Company Dissolution: A Step-by-Step Guide

While Indonesia offers a favourable business environment and numerous opportunities for growth, there may come a time when you need to close your company due to unforeseen circumstances or strategic decisions. This process, known as company dissolution, is a legal procedure that requires adherence to specific regulations to ensure the smooth and compliant closure of your business operations in Indonesia. 

Our legal team specialises in guiding businesses through complex processes like company dissolution, ensuring full compliance and a smooth transition. 

Common Reasons for Dissolving a Company

Company dissolution is the formal process of legally terminating a company’s existence. This results in the cessation of all business activities and the removal of its legal status. Although financial insolvency—where a company can no longer meet its debt obligations—is a common cause for dissolution, several other factors can lead to this decision: 

1. Expired Business Licence: Companies that fail to renew their business licences may be subject to dissolution. 

2. End of Incorporation Period: When businesses are established for a set duration and the period is not extended, they must dissolve.

3. License Revocation: If authorities revoke a company’s licence due to non-compliance or legal violations, dissolution may be required. 

4. Prolonged Inactivity: Companies that have been inactive for more than three years are often dissolved. 

5. Legal Violations: Engaging in illegal activities can result in mandatory dissolution. 

6. Voluntary Dissolution: Shareholders may choose to dissolve a company voluntarily due to shifts in business strategy, financial issues, or internal disputes. 

If you’re considering any of these options, our expert consultants can help you evaluate the best course of action and manage the dissolution process from start to finish. 

Essential Documentation for Dissolution

Dissolving a company in Indonesia is a serious legal matter that involves meticulous preparation and compliance with regulatory requirements. Gathering the necessary documents is vital to avoid delays and ensure a smooth process. The essential documents required for dissolving a limited liability company (PT) include: 

1. Deed of Establishment (Akta Pendirian Perusahaan): The original incorporation certificate and any amendments. 

2. Decree from the Ministry of Law and Human Rights (SK Kemenkumham): This document details the company’s legal standing and updates. 

3. Identification Copies for Management: This includes IDs for shareholders, directors, and commissioners. 

4. Tax Documentation: Tax Identification Numbers (NPWP) for directors, along with all company tax filings. 

5. Minutes of Shareholders’ Meeting (RUPS): This records the decisions made regarding the company’s dissolution. 

6. Letter of Domicile: Confirms the official address of the company. 

7. Business Licence (NIB): A copy of the company’s business identification number. 

Steps to Dissolve a Company

The dissolution process, known as liquidation, involves settling all financial obligations and distributing any remaining assets. Both active and inactive companies must undergo this process. 

A legal consultant, lawyer, or the company’s Board of Directors can act as the liquidator, responsible for making public announcements about the dissolution. In order to achieve legal recognition, the announcements must be published in national newspapers.

The entire dissolution process typically takes between 12 to 18 months, depending on the specific circumstances of the company. An outline of the key steps involved, as per Indonesia’s Law No. 40/2007 on Limited Liability Companies: 

1. Notary Issues First Article of Dissolution (5 working days). 

2. First Announcement in a National Newspaper (3 working days). 

3. Approval from the Ministry of Law and Human Rights (60 working days). 

4. Cancel Business Identity/Licences (NIB) via OSS (30 working days). 

5. Notary Issues Second Article of Dissolution (5 working days). 

6. Revoke Taxpayer ID (NPWP) and Tax Registration (180 working days each). 

7. Second Announcement in a National Newspaper (3 working days). 

8. Final Approval from the Ministry of Law and Human Rights (30 working days). 

9. Third Announcement in a National Newspaper (3 working days). 

The timeline may vary depending on the complexities of your business, but this provides a general guideline. To ensure your company’s dissolution proceeds without unnecessary delays, we offer expert project management and legal consultancy throughout each phase of the process. 

Streamline Your Exit Strategy with SAS

Closing a business in a foreign country can be overwhelming, particularly with Indonesia’s evolving legal landscape. At SAS, we understand the challenges that come with dissolving a company. Our experienced team can guide you through the entire process, ensuring compliance with all legal requirements. Contact us today to explore how we can assist you in navigating your exit strategy with ease. 

This article provides general information and is not intended as legal advice. The company dissolution process can be complex, and specific legal requirements may vary. We strongly recommend consulting with one of our qualified legal professionals to ensure full compliance and to address any unique circumstances related to your business.