Limited Liability Company Agreement Template for Indonesia

A Limited Liability Company Agreement is the cornerstone document for establishing and operating a Perseroan Terbatas (PT) in Indonesia. This comprehensive legal framework governs the relationship between shareholders, directors, and commissioners while ensuring compliance with Indonesian corporate law. Under Law No. 40 of 2007, this agreement is mandatory for all limited liability companies and forms the basis for corporate governance throughout the company's existence.

When do you need this document?

You need this agreement when establishing a new PT in Indonesia, whether for domestic or foreign investment purposes. It's essential when multiple shareholders are involved, as it clearly defines each party's rights, obligations, and ownership percentages. The document is also required when restructuring an existing company, adding new shareholders, or modifying capital structure. Foreign investors must have this agreement in place before obtaining Investment Coordinating Board (BKPM) approval, and it's necessary for companies seeking to operate in restricted business sectors that require specific ownership structures.

Key legal considerations

Your agreement must address several critical legal elements to ensure enforceability and regulatory compliance. Capital structure provisions must specify minimum paid-up capital requirements, which vary by business sector and can range from IDR 2.5 billion for certain activities. Shareholder rights clauses should detail voting procedures, dividend distribution methods, and transfer restrictions, particularly important for foreign-invested companies subject to ownership limitations. Corporate governance sections must outline board composition, including the mandatory Board of Commissioners for companies with specific capital thresholds. Dispute resolution mechanisms should specify jurisdiction and applicable law, typically Indonesian courts and Indonesian law for PT entities.

Legal requirements in Indonesia

Indonesian law mandates specific requirements for PT agreements under Law No. 40 of 2007 and related regulations. The agreement must be executed through a notarial deed prepared by an authorized Indonesian notary, and all parties must provide complete identification documents as required by the Ministry of Law and Human Rights. Capital contribution requirements vary by business sector, with Government Regulation No. 43 of 2011 specifying detailed procedures for capital payments and verification. Foreign investment components must comply with Law No. 25 of 2007 on Investment, including negative investment list restrictions and minimum investment thresholds. The agreement must specify the company's business activities using Indonesian Standard Industrial Classification codes, and certain sectors require additional approvals from relevant ministries before the company can commence operations.