Any business may come to a point when the business comes to an end and the decision to strike off the business is inevitable. These could be some of the reasons for closing a PMA :
- There is a business failure due to market, management, financial issues, etc.
- The business license has come to an end, as forced by law or by court order
- Disposal of Shares to third parties is not an option due to operation confidentiality or other reasons.
These are typical steps for company liquidation of a PMA Company in Indonesia, from start to finish :
A. Initial Legal Action
Hold General Meeting of Shareholders (GMS ) or prepare this GMS notes to obtain the approval for these agendas by shareholders :
- Resolution to dissolve the company being approved with majority
- Dismissal of Board of Directors and Board of Commissioner (optional but strongly suggested).
- Appointment of a Liquidator (or a Liquidation Team) for Lead and man manage the asset and liabilities settlement *).
*) Per Indonesia Company Law, any individual(s) can be appointed as liquidator(s) provided he is she is found capable to do so. It could be ex director, accountant, tax consultant, or lawyers or anyone suitable can be appointed provided he or she is found capable. In most cases of voluntary dissolution of a financially solvent company with no potential dispute with third parties, appointing a tax consultant is more leveraged to assist in one of the most critical paths of liquidation , i.e., the tax audit.
The draft and process of GMS can be fully assisted by a Public Notary. And the public notary shall assist in filing notification of such liquidation decision with The Ministry of Law and Human Rights. From that point, the company is no longer capable of making any new business transactions unless they are relevant with assets disposal and debt settlement. However, please note that the Company will not lose its status as a legal entity until the “in the liquidation” status comes to an end by the General Meeting of Shareholders or by the court.
B. LIQUIDATOR’s Work
- On this point on, the appointed liquidator shall commence the task and duties, such as:
Making public announcements with both the newspaper and the State Gazette (“The First Announcement”). This announcement works as an invitation for creditors to file any unsettled debts or claims.
- Filing notification with the Capital Investment Coordination Board (“BKPM”) via OSS or by manual process.
- Re inventory of the company’s assets and liabilities based on internal data and public claims.
- Make another public announcement after 60 days of the first announcement regarding the assets distribution plan resulting from the liquidation ( “The Second Announcement“)
- Proceeding with necessary arrangements and payment of services that are relevant.
- Hold final and binding GMS to obtain Shareholders’ approval and acceptance of the liquidator’s work.
- Making final announcement in daily newspaper containing the final result of the liquidation (“The Third Announcement”)
- Obtain the decree of dissolution from the Ministry of Law and Human Rights.
Note: If the Liquidator estimates that the company is incapable of settling debt fully from the assets proceeding, the liquidator must consider filing a bankruptcy petition over the Company. However, all creditors and shareholders are encouraged to agree with settlement outside the bankruptcy process as this is faster and less painful for all.
C. Tax ID Deregistration
One of the toughest points of company dissolution in Indonesia is that the company books and accounts must withstand tax scrutiny. The scope of the scrutiny will cover the 5 (five) most recent years’ books and accounts, and this is often a challenge when the companies that were actively in operation over those years. In general, tax consultant services would help prepare for the tax audit.
C.1. Pre-audit preparations.
We would highly be recommended that books and accounts are heavily checked, reconciled, and diagnosed before that audit comment and mitigation plan is developed over significant tax issues. We often come up with the recommendation to amend the relevant tax returns, overhauling books and accounts, or other mitigation actions.
C.2. Final Corporate Tax Return (s)
Once the accounts are ready for a tax audit, an application for Tax ID Cancellation will be submitted, together with current year’s corporate tax return. This corporate tax return serves as the final and last tax return, covering the date from the beginning of the book year to the date of the closure.
C.3. Tax Audit Assistance
Within 1-3 months, the tax office may commence the audit and the process may take up to 12 months. If the company finds that the amount of the tax audit findings are reasonable, the assessment can immediately result in the tax clearance.
Once the tax audit or appeal is completed and resolved, and payment is made (if any), the process returns to the legal section for completion.
Registered Tax Consultant
Licensed Receiver for Bankruptcy Case.
Registered Tax Consultant
Candidate Public Notary – by education
Registered Tax Consultant
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