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Are there Nominee Director practices in Indonesia?

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  • Are there Nominee Director practices in Indonesia?

    So we are told that to open a company in Indonesia it is a Must to hire 1 Indonesian Director, same regulations are in neighboring countries local lawyers readily provided a list of companies that provide a service of being a Nominee Director. That person only serves a function of being a citizen of the country, doesn't sign or vote on anything and bears no responsibility, also paid really small fees. We have never actually tried it there, but curious if it can be an option for Indonesia as well. So do you know if there such practices in Indonesia? Do you know such agencies? Is it a legally sound solution?

  • #2
    I actively participate in this Forum for around 10 years but never heard about that here and did not hear anywhere else .

    I also know very little about business' rule . I would guess that it may depend on if you own 100% or if you have an Indonesian partner (the Indonesian government has a list of business types showing which areas of business must have Indonesian participation) . To me it seems strange to impose 1 Indonesian director if the company is totally owned by a foreigner . I think I heard that usually an Indonesian PT PMA company has/may have 1 director and 1 commissioner .

    Another thing that I know is that the Human Resources chief of any Indonesian based company must be Indonesian .

    You can have more details by searching the internet for something like : Pendirian PT PMA , or check at the agents' website in the link bellow . If necessary you can translate at Google Translate

    http://www.livinginindonesiaforum.or...311#post254311 (Business/PMA : references , agents )

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    • #3
      Thank you Marcus!

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      • #4
        Hi Darinka,

        I have seen such case before and what I heard is that it is mandatory to hire a local as a director. The person may not be active in the organizations day-to-day business but gets the director's fees and other benefits. Also, the company I know used the director as a shield, when there are government dept. related inquiries or raid for wrong practises in the organization were there. Examples of wrong practises are practises which were done since ages, but no one bothered for that untill now when the rules and government focus is on the issue For Eg. Environmental Impact due to import of Iron scrap by steel company, The company imported scrap since ages and there were different grade of impurities in that but no one bothered whether it is mixed with plastic or rubber, etc. but suddenly the company was raided for importing poor quality scrap and was pressed on environmental impact charges.

        There are practises related to Tax filing, work permit and many other aspects where It makes sense to keep a local director. Simple case may be; you use computer in your company for designing purpose and It has AutoCAD which is unlicensed or exceeds the license quota that you have. If your company gets raided by the police, computers will be taken in as proof and the director needs to visit the police station everyday and wait his/her turn to give statement & for further inquiry, Do you think It makes sense for a highly paid expat to sit in the police station just waiting his turn to give statement and this won't end, you need to be present on call, else charges maybe pressed against you. I have seen such case and it took months of such attendance at local police station.

        There are many more examples to this. Not everything can be shared but yes, now you may feel the necessity of having a local director who can manage these local issues and can be compensated accordingly whereas the other director can focus on the growth of business, etc.

        Hope it helps !

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        • #5
          Originally posted by darinka1 View Post
          So we are told that to open a company in Indonesia it is a Must to hire 1 Indonesian Director, same regulations are in neighboring countries local lawyers readily provided a list of companies that provide a service of being a Nominee Director. That person only serves a function of being a citizen of the country, doesn't sign or vote on anything and bears no responsibility, also paid really small fees. We have never actually tried it there, but curious if it can be an option for Indonesia as well. So do you know if there such practices in Indonesia? Do you know such agencies? Is it a legally sound solution?
          The Mandatory is 1 (one) INDIVIDUAL RESIDENT DIRECTOR; either Indonesian - local person with TAX ID, or Foreign National holding an Indonesia Work Visa (IMTA and KITAS) or Permanent Resident Expatriate . But in such case, because of some reasons - hired LOCAL DIRECTOR e.g. Timely Corporate Bank Account Approval, Employee Visa Approvals, Specific Indonesian Government License Approvals.

          Could help you if and in case needed to provide a Nominee Director

          Hope are help

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