Running a business in Indonesia can be a complex process. No entrepreneur is immune to circumstances that may lead to the decision to close a company. Shutting down a business requires compliance with various legal, tax, and administrative procedures. Regardless of the reason for liquidation, it's crucial to follow the established regulations to avoid legal issues, penalties, or outstanding tax liabilities. In this article, you will learn about the main steps and important nuances involved in closing a company in Indonesia.
Several factors can lead to the decision to liquidate a business, including:
1. Financial instability – The company may be operating at a loss, making further activity unviable.
2. Shareholders' decision – A voluntary decision to cease operations.
3. Legal issues – Such as violations of regulations or challenges in obtaining required licenses.
4. Limited operational term – If the company’s founding documents specify an expiration date, it must be dissolved once that date is reached.
Whatever the reason, the closure process must comply with local laws, including the Company Law (Law No. 40/2007).
The first step is for the shareholders to hold a General Meeting of Shareholders (GMS) to:
✓ Approve the decision to liquidate the company
✓ Appoint a person responsible for managing the liquidation (a trusted representative, lawyer, or third-party liquidation firm)
✓ Document the decision in an official meeting resolution
This resolution must be in line with the company’s Articles of Association and must be notarized.
Once the decision is made, stakeholders such as employees, partners, contractors, and government bodies must be notified. Here’s how to notify government authorities:
1. Ministry of Law and Human Rights (Kemenkumham)
Submit a closure application via the OSS (Online Single Submission) system. Required documents include:
• Notarized shareholder resolution on company liquidation
• Final report confirming all procedures have been completed
2. Tax Office (Direktorat Jenderal Pajak)
Notify the tax office to:
• Close the company’s NPWP (tax ID number)
• Settle all tax liabilities (e.g., corporate income tax, VAT)
• Obtain an official confirmation of tax deregistration
This includes asset liquidation, settling debts, and closing bank accounts.
The liquidator must inventory all assets and distribute them according to law:
• Sell company assets, if needed
• Distribute remaining funds to shareholders or use them to pay outstanding debts
All actions must be documented and included in liquidation reports.
Creditors
All debts to suppliers, contractors, and banks must be settled. If there are insufficient funds, alternative solutions like partial payments or restructuring must be negotiated.
Employees
Employment contracts must be closed lawfully, including final salary payments, compensation, unused leave payouts, and severance. All settlements must be properly documented for submission in the final liquidation report.
Once all debts and obligations are resolved and taxes are cleared, company bank accounts must be closed. The bank will require the notarized liquidation documents.
Under Indonesian law, a notice of liquidation must be published in at least one national daily newspaper. This provides creditors and stakeholders a period (typically 60 days) to submit claims before the process continues.
After all steps are completed and verified by government authorities, the company will be officially removed from the corporate registry.
For companies with foreign investment status (PT PMA), additional steps may apply:
• Coordination with the Investment Coordinating Board (BKPM) is required
• Cancellation of foreign Investor KITAS visas (if issued) must be handled
• Additional reporting and approvals may be needed for foreign shareholders
Closing a company in Indonesia is a multi-step process that requires careful attention and strict compliance with local regulations. A professional approach will help you avoid legal risks and unnecessary delays.
If you're planning to liquidate your company, start by consulting with experts. Our company, Good Luck Group, will help you successfully liquidate your business, save time and avoid legal risks.
