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.

Queen Law Firm Signed a Peace Agreement on Behalf of An Energy Group in China

Posted by Dr. Guan Yue on

After months of difficult negotiations, Queen Law Firm once again helped a Chinese client win the lawsuit in a Chinese energy group v. an Indonesian energy group, and successfully negotiated at the mediation stage. A settlement agreement was signed with the other party at the Mediation Chamber of the Central Jakarta District Court on September 30, 2021.

According to the Indonesian Civil Procedure Law, mediation must be conducted before the case enters the formal litigation stage, and the time limit for mediation is a maximum of 40 days. However, the mediator can make an appropriate extension according to the actual situation. The purpose of mediation is to resolve disputes through negotiation as much as possible and to successfully resolve civil cases at the mediation stage, so as to save limited judicial resources.

In the course of handling cases for many years, Queen Law Firm has also tried its best to negotiate with the other party during the mediation stage to strive for the best interests of the client, so that the case can achieve the greatest effect in the shortest time.

Successive victories have proved that the professional team of Queen Law Firm is capable of handling any complicated cases and high-pressure working environment, and is able to consider customers to the greatest extent. Because of this, Queen Law Firm has accumulated numerous client groups from various countries around the world over the years and has become an influential presence in the industry.

Queen Law Firm Wins Case Again

Posted by Irfan Disnizar, SH. on

In a land dispute case that was pronounced at the Cianjur District Court on September 29, 2021, although the opponent was a team of well-known lawyers in the field of law, Queen Law Firm still fulfilled its mission and spared no effort to protect the interests of its clients, and as always achieved the final victory.

Winning cases continuously is the best gift Queen Law Firm can give to its clients.

Queen Law Firm Won the “Indonesian Best Choice Award 2021”

Posted by Dr. Guan Yue on

Congratulations to Eni Oktaviani and Guan Yue, the Managing Partners of Queen Law Firm, for winning the “Best Choice In Lawyer Award” at the “Indonesian Best Choice Award 2021” ceremony held at the Holiday Inn Kemayoran Hotel in Jakarta on the evening of September 24, 2021. This signifies that Queen Law Firm’s unremitting efforts have been recognized by the Indonesian government and the field of law.

This awards party gathered elites from all walks of life in Indonesia. Many companies and individuals in multiple industries, including Internet companies, the beauty industry, banks, foundations, the legal profession, and real estate, compete for the few awards. Queen Law Firm lived up to expectations and won the “Best Choice In Lawyer Award”.

After years of development, Queen Law Firm has become a rising star in the Indonesian legal community. With a professional team, superb knowledge, rich experience, and strong channels, Queen Law Firm have solved countless cases from companies and individuals from all over the world, successfully safeguarding the interests of clients and the dignity of the law.

Therefore, it is the hard work of all members of Queen Law Firm and the support of all customers around the world that have achieved this honor. In the future, Queen Law Firm will continue to work hard to create more brilliance with all the people who support and encourage Queen Law Firm.

Guan Yue Accepts an Exclusive Interview with the Japan Daily News

Posted by Dr. Guan Yue on

On August 21, 2021, Guan Yue from Queen Law Firm accepted an interview with reporter Epo A Ishiyama from Japan Daily News about the Indonesian criminal virtual court.

The virtual court is a measure taken by the Supreme Court of Indonesia in response to the growing COVID-19 pandemic in Indonesia. Guan Yue pointed out that the virtual courts in Indonesia currently only target criminal cases. The difference from an ordinary trial is that the defendant does not need to go to court to participate in the trial in person. Instead, the defendant participates in the trial through a TV screen in a specially arranged room in the prison. Other personnel, including judges, prosecutors, lawyers, witnesses, etc., must still be present in court in person.

During the COVID-19 epidemic, the virtual court can ensure that the defendant does not bring the virus from outside the prison into the prison, and it can also ensure that the trial of the case will not be interrupted due to the epidemic. Because, according to the Indonesian Criminal Procedure Law, the defendant cannot be more than 400 days in custody until the final judgment. If the final judgment is not made after the deadline, the defendant must be released.

Of course, Guan Yue also pointed out that virtual courts will reduce the quality of defense. Bypassing, the judge cannot really feel the defendant’s remorse, which will also affect the final judgment. Because the judgments made in trials conducted through ordinary courts are often lighter than those made in trials conducted through virtual courts. Moreover, due to network reasons, it will be difficult for the defendant to communicate with the parties to the trial, especially for foreign defendants. At the same time, with regard to the execution of a death sentence through a virtual court, Guan Yue believes that this is not a humane practice.

There are two sides to everything. Guan Yue believes that during the epidemic, for the safety of most people, it is indeed a better way to use virtual courts to try criminal cases.

Queen Law Firm Distributes Daily Needs To The Community In Pandemic

Posted by Dr. Guan Yue on

The COVID-19 epidemic has been going on for more than one year, and Indonesia’s anti-epidemic situation has become increasingly severe. Starting on July 3, the Indonesian government has adopted Enforcement of Emergency Community Activity Restrictions (PPKM). More and more people have lost their source of livelihood because they can’t carry out normal activities so that they can’t guarantee the most basic life needs.

To this end, Queen Law Firm adheres to the concept of “take it from the people and use it for the people”, and prepares daily necessities for a certain number of people to alleviate their urgent needs.

Queen Law Firm hopes to help people in need to tide over the difficulties through this event.

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.

 

Maintain Rights is Everyone’s Obligation

Posted by Dr. Guan Yue on

On May 19, 2021, after more than a year of hard work, the South Jakarta Court No. 1072 Chinese Citizens v. Indonesian Citizens Breached the first-instance verdict. In addition to returning the principal, the Indonesian defendant must also pay high compensation. Queen Law Firm once again helped the client get justice back.

Of course, before the Chinese clients decided to start the lawsuit, there was also a fierce ideological struggle. After all, the clients need to complete the notarization and certification of the power of attorney in China and pay high attorney fees. Moreover, the clients must also bear the risk of losing the case. However, clients ultimately choose to protect their legal rights through legal means, because many things cannot be measured solely by economic benefits. The psychological pain caused by torts often makes the victims fight back, even without worrying about the economic gains or losses. As the German jurist Rudolf von Jhering said:

“The aim of the plaintiff’s suit to defend his rights from despicable humiliation is not a trivial matter, but an ideal goal of affirming his own personality and sense of law. Compared to this end, all the sacrifice and pain it causes is nothing for the right-holder – the goal is compensating for the means. The victim’s cries for filing a lawsuit not for monetary gain, but for ethical suffering from suffering an illegal offense.” (Rudolf von Jhering, The Struggle for Law, p. 21)

Feelings of law are feelings that people in a healthy society should have. So, what is the feeling of the law? For example, when we are queuing at the supermarket and suddenly someone comes and doesn’t want to queue, do we feel uncomfortable in our hearts? So, what’s the level of this discomfort? And will this mental pain compel us to stand up and accuse his behavior? This is a feeling of law. In other words, the healthy feeling of the law will directly lead to community rejection of actions that violate their rights. The better the legal education and law enforcement environment of the whole society, the healthier the legal sense of the community, the more concerned they are about their own rights, and the more courageous they will be to fight against violations of their own rights.

Apart from their own material value, rights also have ideal values ​​because of their combination with personality. Violation of rights will result in loss of property and insult to the victim’s personality. Personality is the most essential difference between humans and animals. If one’s personality was lost, then it would be no different from a walking corpse. In many of the cases we have handled, the actual amount of money involved is not very large, but the client insists on suing or reporting the case because the client believes that even though his rights have been violated, he has not only lost money but more of his personality. This is an insult to the victim by the perpetrator. If the victim chooses to remain silent, he will be subjected to mental torment for a long time at a later date. As a person of a complete and healthy personality, he must have a healthy feeling and awareness of the law. He must dare to fight when his rights are violated in order to safeguard human dignity and alleviate the emotional pain of the law. This is a kind of Spiritual self-protection. Then, maintaining rights becomes an obligation that must be carried out by individuals.

Likewise, many clients will say to us: “I’m not doing this for myself, but to teach others a lesson, so that she won’t do the same for others in the future.” These are citizens in a healthy society, I highly commend the necessary awareness. The progress of a society depends on the efforts of everyone. It is clearly unfair and immoral for people to just step back and expect others to stand up and face rights violations. The remaining people will endure a lot more pressure. This is clearly unfair and unethical. Of course, this also cannot be separated from the support of the national law enforcement apparatus. If the state law enforcement apparatus only tries to mediate differences by sacrificing principles or even reversing black and white, it will cause the whole society to misunderstand what is called “judicial murder.” People will not be sure what is right and what is wrong. People no longer dare to defend their rights. More and more people are choosing silence, choosing to flee, and choosing not to believe in the law anymore. Then the laws of this country will no longer be respected, the country has no international status at all, and its people will not be respected by the people of other countries. Only the healthy and strong sense of the law of each person is a very rich source of national strength and a sure guarantee for independence at home and abroad. Therefore, safeguarding rights is also an obligation that must be carried out by all levels of society.

Finally, end with a passage from Rudolf von Jhering:

“When law and justice are rejuvenating in a country, it is not enough for judges to wait for trial in court and police patrols. It is necessary for everyone to do their best to assist. Those who are protected by the law should do their best. What it can do to protect the power and prestige of the law. In the interests of society, everyone is a natural fighter who fights for rights.” (Rudolf von Jhering, The Struggle for Law, p. 56)

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.