Indonesian Director in Foreign Owned – Based on a limited liability company law, every limited liability company including a foreign owned limited liability company must have at least one director, one commissioner, and two shareholders. The question is it mandatory to have Indonesian Director in foreign owned limited liability company?

To answer the question above, we need to look at the requirements for appointment of limited liability company directors, as stipulated in Article 93 of the Limited Liability Company Law, which are:

1. Those who can be appointed as members of the Board of Directors are individuals who are capable of carrying out legal actions, except within 5 (five) years before their appointment:

a) Declared bankrupt;

b) Become a member of the Board of Directors or a member of the Board of Commissioners found guilty of causing a Company to go bankrupt; or

c) Convicted of a criminal offense that is detrimental to the country’s finances and / or related to the financial sector.

2. The requirements as referred to in paragraph (1) do not reduce the possibility of the technical authority having the authority to determine additional requirements based on statutory regulations.

From the quotation of Article 93 paragraph (1) of the Limited Liability Company Law, we can draw the conclusion that the Limited Liability Company Law does not regulate the existence of an obligation / obligation for a Limited Liability Company which is a foreign investment to appoint a Director who is an Indonesian citizen.

However, it is very interesting to observe the sound of Article 93 paragraph (2) of the Limited Liability Company Law. Although in the elucidation section of Article 93 paragraph (2) the Limited Liability Company Law is stated “quite clearly”, we can conclude that Article 93 paragraph (2) of the Limited Liability Company Law opens opportunities for other statutory regulations to be able to provide specific rules regarding the requirements additionally, especially for the appointment of Directors of a certain limited liability company.

For that reason, I will give an example of one of the technical regulations that are relevant to the provisions of Article 93 paragraph (2) of the Limited Liability Company Law, for example Decree of the Minister of Manpower and Transmigration of the Republic of Indonesia Number 40 of 2012 concerning Certain Positions forbidden from Occupying Foreign Workers, which expressly forbids the position of Personnel Director to be filled by foreigners. That is, if a Foreign Owned Limited Liability Company wants to appoint a personnel director, then the personnel director must be a person of Indonesian citizens.

In addition, in several reports in the mass media, the Capital Market and Financial Institution Supervisory Agency or Bapepam LK (now the authority of the Financial Services Authority) has asked foreign insurance companies to place directors who are Indonesian citizens to fill positions in the board of directors, with the aim of being able to -transfer knowledge and management skills.

If there is a local shareholder in Foreign Owned Limited Liability Company, it is recommended by the Indonesian Investment Coordinating Board (BKPM) that the company must also have at least one Indonesian director.

If there is only one director, he must have a Tax Card (NPWP). However, if there is more than one director, at least one of them must have a Tax Card (NPWP). All directors must have a residence permit (KITAS) or personal domicile along with a work permit. The only problem is that work permits can only be issued after company registration is complete. Therefore, obtaining KITAS can come from other companies or from Indonesian spouses.

When the preconditions above are difficult to obtain, we can assist you with other options. Contact our consultant now and get your free consultation.