Reasons for Company Closure and its Legal Basis

Corporate Secretary Service Indonesia – Post-pandemic still has an impact on businesses, where many decide to deactivate including closing the company. Unlike the easier establishment, closing of company or a PT requires a longer time and process.

Reasons for Closing a PT in Indonesia

One of the factors for closing a PT is that there is no longer a sense of desire or enthusiasm or intention to continue the business activities that were previously the background of the establishment of the PT.

The decision is taken based on various reasons:

• Avoiding losses, taking into account various factors and circumstances in Indonesia want to avoid financial losses that arise;
• Inactivity of business activities, which can be due to a natural decrease in customers, for example a pandemic that causes social restrictions so that business activities become limited to do;
• Change in business plan;
• Changes in laws and regulations, for example, there are changes in the law that have a negative impact, for example, previously it was allowed to run a certain business but after that there was a law that prohibited the running of PT;
• Decreased market demand, which the demand for the supply of goods decreases in the market.

As we know, running a PT requires a lot of money. Many PTs have not yet broken even because the operational costs are not small, depending on the scale of the PT. So when these reasons arise, it becomes an option for the founder of the PT to close or deactivate the PT to suffer greater losses.

Read Also: Here are 3 Important Reasons Why Entrepreneurs Must Have an NIB

Article 142 paragraph (1) of the PT Law also regulates the reasons for the Closing of Company or a PT based on the law, including:

1. Based on the decision of the GMS (General Meeting of Shareholders). GMS or PT shareholders voluntarily close the company. There is no coercion from other parties but indeed a mutually agreed agreement with the aim of closing the PT. In accordance with the quorum or also agreed in full (no shareholders oppose).
2. Because the period of standing of the PT in the Articles of Association expires. Currently there are not too many because this is for PTs that were established like JOs or PTs that were established rather long ago (many years ago). Most of these PTs are established for an indefinite period of time. Thus, this point is rare.
3. Based on a court order, so it is determined to be dissolved.
4. Based on a court decision that has permanent legal force, the bankruptcy estate of the PT is not sufficient to pay the bankruptcy costs. So this is for PTs that are in a bankruptcy position where it has been determined based on the decision of the commercial court that the assets are not sufficient to pay the bankruptcy costs, so they can be dissolved.
5. Because the bankruptcy estate of a PT that has been declared in insolvency. This is regulated in the bankruptcy law.
6. Due to the revocation of the PT’s business license, it is obliged to liquidate the PT in accordance with laws and regulations. This is regulated in sector regulations where due to the nature of the business when the license is revoked, the regulations are required to follow it by conducting liquidation.

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