Indonesian Law | Hukum Indonesia - Blog: How to Dissolve a Company in Indonesia

Sunday, January 5, 2014

How to Dissolve a Company in Indonesia

Company Liquidation
A liquidation of an Indonesian company, by virtue of Article 142 paragraph 1 of the Indonesian Law No. 40 of 2007 on Limited Liability Company (“Company Law”), can be conducted based on the following grounds:
  1. resolution of the General Meeting of Shareholders (“GMS”);
  2. due to the expiry of the company, as prescribed in the company's articles of association;
  3. a court order;
  4. revoked bankruptcy statement based on a binding court judgment and the asset of the company is not sufficient to pay the bankruptcy cost; or
  5. due to the revocation of the company’s business permit, and therefore the company is obliged to conduct liquidation according to prevailing regulations.
The simplest method to dissolve a company is by virtue of a resolution of GMS that meets the minimum quorum requirement.

The shareholders of the company may undertake the GMS on the closure of the company after 30 days written notice to Ministry of Manpower. This obligation is regulated in Article 8 (1) of Law Number 7 of 1981 concerning Employment Mandatory Reporting.


Article 144 of the Indonesian Company Law stipulates that the General Meeting of Shareholder concerning closure of company can be held based on the proposal from the Board of Directors, Board of Commissioners or 1 (one) or more shareholder representing at least 1/10 (one-tenth) from the total number of shares with voting rights. Moreover, the quorum of the GMS on the closure of the company shall be valid if two conditions are met. First, regarding the quorum, at least 3/4 of the total shares issued with voting rights must be present or represented in the GMS, except if the company’s articles of association require a higher quorum. Second, a qualified majority must be reached: more than 3/4 of the total votes in the GMS are in favor of the dissolution.

The GMS Resolution should also appoint a liquidator for the company liquidation process. If the GMS Resolution does not appoint a liquidator, therefore the company's directors automatically become the liquidator for the company liquidation process. 
During the liquidation period, only the liquidator is allowed to perform any legal actions on behalf of the company.

The liquidator shall be responsible for proceeding and administering all necessary legal procedure pertaining to the company liquidation, as follows:


- Within the latest period of 30 days as of the company’s dissolution, the liquidator shall be obliged to notify the following:

  • All creditors regarding the company’s dissolution, by way of announcing the company’s dissolution in a newspaper and in the State Gazette of the Republic of Indonesia; and
  • The Minister of Law and Human Rights for recordation of the company’s dissolution in the register of companies (Article 147, paragraph 1 of the Company Law).

- The liquidator’s obligations in the settlement of a company’s assets in the liquidation process shall cover the following:
  • Recording and collecting assets and debts of the company;
  • Tax Deregistration. Tax office shall carry out a tax audit to the company;
  • Publishing the plan for distribution of assets from the liquidation in the newspaper and the State Gazette of the Republic of Indonesia. Please note that the creditors may submit an objection to the plan for division of the assets resulting from the liquidation within a period of sixty days;
  • Making payment to creditors;
  • Making payment from the remaining liquidation assets to the shareholders; 
  • Other acts required for the settlement of the assets; and
  • Deregistration within Ministry of Law and Human Rights.

- The liquidator shall be obliged to notify the Minister and announce the final result of the liquidation process in a newspaper. This is conducted after the liquidator completes the payment of the remaining assets to all shareholders, and the GMS Resolution gives full acquittal and discharges to the liquidator.

By: tnrlawfirm

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