INSTRUCTION:

Please prepare your answer in English

1. Mr. A and Mr. B are Indonesian citizens who intend to cooperate with Mr. X, a Singaporean national, to carry
out business activities in the mining industry. To realize this cooperation, they have agreed to establish a
business entity in Indonesia.

Mr. X, as the largest provider of capital, wants himself to represent the business entity in every action taken for
and on behalf of the said business entity.

Mr. A and Mr. B then consult with you as the legal counsel relating to the following matters:

a. What form of business entity would you recommend so that their business activities can be carried out well?
Answer :
The form of business entity that I recommend is a limited distribution of foreign investment ( PT PMA)

b. What are the stages for establishing such that business entity?
Answer :
1. Deed of establishment of Limited Liability Company
2. Decree of the Minister of Law and Human Rights Concerning the ratification of a Limited
Liability Company Legal entity
3. Have NPWP Company
4. Mandatory to meet the requirements for investment value and capital to obtain an Investment Per
mit, namely That there is a minimum capital that must be met by PT PMA. Based on the latest reg
ulation, namely BKPM Regulation Number 4 of 2021, the minimum paid-up capital for PMA is I
DR 10,000,000,000.00 (ten billion rupiah).
Furthermore, it is regulated in Presidential Regulation Number 10 of 2021 concerning the Investm
ent Business Sector that foreign investors can only carry out business activities with an investment
value of more than IDR10,000,000,000.00
(ten billion rupiah) outside the value of land and buildings.
5. Create a Business identification Number (NIB) and Other business licenses that can be submitted
with the online single submission (OSS) or BKPM system according to the company’s business
sector
6. The location of the business activity must be in accoardance with the spatial plan of the local area
7. Complete other special permits needed to relevant ministries, which are related to the company
sector.

c. What relevant laws and regulations must be considered in relation to the establishment and operation of
the business entity?
Answer :
The relevant laws related to the establishment and operation are law No.25 of 2007 corcerning
investment, law No. 40 of 2007 concerning Limited Liability Companies and Law No. 11 of 2020
concerning Job Creation

d. Is it possible under the Indonesian laws for Mr. X to act for and on behalf of the business entity?

(i) If possible, what should be done to make Mr. X a party who can act for and on behalf of the
business entity?

Answer :
Mr. X cannot be a party acting for and on behalf of a limited liability company
 (ii) If not, why and what is the legal basis?
Answer :
Because in article 14 of the Investment law that right of foreign investors have right to certainty of
rights, law and protection, open information about field of business being carried out, service rights,
various forms of convenience facilities in accordance with the povisions of law and regulation

2. Mr. Arief, an Indonesian national, wishes to sell his shares in PT AAA to Mr. Bona, a Singaporean national. He
owns 25% of the total shares issued by PT AAA. Mr. Bona asks for your advice as an Indonesian legal
consultant on the following issues:

a. How is the process of shares purchase conducted under Indonesia Law? When is the shares purchase
legally valid and binding under Indonesian Law? Provide him the legal basis.
Answer :
Article 56 Law concerning Limited Liability Companies has regulated :
1. The transfer of right to share is carried out by a deed of transfer of rights or copy there of shall be
submitted in writing to the company
2. The board of directors shall record the transfer of right to shares
3. The date and day of the transfer of rights in the register of shareholders or a special register and n
otify the change in the composition of shareholders to the Minister to be recorded in the register o
f the Company no later than 30 days from the date of recording the transfer of rights;

b. Further, Mr. Bona tells you that he has a plan to re-sell the shares he will buy from Mr. Arief to another
third party. Therefore, he would like your explanation and confirmation as a legal counsel on when he will
be legally recognized as the owner of the shares. Provide him the legal basis.

Answer :
Article 56 Law concerning Limited Liability Companies is
The Board of Directors has recorded the transfer of rights to shares and notified the changes in the composi
tion of shareholders to the Minister.

c. In addition to the above questions, he would like to know whether there are other requirements or issues
that he must take into account in relation to this shares purchase transaction before he and Mr. Arief enter
into the agreement.

Answer :
It is important to note that before conducting a share purchase transaction and entering into an agreement,
you should pay attention to the financial and financial matters of the limited liability company by
conducting an examination and due diligence on the finances of the limited liability company.

d. Because your legal explanation is very clear and understandable, he prefers that your legal services are
related to the preparation of the agreement and/or documents relating to the transaction to be entered into.
Please explain the agreement and/or documents that must be prepared and executed.
Answer :
the agreement and/or documents that must be prepared and executed is a deed of sale and purchase of
shares contains the sale and purchase agreement and the transfer of shares agreed upon and executed by the
parties. An agreement is valid if it fulfills the requirements in Article 1320 of the Civil Code.