Not Arbitrary, Here’s How to Dissolve a Company!

Corporate Secretary Service Indonesia – The closing of company or PT (LLC) is the final step to overcome complex situations concerning the fate of the business. Unfortunately, many business actors do not understand the dissolution of a company that needs to be involved in this law. The legal process of dissolution must also be carried out thoroughly so that no problems arise in the future.

Establishing and dissolving a company in Indonesia requires a legal process. This provision is even regulated in PT Law Number 40 of 2007, section 142, concerning termination of activities, liquidation, and the end of company status in legal entities.

6 Basic Reasons for Closing of Company

Entrepreneurs must dissolve a company or PT so that the termination of their business operations can be legal. Although Indonesia can be said to be a conducive location for establishing companies and making investments, some companies are still unlucky in the resource, marketing, and business investment sectors.

These are some of the reasons why entrepreneurs find it very difficult to operate their businesses in Indonesia, and it is not uncommon to dissolve a company. Establishing and dissolving a PT in Indonesia must first pass through a legal entity. This provision is even stipulated in Law No. 40/2007 on Limited Liability Companies (UUPT).

Sometimes, company dissolution is only sometimes motivated by business failure. It can also occur due to poor management, lack of resources, and an unstable economy. The decision to close a company is not infrequently taken in the middle of a growing business.

According to Limited Liability Company Law Number 40 of 2007, several reasons can be used to determine the cause of a company’s dissolution.

1. GMS Decision

The GMS, or General Meeting of Shareholders, is a company organ other than the board of commissioners and directors. Based on Article 142 paragraph (1) letter a, the GMS has the authority to dissolve the company. However, the proposal to dissolve a company at the GMS only gives the board of commissioners, directors, and shareholders the right.

The validity of the GMS decision regarding the company’s dissolution can be recognized if it is made in accordance with Article 87 paragraph 1 and Article 89. Article 87 calls for deliberation and consensus before voting.

If this deliberation does not find a solution, then the dissolution decision must be able to meet the quorum. The quorum must be at least ¾ of the total number of shares with voting rights and approved by at least ¾ of the total votes cast.

2. Dissolution by court order

Parties with legal standing or rights can submit an application to the court to determine a company’s dissolution. Interested parties include directors, commissioners, and shareholders. Based on Article 146, paragraph (1) of the Company Law, the prosecutor’s office can submit an application related to the determination to the court if the company violates laws and regulations or the public interest.

Absolute competition related to the determination of company dissolution is the authority of the General Court or District Court. Meanwhile, the relative competence is in the District Court, which is adjusted to the company’s place.

Read Also: Key Points in the Business License Application Process

3. Dissolution is based on the company’s time expiring.

The Articles of Association of the Company can provide a period of establishment of the company, which can be 30 years, 60 years, or even indefinite. Suppose there is such a time limit for incorporation. In that case, if the company’s time expires, the company can be dissolved immediately. Another alternative is to extend the license period as well as the company’s time period.

According to the Limited Liability Company Law, the latest is 30 days after the company’s dissolution, and the executor of the GMS must immediately appoint a liquidator. If the GMS is not authorized to appoint a liquidator, the board of directors automatically becomes the liquidator.

4. The bankruptcy estate of the company is unable to pay the bankruptcy costs.

Based on Article 142 paragraph (1) of the PT Law, the inability or lack of bankruptcy assets to pay bankruptcy costs and curator’s fees can have implications for the revocation of decisions related to bankruptcy statements at the suggestion of the Supervisory Judge. If this happens, the dissolution of the company continues.

According to Article 142 paragraph 3 of UU PT, the next step that the company can take is to condition the holding of a GMS to appoint a liquidator. If this appointment is not made, then the board of directors will legally take on the role of liquidator.

5. Bankruptcy estate of a company in insolvency

After the bankruptcy verdict, the bankruptcy estate was insolvent. Since then, the company has been dissolved in accordance with Article 142 paragraph (1) letter e of the Company Law.

In accordance with Article 187 of Law No. 37 of 2004 related to Bankruptcy and Suspension of Debt Payment Obligations, since the company’s assets are in a state of insolvency, the supervisory judge at the Commercial Court can hold a creditors’ meeting. This meeting is held to find the necessary information regarding the procedures for processing or administering a company declared bankrupt.

6. Revocation of PT or company license

Article 142 paragraph (1) letter f of the PT Law states that the revocation of a company’s business license can impact the company’s dissolution if the revoked license is the only type of licensed business owned by the company. This condition certainly makes the company unable to continue in other fields. Suppose the company has several other business licenses, and only one is revoked. In that case, this condition will not cause the closing of company.

Revocation of a company’s business license is an administrative sanction regulated by several laws. The authorized official will later issue a decision containing the revocation of the previously granted business license and several reasons for revocation. Liquidation is the process of revoking the status of a legal entity owned by a company. Article 142, paragraph (2) of the PT Law emphasizes that if the company dissolves based on the six reasons above, liquidation must follow.

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