INTRODUCTION

One of the most common paths to building wealth in Indonesia is through entrepreneurship. Whether undertaken by individuals or groups, running a business requires legal certainty. This legal foundation is most commonly achieved by establishing a Limited Liability Company known in Indonesia as Perseroan Terbatas (“PT”).

A PT is recognized as a legal entity with its own rights and obligations, distinct from its founders or managers. Under Indonesian law, a PT must be established by at least 2 (two) individuals through a notarial deed, with each founder required to subscribe to shares in the company. These founders, by holding shares, become shareholders of the PT.

As a legal subject, a PT stands independently and has the authority to act on its own behalf. This includes the ability to enter into legally binding agreements, such as incurring debt or establishing contractual obligations with third parties.

As shareholders, they are granted specific legal rights under Indonesian corporate law. However, these rights are also accompanied by responsibilities and limitations that every shareholder must understand and respect.

In this article, we highlight the key rights, obligations, and regulatory frameworks that govern shareholders in Indonesia essential knowledge for anyone involved in business ownership or corporate structuring in the country.

CONCLUSION 

Understanding the legal framework of share ownership in Indonesia is essential for anyone involved in building or managing a company. The Company Law, Investment Law, and their implementing regulations collectively establish the rights, obligations, and limitations that shareholders must observe, whether domestic or foreign. From determining the type and structure of shares to navigating ownership limits and dividend entitlements, including applicable tax obligations, shareholders must be well-informed to ensure compliance and protect their interests. By adhering to these legal provisions, companies and investors alike can foster a more secure, transparent, and accountable corporate environment aligned with Indonesia’s business and regulatory landscape.

Regards,

Pasaka Rievan Smith 
Counsellors at Law

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