3 Important Steps in the Procedure for Changing PMA Companies to PMDN

3 Important Steps in the Procedure for Changing PMA Companies to PMDN

3-Langkah-Penting-Dalam-Prosedur-Perubahan-Perusahaan-PMA-Menjadi-PMDN

19 Jan 2021

3 Important Steps in the Procedure for Changing PMA Companies to PMDN

The departure of foreign investors from the company structure, of course, impacting the adjustment of the company legality. Pay attention to the procedure so that errors do not occur in the process.

The intricacies of investment development in Indonesia are very diverse. The ups and downs of business activities are largely determined by existing investments. This causes business actors to be smart in determining business steps, especially in the investment aspect. It is often considered that a business gets ahead when it gets investment or capital from abroad. However, it is common for foreign investment companies (PMA) to change their company’s capital scheme to become domestic investment (PMDN).

It is important to understand and know the procedure for changing PMA to PMDN, considering that there is a change in the Company’s investment status which will also result in several PMA licensing provisions. Following are the procedures and important things you need to know about changing the status of PMA to PMDN.

  1. Follow the Acquisition Terms and Procedures

Changes in the status of PMA to PMDN will certainly result in changes to the Company’s controllers. The process of changing the Company’s control is known as an acquisition. The acquisition process is regulated in Law Number 40 of 2007 concerning Limited Liability Companies (UUPT). The following are important terms of the Acquisition that the Company must fulfill and pay attention to:

  • Acquisition must pay attention to the provisions of the Company’s Articles of Association which are taken over regarding the transfer of rights over shares and agreements that have been made by the Company with other parties;
  • The acquisition of shares must not harm the Company, both the interests of the acquiring Company and the interests of the acquired Company;
  • The acquisition must not harm the minority shareholders;
  • The acquisition of shares must not harm the Company’s employees;
  • The acquisition must not harm the creditors and other business partners of the Company;
  • The acquisition of shares must not harm the public interest and fair competition.

The process of acquiring foreign shares to become locally owned is as follows:

  1. General Meeting of Shareholders stating the Acquisition plan for the transfer of foreign shares to local parties;
  2. Newspaper announcements regarding the acquisition plan;
  3. General Meeting of Shareholders on the implementation of the acquisition;
  4. Amendments to the Company’s Articles of Association;
  5. Press release regarding the results of the acquisition.
  1. Announcing the New Beneficiaries

Changing the status of PMA to PMDN will automatically change the party who becomes the Beneficiary (Beneficial Owner). Article 4 of the Presidential Regulations 13/2018 states that the Beneficial Owner of a limited liability company is an individual who meets the following criteria:

  1. Has more than 25 shares%o (twenty five percent) in the limited liability company as stated in the Articles of Association;
  2. has voting rights of more than 25% (twenty five percent) in a limited liability company as stated in the Articles of Association;
  3. receives profits of more than 25% (twenty five percent) of the profits obtained by the limited liability company per year;
  4. has the authority to appoint, replace, or dismiss members of the board of directors and members of the board of commissioners;
  5. has the authority or power to influence or control the limited liability company without having to obtain authorization from any party;
  6. receives benefits from a limited liability company; and/or
  7. is the actual owner of the funds of the limited liability company share ownership.

PMA companies whose status changes to PMDN are required to submit data Beneficial Ownership although the data on status change of the Company have been listed in the Amendments to the Articles of Association which are recorded in the General Legal Administration (AHU) system. The company still has to make a statement letter containing information on the data of Beneficial Owner. Which later the statement letter will also be uploaded into the AHU system by the Notary. This is a form of Corporate legal compliance.

  1. OSS Data Adjustments

Before Online Single Submission (OSS) was enforced, PMA companies that turn into PMDN must apply for a Principle Licensing change to BKPM. This is in accordance with the Decree of the Head of the Investment Coordinating Board Number: 57/SK/2005 concerning Guidelines and Procedures for Investment Application of Domestic Investment and Foreign Investment.

However, since the enactment of the OSS through Government Regulation Number 28 of 2018 concerning Electronically Integrated Business Services, Companies no longer need to apply for a license adjustment to BKPM. What the Company needs to do after the change from PMA to PMDN is adjustments to OSS data.

The stages of adjusting OSS data that need to be carried out by the Company are as follows:

Legality Adjustment

The first thing to check in the OSS system is whether the amended Company Articles of Association have been recorded or not in the OSS system. The OSS system is integrated with the AHU system, so that if there is no obstacle, the amended Company Articles of Association data will automatically appear in the OSS system. If the Amended Articles of Association have appeared, the Company needs to check and ensure first whether the existing legality data is in accordance. The adjustments can be directly compared between the legality data recorded in the last OSS and the legality data of the latest Amendments to the Articles of Association.

NIB adjustment

The next step that needs to be done is adjusting the Business Identification Number (NIB). This NIB adjustment will be in line with previous legality adjustment. If the legality data in OSS is in accordance with the Last Amendment, then NIB will immediately follow. The company only needs to re-confirm the data and then print the adjusted NIB.

Business Permit Adjustment

The final and most important step in adjusting OSS data is adjusting the Business License. PMA companies that change to PMDN sometimes change not only their share ownership status, but also company management, especially Director. Thus, the adjustment of the Business License in OSS is important considering that when processing it, the data of the person in charge or the Director must be included. Besides, there are other license adjustments according to the Company’s business activities.

Conclusion

Changing the status of a company from PMA to PMDN is not a difficult thing to do. However, Business Actors need to understand the important steps of the process. Furhthermore, it is not only the Company’s Articles of Association that need to be adjusted, but also the licensing. Therefore, it is important to know the description regarding the process of changing the PMA to PMDN.

If you need advice and assistance in the process of changing a PMA Company to PMDN, please contact BP Lawyers via ask@bplawyers.co.id or 082112341235