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Company Dissolution in Indonesia
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Closing your Indonesian business requires following the official procedure when you cease operations.
The initial step in dissolving a company in Indonesia involves removing its legal entity status. Therefore, upon declaring dissolution, a company must legally cease all operations.
By having legal, tax and accounting experts from LMI Consultancy, we provide a one-stop service for company dissolution. We will ensure that all perspectives will be covered during the process for the benefit of clients so the company can be dissolved correctly and in an orderly way.
Type of Dissolution
- Voluntary Dissolution: Initiated by the shareholders through a General Meeting of Shareholders (GMS) decision. Reasons may include low profitability or strategic business changes.
- Involuntary Dissolution: Occurs against the will of the shareholders, often mandated by a court order. This can happen due to bankruptcy or failure to comply with legal requirements.
- Liquidation (Voluntary): A process where a solvent company decides to wind up its operations voluntarily. It involves appointing a liquidator to sell assets, settle debts, and distribute remaining assets to shareholders.
- Liquidation (Involuntary): Initiated when a company is declared bankrupt by a court. The court appoints a liquidator to manage the sale of assets and settlement of debts according to creditor claims.
- Dissolution by Revocation: Occurs when the government revokes the business license due to non-compliance with regulations or failure to operate for an extended period.
- Dissolution as per Articles: A company may dissolve itself according to stipulations outlined in its Articles of Association, which may include specific conditions for dissolution
How are assets distributed among creditors and shareholders during liquidation
During liquidation, the distribution of assets among creditors and shareholders follows a specific hierarchy based on the priority of their claims, just like the following list:
Secured Creditors
- Secured creditors: These creditors have claims backed by collateral. They are paid first from the proceeds of selling secured assets.
Preferential Creditors
- Employees, tax authorities, etc: This group includes employees owed wages and certain tax obligations. They are paid after secured creditors.
Unsecured Creditors
- Unsecured creditors: These creditors do not have collateral backing their claims and are paid next, often on a pro-rata basis if funds are insufficient.
Shareholders
- Preferred and common shareholders: Shareholders receive any remaining assets after all creditors have been paid. Preferred shareholders are paid before common shareholders.
Distribution Process
- Asset Liquidation: A liquidator is appointed to sell the company's assets to generate funds.
- Payment of Liquidation Costs: Before any distributions, costs related to the liquidation process (e.g., liquidator fees) are settled.
- Secured Creditors Paid First: Proceeds from the sale of secured assets are used to pay off secured creditors.
- Preferential Claims Settled Next: After secured creditors, preferential creditors receive their due payments.
- Unsecured Creditors Paid on Pro-Rata Basis: If there are remaining funds, unsecured creditors are compensated based on the proportion of their claims.
- Shareholder Distribution: Finally, if any assets remain after all debts have been settled, they are distributed among shareholders according to their share type (preferred or common).
Document Requirements
- ID card and NPWP of Director and Committees;
- Deed of the establishment until the last amendment;
- Decree of the Ministry of Law and Human Rights until the last amendment;
- Minutes of the GMS;
- Company Domicile Certificate (SKDP);
- NPWP, Trade Business Licence (SIUP), and TDP/NIB;
- Proof of monthly and annual tax reports of PT.
Dissolve Your Company in Indonesia with LMI Consultancy
- Consult your inquiry with our professional consultant
- Submit necessary document
- Proceed with the payment
- Application process
- Receive the complete document
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Established in 2016, LMI Consultancy has been supporting countless individuals in understanding the intricacies of visas, business setup, tax & accounting, and property investment in Indonesia, providing a comprehensive and dependable service.
We take pride in being an ethical and innovative company that places a strong emphasis on exceptional customer service and strives to set a new standard in our industry, guaranteeing a smooth and encouraging experience for our clients.
FAQ
What is the typical duration of the liquidation process for a PMA company?
It may take up to two years to complete the liquidation.
What responsibilities do investors have as shareholders in a company undergoing liquidation?
The shareholders’ responsibility is to appoint a liquidator to handle the liquidation at the general meeting where the liquidation is approved. Should no liquidator be appointed, the Board of Directors will serve in that capacity.
Who can be the liquidator of a company?
An appointed person or company, known as a liquidator, handles the liquidation process as determined by the General Meeting of Shareholders. Typically, the appointed liquidator is a company director, though an independent expert could also serve.
Disclaimer : Our services in LMI Consultancy provide consulting services focused on ensuring client compliance with applicable immigration and legal regulations in Indonesia. We do not provide or facilitate the production of official government documents, nor do we offer any expedited or preferential access to government services.
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