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New Procedures For Validating a Legal Entity, Approving an Amendment of Article of Association and Company’s Data

Couple meeting with a financial adviserNew Procedures

On March 26, 2014, the Minister of Law and Human Rights ("MoHLR" ) enacted the Regulation of MoHLR No. 4 of 2014 on Validating a Legal Entity, Approving an Amendment of Article of Association and Company’s Data (“Regulation of MoHLR No. 4/2014”). In principle, the Regulation of MoHLR No. 4/2014 regulates new procedures to improve services and accelerate processes for validating a legal entity, approving an amendment of article of association and data of a limited liability company (“Company”) through online media.

Regulation of MoHLR No. 4/2014 regulates procedures which are tend to be more effective rather than the previous procedures, which were regulated under the Regulation of MoHLR No. M.HH-01.AH.01.01 of 2011 on Procedures for Validating a Legal Entity, Approving an Amendment of Article of Association and Company’s Data (“Regulation of MoHLR No. 01/2011”).

In essence, MoHLR No. 4/2014 sets out that the approval or refusal by the MoHLR shall be delivered electronically to the applicant. Therefore, the notary may print the decision of MoHLR by himself (self-printing). In the event that the applicant has an obligation to deliver supporting documents in submitting an application, then the applicant shall be required to deliver the statement letter electronically, stating that the supporting documents are complete. Nevertheless, all supporting documents in the physical form will be kept by the notary. The above mentioned procedures are different with Regulation of MoHLR No. 01/2011, which requires the applicant to deliver the physical form of the application letter with the attached supporting documents.

Application Through Online Media

In substance, the process and application for validating a legal entity, approving an amendment of article of association and Company’s data as set out in the Regulation of MoHLR No. 4/2014 are similar. Those applications are submitted through legal entity administration system (“SABH”). SABH is a technology service of a Company in electronically, which is managing by the Directorate General of General Legal Administration. The applicant is joint founders or director of a Company if the Company has obtained a legal entity status, or liquidator of a Company if the Company has been dissolved (“Applicant”).

The application of validating a legal entity shall be preceded by requesting Company’s name to the MoHLR. The approval or refusal of the Company’s name application shall be given to the Applicant electronically. The application for validating a legal entity should be submitted electronically to the MoHLR at the latest 60 (sixty) days from the signing date of the deed of establishment. The application shall be made by filling in a Company’s establishment form. The Applicant is obliged to pay application fees for validating a legal entity through collecting bank (bank persepsi) according to the prevailing laws and regulations. Moreover, the Applicant must deliver statement letter electronically, stating that the form of Company’s establishment and supporting documents are in accordance with the prevailing laws and regulations. Nevertheless, the supporting documents related to the application of Company’s establishment will be kept by the notary.

The MoHLR’s decision with regards to the validation of a legal entity shall be issued at the latest 14 (fourteen) days from the date of a non-objection statement from the MoHLR. The decision shall be delivered electronically to the Applicant, and the notary may directly print the decision stamped with a notary’s stamp. Furthermore, the MoHLR’s decision shall also contain a phrase, stating “this MoHLR’s decision is printed from SABH”.

The procedures of the (i) payment of an application, (ii) submission of statement letter by the Applicant, (iii) statement of a non-objection from the MoHLR after the completion of insertion of the data form through SABH, (iv) time period for the issuance of MoHLR’s decision, (v) delivery of MoHLR’s decision, (vi) documents keeping by the notary, and (vii) printing the MoHLR’s decision by the notary are applied mutatis mutandis in the application for approving an amendment of article of association and Company’s data. However, the differences from each application remain to the types of supporting documents.

Non-Electronic Request

In the event that the application to validate a legal entity, approve an amendment of article of association and data of a limited liability company cannot be processed electronically, due the reasons of (i) the domicile of the notary has no internet network, or (ii) SABH is not working properly based on the official announcement by the MoHLR, then the Applicant may submit the application manually. The application is made by submitting an application letter in writing and supporting documents manually. In additions, the manual application shall also be equipped with a statement letter from the head of telecommunication office in the notary’s domicile, stating that the domicile of the notary has not yet covered with internet facilities.

By the enactment of the Regulation of MoHLR No. 4/2014,  the Regulation of MoHLR No. 01/2011 is revoked and declared no longer valid.

Ivor Pasaribu

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