logo-ahplogo-ahplogo-ahplogo-ahp
  • Home
  • Firm
    • About Us
    • Careers
    • Linked Stream
  • Solutions
      • Anticorruption & Good Corporate Governance
      • Banking & Finance
      • Capital Markets
      • Competition Law
      • Debt & Corporate Restructuring
      • Dispute Resolution
      • Energy, Oil & Gas
      • Foreign Direct Investment
      • Fraud & Forensics Investigation
      • Intellectual Property
      • Islamic Finance
      • Labor Law
      • Mergers & Acquisitions
      • Projects & Natural Resources
      • Real Property
      • Shipping & Aviation
      • Tax & Customs Services
      • Telecommunications & Media
  • Members
  • Events
    • News & Insights
  • Rajah Tann Asia
✕
            No results See all results

            Government Reduces Authorized Capital Requirement for MSMEs

            As part of the overall effort to encourage more micro, small and medium enterprises (“MSME”) to incorporate, the government, by virtue of Government Regulation No. 7 of 2016 (the “Regulation”), has relaxed the authorized capital requirement for such enterprises in a situation where the net assets of one or all of the founders of an enterprise satisfy the criteria for classification as an MSME.

            In such circumstances, the amount of the new company’s authorized capital shall be agreed between the founders, as set out in company’s deed of incorporation. This represents an exemption to Article 32(1) of the Companies Law (No. 40 of 2007), which stipulates that a company’s authorized capital should be at least Rp 50 million. Such an exemption is possible as Article 32(3) provides that changes in the required amount of authorized capital may be made by way of government regulation.

            Under the Micro, Small and Medium Enterprises Law (No. 20 of 2008), for an enterprise to be classified as an MSME, the following financial criteria must be satisfied:

            (1) Micro Enterprise:
            a. Net assets of not more than Rp 50 million, excluding land and business premises; or
            b. annual sales of not more than Rp 300 million.
            (2) Small Enterprise:
            a. Net assets of between Rp 50 million and Rp 500 million, excluding land and business premises; or
            b. annual sales of between Rp 300 million and Rp 2.5 billion
            (3) Medium Enterprise:
            a. Net assets of between Rp 500 million and Rp 10 billion, excluding land and business premises; or
            b. annual sales of between Rp 2.5 billion and Rp 50 billion.

            As with the Companies Law, the Regulation requires that at least 25 percent of authorized capital must be fully paid up, as evidenced by proof of payment. In addition, the Regulation stipulates that such proof of payment must be sent electronically to the Minister of Law and Human Rights within not more than 60 days of the signing of the company’s deed of incorporation.

            Existing companies are unaffected by the Regulation, while companies that are in the process of incorporation will continue to be processed under the provisions of the Companies Law.

            The Regulation entered into effect on 22 March 2016.

            ***

            AHP Client Alert is a publication of Assegaf Hamzah & Partners. It brings an overview of selected Indonesian laws and regulations to the attention of clients but is not intended to be viewed or relied upon as legal advice. Clients should seek advice of qualified Indonesian legal practitioners with respect to the precise effect of the laws and regulations referred to in AHP Client Alert. Whilst care has been taken in the preparation of  AHP  Client Alert, no warranty is given as to the accuracy of the information it contains and no liability is accepted for any statement, opinion, error or omission.

            Download

            More Articles

            • OJK Announced Guidelines to Implement Offerings Classified as Non-Public Offerings
              February 7, 2023
            • Regional Trade Highlights 2022
              January 30, 2023
            • Indonesia Expands Its Anti-Tax-Avoidance Measures: A Development to be Aware of in Tax Planning and Compliance
              January 27, 2023
            • Dissecting the Amendment to the Omnibus Law: Which Sectors are Affected and How?
              January 20, 2023
            • A New Rule Requires Importers of Software or Other Digital Products via Electronic Transmission to Fulfil Customs Obligations
              January 16, 2023
            • Rajah & Tann Asia Member Firms, Members of Lifesciences Asia-Pacific Network (LAN), Contribute to the Singapore and Indonesia Chapters of Comparative Study: Patent Linkage Systems in APAC
              January 13, 2023
            • Indonesia’s New Criminal Code Introduces Corporate Crime
              January 4, 2023
            • A Practical Guide to Getting Your Organisation PDP Law-Ready
              December 1, 2022
            • Shipping Law Updates
              November 16, 2022
            • Arb-Med-Arb: An Effort to Enhance Amicable Dispute Resolution
              September 30, 2022
            By Practice Area
            • Projects & Energy
            • Technology Media & Telecommunications
            • Intellectual Property
            • Real Property
            • Banking & Finance
            • Capital Markets
            • Competition
            • Mergers & Acquisitions
            • Dispute Resolution
            • Tax and Customs

            Jakarta Office

            Capital Place, Level 36 & 37
            Jalan Jenderal Gatot Subroto Kav. 18
            Jakarta 12710,
            Indonesia

            Phone: +62 21 2555 7800
            Fax: +62 21 2555 7899
            Email: info@ahp.id


            Subcribe

            Surabaya Office

            Pakuwon Center, Superblok Tunjungan City
            Lantai 11, Unit 08
            Jalan Embong Malang No. 1, 3, 5,
            Surabaya 60261
            Indonesia

            Phone: +62 31 5116 4550
            Fax: +62 31 5116 4560

            Assegaf Hamzah & Partners


            © 2001 - 2022 Assegaf Hamzah & Partners. All rights reserved.

            Rajah & Tann Asia is a network of legal practices based in Asia.

            Member firms are independently constituted and regulated in accordance with relevant local legal requirements. Services provided by a member firm are governed by the terms of engagement between the member firm and the client.

            This website is solely intended to provide general information and does not provide any advice or create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on this website.