Recordation of the Deed of Transfer of Shares from Foreign Taxpayers
Posted by indonesiacompanylaw in Company Shares on May 11, 2012
Background
A tax on the ‘gains’ (profits) of sale of shares of Domestic Limited Liability Companies (“Domestic Company”) which is conducted by a Foreign Taxpayer, where the company is not the issuer or Public Company, is specifically regulated in the Decree of Minister of Finance of Republic of Indonesia Number: 434/KMK.04/1999 on Income Tax Deduction Article 26 on Income Received or Earned by Foreign Taxpayer besides Permanent Establishment on Gains of Sale of Shares (“Decree of Minister of Finance No. 434/KMK.04/1999”)
The purpose of the issuance of the Decree of Minister of Finance No: 434/KMK.04/1999 is to provide a certainty regarding the tax upon the income which is received and earned from Foreign Taxpayer besides Permanent Establishment from the sale of shares of Domestic Company, which is income tax withholding of 20% (twenty percent) of the income. Read the rest of this entry »
Corporate Social Responsibility by Limited Liability Companies
Posted by indonesiacompanylaw in Company on April 26, 2012
Corporate Social Responsibility (“CSR”) in Bahasa is known as tanggung jawab sosial perusahaan. Chapter V of Article 74 of the Law Number 40 of 2007 on Limited Liability Companies (“Company Law”) regulates on Social and Environmental Responsibilities, where Companies which perform its business activities in sectors of and/or related to natural resources are required to undertake social and environmental responsibilities
Under Article 74 paragraph (1) of Company Law, there are 2 (two) criterias that require Companies to undertake CSR, namely;
1. Companies which perform its business in sectors of natural resources.
The definitions of “Companies which perform its business in sectors of natural resources” are companies which perform business activities in management and utilization of natural resources. Read the rest of this entry »
Classification of Shares in Limited Liability Companies
Posted by indonesiacompanylaw in Shareholder on March 26, 2012
Share is a proof that shareholders have conducted a full deposit of capital in Limited Liability Companies (“Company”). Shares in Company are classified based on similar characteristics, it is called classification of shares. Article 53 paragraph (1) of Law Number 40 of 2007 on Limited Liability Companies (“Company Law”) states that the Articles of Association (“AOA”) specifies more than one class of shares.
Common Shares
Based on Article 53 paragraph (3) of Company Law, every share in the same class gives the holder the same rights. If there is more than one classification of shares, then AOA sets one of them as common shares. Common shares are shares which have voting rights to adopt resolutions in General Meeting of Shareholder (“GMS”) concerning all matters related to management of Company, have rights to receive dividends which are distributed and to receive remaining assets as a result of liquidation
Voting Rights
Voting right which are possessed by holders of common shares may also be possessed by holder of other classes of shares.
Classifications of Shares
Classification of shares as referred in Article 53 paragraph (3) of Company Law, are:
Read the rest of this entry »
Increase of Capital
Posted by indonesiacompanylaw in Capital Structure on February 15, 2012
Background
A Limited Liability Companies (“Company”) may gain their capital by increasing its capital, the process is performed based on General Meeting Shareholder’s (“GMS”) Resolution. According to Article 41 paragraph (2) of Law Number 40 of 2007 on Limited Liability Companies (“Company Law”), GMS may transfer authority to Board of Commissioners (“BOC”) for purposes of approving implementation of the GMS’ resolution to increase the Company’s capital for maximum of 1 (one) year, with notes that anytime the granting of authority may be revoked by the GMS.
1. Increase of Authorized Capital
The GMS’ resolution to increase authorized capital is valid if taken with consideration of condition for quorum and number of approving votes to amend the articles of association (“AOA”) in accordance with provisions in Company Law and/or its AOA.
2. Increase of Subscribed Capital and Paid-up Capital
GMS’ resolution to increase subscribed and paid-up capital within limits of authorized capital are valid, if taken with a quorum of more than ½ (one half) of total number of shares with right to vote and approved by more than ½ (one half) of total number of votes, except a larger amount is stipulated in AOA.
All shares that are issued in relation to an increase of capital must first be offered to every shareholder in proportion to share ownership for the same classification of shares. If shares that will be issued for an increase of capital constitute classification of shares which has never been issued, those entitled to the first right to purchase are all shareholders in accordance with their ownership proportion of total shares. Article 43 paragraph (3) of Company law stated, the prior offer of shares shall not apply if shares issuance that are addressed to: Read the rest of this entry »
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