets
- Announce how the assets will be divided
- Finalise payments made to the creditor
- Finalise remainder asset payments to shareholders
- Any other actions necessary to settle the assets
We Are Here to Help
For many, liquidating their business is not an easy decision. 3E Accounting will be here to guide you in every step of the way. Let us handle the complex aspects of dissolution so you can better focus on what your next steps should be. For more information on our Indonesia company dissolution services, contact us today.