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Steps that You Need to Do after Knowing Recently Regulated Beneficial Ownership

Steps that You Need to Do after Knowing Recently Regulated Beneficial Ownership

Here are some steps that every business doer needs to do to comply with provisions regarding beneficial ownership.

Following the steps of several countries that fight against cash flow from corporate fields into corruptions, money launderings, or terrorism funding, Indonesia has recently regulated the principal of beneficial ownership to combat crimes relating to corporations. In 2018, President Joko Widodo issued a presidential regulation about the application of this principle for prevention and eradication of crimes limited to money laundering and terrorism funding in Regulation of the President Number 13 of 2018 that stipulates the definition and identification of someone who can be called as beneficial owner and creates a new norm that requires a registration for beneficial owner in every corporation. Moreover, in 2019, Ministry of Law and Human Rights issued two ministerial regulations regarding the procedures to enact this presidential regulation, namely the implementation in Regulation of the Minister of Law and Human Rights Number 15 of 2019 and the supervision in Regulation of the Minister of Law and Human Rights Number 21 of 2019. Corporations, either recently or has been established, take form as legal entity or non-legal entity, have to comply with these new regulations.

WHAT ARE CORPORATIONS REGULATED IN THIS PRESIDENTIAL REGULATION?

Corporations in this Presidential Regulation include:

  • Limited Liability Companies
  • Foundations
  • Associations
  • Cooperatives
  • Commanditaire Vennootschap (CV)
  • Firms
  • Other types of corporates.

WHAT ARE THE CRITERIA OF A BENEFICIAL OWNER?

According to the Article 3 Presidential Regulation, every corporates has to set a beneficial owner, at least one person, who meets each criteria according to the respective types of corporates:

Limited Liability Companies

Foundations

Associations

Has shares more than 25% (twenty five percent) in the company as stipulated in the article of association Has initial assets more than 25% (twenty five percent) in the foundation as stipulated in the article of association Has funding source more than 25% (twenty five percent) in the foundation as stipulated in the article of association
Has vote rights more than 25% (twenty five percent) in the company as stipulated in article of association    
Receives profit more than 25% (twenty five percent) from the profit received by company per year   Receives the result of business activities more than 25% (twenty five percent) from the profit received by the association per year
Has the authority to appoint, replace, or discharge directors or commissioners Has the authority to appoint or discharge patrons, executives, and supervisors Has the authority to appoint or discharge executives and supervisors of the association
Has the authority or power to influence or control the company without obtaining authorization from any parties* Has the authority or power to influence or control the foundation without obtaining authorization from any parties* Has the authority or power to influence or control the association without obtaining authorization from any parties*
Receives benefits from the company; and/or* Receives benefits from the foundation; and/or* Receives benefits from the association; and/or*
Is the real owner of the share ownership fund of the company* Is the real owner of the other assets or an investment funds of the foundation* Is the real owner of the funding source fund of association*

 

(*) Individual that meets the criteria with an asterisk is the individual that does meet the criteria without an asterisk.

 

Cooperatives

Commanditaire Vennootschap (CV)

Firms

  Has capital and/or deposit asset value more than 25% (twenty five percent) as stipulated in the obligation of CV establishment Has paid-up capital more than 25% (twenty five percent) as stipulated in the obligation of firm establishment
Receives result of business activities more than 25% (twenty five percent) from the profit received by the cooperative per year Receives profits more than 25% (twenty five percent) from the profit received by the CV per year Receives profits more than 25% (twenty five percent) from the profit received by the firm per year
Has the authority, directly or indirectly, to appoint or discharge executives and supervisors    
Has the authority or power to influence or control the cooperative without obtaining authorization from any parties* Has the authority or power to influence or control the CV without obtaining authorization from any parties* Has the authority or power to influence or control the firm without obtaining authorization from any parties*
Receives benefits from the cooperative; and/or* Receives benefits from the CV; and/or* Receives benefits from the firm; and/or*
Is the real owner of the equity fund of the cooperative* Is the real owner of the fund and/or deposit asset value of the CV* Is the real owner of the paid-up capital fund of the firm*

 

For the other types of corporates, the criteria are not very different, as follows:

  • Has capital, either in money or other assets more than 25% (twenty five percent) as stipulated in the obligation of the corporation establishment
  • Receives profit more than 25% (twenty five percent) from the profit received by corporation per year
  • Has the authority or power to influence or control the corporation without obtaining authorization from any parties*
  • Receives benefits from the corporation; and/or*
  • Is the real owner of the paid-up capital fund of the corporation*

(*) Individual that meets the criteria with an asterisk is the individual that does meet the criteria without an asterisk.

Read More : Procedures in Investment Licenses in Indonesia

HOW YOUR CORPORATION SET A BENEFICIAL OWNER?

The corporation set beneficial owner(s) of the corporation according to the information obtained by:

  1. the articles of association, including documents on amendments to articles of association, and/or deed of incorporation of the corporation;
  2. the obligation documents of the corporation;
  3. the decision of general meeting of shareholders documents, the decision of meeting of foundation organ documents, the decision of meeting of board documents, or the decision of meeting of members documents;
  4. information of the authorities;
  5. information of private institutions that accept the placement or transfer of funds in the context of purchasing limited company shares;
  6. information on private institutions that give or provide benefits from the corporation to beneficial owner(s); statements from members of the board of directors, members of the board of commissioners, patrons, executives, supervisors, and/or accountable corporate officials/employees;
  7. documents owned by the corporation or other parties which show that the individual is the actual owner of funds from the ownership of limited company shares;
  8. documents owned by the corporation or other parties showing that the individual is the true owner of funds for other assets or an investment in the corporation; and/or other accountable information.
  9. documents of the corporation or other parties showing the individual is the true owner of funds for other assets or an investment in the corporation; and/or
  10. other accountable information.

The corporation decide the categories of beneficial owner(s) that is in accordance with the information given by the corporation to the authorities. The categories are:

  • Beneficial ownership identified: the corporation has set the beneficial owner(s) after identifying and verifying;
  • Beneficial ownership not identified: the corporation has set the beneficial owner(s), but has neither identify nor verify; or
  • Beneficial ownership not verified: the corporation has set the beneficial owner(s) after identifying, but has not verify yet.

Authorities in here include:

  • Ministry that holds governmental affairs in law for companies, foundations, and associations;
  • Ministry that holds governmental affairs in cooperatives and small and medium enterprises for cooperatives;
  • Ministry that holds governmental affairs in trades for CV, firm, and other corporate types; and
  • Institution that has the authority and regulation in the cooperative enterprises.

Other than beneficial owner(s) that is set by the corporation, the authorities above can also set another beneficial owner, which is done by the evaluation from:

  • Audit result to the corporation which is conducted by authorities;
  • Information of public or private institution that manage data and/or information of beneficial ownership, and/or receive report from certain profession that contains information of beneficial ownership; and/or
  • Other information that is accountable.

HOW TO IMPLEMENT THE PRINCIPLE OF BENEFICIAL OWNERSHIP?

Corporations have to implement the principle of beneficial ownership, by appointing a an official or employee to:

  • Carry out the implementation of this principle; and
  • Provide information about the corporation and its beneficial ownership by the request of authorities and law enforcers.

This principle includes identification and verification of beneficial owner(s).

These can be carried out when:

  • Request of establishment, registration, legalization, approval, or business licensing of the corporation; and/or
  • The corporation runs its business or activities.

Identification can be done by collecting beneficial owner information, at least cover:

  1. Full name(s);
  2. Identity number(s), driving license(s), or passport(s);
  3. Date(s) and place(s) of birth;
  4. Citizenship(s);
  5. Residence address(es) as written in identity card(s);
  6. Country(s) of origin in case of foreigners;
  7. Taxpayer Number(s) or similar identity taxation number(s);
  8. Relation between the corporation and the beneficial owner(s).

This information has to be accompanied by supporting documents.

Verification can be done by researching the accordance between beneficial owner information and supporting documents. When needed, authorities can also do verification.

Submission

After that, the corporation must submit the true beneficial owner information to the authorities. This submission is accompanied by statement letter from the corporation about the information correctness submitted to the authorities, which can be submitted by:

  • Founders or executives of the corporation;
  • Notaries; or
  • Other parties that are given authorities by founders or executives to submit the information.

While Establishment, Registration, Legalization, Approval, or Licensing of the Corporation

The implementation of this principle while the request of establishment, registration, legalization, approval, or business licensing of the corporation can be done by:

  • The submission of the information, in the case the corporation has set the beneficial owner(s); or
  • The submission of willingness statement letter to submit the information to the authorities in case of the corporation has not set the beneficial owner(s), and has to set and submit to the authorities after 7 (seven) days after the corporation receives business license/registered sign from authorized institutions/bodies.

This submission can be done through Corporation Administration Service System (Sistem Pelayanan Administrasi Korporasi).

While the Corporation is Running Its Business or Activities

The implementation while the corporation is running can be done by submitting every beneficial owner information change to the authorities by Corporation Administration Service System. This must be submitted 3 (three) workdays after the change. Corporations have to update of the beneficial owner information periodically once a year.

Document Administration

Corporations, notaries, or other parties that are given authorities from corporation have to administer documents relating to beneficial ownership of the corporation at least in 5 (years) since the establishment or legalization of the corporation. In case of the liquidation, the liquidator has to administer these documents at least 5 (years) after the liquidation. These documents include:

  1. beneficial ownership changes;
  2. beneficial owner(s) information updates;
  3. other documents relating to beneficial owner information.

 

Author: Frederik Widjaja

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