An Individual Now Is Able to Establish a Limited Liability Company

Law No. 40 of 2007 on the Limited Liability Companies (the “Company Law”) has been amended by Law No. 11 of 2020 on the Job Creation (the “Omnibus Law”), in which introduces several aspects related to the micro and small-scale businesses. Following the issuance of the Omnibus Law, on the 2^nd of February 2021, the Government issued an implementing regulation on the micro and small-scale businesses under the Government Regulation No. 8 of 2021 on the Authorized Capital of the Companies and Registration of Establishment, Amendments, and Dissolution of the Companies that Qualify as Micro and Small-Scale Businesses (“GR 8/2021”). GR 8/2021 revokes the Government Regulation No. 29 of 2016 on the Changes to Authorized Capital of Limited Liability Company (“GR 29/2016”).

In this case, the criteria for the company to be considered as the micro and small-scale businesses shall refer to the criteria as governed under the Government Regulation No. 7 of 2021 on the Facilities, Protection and Empowerment for Cooperatives and Micro, Small and Medium-Scale Businesses. The criteria of micro, small and medium-scale businesses are divided based on their capital or annual sales in accordance with the status of the company.

In regard to the newly established company, the criteria of the micro, small and medium-scale businesses are based on their capital as follows:

1. micro-scale businesses have the capital in the amount of up to Rp1,000,000,000, excluding land and building; and
2. small-scale businesses have the capital in the amount of more than Rp1,000,000,000 up to Rp5,000,000,000, excluding land and building.

Then, the criteria of the micro, small and medium-scale businesses for businesses that have been established before GR 8/2021 is issued are based on their annual sales as follows:

1. micro-scale businesses have annual sales in the amount of up to Rp2,000,000,000; and
2. small-scale businesses have annual sales in the amount of more than Rp2,000,000,000 up to Rp15,000,000,000.

Based on GR 8/2021, companies that are categorized as micro and small-scale businesses can be established by (i) two parties or more; and (ii) an individual. GR 8/2021 specifically only regulates the establishment, amendment and dissolution of companies categorized as micro and small-scale businesses established by an individual. An individual who would like to establish such a company shall be an Indonesian citizen who is legally capable and at least 17 years old.

Unlike the establishment of companies established by two persons or more that requires deed of establishment, the establishment of individual owned companies only requires such individual to fill out an establishment statement through the Ministry of Law and Human Rights’ website to obtain registration certificate. The individual must fill in information in the establishment statement, among others:

1. name and domicile of the company;
2. term of the establishment of the company;
3. purpose, objective and business activities of the company;
4. amount of the authorized, issued and paid-up capital of the company;
5. nominal value and the number of shares of the company; and
6. full name, place and date of birth, occupation, domicile, citizenship number, and tax identification number of the founder, director, and shareholder of the company.

The individual owned company shall change its legal status into company if (i) the shareholder of the individual owned company becomes more than one person; and/or (ii) no longer meets the criteria of the micro and small-scale businesses.

As the backbone of the nation’s economy, micro and small-scale businesses activities play an important role in Indonesia. Thus, the issuance of GR 8/2021 is expected to ease the doing of business in Indonesia by promoting individuals to establish the companies and execute more business opportunities.

By: Nabila Roselano