Law No.

11 of 2020 on Job Creation dated 2 November 2020 ("Law 11/2020"), or

also known as the Omnibus Law has amended numerous laws in various sectors, including
Law No. 40 of 2007 regarding Limited Liability Company ("Law 40/2007").

Some essential changes under the Omnibus Law encompass among others, the removal of
company's minimum authorized capital and introduction of the simplification for the
incorporation of micro and small enterprises ("MSE").

Legal Frameworks: The executive summary below referred to the following prevailing laws
and regulations:

1. Law 40/2007 as amended by Law 11/2020 ("Amended Law 40/2007"); and

2. Government Regulation No. 8 of 2021 on Authorized Capital of Limited Liability
Company and Registration of Its Establishment, Alteration, and Dissolution of Micro
and Small Enterprises ("GR 8/2021"); and
3. Minister of Law and Human Rights Regulation No. 21 of 2021 on Requirements and
Procedures for the Establishment, Adjustment, and Dissolution of a Limited Liability
Company ("MoLHR Regulation 21/2021").

Key Amendments introduced by Amended Law 40/2007: Below are some key of the
amendments of Law 40/2007 provisions.

Legal Status of Company: Based on Law 40/2007, legal entity status of the company shall
be obtained after (i) the Company being registered with the Minister of Law and Human
Rights ("MoLHR") and (ii) issuance of proof of registration issued by the MoLHR (Art. 7
(4) of Amended Law 40/2007).

In the previous regime, the Company would obtain its legal entity status on the date of the
issuance of the Ministry Decree on the legalization of the Company's legal entity (approval to
the establishment). This procedural change simplifies and expedites the Company
establishment process. 

Minimum Requirement of Company's Authorized Capital: The omnibus has omitted the

minimum requirement of company's authorized capital. In this instance, the amount of
authorized capital shall be agreed solely by company's founders (Art. 32 (2) of Amended Law
40/2007). However, there is still no certainty on the implementation of the omission of such
minimum authorized capital requirement. Please also note that this provision is only
applicable for Local Investment Company.

In addition to the above, foreign companies/Perusahaan Modal Asing (PMA) there are also

changes to provision regarding minimum capital requirement, however, this is not regulated
under the Amended Law 40/2007 but is being further addressed under the Indonesia
Investment Coordinating Board/Badan Koordinasi Penanaman Modal (BKPM) regulation.

Easing on the requirement of MSE Establishment: Law 11/2020/Omnibus Law stipulates

that MSE can be established by a sole shareholder ("Individual MSE Company") through
an Establishment Statement Letter/Surat Pernyataan Pendirian, instead of notarial deed (Art.
153A (1) of Amended Law 40/2007).
In addition to the above, the establishment of MSE should fulfill the general conditions which
are: (i) shareholder of MSE must be individuals; (ii) the founders of MSE company may only
establish 1 (one) MSE in one year (Art. 153E of Amended Law 40/2007).

Establishment Procedures of Individual MSE Company: Any business actor who intends

to establish an Individual MSE Company shall: (i) register itself to Legal Entity
Administration System/Sistem Administrasi Badan Hukum, a platform that is managed by
MoLHR; and (ii) fill in the provided establishment form that is deemed as Establishment
Statement Letter (Art. 13 of MoLHR Regulation 21/2021)

Afterwards, MoLHR will issue an Establishment Certificate that shall be kept by the business
actor, along with the Establishment Statement Letter, to be the evidence of Individual MSE
Company establishment. (Art. 14 (1) and (2) of MoLHR Regulation 21/2021).

Changes of Individual MSE Company: An individual MSE company must convert into
a 'general' limited liability company if the same: (i) no longer has a sole shareholder; (ii) does
not fulfill the MSE general requirements as provided under Art 153A of Amended Law
40/2007 (Art. 153H (1) of Amended Law 40/2007 jo. Art. 17 (1) MoLHR Regulation
21/2021).