Closing Company & Representative Company
Dissolution of Company
The dissolution of a company can occur because (according to the Article 142 paragraph (1) of Act Number 40 of 2007 concerning Limited Liability Companies), such as:
- Based on the decision of the General Meeting of Shareholders (“GMS”);
- Because the period of establishment established in the articles of association has ended;
- Based on the determination of the court;
- With the revocation of the bankruptcy based on the decision of the Trade Court that has permanent legal force, the bankrupt assets of the Company are not sufficient to pay the bankruptcy fees;
- Because the bankrupt assets of the Company that have been declared bankrupt are in a state of insolvency as stipulated in the Act concerning Bankruptcy and the Postponement of Obligations to Pay Debt;
- Due to the revocation of the Company’s business license so that the Company requires liquidation in accordance with the provisions of the legislation.
In addition, based on Article 142 paragraph (2) of Act 40 Number 2007, dissolution must be followed by liquidation.
Liquidation is the process of management and settlement of assets and liabilities of a company whose handling is carried out by the curator (if in the process of Bankruptcy Act) or liquidator (outside the scope of Bankruptcy Act) the end of the settlement is used to pay debts from debtors to their creditors.
In case that the requirements for dissolution of the company have been fulfilled, the liquidation process begins with the appointment of one or more liquidators. If a liquidator is not determined in the liquidation process, the board of directors acts as a liquidator (Article 142 paragraph (3) of Act 40 of 2007). The liquidators who are appointed can be professionals who are experts in their fields (in the sense of someone outside the management structure of the company), but many liquidators are appointed directors of the company. In carrying out its duties, the liquidator is given broad authority including forming a liquidator team and appointing other consultants to assist in the liquidation process.
The liquidation procedure in Act Number 40 of 2007 is regulated in Articles 142 – 152 specifically Article 147 – 152 of Act 40 of 2007, the liquidation process in Indonesia can be divided into three stages:
1. First step
The company should conduct an announcement of newspaper and Indonesian State Gazette (“BNRI”) followed by notification to the Minister to be recorded in the company register that the company is under liquidation. In the announcement explained the legal basis for dissolution, the procedure for submission of bills, the period of submission of bills and also the name and address of the liquidator. Correspondingly, the liquidator also records the assets of the company (assets and liabilities) including the recording of the names of creditors and their levels and other matters related to management actions in the liquidation process (Article 147 of Act Number 40 of 2007).
2. Second step
The next step is doing newspaper and BNRI announcements, in this second announcement the liquidator is also obliged to notify the Minister of the plan for the distribution of liquidated wealth (this report is carried out by the liquidator by notifying by registered letter to the relevant Minister) (Article 149 paragraph (1) of Act 40 of 2007).
After more than 90 days of this second announcement, the liquidator can make an settlement by selling assets that were previously assessed by an independent appraisal, followed by the division of the assets to its creditors. Furthermore, in case there is remaining wealth from liquidation, the remainder must be returned to the shareholders.
3. The last step
Conduct a General Meeting Shareholders (GMS) on the accountability of the liquidation process that has been carried out (Article 152 paragraph (1) of Act Number 40 of 2007). In case that the GMS accepts the accountability of the liquidation process that has been carried out then proceed with the announcement to the newspaper which is then followed by a notification to the Minister that the liquidation process has ended (Notary notification to the Minister through sisminbakum) (Article 152 paragraph (3) Act Number 40 of 2007).
If the announcement has been made, the Minister will record the end of the company’s legal status and delete the name of the company from the list of companies followed by an announcement in the State Gazette of the Republic of Indonesia (Article 152 paragraph (5) jo. Article 152 paragraph (8) of Act 40 of 2007) . More away, after all the process in the Ministry finished, the next step is revocating all document legal and/or the licenses that company has during operational.
Closing a Foreign Representative Office in Indonesia
The application of closing a representative office can be submitted by the Director of the Head Office or the Head of the representative office.
- The applicant should submit an application for closing the reprentative office to the Head of BKPM.
- The applicant should submit the original version of the representative license.
- The applicant should submit the License for Foreign Employee (IMTA) if the Head of the representative office is a foreigner, or Citizen Identity Card (KTP) if the Head of the representative office is an Indoensian Citizen.
- The applicant should submit a letter of statement with a stamp which contains a declaration free from debt from any party.
Process or requirement may vary depend on the specific facts and conditions. In addition, the law and regulations in Indonesia subject to frequent changes. Please contact us to get an up to date information and accurate advise. Indo-Ned Consultancy will help you to do your business in Indonesia.