Background
The application for transfer of ownership of foreign shares can be submitted either by foreign investment company or by domestic investment company. The transfer of ownership of foreign shares shall be conducted whenever there are changes in the company’s capital that cause some or all the company’s capital into a foreign capital or domestic capital.
The Transfer of Ownership of Foreign Shares for Domestic Investment Company
The transfer of ownership of foreign shares for domestic investment company occurs when domestic investment company conduct a change in the company’s capital as a result of the entry of foreign capital that causes some or all company’s capital become foreign capital. In the event that the transfer of ownership of foreign shares, the company does not have Principle License and does not have the Business License or has not obtained the Principle License, Article 23 paragraph 1 of Peraturan Kepala BKPM No.12 year 2009 (“Perka BKPM 12/2009″) requires the company to conduct Registration of the company’s investment as a result of the changes to PTSP BKPM.

Upon the application of the Registration, PTSP BKPM could issue:

1. Registration, if the business type and the percentage of foreign shares ownership fulfill the prevailing laws and regulations;

2. Rejection Letter, if the business form and the foreign shares ownership do not fulfill the regulation in the legislation as contained in the Annex VIIB of Perka BKPM 12/2009.

In the case that the investment company has acquired Principle License or Business License, Article 23 paragraph 2 of Perka BKPM 12/2009 requires the company to submit an application for Principle License or Business License of the investment as a result of the changes to PTSP BKPM. If the form of business is under the authority of provincial government and/or local government, the company shall attach an Introduction Letter from PTSP PDPPM or PTSP PDKPM regarding the plan of the entry of foreign capital as contained in the Annex VIIA of Perka BKPM 12/2009 prior to submitting the application. At the latest within 10 (ten) working days PTSP PDPPM or PTSP PDKPM have not issued the Introduction Letter, the company can attach the receipt of submission of the application.

The Transfer of Ownership of Foreign Shares for Foreign Investment Company
The transfer of ownership of foreign shares for foreign investment company occurs when a foreign investment company conducts a change in the company’s capital as a result of the release of all the foreign capital which causes the entire company’s capital into domestic capital. In the event that the company has acquired Registration by the time that the company will conduct the transfer of ownership of foreign shares, Article 24 paragraph 1 of Perka BKPM 12/2009 requires the company to conduct Registration of company’s investment as a result of the changes to PTSP BKPM, PTSP PDPPM, or PTSP PDKPM according to its authority. If what is acquired by the company is the Principle License or Business License, then according to Article 24 paragraph 2 of Perka BKPM 12/2009, the company shall submit an application for Principle License or Business License of the investment as a result of the changes to PTSP BKPM, PTSP PDPPM, or PTSP PDKPM according to its authority. Foreign investment company which form of business is under the authority of provincial government and/or local government shall submit Introduction Letter from PTSP BKPM regarding the plan of the release of all foreign capital prior to the conduct of Registration or submit the Principle License or Business License.
Renintha Karina