Indonesian Companies Must Report Their Beneficial Owners
The Presidential Regulation Number 13 of 2018 on the Implementation of the Principle of Knowing Beneficial Owners of Corporations in Relation to the Prevention and Eradication of Money Laundering and Terrorism Financing Crimes ("Reg 13/2018”) was recently enacted.
As required under the Reg 13/2018, a limited liability company should determine its beneficial owner. A limited liability company defines as local and foreign investment companies. Given this definition, the Reg 13/2018 also indirectly support the prohibition of nominee arrangement for a foreign investment company as set forth Article 12.7 of the Head of BKPM Regulation Number 13 of 2017.
The following are criteria of being considered as a beneficial owner: 1. Possessing more than 25% (twenty five percent) of the shares in the company as set forth in its articles of association. 2. Possessing more than 25% (twenty five percent) of the voting rights in the company as set forth in the articles of association. 3. Receiving more than 25% of the profits earned annually by the company. 4. Having authority to appoint, replace or dismiss members of the board of directors and board of commissioners of the company. 5. Having authority or power to influence or control the company without the need to obtain authorization from any party. 6. Receiving benefits from the company. 7. The beneficial owner is the actual owner of the fund used to subscribe the shares of the company.
Otherwise, the Authorized institutions are also entitled to determine other beneficial owner based on their audit result, information from government or private departments who are maintaining such beneficial owner’s information or other reliable information.
The Authorized Institutions is defined as central or local government institutions that have authority over registration, ratification, approval, notification, business license or dissolution of company; and Institutions that have authority to monitor and regulate corporation businesses.
Another obligation of a company is to appoint an officer or employee to implement the principle of knowing the beneficial owners and provide beneficial owners’ information based on request from the Authorized Institutions. In addition, a company should report the updated beneficial owners’ information to the Authorized Institutions.
A company must report beneficial owners’ information when it applies for establishment, registration, ratification, approval or business license; or for any changes or updates. The reporting can be done by the management of the company, a notary or a proxy.
Meanwhile, the Reg 13/2018 stipulates minimum beneficial owners’ information i.e. name; identity card/passport/driving license number; date and place of birth; citizenship; complete address as stated in the identity card, country of origin if foreigners; tax ID number and explanation on relationship between the company and the beneficial owner.
In light of the sanction of failing to comply with the Reg 13/2018, it is still unclear on what laws and regulations the Reg 13/2018 is referring to. However, it could refer to the laws and regulations issued by other authorities which have basically the same purpose such as Minister of Law and Human Rights Regulation No. 9 of 2017 on the Principle of Knowing the Service Users for Notaries or OJK Rule No. 11/POJK.04/2017 on Reporting of Share Ownership in Public Companies.