Makarim & Taira S.
  September 12, 2011 - Indonesia

New Application Procedures for Validating a Legal Entity and Approving Amendments to Articles of Association in Indonesia

A new Regulation of the Minister of Law and Human Rights No. M.HH-01. AH.01.01 of 2011 on the Application Procedures for Validating a Legal Entity and Approving Amendments to the Articles of Association and the Notification Procedures for Amendments to the Articles of Association and Changes to Company Data (the “MOLHR Regulation”) was issued on 1st April 2011.

The MOLHR Regulation amends the procedure for approval of a proposed company name, as well as for the validation as a legal entity and approval and notification procedures for certain amendments to the articles of association. Most notably, the MOLHR Regulation calls for requests to be submitted directly by the applicant (rather than through a notary). Below are the key highlights of the MOLHR Regulation.

Legal Entity Validation
According to the MOLHR Regulation, before submitting the application for the validation of its legal entity status, the applicant must apply for approval of the company’s name by submitting the completed Name Application Form. The MOLHR Regulation does not set any time limit to approve or reject the application. However, once the name of the company has been approved, the applicant must apply for the validation of the company’s legal entity status within 60 days following such approval.

If the request for legal entity status satisfies the relevant requirements a nonobjection statement will be issued through the legal entity administration system (SABH). According to the MOLHR Regulation, within 30 days of the issuance of the non-objection statement, the applicant must submit the physical application and supporting documents. Accordingly, within 14 days of receipt of the completed application and supporting documents, a Decree validating the legal entity status of the company should be issued.

Approval of Certain Amendments to the Articles of Association
According to the MOLHR Regulation, certain amendments to the articles
of association (i.e., those involving the company’s name and domicile, the company’s purpose and objectives and business activities, the company’s period of incorporation, the amount of authorized capital, a reduction in the subscribed and paid-up capital and a change of status from a private company to a public company, or vice versa) require approval from the MOLHR. Applications for approval must be submitted within 30 days of the date of the notarial deed containing the amendments to the articles of association using Amendments to the Articles of Association Form I.

Notification of Amendments to the Articles of Association
For amendments to the articles of association other than those which require approval, the applicant need only notify the relevant authority. The notification procedure is the same as that for an application for approval for certain amendments to the articles of association.

Notification of Changes to Company Data
In the event of certain changes to company data (e.g., changes in the company’s shareholder or share ownership percentages, members of the Board of Directors or Board of Commissioners, or the company’s address), the Applicant must notify this using the Changes to Company Data Form.

Conclusion
Unlike the previous MOLHR Regulation (which required a notary to submit the above applications and notices), under the current MOLHR Regulation these applications and notices must be submitted electronically by the applicant through the legal entity administration system.

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