Indonesia has emerged as one of Southeast Asia’s most compelling investment destinations. With a market of over 280 million people, a rapidly expanding middle class, and strategic access to both regional and global trade, it is no wonder foreign investors are increasingly drawn to Jakarta, Bali, and beyond.
Yet a recurring question arises among international entrepreneurs: Can a foreigner serve as a director, shareholder, or commissioner in an Indonesian company? The answer depends on the type of company structure chosen and the regulations governing foreign ownership. Let’s break it down.
Types of Company Structures in Indonesia
Local PT (Limited Liability Company)
A PT (Perseroan Terbatas) is the most common vehicle for local businesses in Indonesia. It requires at least two shareholders, one director, and one commissioner. However, foreigners cannot directly own shares in a PT Local. This structure is reserved for Indonesian citizens or entities.
For foreign investors seeking to access the local market through a PT, nominee arrangements with trusted Indonesian shareholders are sometimes used — though this carries significant legal risk without professional structuring.
PT PMA (Foreign-Owned Company)
The PT PMA (Perseroan Terbatas Penanaman Modal Asing) is the preferred choice for foreign investors. It allows direct foreign ownership, subject to the Positive Investment List (Daftar Positif Investasi) that outlines sectors open, restricted, or closed to foreign investment.
Key requirements:
- Minimum of 2 shareholders (foreign individuals or entities are allowed)
- At least 1 director and 1 commissioner (either foreign or local)
- Minimum investment realisation: USD 800,000 across the company’s lifecycle
A PT PMA offers full legal certainty and transparency, making it the safest vehicle for long-term investment.
Representative Establishment
Foreign companies may also set up a Representative Office in Indonesia (KPPA or KP3A). This structure does not generate revenue directly but allows market research, promotion, and liaison activities. It’s often the first step for multinationals testing the waters before committing to a PT PMA.
Who Can Be a Business Shareholder in Indonesia?
Foreigners can legally own shares in a PT PMA, but not in a PT Local. This ownership can be direct (as individuals) or indirect (through a foreign company).
Shareholders in Indonesia have the right to:
Receive dividends
Shareholders are entitled to a portion of the company’s profits, distributed as dividends according to the proportion of shares they hold. The dividend distribution is usually decided in the General Meeting of Shareholders (GMS) after the company’s annual financial statements are approved. For foreign shareholders, dividends can be repatriated overseas, provided all tax obligations (such as withholding tax) are met in Indonesia.
Vote in General Meetings of Shareholders (GMS)
Every shareholder has the right to attend the GMS, voice opinions, and exercise voting rights. Generally, one share equals one vote, meaning the more shares held, the greater the influence in decision-making. This voting power allows shareholders to directly shape the company’s direction by:
- Electing or dismissing directors and commissioners
- Approving major transactions such as mergers or acquisitions
- Amending the Articles of Association
- Approving the annual report and dividend distribution
This mechanism gives shareholders the authority to influence strategic and governance matters at the highest level.
Transfer shares (subject to approval and compliance)
Shareholders can transfer their shares, but such transfers must comply with Indonesian Company Law and the company’s Articles of Association. In many cases, existing shareholders or the Board of Commissioners have the right of first refusal before shares can be transferred to a third party.
Additionally, foreign shareholders must ensure compliance with the Positive Investment List, which regulates ownership limits in certain business sectors. All share transfers must be notarised and reported to the Ministry of Law and Human Rights (MOLHR) to be legally recognised.
They are also bound by obligations, including funding commitments and compliance with Indonesia’s capitalisation rules.
Important Notes: Maintaining the Register of Shareholders
Every Indonesian company must maintain an official shareholder register. This register records the names of actual shareholders not just nominees. For foreign investors using a nominee arrangement, it is essential to structure this carefully under notarised agreements to protect beneficial ownership rights.
LMI Consultancy advises against informal nominee setups, as these may leave investors exposed to disputes or regulatory breaches.
Indonesia Law & Regulatory Basis for Foreign Investment
The legal framework for foreign ownership is anchored in:
- Law No. 25/2007 on Investment
- Company Law No. 40/2007 (UUPT)
- Omnibus Law on Job Creation (Law No. 11/2020)
- Positive Investment List (Presidential Regulation No. 10/2021 and amendments)
Together, these rules define who can be shareholders, directors, and commissioners in Indonesian companies and under what restrictions.
Understanding Board of Commissioners and Their Duties
Indonesia’s corporate governance follows a two-tier board system:
- Directors manage day-to-day operations.
- Commissioners supervise directors, provide strategic oversight, and ensure compliance with the law.
- Commissioners do not get involved in daily management but serve as a check-and-balance mechanism, ensuring the company acts in the best interests of its stakeholders.
Who is Eligible to be a Commissioner for a Company in Indonesia?
Both Indonesians and foreigners can serve as commissioners, provided all legal requirements are met. For PT PMAs, it is common to appoint at least one foreign commissioner, especially when investors want close oversight of company management.
However, local knowledge is critical. Many companies adopt a mixed board composition, combining foreign commissioners for global perspective with local commissioners who understand regulatory nuances.
Can a Foreign Individual Be a Director in an Indonesian Company?
Yes, foreigners can serve a role in the Board of Directors of a PT PMA. Directors are responsible for the operational management of the company and are legally liable for its actions.
In PT Locals, however, directors must typically be Indonesian nationals, unless structured otherwise with nominee or special arrangements.
Foreign Director Requirements
For a foreigner to serve as a director in Indonesia, several requirements must be met:
- A valid Limited Stay Permit (KITAS) with a Work Permit (Notifikasi/IMTA)
- Appointment through a General Meeting of Shareholders and legalisation by a Notarial
- Deed Compliance with sectoral regulations (some industries require local directors)
Directors must also be mindful of Indonesia’s strict manpower and immigration laws, as missteps can result in personal liability or company sanctions.
Establish Your Business Presence in Indonesia with LMI Consultancy
Whether you are exploring Indonesia for the first time or planning a major expansion, understanding the roles of shareholders, directors, and commissioners is critical to building a compliant and successful business.
At LMI Consultancy, we provide end-to-end support, from structuring your PT PMA and securing investment licenses to appointing directors, commissioners, and shareholders in full compliance with Indonesian law.
With a team of experts bridging local regulations and international investor needs, we ensure you enter the Indonesian market with clarity, confidence, and compliance.
Contact us today to begin your investment journey and company incorporation in Indonesia.
