When transferring ownership of shares issued by a Limited Liability Company (PT), the transaction does not stop when the Sales and Purchase Agreement is signed. Learn more about the completion of transfer of shares, and when does the ownership of shares is deemed to have been transferred to the new shareholder.
In transferring the rights of shares, it requires a unique process of transaction, because parties involved in the transaction are not only buyer and seller of shares, but also the limited liability company itself as the issuer. In addition, there are some requirements listed on Article 57 Paragraph 1 Law No. 40 of 2007 concerning Limited Liability Company (“Company Law”) that must be completed by shareholders prior to shares transaction, such as:
If the 3 (three) requirements are completed; the next step is to legalize the transfer of shares. Pursuant to Article 56 Paragraph 1 of Company Law regulates a transfer of shares must be conducted by way of executing a deed of share transfer, and its copy must be delivered to the Company in writing. After the parties have signed the deed of share transfer, there are some steps that must be done by the seller, which are:
WHEN DID THE OWNERSHIP RIGHTS OVER SHARES LEGALLY TRANSFERRED?
Although both buyer and seller have signed the deed of share transfer, the ownership rights over the shares sold will not transfer to the buyer automatically. The ownership rights over the shares will shift to the buyer after the delivery of the shares takes place. As stated in article 612 of Indonesian Civil Code, “The delivery of movable properties, with the exception of intangibles, shall take place by a single handover which is carried out by the owner or on his behalf, or by the delivery of the keys of the building in which the properties are located. Delivery shall not be required in the event that the individual entitled to the properties already has such in his possession by virtue of another title.”
Because share is included in registered debts and other tangible properties, based on the above provision, therefore, its sale and purchase:
Hence, the moment when the seller delivered share certificates to the buyer, the ownership rights transferred to the buyer.
After the share certificates received by the buyer, he must submit the certificate to the company so that the title over the certificates could be transferred. The buyer also has to submit the copy of the deed of share to the BOD to be recorded in the shareholders’ register.
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 prevailing laws and regulations.
SMART Consulting is an Indonesian Corporate Legal Services firm. Our experience and dynamic firm value assist Clients in staying up-to-date with the newest Indonesian laws and regulations. SMART focuses on foreign investment and general corporate matters, including establishment of PMA Company and providing Corporate Secretarial and Legal Services to maintain investors’ business Indonesia.
Contact Us Now to get your legal solution for your business goals in Indonesia, and still comply with the prevailing laws and regulations.