Generally no, unless the company is converted into a PT PMA structure with foreign shareholding.
In the context of growing international investment and Indonesia’s evolving business landscape, the appointment of foreign nationals as directors of Indonesian companies has become increasingly common. While Law No. 40 of 2007 allows foreign directors, appointing them requires careful compliance with corporate, immigration, employment, and taxation regulations. This guide walks through each legal step and analyzes key issues surrounding how to appoint a foreigner as director in an Indonesian company.
The main regulation governing company structures in Indonesia is Law No. 40 of 2007 on Limited Liability Company (Company Law). Under this law, every company must have at least one director and one commissioner. Notably, there is no restriction on foreign nationals being appointed as directors, provided all legal requirements are met.
Once appointed, a foreign director has the same rights and responsibilities as an Indonesian citizen director. However, immigration, employment, and tax laws impose additional obligations, especially related to working permits and residency.
Foreigners are generally appointed in PT PMA, which are companies set up with foreign shareholding. These companies are specifically structured to comply with Indonesia’s foreign investment rules, making them the ideal vehicle for appointing a foreign director.
In practice, foreigners cannot be appointed as directors of a purely local PT (Perseroan Terbatas) unless they have legal ownership or the company has restructured to accept foreign shareholders—thereby becoming a PT PMA. Otherwise, a foreigner is only assigned non-operational or advisory roles.
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To be lawfully appointed, a foreign national must fulfill the following:
Your company must also provide a domicile letter, a taxpayer identification number (NPWP), and evidence of the company’s business activity before applying for the foreign director’s KITAS and IMTA.
Check your company’s Articles of Association (AoA) to ensure that there’s no clause limiting the appointment of foreign nationals as directors. If limitations exist, the shareholders must amend the Articles of Association (AoA) through a General Meeting of Shareholders (GMS).
The GMS must approve the appointment, and the shareholders should make the resolution in the presence of a notary. The notarial deed of the GMS will serve as a legal record of the appointment.
The notary must then file the director’s appointment with the Ministry of Law and Human Rights (MOLHR) via the online AHU system. The appointment becomes legally effective after MOLHR issues a ratification letter.
This step is mandatory and must be completed within 30 days of the GMS. Failing to notify MOLHR on time may result in administrative sanctions.
Next, the company must sponsor the foreign director’s VITAS, followed by an application for KITAS and IMTA. These permits are crucial, as foreigners cannot act in a director capacity without them.
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To successfully appoint a foreign director, prepare the following:
Once appointed, foreign director must comply with:
Failure to comply can result in penalties, or in some cases, deportation or blacklisting.
Some risks include:
Thus, due diligence and professional legal guidance are non-negotiable.
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Mandatory for all directors—foreigners included. Required for:
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Under Article 97 of the Company Law, directors must:
Failure to comply may result in personal liability.
At Kusuma & Partners Law Firm, we frequently assist both multinational corporations and startups in legally appointing foreign directors. Our experience shows that the most common pitfalls arise from neglecting immigration coordination, shareholder readiness, legal compliance & tax compliance matter. We provide end-to-end support, including legal restructuring, AoA amendments, GMS facilitation, legal compliance, tax compliance, notarial documentation, and immigration processing—all customized to our clients’ needs.
Appointing a foreigner as a director in an Indonesian company is absolutely possible and legally permissible—when done right. But the process is not just a formality. It involves strict compliance with corporate, immigration, labor, and tax laws.
Whether you are a business owner looking to bring international leadership into your operations or an investor aiming to formalize your role, always ensure the process follows the legal corridors of Indonesia.
Need help navigating the legal complexities of appointing a foreign director in your Indonesian company? Kusuma & Partners Law Firm is here to assist. Our seasoned lawyers will ensure full legal compliance and tax compliance, handle the paperwork, and protect your company’s interests.
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“DISCLAIMER: This content is intended for general informational purposes only and should not be treated as legal advice. For professional advice, please consult with us.”
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