Category: Legal Articles

The Difference between Authorized Capital, Issued Capital, Paid-Up Capital in Indonesian Company Law

Posted by Dr. Guan Yue on

The rapid development of Indonesia’s economy has attracted a large number of foreign investors to set up companies in Indonesia. Investors often cannot distinguish the difference between registered capital, issued capital, and paid-in capital. Queen Law Firm will explain this issue to the majority of foreign investors today.

In Indonesia’s regulations on company establishment, capital is divided into three types, namely, Authorized Capital (modal dasar), Issued Capital (modal ditempatkan), and Paid-Up Capital (modal disetor).

Authorized Capital is the entire nominal value of the company’s shares mentioned in the Articles of Association or the Deed of Establishment document. Authorized Capital in principle is the total number of shares that can be issued by the company.

Issued Capital is the number of shares that have been taken by the founders or shareholders. In other words, Issued Capital is the capital that the founders or shareholders are able to repay. So it is possible for the capital that has been written in the Deed of Establishment document indirectly and in the near future, it is agreed to be provided by the owners of capital. In other words, the company’s finances that initially had 0 or nothing would get a capital injection, but some were immediately available and some were still promised to be available.

Paid-up Capital is capital that has been entered by the shareholders as payment for shares taken from the issued capital. So, Paid-up Capital is capital that has actually been paid into the company. If the capital value has been given from the owner of the capital to the company, then the value becomes the property of the company and is recorded in the company’s books. In other words, the company gets fresh money from the owners of capital. The amount of Issued Capital that has not been paid up can be recorded as a liability/debt of the owner of the capital to the company.

Simply put, the difference between Issued Capital and Paid-up Capital is that when the owner of the capital has agreed to provide capital of IDR 500 million in the form of money or goods, the capital is referred to as Issued Capital. If the capital has not been provided, it will be considered a debt. When he has given the Rp 500 million, then the debt is considered paid off and is referred to as Paid-up Capital.

According to the “Indonesia Company Law”, the company must have issued and paid at least 25% of the registered capital when it is established. For example, for a foreign company, the registered capital is at least IDR 10 billion, so the company’s establishment contract must state that the registered capital is IDR 10 billion. According to the law, at least 25% of IDR 10 billion, or IDR 2.5 billion of issued capital, must be injected and deposited when the company is established. This amount is the minimum amount, so if you want to deposit more than IDR 2.5 billion, of course, you can.

Land Dispute Problems, Prevention and Resolution

Posted by Irfan Disnizar, SH. on

There are many cases of land disputes that have entered Queen Law Firm, with different characteristics of cases, although many cases are similar but not the same, here are some of the problems we often encounter:

  1. Lack of orderly land administration in Indonesia, what we often encounter is that one land has multiple certificates with different owners;
  2. There are several Notaries, Land Deed Making Officials (PPAT) / Temporary Land Deed Making Officials (PPATS) / Subdistrict Head, less careful in carrying out their duties, in some cases Notaries, Land Deed Making Officials (PPAT) / Temporary Land Deed Making Officials (PPATS) / Subdistrict Head, in making a deed of sale and purchase of a land object they do not first check the status of Land at the National Land Agency so that in some cases when buying and selling has occurred and will register the transfer of land rights to the National Land Agency, the rights cannot be transferred because the land is in a state of dispute;
  3. There are erroneous land data, both in terms of area, boundaries, and overlapping rights with one another;
  4. The problem of inheritance land ownership between individuals, both in the distribution of land rights and the sale of land rights whose certificates have not been broken;
  5. The laws and regulations overlap each other, both horizontally and vertically, as well as the substances regulated;
  6. Limited human resources tasked with resolving land disputes either in the District Court or the State Administrative Court, so that a Land Dispute case can take years, even though the government has regulated in Article 4 Paragraph (2) of the Law of the Supreme Court of the Republic of Indonesia stipulates that justice is carried out quickly, simply and at low cost, but in reality, it has not been realized;
  7. The existence of settlements from other agencies, resulting in overlapping authorities, for example in remote areas where land disputes have not yet developed are resolved by customary heads, tribal chiefs, village heads, or clan heads.

In order to avoid the above-disputed issues in terms of buying and selling land, everyone should pay attention to the following:

  1. Looking for the origin of the land, which is usually found in the Kelurahan/Village called Letter C Desa which contains the previous to the latest land ownership;
  2. Checking the certificate of ownership of land rights to the National Land Agency (BPN), to check who the owner is, whether there is a mortgage that is imposed, or to check whether the certificate is still in a state of dispute or not;
  3. Make a Deed of Sale and Purchase at a Notary, Land Deed Making Officer (PPAT) / Temporary Land Deed Making Officer (PPATS) / Subdistrict Head who are competent and responsible in carrying out their duties.

However, if this land dispute has occurred, the settlement of land disputes can be done through the District Court, it can also be through the State Administrative Court, and it is not uncommon for land dispute resolution to penetrate into the criminal law area because the dispute contains elements criminal.

 

 

 

 

Regarding the Establishment of A Representative Office of A Foreign Company in Indonesia

Posted by Dr. Guan Yue on

With the rapid development of the Indonesian economy, more and more overseas companies plan to enter the Indonesian market. However, many companies are hesitant to set up a branch or representative office in Indonesia. Here, I will focus on the relevant situation of the representative office.

Restrictions on Representative Office

Indonesian laws and regulations allow foreign companies to open representative offices in Indonesia. However, allowing the establishment does not mean that there are no restrictions. In addition to being unable to freely conduct commercial operations, foreign company representative offices also have many other restrictions. According to the guidelines and procedures for permits and investment facilities in Article 37 of Regulation No. 13 of 2017 of the Indonesian Investment Coordination Board, the establishment of a representative office of a foreign company in Indonesia has at least five restrictions:

  1. A representative office of a foreign company can only act as a supervisor, liaison, and coordinator and handle issues related to the parent company’s interests or its affiliates.
  2. A representative office is limited only to prepare for establishing and developing a foreign investment company business in Indonesia or other countries and Indonesia.
  3. Regarding the office location of a representative office of a foreign company. The Indonesian Investment Coordinating Commission Regulation No. 13 of 2017, Article 37(1) Subparagraph c stipulates that the office of foreign company representative offices is limited to office buildings located in provincial capital cities. In other words, representative offices of foreign companies are not allowed to be established in non-provincial capital cities. At the same time, you cannot use a virtual office address like a limited company.
  4. The representative office of a foreign company is prohibited from seeking income from Indonesia. The Indonesian Investment Coordinating Board Regulation No. 13 of 2017 Article 37(1) Subparagraph d stipulates: (the activities of foreign company representative offices are restricted) shall not seek income from Indonesia, including agreements/transactions that are not allowed to carry out activities or buy or sell goods or services with companies or individuals in Indonesia.
  5. Applicable to the handling of the relationship between a representative office of a foreign company and a subsidiary or branch. The Indonesian Investment Coordinating Commission Regulation No. 13 of 2017 Article 37(1) Subparagraph e stipulates: Foreign company representative offices shall not participate in the management of companies, subsidiaries, or branches in Indonesia in any form.

Obligations of A Representative Office of A Foreign Company

In addition to the above restrictions, the regulations also stipulate certain obligations for the representative office as an organization and the head and employees as individuals. For example, before operating, a representative office must obtain a representative office license from the Indonesian government. This is stipulated in Article 37(2) of Indonesian Investment Coordinating Board Regulation No. 13 of 2017.

The maximum period of validity of a representative office permit is three years unless the letter of an appointment indicates that it is less than three years, and it can be extended by the period of validity specified in the letter of appointment. The representative office must apply for an extension of the representative office license at least 30 days before the license expires.

Finally, there is the obligation of the person in charge of the representative office. The person in charge must live in Indonesia and take full responsibility for the normal operation of the representative office. The person in charge shall not engage in activities other than the related activities of the representative office, and shall not concurrently hold the position of the person in charge of the representative office of other companies and/or representative offices. If the person in charge of the representative office is a foreign citizen and/or has foreign employees, then according to Indonesian laws and regulations, the representative office must also employ Indonesian employees.

 

100% Closed and Open Business Fields for Foreign Capital Companies in Indonesia

Posted by Dr. Guan Yue on

In order to accelerate economic growth, the Indonesian government has taken many major steps. One of them is to increase foreign investment by relaxing negative investment. This new policy allows foreign-funded enterprises to own only 64% of the shares at first, but now they can own 83% of the shares.

In fact, in Economic Policy Package XVI, the government has added 100% of the business areas that are open to foreign direct investment to the list. With this policy, the government expects that the industrial sector, especially small and medium-sized enterprises, will have significant growth.

Closed Business Fields for Foreign Capital Companies

In 2018, the government saw significant developments in the investment sector. Likewise, foreign investor confidence in Indonesia is considered to be increasing. That is why the government ensures that there are only eight business fields closed to foreign capital companies, namely:

  1. Cannabis cultivation.
  2. Catching certain types of fish.
  3. Taking or utilizing live or dead corals from the wild.
  4. Lifting of valuable objects on a sunken ship.
  5. The chemical industry pollutes the environment.
  6. Chemical weapons industry.
  7. Liquor / alcoholic industry.
  8. Gambling or casino business.

List of Business Fields that a Foreign Capital Company may Own

In the following business areas, foreign businessmen no longer need to have joint ventures with Indonesian residents, and can completely 100% own the company as a sole proprietorship, specifically involving 25 business areas, namely:

  1. Business in the nature tourism sector takes the form of exploiting ecotourism activities and services as well as facilities in forest areas.
  2. Survey and market research services.
  3. The job training sector, including the development of work competencies, productivity, and work ethic. For example, in the fields of technology and engineering vocational, commerce, language, tourism, information technology, and agriculture with the aim of equipping the workforce to enter the world of work.
  4. Art gallery area.
  5. Performing arts field.
  6. The human transportation business segment uses non-route land transportation, transportation with certain majors in the transportation sector, and tourism transportation.
  7. Overseas sea transport for passengers (excluding cabotage) in the Transportation sector
  8. Data communication system services sector.
  9. Fixed telecommunications network operating sector.
  10. The communication and information sector in the operation of mobile telecommunications networks.
  11. Content services telecommunications services.
  12. Information service center or call center services and other value-added telephone services.
  13. Internet access service sector.
  14. Internet telephone services for the public interest.
  15. Internet interconnection services (NAP) and other multimedia services.
  16. Provision, utilization, inspection, and submission of electrical power installations, including high voltage / extra high voltage electricity.
  17. Finished drug pharmaceutical industry.
  18. Acupuncture service facilities.
  19. Pest control/fumigation service sector.
  20. Oil and gas construction services.
  21. Geothermal survey services sector.
  22. Oil and gas drilling services at sea.
  23. Geothermal drilling services.
  24. Geothermal operation and maintenance services sector.
  25. Power generation sector> 10 MW.

Therefore, for those foreigners who want to set up a foreign-funded enterprise, first of all, please make sure that the business area to be involved is no longer in the negative investment list, and determine whether it can be 100% sole proprietorship to ensure that your business can run normally.

 

Transnational Divorce Lawsuit in Indonesia

Posted by Dr. Guan Yue on

As a well-known law firm in Indonesia, Queen Law Firm handles various kinds of cases, including commercial cases, civil cases, criminal cases, and so on. Among them, one type of case has been on the rise in recent years, namely transnational divorce suits. In such cases, the majority of divorce suits were filed by foreign women against Indonesian men. The reasons for divorce vary widely, of course, this is a matter of morality and we will not discuss it here. I will mainly discuss some of the legal issues related to divorce suits filed by foreign women against Indonesian men.

For litigation, in this kind of case, the main charges cover three things, namely: divorce, child custody, and distribution of joint assets.

1. Divorce

In accordance with Article 1 of Law No. 1 of 1974 concerning Marriage:
“Marriage is a physical and mental bond between a man and a woman as husband and wife with the aim of forming a happy and eternal family or household based on the One Godhead.”

Marriage is sacred and is an important factor for the continuity of human society. Moreover, for women in transnational marriages, it takes a lot of courage for women to leave their homeland and their families and choose to live in a country that is completely foreign to men. However, if the marriage cannot be continued for various reasons, divorce can bring new opportunities for both parties.

Based on Article 39 of Law Number 1 of 1974 concerning Marriage in conjunction with Article 19 letter (f) PP No.9 of 1975 concerning the Implementation of Law Number 1 of 1974 concerning Marriage, which reads as follows:
“Between husband and wife, there are continuous quarrels and fights and there is no hope of living in harmony again in the household.”

In other words, as long as the marriage can no longer maintain happiness, you can file a divorce suit in court. The reason for divorce can be for any reason, as long as it is in accordance with the facts and can provide evidence and valid witnesses for that reason in the next trial.

2. Child Custody

For those who are Muslims regulated in Article 105 Compilation of Islamic Law, it reads:
“In the event of a divorce:
a. Caring for children who are not yet 12 years old is the right of the mother;
b. Child care that is 12 years old is left to the child to choose between the father and mother as the holder of the right to care for him;
c. maintenance costs borne by his father. ”

For non-Muslims, based on the Decision of the Supreme Court of the Republic of Indonesia No. 102 K / Sip / 1973 dated 24 April 1975, reads as follows:
“Based on the jurisprudence regarding child guardianship, the rule is that the biological mother is prioritized, especially for young children, because the interests of the child are the criterion, unless it is proven that the mother is not fair to care for her child.”

Based on MARI Decision number 126 K / Pdt / 2001 dated August 28, 2003:
“If there is a divorce, the child who is still under the age of maintenance should be left to the closest and familiar person to the child, namely the mother.”

Therefore, for children under 12 years of age, custody of the child will automatically be granted to the mother. However, if the mother has bad habits and the judge believes that the woman does not have the ability to properly care for the child, then custody of the child will most likely be passed on to the father’s side. We want to remind all foreign women to pay attention to this. Indonesia is a Muslim country, and judges hate women for alcoholism, gambling, and smoking. If women have the bad habits mentioned above and men have enough evidence and witnesses, it will be a big obstacle to our fight for child custody.

3. Distribution of Joint Assets

Article 53 of the Marriage Law divides assets in marriage into three types, namely:
“Congenital assets, namely assets obtained by husband or wife from before the marriage. Each of them has the full right to carry out legal actions regarding their inherited assets.
The assets of each husband or wife obtained through inheritance or gifts in marriage. The right to this property fully rests with each husband or wife
Joint Assets or Gono-gini, namely assets obtained during marriage. ”

Gono-gini assets are joint property of husband and wife, even though only the husband or wife works. Regarding the formation time of the hessian property, it is usually determined based on rationality rather than the actual formation time. In principle, these assets must be distributed fairly so as not to cause injustice between the rights of the husband and the rights of the wife. However, if one party has a serious fault in the marriage, or the burden of caring for the child is heavy and the other party is unable to pay child support, then the distribution of assets will favor the innocent party or the party who has to look after the child. After all, justice is not the same as fairness.

Divorce, as the end of the marriage, not only hurts both parties, but also causes great psychological harm to the children. Therefore, anyone should consider carefully before making a divorce decision. Of course, if you choose to keep a marriage where there is absolutely no happiness for the sake of your children, it is meaningless, constant quarrels between husband and wife will only cause continuous harm to the children.

After you make a divorce decision, please contact Queen Law Firm, no matter what kind of dilemma, we will face it together with you.

 

Prison Punishment = Punishment for Family

Posted by Irfan Disnizar, SH. on

Remind all those who are about to commit, are, or intend to commit illegal/criminal activities, they must remember that there are relatives, parents, children, and wives waiting for your return at home. Once you are subject to criminal penalties, not only are you alone but also your parents, wife, and children. Legally, you must take responsibility for what you have done, but if you are imprisoned, your parents, wife, and children will suffer unnecessary joint punishments for this. Such punishments may be financial. It may also be spiritual. Many times, because they worry about you, they have to give up a comfortable life, cut rations and family expenses, and even owe debts so that they can send food and other necessities to prison, just to make you feel less in prison. Bit bitter.

As lawyers dealing with criminal defense, we must often go to prison to meet with clients. We often see elderly mothers wandering in the queue for visits carrying food to be sent to prison. There are also many women with toddlers sitting in chairs with sad faces waiting to see their husbands. They are worried about the condition of their husbands in prison, while the innocent children are still playing, not knowing what happened to their father. For criminals of foreign nationality, their families need to raise money to buy air tickets and travel all the way to an unfamiliar country, even if they are separated by thousands of mountains and rivers, in their minds, what they want to visit is not a criminal, but a relative.

Stay away from all kinds of illegal and criminal acts, because that is the best way to love and protect your family.

About Business Contracts

Posted by Irfan Disnizar on with 0 Comment

Purpose of Designing Business Contracts

Formulate a Contract that can provide legal binding power, as well as provide legal certainty for parties involved in a business / commercial transaction.

The types of trade transactions are becoming increasingly varied and transnational in nature.

Insights on non-legal issues are very important, which can affect the success of a business transaction and fulfill the legitimate expectations of the parties.

Good Business Contract

A good business contract designer must have the willingness and ability to have commercial awareness or understanding of the goals and objectives of a commercial transaction.

A good Business Contract can only be drawn up if a designer can understand:

  • Understanding Transaction / commercial awareness;
  • Understand economic factors, social & political factors, and other non-legal factors;
  • Understand legal provisions, and
  • Be able to put in user-friendly legal language.

Conclusion

In preparing a Business Contract, as a good contract compiler, someone must at least:

Trying to understand the interests/peculiarities/characteristics of these business transactions and bring them to the realm of legal thought to then ground them back to the world of business, namely in the form of BUSINESS CONTRACTS

In other words, translating business deals into the concept of “Contract Law”

Inspired by : Dr. Bayu Seto Hardjowahono, SH., LL.M & Ignatius Denny Lesmana

Prenuptial Agreement in Mixed Marriage

Posted by Irfan Disnizar, SH. on with 0 Comment

Many of our clients, especially foreigners who are getting married or already married to Indonesians, ask whether before marriage they have to make a Prenuptial Agreement and what is the Prenuptial Agreement for?

Therefore, we will first discuss the Prenuptial Agreement, Prenuptial Agreement found in Article 29 Paragraph 1 of Law No. 1 of 1974 concerning Marriage which states: “At the time or before the marriage is held both parties a party with a joint agreement can submit a written agreement that is legalized by a marriage registrar, after which the contents also apply to the third party involved.”

The prenuptial agreement contains the separation of property, for foreigners the Prenuptial Agreement is very important especially for immovable objects such as land, houses, shop houses, office houses, apartment units and other properties that cannot be owned by foreigners, referring to Article 26 Paragraph (2) of Law No. 5/1960 concerning Basic Regulations for Agrarian Principles states: “Property rights cannot be owned by foreigners and the transfer of property rights to foreigners is prohibited under the threat of null and void.” In this principle, it is emphasized that foreigners cannot own land in Indonesia and only Indonesian citizens can own land in Indonesia. Meanwhile, at the time of marriage, there will automatically be a mixture of assets contained in Article 35 Paragraph 1 of Law No.1 of 1974 concerning Marriage which states that: “Assets acquired during the marriage become joint assets.” Thus, all assets in the form of movable and immovable objects will automatically become collective assets. However, back again to Article 26 Paragraph (2) of Law No. 5 of 1960 concerning Basic Agrarian Principles that foreigners cannot have ownership rights to land, so couples of different nationalities in Indonesia must make a prenuptial agreement to separate their property, especially immovable objects so that the husband/wife Indonesian citizens can purchase immovable property in the form of land, houses, shop houses, office houses, apartment units, and other properties.

Then when should a prenuptial agreement be made? This agreement should be made before the marriage takes place and be registered at the time the marriage takes place.

But what if a couple from different countries before and after marriage have not made a Prenuptial Agreement? Referring to the Decision of the Constitutional Court of the Republic of Indonesia Number: 69 / PUU-XIII / 2015, it is stated that: “A marriage agreement can be made at the time, before it is held (marriage) or while in a marriage bond and both parties with consent – can jointly submit an agreement. written which is legalized by a marriage registrar or notary public, after which the contents also apply to Third Parties as long as the Third Party is involved. ” And in Article 29 Paragraph 1 of Law No.1 of 1974 concerning Marriage which states:” At or before the marriage takes place both parties based on mutual consent may submit a written agreement that is legalized by the marriage registrar, after which the contents also apply to the third party involved.”

Therefore, a Prenuptial Agreement (Marriage Agreement) can be signed after marriage and has the same legal effect as a Prenuptial Agreement signed before marriage.

Peace in Postponement of Obligation to Pay Debt and Bankruptcy

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Principle of Peace

“Peace Institution” in the Bankruptcy and Postponement of Debt Payment Obligations Law regime is the embodiment of various principles adhered to in the UUK and at the same time becomes the most important institution in the UUK;

The principle referred to is the Balance Principle, which is the balance between the interests of debtors, creditors and other stakeholders in the Postponement of Debt Payment Obligations and Bankruptcy proceedings;

The principle of business continuity (going concern) becomes very important to protect the business of debtors and creditors, employees, suppliers and other parties directly and indirectly;

The Principles of Transparency and Justice are keywords in the peace process.

The Party That Proposed Peace Plan

1. debtor, When submitting a petition request for himself (voluntary petition). Debtors who estimate in the future will not be able to carry out their obligations to creditors;

2. debtor, When he is declared to have postponed his debt payment obligations;

3. debtor, When he was declared bankrupt;

4. curator, When the debtor is declared bankrupt.

Bad Credit

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Bad Credit

Bad credit or problem loans are loans that have difficulty paying off due to factors or intentional elements or due to conditions beyond the ability of the Debtor.

In Indonesia, there are 2 (two) types of credit:

  • Current Credit, and
  • Non-performing Loans:
  • Substandard Credit
  • Doubtful Credit
  • Bad Credit

Cause

The appearance of problem loans does not happen suddenly, it will appear after going through a process, which can be caused by negligence or mistakes of the Creditors (financial service providers) or from the Debtors.

Creditor

Careless apply credit rules, it is too easy to give credit, the concentration of credit funds in a group of debtors, high-risk business sectors, lending that exceeds the ability limit, etc.

Debtor

Declining business conditions due to deteriorating general economic conditions, mismanagement, family problems, business failures, liquidity problems, force majeure, bad temper, etc.

Bad Credit Indication

  • Deferral of abnormal obligations
  • The unexpected investigation from another financial institution
  • Internal problem
  • Changes in the map of market participants / new competitors
  • Increased use of overdraft facilities
  • The company is in chaos
  • Illegal activities were found for the business
  • Request additional credit
  • Request for an extension or reschedule of credit
  • A business that is too expansive
  • Other creditors protect the credit provided by requesting additional collateral or binding a notary for collateral

How to Settle Bad Credit

  • Rescheduling
  • Reconditioning
  • Restructuring
  • Liquidation
  • BANKRUPTCY
  • DELAYING DEBT PAYMENT OBLIGATIONS