How to Dissolve a Company in Indonesia

by Taji Sianturi on December 11, 2013

Liquidation of the company by virtue of Article 142, paragraph 1 of the Indonesian Law No. 40 of 2007 on Limited Liability Company (“Company Law”) could performed by the following reasons:

a. Based on a resolution of the General Meeting of Shareholders (“GMS”);
b. Due to the expiry of the company, as prescribed in the articles of association;
c. Based on a court order;
d. Due to a revoked bankruptcy statement, etc.; or
e. Due to the revocation of the company’s business permit, so that the company is obliged to conduct liquidation according to prevailing regulations.

The simplest method to dissolve the company is by virtue of resolution of the GMS.

The shareholders of the company can perform the GMS on the closure of the company after 7 working days written notice to employees/workers and the local government agency responsible for manpower affairs. This obligation is regulated in Article 148 of Law Number 13 of 2003 concerning Manpower.

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 right. Moreover, the quorum of the GMS on the closure of the company shall be valid if it is taken by mutual consensus or if it is approved by at least 3/4 (three-fourth) of the total shares issued with voting rights are present or represented, except the company’s articles of association stipulates a higher quorum.

The GMS Resolution should also appointed a liquidator for the company liquidation process. If the GMS Resolution does not appoint a liquidator therefore the directors automatically become the liquidator for the company liquidation process.

The liquidator shall be responsible to proceed and administer all necessary legal procedure in regards with 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 persons:

a. 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
b. The Minister of Law and Human Rights of Republic of Indonesia, about the company’s dissolution that is to be registered in the Company Registry and states that the company is in liquidation (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:

a. Recording and collecting the assets and debts of the company;
b. Publishing the plan for distribution of assets from the liquidation in the newspaper and the State Gazette of the Republic of Indonesia;
c. Making payment to creditors;
d. Making payment from the remaining liquidation assets to the shareholders; and
e. Other acts required for the settlement of the assets.

– 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.

The timeline estimation of the dissolution process will take at least 9 to 12 months from the date of the GMS Resolution.

Taji Sianturi

Taji Sianturi

Attorney and Managing Partner of TAJI & REKAN, one of leading full service law firms in Indonesia which is based in Jakarta. TAJI & REKAN - Indonesian Law Firm - Jakarta Lawyers.
Taji Sianturi

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