Want to Change an Individual PT to a Regular PT? Here’s the Rules!
“If over time the business of an individual PT no longer meets the criteria of an individual PT, the individual PT must change its legal entity status.”
Not infrequently an Individual Limited Liability Company (PT) then develops rapidly to reap large profits that exceed the turnover limit of Micro and Small Enterprises (UMK). This certainly encourages PT Individuals to change their legal entity status to “Ordinary PT”. So, what are the rules?
Provisions regarding changes to the legal entity status of PT are further regulated in the Regulation of the Minister of Law and Human Rights Number 21 of 2021 concerning Terms and Procedures for Registration of Establishment, Amendment, and Dissolution of Limited Liability Company Legal Entities (Permenkumham 21/2021).
Based on Article 2 paragraph (1) Permenkumham 21/2021, two types of PT can be identified, namely:
- Capital partnership PT; and
- Individual PT.
Meanwhile, a capital partnership PT is defined as, “a capital partnership legal entity established based on an agreement and conducting business activities with authorized capital which is entirely divided into shares.” Capital partnership PT can also be referred to as “Ordinary PT”.
Meanwhile, an individual PT is defined as, “an individual legal entity that meets the criteria for micro and small businesses as regulated in the laws and regulations concerning micro and small businesses”. The regulation in question is more precisely Government Regulation Number 7 of 2021 concerning Ease, Protection, and Empowerment of Cooperatives and Micro, Small, and Medium Enterprises (PP 7/2021).
Criteria for Micro and Small Enterprises
In addition to having to meet the criteria for Micro and Small Enterprises, individual PTs must also have one shareholder and be established by one person (Article 153A paragraph (1) of Law Number 40 of 2007 concerning Limited Liability Companies as amended by Law Number 11 of 2020 concerning Job Creation).
Meanwhile, according to Article 35 paragraph (3) letter a and paragraph (5) letter a of PP 7/2021, the criteria for Micro Enterprises are as follows:
- Maximum business capital is IDR 1 billion, excluding land and buildings for business premises.
- Maximum annual turnover of IDR 2 billion.
Meanwhile, based on Article 35 paragraph (3) letter b and paragraph (5) letter b of PP 7/2021, the criteria for Small Business include:
- The business capital of more than IDR 1 billion up to a maximum of IDR 5 billion, excluding land and buildings for business premises.
- Annual turnover of more than IDR 2 billion up to a maximum of IDR 15 billion.
How to Change Individual PT’s Legal Entity Status into Regular PT
Now, if over time the business of an individual PT no longer meets the criteria above, the individual PT must change its legal entity status to a capital partnership PT or ordinary PT (Article 17 paragraph (1) Permenkumham 21/2021). By first changing the status through a notarial deed, which contains:
- Shareholder’s statement containing the change of status of individual PT into a capital partnership PT;
- Changes in the articles of association from the original statement of establishment and/or a statement of changes to the individual PT become the articles of association; and
- Company Data.
The deed must then be registered with the Minister of Law and Human Rights electronically through the DITJEN AHU ONLINE (Article 17 paragraph (2) Permenkumham 21/2021).
Want to convert your individual PT into a regular PT? Consult us in Prolegal!
Author: Aleyna Azzahra Badarudin
Editor: Bidari Aufa Sinarizqi
Translator: Desak Nyoman Ratna Sari