CHANGING THE BUSINESS OF PMA COMPANY

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Changing the business activity of a PMA Company not only requires the adjustment of its corporate legal documents, but also impacts the investment license issued by the Investment Coordinating Board. Learn more on the procedure to change the business activity of PMA Company.


There are plenty of reasons behind the change of business for every Companies: change of Business Plan, or change of Ownership, and so on. After making such decision, the Company then must prepare to start the process of adjustment of its corporate documents, including its Articles of Association.

However, since PMA Company is also regulated by Investment Law and its subordinate regulations, PMA Company must also adjust its investment license accordingly with its change of business, and if the change fulfill certain criteria, the PMA Company must apply for an entirely new investment license, which will impact the PMA Company.

Therefore, the following are the steps to change the business of PMA Company:

  1. GENERAL MEETING OF SHAREHOLDERSPursuant to Article 19 of Law No. 40 of 2007 concerning Limited Liability Company (“Company Law”), all amendments of Articles of Association must be determined and agreed upon by the General Meeting of Shareholders (“GMS”), including change of Company Business Activities, as determined previously in the Objectives and Purposes of the Company.

    The Objectives and Purposes of the Company is usually stipulated in Article 3 of Company Articles of Association. Therefore, the GMS shall agree on the amendment of such Article.

    Since the change of business is conducted by the PMA Company, the GMS must be submitted to the Indonesia Investment Coordinating Board (“BKPM”) to be approved before it can be notarized and commenced effectively.

  2. APPLICATION TO BKPM (INVESTMENT COORDINATING BOARD)After the GMS is conducted and a resolution is reached, the GMS minutes of meeting or Shareholders’ Resolution is submitted to BKPM for approval.

    The type of application submitted to BKPM depends on what investment stage the PMA Company is in. Here are some examples on the BKPM Application to change business activities of PMA Company:

    • PMA COMPANY ONLY HAS PRINCIPLE LICENSE (IZIN PRINSIP)If the PMA Company has only been established and has yet to obtain Permanent Business License (Izin Usaha Tetap or IUT), the application is submitted to apply for Alteration of Principle License (Izin Prinsip Perubahan), to alter the current Principle License owned by the PMA Company.

      To change the business activities of PMA Company to specific business sectors, such as Manufacturing, the PMA Company may be required by BKPM to apply for a new Principle License, and revoke the old Principle License after the new license is issued.

    • PMA COMPANY ALREADY HAS PERMANENT BUSINESS LICENSE (IZIN USAHA TETAP)If the PMA Company already has a Permanent Business License (Izin Usaha Tetap), changing its business activity means the PMA Company must apply for a Principle License (Izin Prinsip) from the beginning.

      IMPORTANT: Applying for a Principle License from the beginning is deemed as investing in a new investment. Therefore, the PMA Company is required to invest pursuant to the minimum investment amount as stipulated in the prevailing Investment laws and regulations.

  3. NOTARIZE THE ADJUSTMENT OF ARTICLES OF ASSOCIATIONAfter the PMA Company obtains approval of the change of business activities from BKPM, the Notary can notarize the adjustment of Articles of Association, with reference to the approval given by BKPM for the new business activity.
  4. APPROVAL BY THE MINISTER OF LAW AND HUMAN RIGHTSAfter the adjustment of Articles of Association is notarized, the Notary Deed is submitted to the Minister of Law and Human Rights to be approved. The change of business activities is deemed legally effective since the issuance of the Letter of Approval by the Minister of Law and Human Rights.
  5. PERMANENT BUSINESS LICENSE FOR THE NEW BUSINESSIt is important to note that the PMA Company must obtain a new Permanent Business License (Izin Usaha Tetap) for its new business activity within the validity period determined for its Principle License. Without the Permanent Business License, the PMA Company is not allowed to conduct operational activities for the new business.

 

HOW CAN SMART CONSULTING HELP YOU?
To ensure a smooth investment and business operation from the legal perspective, but also still focus on maintaining your business in Indonesia and reach your revenue target, it is advised for you to find capable and trusted lawyers or legal consultants for advice and assistance in ensuring your legal compliance with prevailingtrading laws and regulations.

SMART Consulting is an Indonesian Corporate Legal Services firm. We have assisted local and multinational companies in handling their corporate legal matters, including preparing resolutions and general meeting of shareholders for their Client, liaising with BKPM in regards to Client investment and business licenses, and acting in an advisory capacity for the Client.

Contact Us Now to get your legal solution for your business goals, and still comply with the prevailing laws and regulations.
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