A company’s directors are its strategic anchors, guiding its long-term direction, ensuring compliance with laws, and safeguarding shareholder interests.
In Indonesia, where regulations are evolving and corporate governance standards are tightening, the role of a director extends beyond boardroom decisions.
It involves daily management, financial accountability, and ensuring the company aligns with national regulations and ethical business practices.
Business Setup: Roles of Foreign Company Directors in Indonesia
Foreign nationals can play an important role in driving Indonesia’s business ecosystem, bringing global perspectives, leadership experience, and access to international networks. A foreign director in an Indonesian company operates under the same fiduciary and managerial duties as local directors but must also comply with immigration, work permit, and reporting requirements.
Members of the Board of Directors, whether local or foreign, are legally responsible for ensuring that the company follows Indonesia’s Company Law, taxation framework, and employment regulations.
They act as signatories on behalf of the company and may be held personally liable for certain compliance breaches. Hence, foreign directors are both key decision-makers and accountability holders within Indonesia’s legal framework.
What Kind of Company in Indonesia Has Foreign Directors?
Foreigners may hold directorships primarily in PT PMA (Perseroan Terbatas Penanaman Modal Asing) or foreign-owned limited liability companies. This entity type is the main vehicle through which expatriates and international investors establish a business presence in Indonesia and conduct various business activities.
While local PT (PT Lokal) companies can only have Indonesian shareholders and commissioners, they can still employ foreign nationals in managerial or advisory roles under specific conditions.
However, directorship with signing authority is generally reserved for PT PMAs, where foreign ownership is permitted and governed by Indonesia’s investment and company laws.
Board of Directors and Board of Commissioners: Functions in a Company
Under the Company Law (Law No. 40 of 2007), every limited liability company in Indonesia must have at least one Director and one Commissioner.
The Board of Directors (BOD) is responsible for managing the company and executing its business strategy, while the Board of Commissioners (BOC) supervises the directors and provides strategic oversight.
These roles and responsibilities are formalised in the company’s Articles of Association, which set out decision-making powers, tenure, and corporate authority. For foreign directors, understanding these articles ensures compliance and prevents conflicts between operational decisions and shareholder expectations.
Understanding PT PMA Companies in Indonesia
A PT PMA is a limited liability company established under Indonesian law with partial or full foreign ownership. It allows foreign investors to participate in Indonesia’s economy across most business sectors, subject to the Positive Investment List (Presidential Regulation No. 10 of 2021).
To establish a PT PMA, investors must meet the minimum capital requirements. The current IDR 2.5 billion must be deposited as paid-up capital in accordance with BKPM Regulation No. 5 of 2025. The company must also obtain a Business Identification Number (NIB) and relevant operational permits through the Online Single Submission (OSS) system.
A PT PMA must have at least:
- Board of Directors, or at least one director (can be a foreign national)
- Board of Commissioners, or at least one commissioner (can be local or foreign)
- Two shareholders (individuals or entities)
What Do Foreign Company Directors in Indonesia Do?
Foreign directors in Indonesia are responsible for overseeing the company’s operations, ensuring profitability, and maintaining compliance with Indonesian regulations. Their duties include:
- Corporate Governance: Ensuring the company operates transparently and adheres to Indonesian Company Law (Law No. 40 of 2007).
- Regulatory Compliance: Filing annual reports, financial statements, and tax returns in accordance with the Ministry of Law and Human Rights and the Directorate General of Taxes.
- Strategic Management: Driving expansion, negotiating contracts, and aligning business goals with Indonesia’s investment policies.
- Employment Oversight: Ensuring all expatriates and local employees comply with employment and immigration regulations.
Additionally, foreign directors must also obtain a Work Permit (IMTA) and Limited Stay Permit (KITAS) to legally reside and work in Indonesia.
Investing as a Director in an Indonesian Company
Foreign directors often double as investors or shareholders. This dual role aligns management with ownership and provides greater control over decision-making. Investment can be made directly (by purchasing shares) or indirectly through a parent company structure.
However, all capital injections and share acquisitions must be reported through the OSS system and comply with the Investment Coordinating Board (BKPM) requirements. Directors who invest are also expected to ensure that the company’s capitalisation, including paid-up capital and investment value, which should be fully declared and supported by proper documentation.
Restrictions of Foreign Directors
Despite greater openness to foreign participation, Indonesia maintains safeguards to protect national interests:
- Foreign directors must hold a valid KITAS and Work Permit issued by the company that employs them.
- Certain sectors, such as defence, media, and small-scale retail, remain restricted or closed to foreign directorships.
- Foreign directors cannot act as sole directors in companies where sectoral laws require a local counterpart.
- Residency is typically required; directors must spend sufficient time in Indonesia to manage daily operations and meet compliance obligations.
Failure to comply can result in visa revocation, fines, or company sanctions under Indonesia’s immigration and business laws.
Steps to Appoint a Director
- Amend the Company Deed – Appointment or replacement of a director must be notarised and approved by the Ministry of Law and Human Rights (MOLHR).
- Update OSS & NIB – The company must update its OSS data and business registration details to reflect the new director.
- Apply for KITAS and IMTA – Foreign directors must secure a limited stay and work permit tied to their role in the company.
- Tax and Social Security Registration – The director must obtain a Taxpayer Identification Number (NPWP) and be registered with BPJS (social security).
- Public Disclosure – The company must publicly record the appointment in accordance with corporate governance rules.
Establish a Company in Indonesia: Steps to Register
- Define Business Structure & KBLI – Determine your business classification and confirm eligibility under the Positive Investment List.
- Prepare the Deed of Establishment – Drafted and notarised in Indonesian, signed by all shareholders.
- Obtain Legalisation from MOLHR – The Ministry approves the company as a legal entity.
- Register with OSS – Secure your Business Identification Number (NIB) and relevant operational permits.
- Deposit Paid-Up Capital – Transfer the required capital (minimum IDR 2.5 billion for PT PMA) into the company’s bank account.
- Appoint Directors & Commissioners – Nominate qualified individuals and record the appointment through a notarial act.
- Tax and BPJS Registration – Register for NPWP and mandatory social security programs.
Build Your Business Future in Indonesia with Lets Move Indonesia
Navigating the legal, immigration, and corporate governance requirements for foreign directors in Indonesia can be complex, but it doesn’t have to be overwhelming.
As a subsidiary of LMI Consultancy, Lets Move Indonesia provides end-to-end assistance, from company registration and director appointments to work permits and compliance monitoring in Indonesia.
With our expert guidance, you can focus on building and leading your business with confidence, while having us handle and ensure every aspect of your corporate structure aligns with Indonesia’s regulatory framework.
Ready to take the next step?
Contact us today, and let’s make your leadership in Indonesia official, compliant, and future-ready.
