Indonesian corporations must now disclose beneficial owners | Indonesia | Global law firm | Norton Rose Fulbright (original) (raw)

Content

• Introduction
• Scope and definitions
• Reporting obligations
• Date of effectiveness

Introduction

Indonesia’s President Joko Widodo recently issued a regulation requiring corporations to disclose information on their beneficial owners (Presidential Regulation No. 13 of 2018 or Regulation 13). This regulation supports ongoing efforts to prevent and eradicate crimes of money laundering and terrorism financing, and also complies with Indonesia’s commitments under the international agreement on automatic exchange of information (AEOI). The regulation came into effect on 1 March 2018.

This is not the first time corporations in Indonesia have been required to disclose information on their beneficial owners. This obligation already applies to corporations in certain business sectors, including banks and insurance companies, which are regulated by Indonesia’s Financial Services Authority (Otoritas Jasa Keuangan or OJK). The OJK requires all financial institutions to disclose information on their ultimate parent and other controllers. Regulation 13 now imposes this requirement on all types of corporation in Indonesia.

Scope and definitions

Regulation 13 defines a corporation as any organised group of people or assets, whether or not established as a legal entity, including:

1. limited liability company;
2. foundation;
3. association;
4. cooperative;
5. partnership; and
6. other form of corporation (not defined).

A corporation is required to report information on its beneficial owners, including any individual who:

1. can exercise their power to appoint and dismiss the directors, commissioners, managers, trustees, or supervisors;
2. controls the corporation and receives or is entitled to receive direct or indirect benefits from the corporation; or
3. is the true owner of the corporation’s assets or share capital.

Some additional criteria apply specifically to limited liability companies when determining their beneficial owners:

1. ownership of at least 25% of the shares in the company, as set out in the articles of association;
2. ownership of more than 25% of the voting rights in the company, as set out in the articles of association; and/or
3. being entitled to more than 25% of the annual profits of the company.

Since there is no distinction between corporations with domestic and foreign investment, foreign investment (PMA) companies are also subject to Regulation 13.

Corporations must report and disclose information on their beneficial owners to “authorised institutions”, which Regulation 13 defines as any government body (central or local) with authority over the registration, legalisation, approval, licensing and dissolution of corporations, and any authority charged with monitoring and regulating the corporation’s business.

Reporting obligations

When a corporation makes a new application for establishment, approval or licensing, and following any change in its beneficial ownership, it is required to:

1. designate at least one party as its beneficial owner;
2. appoint an employee to be responsible for implementing the principles set out in Regulation 13 and to provide relevant information on the beneficial owner of the corporation to authorised institutions, upon request; and
3. report to authorised institutions on the beneficial ownership of the corporation, and inform them of any changes.

Regulation 13 does not specify what sanctions can be imposed on corporations for failure to comply. However, sanctions may be imposed under “applicable laws and regulations” for failure to report or disclose the beneficial owners when requested to provide such information.

Date of effectiveness

Existing corporations that have already obtained or are currently applying to authorised institutions for registration, legalisation, approvals, permits or licenses had until 5 March 2018 to comply with Regulation 13.

The Indonesian Government announced in local newspapers on 28 March 2018 that it is now preparing the implementing regulations for these new rules, which are expected to be issued within a year. In the meantime, please contact Kresna Panggabean if you have any questions.