Indonesian Law | Hukum Indonesia - Blog

Sunday, January 5, 2014

How to Dissolve a Company in Indonesia

Company Liquidation
In Indonesia, a liquidation of an Indonesian company by virtue of Article 142, paragraph 1 of the Indonesian Law No. 40 of 2007 on Limited Liability Company (“Company Law”), could performed by the following reasons:
  1. Based on a resolution of the General Meeting of Shareholders (“GMS”);
  2. Due to the expiry of the company, as prescribed in the articles of association;
  3. A court order;
  4. Revoked bankruptcy statement based on binding court judgment, and the asset of the company is not sufficient to pay the bankruptcy cost; or
  5. Due to the revocation of the company’s business permit, so that the company is obliged to conduct liquidation according to prevailing regulations.
The simplest method to dissolve the company is by virtue of resolution of the GMS that meets the minimum quorum requirement.

The shareholders of the company can undertake the GMS on the closure of the company after 7 working days written notice to employees and the local government agency responsible for manpower affairs. This obligation is regulated in Article 148 of Law Number 13 of 2003 concerning Manpower.

Article 144 of the Indonesian Company Law stipulates that the General Meeting of Shareholder concerning closure of company can be held based on the proposal from the Board of Directors, Board of Commissioners or 1 (one) or more shareholder representing at least 1/10 (one-tenth) from the total number of shares with voting right. Moreover, the quorum of the GMS on the closure of the company shall be valid if it is taken by mutual consensus or if it is approved by at least 3/4 (three-fourth) of the total shares issued with voting rights are present or represented, except the company’s articles of association stipulates a higher quorum.

The GMS Resolution should also appoint a liquidator for the company liquidation process. If the GMS Resolution does not appoint a liquidator therefore the directors automatically become the liquidator for the company liquidation process.

The liquidator shall be responsible to proceed and administer all necessary legal procedure in regards with the company liquidation, as follows:

- Within the latest period of 30 days as of the company’s dissolution, the liquidator shall be obliged to notify the following persons:

a. All creditors regarding the company’s dissolution, by way of announcing the company’s dissolution in a newspaper and in the State Gazette of the Republic of Indonesia; and
b. The Minister of Law and Human Rights of Republic of Indonesia, about the company’s dissolution that is to be registered in the Company Registry and states that the company is in liquidation (Article 147, paragraph 1 of the Company Law).

- The liquidator’s obligations in the settlement of a company’s assets in the liquidation process shall cover the following:

a. Recording and collecting the assets and debts of the company;
b. Publishing the plan for distribution of assets from the liquidation in the newspaper and the State Gazette of the Republic of Indonesia;
c. Making payment to creditors;
d. Making payment from the remaining liquidation assets to the shareholders; and
e. Other acts required for the settlement of the assets.

- The liquidator shall be obliged to notify the Minister and announce the final result of the liquidation process in a newspaper. This is conducted after the liquidator completes the payment of the remaining assets to all shareholders, and the GMS Resolution gives full acquittal and discharges to the liquidator.

The timeline estimation of the dissolution process will take at least 9 to 12 months from the date of the GMS Resolution.

By: tnrlawfirm

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Thursday, December 5, 2013

Overview on Civil Litigation in Indonesia – Civil Trial Procedure

Civil Litigation Indonesia
Indonesian Civil Trial Procedure is basically regulated by two regulations, which were adopted from the Dutch Colonial system, which are Herziene Inlandsch Reglement (HIR) and Rechtsreglement voor de Buitengewesten (RBg.).

Indonesian legal systems do not use juries. Instead, decisions are made by a panel judges. One of these judges is the Chair (ketua) and is usually more senior than the other judges. The judges face the witness who sits alone in a chair in the center of the court. Advocates are placed off to the sides.

In general, a civil suit filed in the District Court must be based on one of the two following legal reasons: breach of contract (Wanprestasi) or unlawful acts/tort (Perbuatan Melawan Hukum).

General Litigation Process in a Civil Lawsuit

A. District Court Level
  1. The litigation proceeding in Indonesia commences with the plaintiff submitting a lawsuit ("Gugatan") to the District Court and pay official lawsuit fee to the District Court. In general, the location of the District Court is a district court which covers the defendant domicile;
  2. The court then formally informs in writing to the defendant along with the lawsuit ("Gugatan") and an order for the defendant to appear in first court hearing (letters of summons). If the defendant do not appear at the first court hearing, then he is summoned to a second hearing and, if necessary, to a third hearing. If the defendant has failed to make an appearance by the third hearing, the court is able to issue a default decision ("Putusan Verstek"). Such a default decision is subject to appeal and is therefore not final;
  3. If both parties appears (the plaintiff or the plaintiff’s attorney and the defendant or the defendant’s attorney), the judges then orders the parties to select a mediator in order to resolve the dispute through mediation. If the parties do not want to select a mediator, the judge then will select a mediator (usually mediator judge in the court) for the mediation. If the mediation is successful and reaches mutual agreement, the judges will affirm the agreement and incorporate it into a decision (Putusan Dading), which is not subject to appeal and is therefore final, binding and executable;
  4. If the mediation process is unsuccessful or fails to achieve mutual agreement, the mediator returns the matter to the judge in order to further examine the case and make a ruling. The main arguments between the plaintiff and the defendant during the course of the trial are in the form of written submissions;
  5. The defendant is then ordered to submit a response to the plaintiff’s lawsuit, which is called a “Jawaban”. The defendant may also file a counter lawsuit against the plaintiff's lawsuit simultaneously with his Jawaban;
  6. After receiving the defendant’s Jawaban, the plaintiff is given the opportunity to submit a counter plea or “Replik” in order to respond to the defendant’s Jawaban;
  7. The filing of the the plaintiff's Replik triggers the requirement for the defendant to file a response to the Replik. The defendant’s response to the Replik is called the "Duplik";
  8. After written submissions have been completed (Gugatan, Jawaban, Replik and Duplik), the court session moves to evidentiary session where the plaintiff shall submit written exhibits, then if so desired, witnesses in support of the arguments of the plaintiff’s lawsuit/Gugatan;
  9. the defendant is then given the opportunity of rebuttal by means of providing to the court written exhibits, then if so desired, witnesses in support of the arguments of the defendant’s Jawaban;
  10. After the evidentiary sessions have been finalized, each of the parties is given the opportunity to submit their closing arguments on the same court day. This closing arguments is called “Kesimpulan”; and
  11. After both plaintiff and defendant have filed their closing arguments or Kesimpulan , the court renders its judgment and announces it at the final hearing.
The time period from the filling of the lawsuit/Gugatan until judgment in accordance with Supreme Court rules is must be less than 6 months. If for whatever reason a case cannot be completed within 6 (six) months period, the District court must report the reasons of the delay to the relevant High Court.

Law on Evidence

The law on evidence for the court hearing is regulated under Indonesian Civil Procedural Law (Het Herziene Indonesisch Reglement), and evidences that could be admissible to the district court are as follows:
  1. Documents (ordinary documents, notarial deeds and privately executed agreements);
  2. Witness (person/s who know or had the reason to know the situation faced by the parties);
  3. Inferences (judge conclusion about something from known facts or evidence).
  4. Confession; and
  5. Solemn vow.
In addition to the five forms of evidence, by virtue of Law No. 11 of 2008 on Electronic Information and Transactions, the courts are now permitted to accept electronic information and/or electronic documents and correspondence as evidence. However, this does not apply to documents that are required by law to be in written form or in a notarial deed form or required to be drawn up by land deed officials.

All document based evidence to be submitted to the District Court must be charged a stamp duty of IDR 6,000 and then legalized by the District Court. Documents that are not in the Indonesian language must be translated into Indonesian by a sworn translator.

B. Appeal to High Court (Pengadilan Tinggi)

Any party who is displeased or refused the judgment of the District Court level is entitled to appeal to the High Court. The Appeal to the High Court is called “Banding”. The appeal/Banding is required to be filed to the High Court by the appellant within 14 days from the date of issuance of the decision if the appellant attended the final court session.

If the appellant did not appear in the final court session, the time to file an appeal is calculated 14 days from the time the appellant received the notice of decision.

The appellant shall sign the deed of appeal ("Akta Banding") in the same District Court which rendered the initial decision and to pay the appeal fee. The appellant could also file ground for appeal or “Memori Banding”, however there is no obligation for the appellant to file the Memori Banding. The High Court shall have their ruling with or without the appellant Memori Banding. If a Memori Banding is filed, the respondent to the appeal may file a counter statement or “Kontra Memori Banding”, but there is no obligation to do so.

The decision of the High Court may take a year or more until judgment.

C. Appeal to Supreme Court (Mahkamah Agung)

The appeal to the Supreme Court is called “Kasasi”. If any party is displeased or refused the judgment of the High Court level/Banding judgment, therefore such party is entitled to appeal to the Supreme Court or file a "Kasasi". The application for Kasasi has to be filed with the original District Court. This appeal/Kasasi must be filed within 14 days calculated from the time the party received the notice of 
the judgment of the High Court level/Banding judgment. The party who filed the Kasasi must also file ground of appeal or “Memori Kasasi” within the 14 days period. The respondent, if he so desires, may also submit a counter statement or the "Kontra Memori Kasasi", within 14 days calculated from the date that he received a copy of the Memori Kasasi.

The Supreme Court does not review facts but only decides on matters of the law, including the issue of whether the lower courts properly applied the law.

The judgment of the Supreme Court at the Kasasi level will be final and binding.

The losing party has an extraordinary legal remedy of civil review or "Peninjauan Kembali". The civil review or Peninjauan Kembali could be submitted to the Supreme Court which is only available for certain reasons as follows:

  1. The decision was based on a lie or fraud of the opposing party/adversary.
  2. There is new substantial written evidence after the decision was issued.
  3. The decision exceeded what was requested by the parties.
  4. The decision conflicts with other decisions issued by the same court, or another court at the same level, in the same case involving the same parties.
  5. There was manifest error or oversight in the judges' ruling.
Before the judgment of civil review or Peninjauan Kembali, the winning party can enforce the judgment of the Supreme Court (Kasasi Judgement) without delay.

D. Execution or Enforcement of Judgment

If the plaintiff wins with a final and binding judgment, the final and binding judgment is enforced by the original District Court examining the case and, if necessary, the State Auction Agency. To execute the judgment, the applicant must submit an application to the District Court, and then the District Court orders the defendant to fulfil the judgment within eight days. If the defendant does not fulfil his obligations, the defendant’s assets are attached (for the purpose of enforcement) and sold by way of a public auction. Such a public auction is effected by a special administrative board ("Juru Lelang") under the jurisdiction of the Ministry of Finance.