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Business in Indonesia: 3 Types of Local Special Purpose Vehicles

Home » Blog » Business in Indonesia: 3 Types of Local Special Purpose Vehicles

Many businesses may have heard of local nominee directors, commissioners and shareholders in Indonesia as they are foreigners’ favored form when it comes to doing business in the country.

Many businesses may have heard of local professional directors, commissioners and shareholders in Indonesia as they are foreigners’ favored form when it comes to doing business in the country. However, this type of business formation comes with strict regulations. For this reason, it is of significant importance that foreigners have a deeper understanding of what local partner or Special Purpose Vehicle is and how it works before jumping right into it.  Cekindo has laid out what you need to know in the guideline below. 

DEFINITION OF SPECIAL PURPOSE VEHICLE IN INDONESIA

Special Purpose Vehicle mean local companies or individuals who become the shareholders, directors, or commissioner of another company on behalf of foreigners. The local partners do not own any direct rights and authority over the company — they only act as the representatives of the real directors, shareholders and commissioner. 

TYPES OF SPECIAL PURPOSE VEHICLE IN INDONESIA

In Indonesia, you can find three types of Special Purpose Vehicle. Note that foreign directors need to get a KITAS or work permit before they are eligible to work in Indonesia. 

1. Professional Director

A professional director serves as the director of a company in Indonesia  passively but does not have any managing power of the company. They are not allowed to be the bank account signatories of the company.  Since foreign directors will have to obtain a work permit or KITAS before they are allowed to work in Indonesia, both foreign or local companies require a  minimum of one local director in the company. Therefore, before a foreign  director can get a KITAS, you can either include the name of an Indonesian in  the incorporation documents, or opt for professional non-executive director service. It is  fine to change the director afterwards. 

2. Professional Commissioner

A professional commissioner serves as the commissioner of a company in  Indonesia on behalf of the true commissioner. The commissioner supervises  the company and director’s activities.  A professional commissioner service is ideal for foreigners who want to  establish a local company instead of a foreign company PT PMA. The local  professional commissioner can not be the same individual as the special purpose vehicle  director.  

3. Professional shareholder

A professional shareholder serves as the registered shareholder of a  company, representing the real shareholder on legal documents. Just like  professional directors and professional commissioners, their roles are passive,  and they do not have any power to control or manage the company.  

HOW TO USE SPECIAL PURPOSE VEHICLE SERVICES SAFELY 

We couldn’t emphasize more that you need to be extremely cautious when choosing a special purpose vehicle partner in Indonesia even though it is a very common practice. Here are the things that you can do to ensure the safe use of a special purpose vehicle service: 

  • Do some research and find your company a trusted Special Purpose Vehicle services provider. 
  • Create legal agreement between you and the pointed local partner to safeguard your assets, ownership and rights of the company. The agreement has to be drafted via a registered and credible legal counsel. 

                 Read also: How Special Purpose Vehicle Company Works for PT PMA

SPECIAL PURPOSE VEHICLE SERVICE FROM CEKINDO

Cekindo offers Special Purpose Vehicle services that help you find the most trustworthy local partners. We will provide you with a list of local counterparts that you can choose from, and then we will take care of all legal arrangements. The special purpose agreement will then serve as a legal mediator to distribute ownership, control, and income between the true owners and the partners.  We also help you draft the agreements between you and the pointed partner to make sure that all your rights are protected. You should always be careful when it comes to choosing a special purpose vehicle service — and Cekindo is your go-to and worry-free solution. Connect with Cekindo’s one of experienced legal consultants now and we will ensure that your special purpose vehicle arrangements are done legally and safely without any future risks. 

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