Liquidation: winding up a Limited Liability Company in Indonesia
When the shareholders of a limited liability company (foreign owned PMA or local owned PT) decide to close operations in Indonesia, the company needs to be closed down by way of a liquidation procedure. The liquidation procedure will be performed by an appointed liquidator and entails the deregistration of all corporate licenses and at the same time the sale of all company’s assets, collection of receivables, payments of outstanding debts, and the settlement of the remaining assets or debts among the owners.
PNB Law Firm has extensive experience in liquidation procedures where it acted as liquidator. Our team of lawyers warrant a smooth liquidation process resulting in an optimized total return to the shareholders.
Decision to Liquidate a Company (PT or PMA)
The Indonesian company law provides that a decision to dissolve a company is made by a decision in the General Meeting of Shareholders. A General Meeting of Shareholders can be initiated by request of the Board of Directors, Board of Commissioners or one or more shareholders of the company which represent not less than 10% of the total shares with voting rights in the company.
A resolution in the general meeting of shareholders to liquidate the company is approved if at least 75% of the shareholders with voting rights accept the resolution.
Appointment of Liquidator
Once the general meeting of shareholders has approved he liquidation of the company, a liquidator must be appointed. During the liquidation process, the liquidator is the only person who is allowed to act for an on behalf of the company. The members of the Board of Directors will therefore no longer have to authority to perform legal actions in name of the company.
Once the liquidator is appointed by the shareholders, the liquidator’s first task will be to announce the liquidation to several stakeholders, including the creditors and the ministry of law and human rights. The liquidation to creditors shall include the procedures and period for submitting any outstanding claims to the company’s liquidator.
Generally, the liquidator’s task include:
Recording and collecting all the assets and debts of the company;
Resolve all labor conflicts with the employees of the company;
Resolve all tax issued of the company;
Pay out all existing creditors;
In case there are remaining liquidation assets in the company, these shall be paid out to the shareholders; and
Other acts required for the settlement of the assets.