What Is a Certificate of Incorporation & How to Apply

When you want to establish a company, a deed of certificate of incorporation is crucial. This deed marks the official formation of a company.

This deed protects your personal assets from the company’s liabilities and allows you to access various important opportunities, such as opening a bank account and building credibility with clients. 

Obtaining this certificate is therefore a foundational step in launching a trustworthy business.

What Is a Certificate of Incorporation?

A certificate of incorporation is a crucial legal document that signifies the official recognition of a company by the state and permits it to conduct business activities.

This deed establishes the company’s legal status as a separate legal entity UU No. 40 Tahun 2007 tentang Perseroan Terbatas (UU PT). This means the company is a separate entity from its owners. Furthermore, this document outlines important details, such as the company name, business objectives, and authorized shares.

This allows the company to conduct various business transactions, including opening bank accounts, applying for loans, and entering into partnerships.

There are two types of company incorporation: acquisition and pooling of interest. The difference between the two is that an acquisition involves the acquirer gaining control of the net assets and operations of the acquired company.

Certificate of Incorporation vs. Business License: What’s the Difference?

A certificate of incorporation is not the same as a business license. A certificate of incorporation serves as proof of the legal formation of a company or business entity and is filed with the Secretary of State.

A business license, on the other hand, is granted by the government to companies to permit them to conduct business activities and pay taxes.

Requirements Before Applying for Incorporation

There are several requirements that must be met to obtain a certificate of incorporation in Indonesia. 

1. Choosing a Company Name

First, you must choose a unique company name that is not already in use by another party. The name must also not be misleading, resemble government or international institutions, or violate moral norms. 

The name must be requested in advance through the Ministry of Law and Human Rights (MOLHR) and is usually approved within one business day, and is valid for up to 60 days.

2. Deciding on a Business Structure

You need to determine the form of your business: whether to establish a local PT (for Indonesian citizens) or a PT PMA (for foreign capital), or even a sole proprietorship (specifically for MSMEs). 

The company structure must include at least one director and one commissioner, while a sole proprietorship only requires one shareholder/director.

3. Preparing Company Documents (AOA/MOA)

The main document is the Deed of Establishment (Articles of Association/AOA, or AOA/MOA), which includes the company name, address, business objectives, capital structure, list of shareholders, and management.

This document must be prepared by a notary in Indonesian, signed, and then submitted to the Ministry of Law and Human Rights to obtain a Decree confirming the legal entity. 

4. Appointing Directors and Shareholders

A regular PT requires at least two founders, who can be Indonesian citizens or legal entities. For a sole proprietorship PT, one Indonesian citizen is sufficient. 

The company must have at least one director and one commissioner, except for sole proprietorship PTs, which only have directors.

5. Determining Company Address and Capital

The company address must be fully specified, and can be a physical or virtual office, as long as it complies with local zoning regulations.

Authorized capital is no longer required under the Job Creation Law, but a minimum paid-up capital of 25% is usually still recommended or required for certain types of PTs.

How to Apply for a Certificate of Incorporation

Now, how to get a certificate of incorporation? In applying for a certificate of incorporation, you need to follow several processes, as follows:

1. Step-by-Step Application Process

Here are the steps to apply for a certificate of incorporation.

1. Reserve the company name with the Ministry of Law and Human Rights (MOLHR).
2. The notary prepares and finalizes the AOA (Authorized Document for Establishment), then registers the deed with the MOLHR for ratification the Deed of Establishment.
3. Once ratified, obtain a Decree of Approval as a legal entity.
4. Obtain the company’s Taxpayer Identification Number (NPWP) from the local tax office.
5. Register through the OSS system to obtain a Business Identification Number (Nomor Induk Berusaha/NIB), which serves as a business registration certificate and the basis for a business license.
6. Publish the deed in the State Gazette of the Republic of Indonesia through a notary within 14 days.
7. If necessary, apply for additional permits or “high-risk” sectors online via the OSS.

2. Required Documents and Fees

The required documents are follows:

1. Copy of Deed of Establishment
2. Copy of ID card or passport for foreign nationals (for Directors and Board of Commissioners)
3. Copy of Taxpayer Identification Number (NPWP) (for Indonesian citizens only)
4. Copy of Statement of Deposit Capital signed by the company founders
5. Copy of ID card or passport for individual shareholders
6. Copy of approval letter from the Ministry of Law and Human Rights for Indonesian companies as shareholders
7. Copy of Articles of Association and minutes of general meeting of shareholders (if any)

3. Estimated Processing Time

The estimated time to apply for a certificate of corporation in Indonesia is as follows:

1. Name approval: approximately 1 business day.
2. Notary & deed: several business days.
3. Decree validation: 1–3 business days.
4. NPWP and NIB: several business days.
5. The total processing time is approximately 4–6 weeks.

4. Common Mistakes to Avoid During Application

Common problems when applying for a certificate of incorporation are:

1. Using an existing name or violating regulations.
2. Incomplete or incorrectly formatted AOA.
3. Skipping NPWP or NIB registration.
4. Not publishing the deed in the State Gazette.
5. Not applying for additional permits for “high-risk” businesses.

Ensure all documents are complete, the company name is valid, and register through the official portal to avoid delays or rejections.

Abhitech, Your Trusted Partner in Business

Starting a business can be challenging, especially when dealing with unfamiliar local regulations and documentation requirements. Abhitech’s Employer of Record (EOR) services provide the guidance and support you need to simplify the company formation process.

Explore our informative blog for insights, or contact us to start establishing your business legally and efficiently.