Undang-Undang Perseroan Terbatas / Limited Liability Company Nomor 40 Tahun 2007 [english version] I (article 1-60)

THE LAW OF THE REPUBLIC OF INDONESIA

NUMBER 40 OF 2007

CONCERNING

LIMITED LIABILITY COMPANY

BY THE GRACE OF ALMIGHTY GOD

THE PRESIDENT OF THE REPUBLIC OF INDONESIA

Considering : a. that the national economy, which is implemented based on economic democracy with the principles of community, fair efficiency, sustainability, environmental awareness, independence, and safeguards for balanced progress and national economic unity, needs to be supported by a strong economic institutions in the context of creating prosperity for community;

b. that in the context of increasing the national economic development and at the same time providing a strong foundation for the business world in facing the development of world economy and progress in science and technology in the coming globalization era, a support is needed to enact a law that regulates limited liability company which can assure the implementation of a conducive climate for the business world;

c. that a limited liability company as one of the national economic development pillars, need to be given a legal ground in order to accelerate more of the national development composed as a mutual effort based on the principle of family spirit;

d. that Law No. 1 of 1995 regarding Limited Liability Company is considered no longer in accordance with the legal developments and needs of society, so that it is deemed necessary to be replaced with a new law;

e. that based on the consideration as referred to in letter a, letter b, letter c, and letter d, it is necessary to form a Law on Limited Liability Company ;

In View of : Article 5 paragraph (1), Article 20, and Article 33 of the 1945 Constitution of the Republic of Indonesia;

With the unanimous approval of :

THE HOUSE OF REPRESENTATIVE

And

THE PRESIDENT OF THE REPUBLIC OF INDONESIA

HAVING RESOLVED

To stipulate : A LAW ON LIMITED LIABILITY COMPANY

CHAPTER I

GENERAL PROVISIONS

Article 1

In this law the following terms have the following meanings:

1. Limited Liability Company, hereinafter referred to as the Company, means a legal entity constitutes a capital alliance, established based on an agreement, in order to conduct business activities with the Company’s Authorized Capital divided into shares and which satisfies the requirements as stipulated in this Law, and it implementation regulations.

2. Company Organs means the General Meeting of Shareholders, the Board of Directors, and the Board of Commissioner.

3. Social and Environmental Responsibility means the commitment from Company to participate in the sustainable economic development, in order to increase the quality of life and environment, which will be valuable for the Company itself, the local community, and the society in general.

4. The General Meeting of Shareholders, hereinafter referred to as GMS, means the organ of the Company that has authority not given to the Board of Directors or the Board of Commissioners, within limits as stipulated in this Law, and/or the articles of association.

5. The Board of Directors means the organ of the Company that has the authority and full responsibility to manage the Company for the interest of the Company, in accordance with the purposes and objectives of the Company as well as to represent the Company, either in or out the court in accordance with the provisions of the articles of association.

6. The Board of Commissioners and the organ of the Company that has the responsibility to conduct a general and/or specific supervision , in accordance with the articles of association, as well as providing advice for Board of Directors.

7. Issuer means a Public Company or a Company which exercise a public offering to shares, in accordance with the provisions and legislations in the field of capital market.

8. Public Company means a Company which satisfies the criteria of numbers of shareholders numbers and amount of paid-up capital in accordance with the provisions and legislations in the field of capital market.

9. Merger means a legal action taken by one or more Companies in order to merge with another existing Company, which causes the transfer of assets and liabilities of the merging Companies by operation of law, to the surviving Company and thereafter the legal entity status of the merging Company ceases by operation of law.

10. Consolidation means a legal action taken by two or more Companies to consolidate themselves by establishing a new Company, which by operation of law obtains the assets and liabilities from the consolidating Companies, and the legal entity status of the consolidating Companies ceases by operation of law.

11. Acquisition means a legal action conducted by a legal entity or an individual to acquire the shares of the Company, resulting in the transfer of control of such Company.

12. Separation means a legal action taken by a Company in order to separate its businesses, which causes all assets and liabilities of the Company legally transferred to 2 (two) or more Companies, or part of the assets and liabilities of the Company legally transferred to 1 (one) or more Companies.

13. Registered Mail means a letter which is addressed to a recipient evidenced by a signed and the date receipt from the recipient.

14. Newspaper means a daily newspaper in Indonesian language with national circulation.

15. Day means a calendar day.

16. The minister means the minister whose tasks and responsibilities are in the field of law and human rights.

Article 2

The Company must have a purpose and objective as well as business activities that do not conflict with the legislative regulations, public order, and/or morality.

Article 3

(1) The Company’s Shareholders are not personally liable for agreements made on behalf of the Company, and are not liable for the Company’s losses in excess of their prospective shareholding.

(2) The provision as referred to in paragraph (1) do not apply if :

a. the requirements for the Company as a legal entity has not been or are not fulfilled;

b. the relevant shareholders, either directly or indirectly, with bad faith, exploits the Company for their personal interest;

c. the relevant shareholders are involved in illegal actions committed by the Company; or

d. the relevant Shareholders, either directly or indirectly, illegally utilizes the assets of the Company, which result in the Company’s assets become insufficient to settle the Company’s debt.

Article 4

This Law, the articles of association of the Company, and provisions of other legislations shall apply to the Company.

Article 5

(1) The Company shall have a name and domicile within the territory of the Republic of Indonesia, as determined in the articles of association.

(2) The Company shall have a full address in accordance with its domicile.

(3) In correspondences, announcements published by the Company, printed materials, and deeds to which the Company is a party, the name and full address of the Company must be mentioned.

Article 6

The Company may be established within a limited period or unlimited period as stipulated in the articles of association.

CHAPTER II

THE ESTABLISHMENT, ARTICLES OF ASSOCIATION AND AMENDMENTS OF ARTICLES OF ASSOCIATION, REGISTRY OF COMPANY AND ANNOUNCEMENTS

Part 1

Establishment

Article 7

(1) The Company shall be established by 2 (two) or more persons based on a notarial deed drawn up in Indonesian language.

(2) Each founder of the Company is obliged to subscribe shares upon the establishment of the Company.

(3) The provision as referred to in paragraph (2) does not apply in the context of Consolidation.

(4) The Company obtains legal entity status on the date of the issuance of Ministerial Decree regarding the ratification of the Company’s legal entity.

(5) If after the Company obtains its legal entity status and the number of shareholders becomes less than 2 (two) persons, then within the period of not later than 6 (six) months as from such condition, the relevant shareholders is obliged to transfer part of their shares to other persons or the Company shall issue new shares to other persons.

(6) In the event that the time period as referred to in paragraph (5) has exceeded, and there is still less than 2 (two) shareholders, the shareholders shall be personally liable for all agreements/legal relationship and the Company’s loss, and upon the request of the interested party, the District Court may wind up the Company.

(7) The provision which requires the Company to be established by 2 (two) or more persons as referred to in paragraph (1), and the provision on paragraph (5), as well as paragraph (6) do not apply to :

a. State Owned Limited Liability Company; or

b. Companies managing security exchange, clearing house and underwriting, custodian and settlement institution, and other institutions regulated in the Law on Capital Market.

Article 8

(1) The deed of establishment shall set forth articles of association and other information related to the Company’s establishment.

(2) Other information as referred to in paragraph (1) shall contain at least:

a. full name, place and date of birth, occupation, residential, and nationality of the individual founder, or name, domicile, and full address, as well as the number and date of the Ministerial Decree regarding the ratification of legal entity founders of the Company;

b. full name, place and date of birth, occupation, residential, and nationality of the first members of the Board of Directors and the Board of Commissioners to be appointed.

c. the name of the shareholders who have subscribed the shares, detail of the number of shares, and nominal value of shares subscribed and paid-up.

(3) In making the deed of establishment, the founder can be represented by other person by virtue of a Power of Attorney.

Article 9

(1) In order to obtain the Ministerial Decree regarding the ratification of the Company’s legal entity as referred to in Article 7 paragraph (4), the founders shall jointly submit an application through an electronic legal entity administration system information technology services to the Minister by filling up the form which shall contain at least the following :

a. The name and domicile of the Company;

b. The term of establishment of the Company;

c. The purpose and objective as well as business activities of the Company;

d. The amount of authorized capital, issued capital, and paid-up capital;

e. full address of the Company.

(2) Filling in the form as referred to in paragraph (1) must be preceded by the submission of the Company’s name.

(3) In the case the founders do not submit the application themselves as referred to in paragraph (1) and paragraph (2), the founder may only give power of attorney to a notary.

(4) Further provisions regarding the procedure of submission and use of the Company’s name will be stipulated by Government Regulation.

Article 10

(1) The application to obtain the Ministerial Decree as referred to in Article 9 paragraph (1), must be submitted to the Minister not later than 60 (sixty) days as of the signing date of the deed of establishment, complete with information on the supporting documents.

(2) The provision regarding the supporting documents as referred to in paragraph (1) shall be stipulated by a Minister Regulation.

(3) If the form as referred to in Article 9, paragraph (1) and the information on the supporting documents as referred to in paragraph (1) is in accordance with the provisions of the legislations, the Minister shall directly declare electronically that there is no objection to the relevant application.

(4) If the form format as referred to in Article 9 paragraph (1) and the information on the supporting documents as referred to in paragraph (1) is not in accordance with the provisions of the legislations, the Minister shall directly notify electronically of the rejection and the reasons therefore.

(5) Within the period not later than 30 (thirty) days as of the non-objection statement date as referred to in paragraph (3), the relevant applicant is obliged to physically submit an application letter with a supporting documents attached.

(6) If all requirements as referred to in paragraph (5) have been fully fulfilled not later than 14 (fourteen) days, the Minister shall issue a decree regarding the ratification of the Company as a legal entity which is signed electronically.

(7) If the requirements regarding the period and the completeness of the supporting documents as referred to in paragraph (5) are not fulfilled, the Minister shall directly notify the matter to the applicant electronically, and the statement of no objection as referred to in paragraph (3) shall become null.

( In the event that the statement of no objection is null, the applicant as referred to in paragraph (5) may re-submit an application in order to obtain the Decree from the Minister as referred to in Article 9, paragraph (1).

(9) In the event that the application to obtain the Ministerial Decree is not submitted within the period as referred to in paragraph (1), the deed of establishment shall be void as from the lapse of such period and the Company which does not yet have legal entity status shall be dissolved by operation of law, and the settlement shall be conducted by the founders.

(10) The provision on the period as referred to in paragraph (1), shall also apply for a re-submission.

Article 11

Further provisions regarding submission of application to obtain the Ministerial Decree as referred to in Article 7 paragraph (4) for certain areas that do not yet have or cannot use electronic network, shall be regulated in a Ministerial Regulation.

Article 12

(1) Legal actions relating to share ownership and to which payment is performed by a prospective founder prior the establishment of the Company, shall be stated in the deed of establishment.

(2) In the event of legal actions as referred to in paragraph (1) are stated in a deed which is not an authentic deed, such deed shall be attached to the deed of establishment.

(3) In the event of legal actions as referred to in paragraph (1) are stated in an authentic deed, the number, date and name as well as domicile of the Notary making such authentic deed shall be mentioned in the deed of establishment of the Company.

(4) In the event that the provisions as referred to in paragraph (1), (2), and (3) are not fulfilled, such legal actions shall not give rise to rights and obligations and shall not bind the Company.

Article 13

(1) Legal acts performed by the prospective founders for the interest of a Company which is has not yet been established, shall bind the Company after the Company becomes a legal entity if the first GMS of the Company explicitly states that it accepts or takes over all rights and obligations arising from the legal acts conducted by the prospective founders or its attorney.

(2) The first GMS as referred to in paragraph (1) shall be conducted not later than 60 (sixty) days after the Company obtains the status of legal entity.

(3) The resolution of the GMS as referred to in paragraph (2) is valid if the GMS is attended by the shareholders representing all shares with voting rights and the resolution is approved unanimously.

(4) In the event that the GMS is not held within the period as referred to in paragraph (2), or the GMS is failed to adopt the resolution as referred to in paragraph (3), each prospective founder exercising such legal actions shall be personally liable to the consequences arising.

(5) The GMS approval as referred to in paragraph (2) will not be necessary if such legal actions are performed or approved in writing by all prospective founders prior the establishment of the Company.

Article 14

(1) Legal actions on behalf of the Company which has not yet obtained the status of legal entity, may only be performed by all members of the Board of Directors together with all founders, as well as all members of the Board of Commissioners of the Company, and they will all be jointly and severally liable for such legal actions.

(2) In the event of such legal actions as referred to in paragraph (1) are performed by the founders on behalf of the Company which has not yet obtained the status of legal entity, the relevant founders shall be responsible for such legal actions and the legal actions shall not bind the Company.

(3) The legal actions as referred to in paragraph (1), by operation of law shall be the responsibility of the Company after the Company becomes a legal entity.

(4) The legal actions as referred to in paragraph (2) shall only be bound and shall be the responsibility of the Company after such legal actions are approved by all shareholders in the GMS attended by all shareholders of the Company.

(5) GMS as referred to in paragraph (4) is the first GMS which must be held not later than 60 (sixty) days after the Company obtains its legal entity status.

Part Two

Articles of Association and Amendment of Articles of Association

Paragraph 1

Articles of Association

Article 15

(1) Articles of association as referred to in Article 8 paragraph (1) shall contain at least :

a. The name and domicile of the Company;

b. The purposes and objectives as well as the business activities of the Company;

c. The period of incorporation of the Company;

d. The amount of authorized capital, issued capital, and paid-up capital;

e. The number of shares, shares classification if any, including the number of shares for each classification, the rights attached to each share, and nominal value of each share;

f. The name of title or position and the number of members of the Board of Directors and the Board of Commissioners;

g. The determination of the place and procedures for holding a GMS;

h. The procedures of appointment, replacement, and dismissal of the members of the Board of Directors and the Board of Commissioners;

i. The procedure for profit utilization and dividend distribution.

(2) Apart from the provisions as referred to in paragraph (1), the articles of association may also contain other provisions which do not conflict with this Law.

(3) The articles of association may not contain:

a. provisions concerning receipt of fixed interest on shares; or

b. provisions concerning the grant of personal benefits to the founders or other parties.

Article 16

(1) Companies may not use names which:

a. have been legally used by another Company or are in principle the same as the name of another Company;

b. conflict with public order and/or morality;

c. are the same as or similar to names of state institutions, government institutions, or international institutions, except with the permission of those concerned;

d. are not in accordance with the purpose and objective as well as business activities or only show the purpose and objective of the Company without its own name;

e. consist of figures or series of figures, characters or series of characters which do not formed words.

f. have the meaning as Company, legal entity, or civil association.

(2) The name of the Company must be preceded by the phrase “Perseroan Terbatas” (Limited Liability Company) or the abbreviation “PT”.

(3) In the case of a Public Company (Perseroan Terbuka), apart from the provisions referred to in paragraph (2) being applicable, the abbreviation “Tbk” shall be added at the end of the Company’s name.

(4) Further provisions regarding the procedures for the use of Company names shall be stipulated by Government Regulation.

Article 17

(1) The Company shall domicile in the city or regency within the territory of the Republic of Indonesia as stipulated in the articles of association.

(2) The domicile referred to in paragraph (1) shall at the same time constitute the head office of the Company.

Article 18

(1) The Company must have a purpose and objective as well as business activity which are stated in the articles of association of the Company and in accordance with the provisions of legislations.

Paragraph 2

Amendments to the Articles of Association

Article 19

(1) Amendments to the articles of association must be determined by a GMS.

(2) Agenda on the amendments of the articles of association must be clearly stated in notice to a GMS.

Article 20

(1) Amendments to the articles of association of a Company that has been declared bankrupt, cannot be conducted except with the approval from the curator.

(2) The curator’s approval as referred to in paragraph (1) shall be attached in the application for approval and notification of amendments of the articles of association to the Minister.

Article 21

(1) Certain amendments to the articles of association must have approval from the Minister.

(2) Certain amendments of the articles of association as referred to in paragraph (1) shall contain the following:

a. name and/or domicile of the Company;

b. purposes and objectives as well as business activities of the Company;

c. period of incorporation of the Company;

d. amount of Authorized Capital,

e. reduction of issued and paid-up capital; and/or

f. change of the status of the Company from private company to Issuer or otherwise.

(3) Amendments of the articles of association other than as referred to in paragraph (2) are only need to be notified to the Minister.

(4) The amendments to the articles of association as referred to in paragraph (2) and paragraph (3) shall be set forth or stated in the notarial deed and in Indonesian language.

(5) Amendments to the articles of association not drawn up in a notarial deed of minutes of meeting, shall be drawn up in a notarial deed not later than 30 (thirty) days as of the date of resolution of the GMS.

(6) An amendment to the articles of association may not be stated in a notarial deed upon the lapse of 30 (thirty) days as referred to in paragraph (5).

(7) Application for approval of the amendment of articles of association as referred to in paragraph (2) shall be submitted to the Minister, not later than 30 (thirty) days as of the date of the notarial deed containing the amendments of the articles of association.

( The provision as referred to in paragraph (7), apply mutatis mutandis for the notification of the amendment of article of association to the Minister.

(9) After the lapse of 30 (thirty) days period as referred to in paragraph (7), the application for approval or the notification of the amendment of articles of association may not be submitted or delivered to the Minister.

Article 22

(1) An application for approval of the amendment of articles of association regarding the extension of the period of incorporation of the Company as set forth in the articles of association, must be submitted to the Minister not later than 60 (sixty) days prior to the period of incorporation of the Company becomes expire.

(2) The Minister shall provide his approval to application for the extension of the period of incorporation as referred to in paragraph (1) not later than the last date of the Company’s incorporation.

Article 23

(1) Amendments to the articles of Association as referred to in Article 21 paragraph (2) shall take effect as of the issuance date of the Ministerial Decree regarding the approval of the amendment of articles of association.

(2) Amendments to the articles of association as referred to in Article 21 paragraph (3) shall take effect as of the issuance date of receipt of notification by the Minister of the amendment articles of association.

(3) The provisions as referred to in paragraph (1) and paragraph (2) do not apply where this Law determines otherwise.

Article 24

(1) The Company whose capital and number of shareholders fulfill the criteria of a Public Company in accordance with the provisions of the legislations in the field of capital market, is obliged to amend its articles of association as referred to in Article 21 paragraph (2), letter f within the 30 (thirty) days period as of the fulfillment of the criteria.

(2) The Board of Directors of the Company as referred to in paragraph (1) is obliged to submit a registration statement in accordance with the provisions of legislations in the field of capital market.

Article 25

(1) Amendment to the articles of association regarding the change of the status of the Company from private Company to Issuer, shall take effect as of:

a. The effective date of the registration statement submitted to the capital market supervisory agency for Public Company; or

b. Implementation of a public offering by a Company who submits the registration statement to the capital market supervisory agency, in order to exercise a public offering of shares in accordance with the provisions of legislations in the field of capital market.

(2) In the event the registration statement of the Company as referred to in paragraph (1) letter a does not come into effect, or the Company that has submitted a registration statement as referred to in paragraph (1) letter b fails to implement the public offering

of shares, the Company must amend its articles of association again within the period of 6 (six) months after the date of approval from the Minister.

Article 26

Amendment to the articles of association made in the framework of Merger or Acquisition, shall take effect as of:

a. The date of approval from the Minister;

b. A later date determined in the approval of the Minister; or

c. Date of the receipt of notification on the amendment of articles of association from the Minister, or a later date determined in the deed of Merger or the deed of Acquisition.

Article 27

Application for approval on the amendment of articles of association as referred to in Article 21 paragraph (2) will be rejected if :

a. it is contrary to the provisions regarding the procedures of the amendment of the articles of association;

b. the contents of the amendments are contrary with the provisions of legislations, public order, and/or morality; or

c. there is any objection from the creditor to the GMS resolution regarding the reduction of capital.

Article 28

The provisions regarding the procedures of application submission to obtain the Ministerial Decree regarding the ratification of the Company’s legal entity, and the objections as referred to in Article 9, Article 10, and Article 11, shall apply mutatis mutandis to the submission of an application for the approval of the amendment of the articles of association and objections thereto.

Part Three

Company Registry and Announcement

Paragraph 1

Company Registry

Article 29

(1) Company Registry is implemented by the Minister.

(2) Company Registry as referred to in paragraph (1) shall contain data concerning the Company as follows :

a. name and domicile, purposes and objectives as well as the business activities, period of incorporation, and capitalization;

b. full address of the Company as referred to in Article 5;

c. number and date of the deed of establishment and the Ministerial Decree regarding ratification of the Company as a legal entity as referred to in Article 7 paragraph (4);

d. number and date of deed of amendment of the articles of association, and approval from the Minister as referred to in Article 23 paragraph (1);

e. number and date of deed of amendment of the articles of association, and the date of receipt of the notification by the Minister as referred to in Article 23 paragraph (2);

f. name and domicile of the notary who made the deed of establishment and deed of amendment of the articles of association;

g. full name and address of the shareholders, members of the Board of Directors, and members of the Board of Commissioners of the Company;

h. number and date of deed of winding up, or number and date of the court ruling on the winding up of the Company which has been informed to the Minister;

i. the expiry of the Company’s status as a legal entity;

j. the balance sheet and profit and loss statement from the financial year concerned for the Company for which auditing is required.

(3) Data of the Company as referred to in paragraph (2) shall be included into the Company Registry on the same date as the date of :

a. the Ministerial Decree regarding the ratification of the Company’s legal entity status, the approval for the amendment of the articles of association for which approval is necessary;

b. receipt of notification of the amendments to the articles of association for which approval is not necessary; or

c. receipt of notification of the amendments of the Company’s data which do not constitute amendments of the articles of association.

(4) The provision as referred to in paragraph (2) letter g, regarding full name and address of the shareholders of the Issuer, in accordance with the provisions of the legislations in the field of capital market.

(5) Company Registry as referred to in paragraph (1) shall be open for public.

(6) Further provisions regarding Company Registry shall be regulated in a Ministerial Regulation.

Paragraph 2

Announcement

Article 30

(1) The Minister shall announce in the Supplement to State Gazette of the Republic of Indonesia :

a. The deed of establishment of the Company and the Ministerial Decree as referred to in Article 7 paragraph (4);

b. The deed of amendment of the articles of association and the Ministerial Decree as referred to in Article 21 paragraph (1);

c. The deed of amendment of the articles of association, which notification has been received by the Minister.

(2) Announcement as referred to in paragraph (1) shall be conducted by the Minister within the period not later than 14 (fourteen) days as of the issuance date of Ministerial Decree as referred to in paragraph (1) letter a and letter b, or as of the receipt of notification as referred to in paragraph (1) letter c.

(3) Further provisions regarding the procedures of announcement shall be conducted in accordance with the provisions of the legislations.

CHAPTER III

CAPITAL AND SHARES

Part One

Capital

Article 31

(1) Authorized Capital of the Company shall consist of total nominal value of shares.

(2) The provision as referred to in paragraph (1) does not preclude the possibility of the legislative provisions in the field of capital market to regulate the Company’s capital to consist of shares without nominal value.

Article 32

(1) Authorized capital of the Company shall be at least of Rp 50.000.000,00 (fifty million rupiah).

(2) Laws that regulate certain business activities can determine the minimum amount of the Company’s capital which is higher than the provision of authorized capital as referred to in paragraph (1).

(3) The change to the amount of authorized capital as referred to in paragraph (1), shall be stipulated with a Government Regulation.

Article 33

(1) At least 25% (twenty five percent) of the authorized capital as referred to in Article 32 must be issued and paid-up in full.

(2) The capital issued and paid-up in full as referred to in paragraph (1) shall be proven by a valid payment evidence.

(3) Further issuance of shares at any time to increase the issued capital must be paid-up in full.

Article 34

(1) Payment of shares capital may be made in the form of money and/or in other forms.

(2) In the event that the share capital is paid up in some other forms as referred to in paragraph (1), the valuation on the share capital paid up shall be determined based on the reasonable value determined in accordance with the market price or by an independent expert.

(3) Payment of share capital in the form of immovable asset must be announced in 1 (one) or more Newspapers within the period of 14 (fourteen) days after the signing of deed of establishment, or after the GMS resolves such payment of share.

Article 35

(1) Shareholders and other creditors having receivables against the Company, may not set off their receivables against the payment obligation to pay up the share price they have subscribed, except with the approval from the GMS.

(2) The receivables towards the Company as referred to in paragraph (1) that may be set off against the payment of share are receivables on claims towards the Company which arise out of :

a. The Company has received the money or the surrender of tangible or intangible goods which have a monetary value.

b. a party who becomes the guarantor of the Company’s debt has paid the Company’s debt in full, for the amount guaranteed; or

c. The Company becomes the guarantor of a third party’s debt, and the Company has received benefits in the form of money or goods which have a monetary valued, which the Company has in fact directly or indirectly received.